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Bootstrapping Is Valuable While Seeking Funds

Aug 17, 2007
Alex Welch, co-founder of Photobucket, talks about starting his company with a variety of funding means and efforts to save costs. Welch used everything he had from savings, credit cards and home mortgages to a fortuitous partnership with his former boss, he went wheeling and dealing for equipment and a loan from a sympathetic banker to launch his company and push it to profitability.

The online social network for sharing photos and other visual digital media now boasts an estimated 46 million users and growing, but Welch claims it was started on a bunch of servers in his partner's basement.

He says waiting for bigger funding until bootstrapping the company to profitability improved the terms for the original business owners when that funding finally came.

"Besides, when you bootstrap from the beginning and ingrain it in your corporate culture, bootstrapping becomes a state of mind. You never stop treating every dollar like your last one," Welch explains.

Then there is former U.S. Marine and entrepreneur Ann Bernard, says she's using bootstrapping techniques despite seeking VC or other outside funding for her startup social network Why Go Solo. For example, they have a blog detailing their startup phases and then uses Blogger, which is a free platform, and she and her partners plan to put a lot of sweat equity into marketing the venture when it's finally rolled out.

Bootstrapping methods can certainly be a help even when you've got outside funding because they can save you from spending money on things you don't need. So, why not just bootstrap Why Go Solo all the way instead of seeking funding, especially with the decreasing cost of starting just about any Internet based company?

Ann explains:
Our problem is this: when we launch, if we don't make a splash, those sites and other organizations that are not tapping into what we will be providing, they can easily steal our thunder and utilize their already massive following to bury us in the ground. I'm not sure I completely agree with this argument.

For example, Yahoo! bought Flickr even though it already had a photo sharing service of its own and by September 20 they plan to shut down its own service in favor of the newer acquisition simply because it's more popular.

Also, Director of Business Development for Microsoft's Emerging Business Team Don Dodge explains that the ability to technically replicate a startup's key product does not equal the ability to replicate its market position.
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The author writes about Bootstrap and blogs at http://www.bootstrapme.com/.
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