The Bootstrapper’s Guide to Internet Startups

Throughout the process of founding, bootstrapping, and building OpenCal, we’ve learned something about what it means to take an idea and turn it into a sellable product. We feel some of the lessons we’ve learned may help others who are building or are thinking of beginning internet startups of their own. So we’ve decided to kick off a series of posts that we’re calling the Boostrapper’s Guide to Internet Startups.

Bootstrapping: Getting the proverbial ball rolling through a combination of self-funding and using cash from sales to grow the business in place of seeking outside funding.

Bootstrapping to us meant quitting our full-time jobs, doing part-time design work, and plunking down some savings while we built something that we could show to people. Here are five lessons we gleaned from the founding of OpenCal.

1. Start with what you know

Our founders are skilled designers, so we knew whatever we chose, it would have to be in an industry where design skills could make a difference. Online appointment scheduling was an area we cared about and believed that fundamental design improvements would create a more intuitive online booking experience and deliver greater value to businesses and customers alike. This is a key to success because as a bootstrapped startup you simply won’t be able to afford a big team, which means the skills you bring to the table have to be integral to the project. Everything else you will probably have to outsource or do without until you have some sales.

If you already know what you’re passionate about, that’s awesome – you’ve got a great starting point to begin generating ideas. This doesn’t mean you shouldn’t explore industries you know nothing about, but it does mean if you choose to startup in, say, waterless urinals (as James Krug did; read more in this Wired article), make sure you know why you’re choosing that industry and what skills you bring to bear. In James’ case, he was passionate about making a difference to the planet, so creating a water-free alternative to the standard urinal made sense. His skill set was in business development and sales, and you can imagine how important that skill would be when you’re trying to sell a counterintuitive idea to an entrenched industry standard. Of course, selling is no good without a product to sell, and since James did not have a background in engineering, he had to look for a complementary skill set, which brings us to the next point.

2. Choosing the right founder(s).

If you’re going to have a co-founder (or multiple founders), make sure you choose someone who you have worked well with in the past. Just because someone is your best friend doesn’t mean you’ll work well together (that was a spoiler for The Social Network movie right there). The team is the most important ingredient in any startup. That means choosing founders that have complementary skill sets, a common vision or purpose, and a shared passion for the important elements of your product or industry. Beyond matching engineering with business development, or design with marketing, there are a number of other traits that are generally quite valuable in a bootstrapped startup, such as intellectual horsepower, low ego, strong work ethic, a can-do attitude, and the ability to ride out a bumpy road (and it will be bumpy).

We set out with two founders here at OpenCal and it felt like the optimal number to us (and this rough analysis on the msdn blog shows there might be some statistical merit to that claim.) With two founders, you get to share the startup rollercoaster ride with all its ups and downs. You (hopefully) have more money to start off with. You get two brains to tackle the problems, decisions, and challenges you’ll face, but just as importantly, you won’t get too many brains tackling the same issues, which often results in endless arguments and compromises.

3. Murder your darlings.

You’re going to come up with all kinds of ideas for your startup. You’ll need to throw all but one of them away. But don’t let that discourage you – the only way to find good ideas is to come up with lots of ideas, do lots of research, ask lots of questions, and in the end, cross out each one (if you have trouble coming up with ideas, there are methods you can use to trigger that creative spark). Sometimes, you’ll come across a good idea that passes most of the basic tests (does it solve a problem, why someone would value that solution, that someone exists) and you’ll pursue it for a while – just remember that until someone pays for or uses it, it’s still just an idea, and it’s always better to start with a new idea than to blindly follow one just because you’ve already sunk time into it.

There are two opposite but related myths that come up a lot in reference to this lesson:

  • All the good ideas are taken.
  • My idea is so good I need you to sign an NDA just so I can tell you.

To dispel the first myth, all you need to do is look around you. What’s the latest new product or business you heard about? If you have access to the internet (and if you’re reading this, you do), check out – they post a new business every day, and almost all of them feature completely new ideas.

Now, let’s say your good idea is already ‘taken’. Does this mean you shouldn’t pursue it? Hell no. In some ways, an alternate execution of your idea should provide you with some validation – it means someone else saw the same thing as you did and went for it. You can either try to vary your offering in some way from theirs, or if it’s a nascent market, go head-to-head (assuming it’s not Google or some other 800-lb gorilla). Often times being second or third to market can be a huge advantage – you can learn from your competitors mistakes. Speaking of which, you didn’t think Google was the the first search engine to crawl the internet, did you?

The notion that ideas have actual monetary value is a bit more persistent. But consider this: how often have you, or someone you know, come up with a ‘great idea’ (according to whoever)? And what are you doing about those accumulated ideas right now? Probably nothing. That’s because ideas are cheap. It takes almost nothing to come up with one and spit it out. Here, watch: a specialized babysitting service for exotic plants. Is it a good idea? Who knows. Could I sell it? I sincerely hope not. So it’s worthless then. It will remain worthless unless I do the research, find out there’s a market for it with motivated customers, and then execute that idea and make money. In fact, execution of an idea is magical, because you’re taking something that is worthless (the idea) and making it worth something. Execution is tough, and that’s where the value lies.

4. Focus on the solution, not the outcome.

So often we hear about a new startup that wants to replicate Facebook or mentions that their plan it is to exit via a Google acquisition for $20 million. Not only is such thinking foolhardy, it almost guarantees you will not achieve even a modicum of success. Remember this ironclad law: if you’re not delivering value to someone else, you’re not building something valuable, and it will (probably) never amount to anything. Instead of thinking about some pie-in-the-sky outcome, keep your head out of the clouds and focus on the problem you are solving, who you are solving it for and why that is valuable. Build a solution that meets those objectives and iterate.

Secondly, talk with your users or potential users. They’ll give you lots of insight into their problems and needs. You’ll still have to make tough choices and trade-offs (it will be impossible to build every feature for every user), but you’re less likely to end up with a product that pleases no one.

5. Don’t worry about peripheral stuff.

Do I need to incorporate and get a lawyer to set up a share structure? What about my name – should I trademark that? Do you need a Facebook page? Should you build a Twitter following first? The answers to these, and many similar queries, is no. That’s not to say those activities are not valuable – only that they do not come first. For example, we put off incorporation as long as we could. We began building a Twitter and Facebook presence only after we had something to show people.

Here’s a test you can take which will tell you if it is time to work on these problems:

  • Have you showed a potential customer your solution to their problem?
  • Has a customer forked over cash for your solution?*

If you answered ‘no’ to either of those, keep your head down and focus on your solution. You can tell the world about it later.

* You don’t have to charge money for something to be valuable – but if you’ve shown your solution to a potential customer AND they’re not interested in using it even for free, you have a problem, Houston.

This post was originally published on OpenCal’s blog.