In this post, I reveal why you must bootstrap your business and not raise money. You’ll learn proven success principles that can change lives and build your empire.
Bootstrap your business and follow the lead of ultra successful entrepreneurs.
Entrepreneurs who changed the social fabric of society.
When you focus on raising money, instead of building a business, you have it wrong.
And popular media isn’t helping. Today too many entrepreneurs believe they must raise money before starting a company.
With this belief comes dreams of becoming rich and famous from the millions they’ll raise. And even more money, when the company sells or goes public.
The truth is stranger than fiction.
Think Whats App and SnapChat.
Greed and visions of grandeur fueled by Venture Capitalists (VCs). Companies with billion dollar valuations are the heroes of VCs.
But many of these companies are losing money.
Let’s stop the insanity and back to business basics.
Learn how to bootstrap your business. When you do, your focus is on building a real business with paying customers.
Sound too good to be true?
Find me cockroach startups and I’ll show you companies on their way to massive success.
What are cockroach startups, you ask? Read all about it here.
And from cockroach startups emerge unicorns. Think Facebook and Google.
Let’s go back to basics on how to bootstrap your business, change lives, and realize massive profits.
Bootstrap Your Business With These 13 Success Hacks
In this post, I did a deep dive on the thirteen characteristics of cockroach startups.
As a recap, cockroach startups survive and thrive on the following principles:
- Profitability Is Everything.
- Resourcefulness Trumps Resources.
- Small Teams. Big Results.
- Hire Team Members For Mission Over Money
- Do Whatever It Takes To Live Another Day
- Play Small At First So You Can Play Big And Dominate.
- Every Customer Counts.
- Everyone Is In Sales. Founders Included.
- Everyone Is In Customer Service. No Exceptions.
- Bootstrap Your Business. Forever If Possible.
- The Bottom Line Is The Bottom Line. Always
- The Offering Is Everything And The Only Thing
- Your Only Exit Is The One On Your Office Door
Cockroach startups have no room for greed or delusions and grandeur.
When you bootstrap your business, you’re putting it on the line. Every day. All day.
You have no choice but survive and thrive.
When you bootstrap your business get ready for failures, frustrations, and struggle. And this is not only a good thing. It’s needed.
You read that right.
When you bootstrap your business, you master innovation, resourcefulness, and a strong culture. The perfect trifecta for sweet success.
Here’s What Happens When You Don’t Bootstrap Your Business
There is a time and place for VCs.
Many cockroach startups need the help of VCs to scale to the next level. And with this comes the opportunity to change the social fabric of society for the better.
But there’s a certain type of VC that has corrupted a generation of entrepreneurs. These VCs peddles snake oil through tricks that appear to defy gravity.
What are these tricks, you ask?
VCs pump millions into startups with no business model, customers, or revenues.
As if by magic, these companies have other investors value them at over $1 billion. And voila, a so called unicorn is born.
It’s greed at best and stupidity at worse.
And it does get worse.
Startups that have raised $1.48 billion have failed and are shutting down.
Jawbone raised $1 billion and is no more.
Quixey was a mobile search engine that was once valued at $600 million and going up. The $133 million Quixey raised is a distant memory as Quixey is no more.
And the list goes on.
Some of the companies had great ideas with the potential to make a difference.
With fast money comes sloppy entrepreneurship and bad business practices.
When you bootstrap your business, your failures highlight your weaknesses.
But when you have what seems like unlimited money, you don’t have the desire or need to fix the problem.
Bootstrap Your Business For Success Like These 3 Giants
Cockroach startups are in a league of their own.
I should know. I built and ran a cockroach startup that became an 8 figure business.
When the new owners sold the company, it morphed into a half unicorn.
And all from following the best practices of cockroach startups.
But enough about me.
Let’s look at three cockroach startups that went from a dream to dominate their space.
Learn how to bootstrap your business likes these three giants, and you’re well on your way to big things.
Each of the three companies we’ll discuss started off without a penny of venture capital.
Each company implemented most, if not all, of the thirteen cockroach startup habits. You can read in detail about the habits of cockroach startups here.
So who are these three companies that are masters at bootstrapping?
Glad you asked.
The companies are:
When researching companies, the following criteria lead the charge:
- The company is the undisputed champion in its industry.
- Founder DID NOT use outside capital to start the company.
- The company still bootstraps or bootstrapped until going public.
Success leaves clues. And these three companies are no exception.
Ready to learn how to bootstrap your business like these three giants?
Great, let’s do it!
Bootstrap Your Business Like Ubiquiti Networks: From Humble Beginnings To Dominating Its Industry
When Robert Pera left Apple in 2005 to start his company, Ubiquiti Networks, he told himself:
“Don’t screw it up.”
And if that wasn’t enough, he also told himself:
“If this doesn’t work out, I am screwed.”
Sometimes the truth is stranger than fiction! Andy Meek has an outstanding article on Robert Pera’s humble start.
Between personal savings and credit cards, Pera started Ubiquiti Networks with $30,000.
Even in 2005, when Pera started, $30,000 doesn’t take you far. And this is where Pera’s genius kicks in.
Pera invented an embedded radio card that he brought to a trade show. Customers signed up and even paid upfront for a product that didn’t exist.
Way to go Pera!
With cash in hand and pending orders, Pera traveled to Taiwan to figure out how to manufacture the radio. For the next five years, Pera built the business.
[tweet_box design=”default” url=”http://jef.tips/bb” float=”none”]You build your empire when you empower your customers[/tweet_box] and not exploit them for profits.
Empowering customers, and not exploiting them led the charge for Pera. And to this day Pera continues to put customers first, empower them, and only then earns his profits. A lot of profit.
Want Massive Success? Bootstrap Your Business And Put Customers First
The big breakthrough came for Pera five years later, in 2010. Pera was humming along with his embedded radio card.
In 2010 a $50 consumer WiFi Access Point (AP) had 90% of the same components as a $1,000 business WiFi AP.
Outraged at how networking companies fleeced businesses, Pera jumped into action. Pera figured out the ‘last mile’ of connecting businesses to the Internet.
How did Pera do this?
Ubiquiti’s blog shares the details here.
The performance of Ubiquiti’s products is head and shoulders above the competition. Add a cool looking product, an amazing user interface, and solid customer service. And by the way, this comes at a fraction of the cost of competitive products.
But there was one big problem for Ubiquiti.
In 2010 Ubiquiti had 25 employees, and none were in marketing or sales. Ubiquiti was up against massive companies with big marketing budgets and sales team.
Afterall, this is corporate sales.
For the naysayers, Ubiquiti was a failure before it began! Afterall, how could such a small company compete?
When You Bootstrap Your Business You Find A Way When The Naysayers There Is No Way
When you bootstrap your business, like Pera, you find a way. Even when the naysayers say there is no way.
And Pera and Ubiquiti Networks found the way.
In Pera’s own words:
“I believed a solution at just a fraction of the cost combined with a basic feature set and some “Ubiquiti magic” would find its way to disrupting the market and breaking the established IT sales dynamics.”
Numbers talk, and bullsh** walks. Check out the chart below of Ubiquiti’s sales in the corporate market.
So what’s the story behind the numbers, you ask?
Innovation that only comes when you bootstrap your business.
The UniFi line of products did something that was a first in the industry:
- Sold Access Points in three packs
- Created a kick ass design.
- Led the industry in performance
- An easy interface that also extended to smartphones
- Easy expansion
- Low pricing
- Solid customer service
Would Ubiquiti Networks create these factors if it was rolling in VC money? We’ll never know, but I doubt it.
[tweet_dis url=”http://jef.tips/bb”]When you bootstrap your business you have no choice but to be rich in resourcefulness.[/tweet_dis]
And get this, Ubiquiti Networks has no phone support. Instead, support is through Ubiquiti’s employees and customers.
The Ubiquiti mission and culture have forged a strong community of raving fans who lead the way.
When You Bootstrap Your Business Everyone Is In Sales And Support. No Exceptions.
Pera led by example when he started Ubiquiti Networks. Not only did Pera sell, he also provided customer service and support.
In the company blog, Pera shares he was ‘forced’ to spend his time supporting his first customers. From these customer interactions, Pera built the Ubiquiti brand and future products.
Would a VC backed startup have the founder in sales and support?
Not a chance.
But when you bootstrap your business you have no choice but to focus on your customers.
Every customer counts.
Pera shares that his only goal was to live to fight another day. When asked by VCs, Pera shares that the problem with VCs is that they play for tomorrow.
If Ubiquiti played for tomorrow, Pera admits it would have failed.
From 2005 to 2010 Ubiquiti had no outside capital. In 2011, Pera took Ubiquiti Networks public.
As of this writing, Ubiquiti has a market cap of $4.2 billion.
Not bad for a guy who started his company with these words:
“If this doesn’t work out, I am screwed.”
The Ubiquiti Magic Revealed: Bootstrapping Like Only Cockroach Startups Can
Success is how high you bounce after you hit bottom. – General George Patton
Ubiquiti’s story is rich. Rich with success lessons and habits that happen when you bootstrap your business.
When it comes to habits of cockroach startups, Ubiquiti leads the way. In particular, there are six key habits of cockroach startups that have fueled Ubiquiti massive success.
What are these habits, you ask?
Glad you ask, as this is what we’ll now discuss in detail. Master these habits when you bootstrap your business, and you master yur destiny.
Hire Team Members For The Mission Over Money
Ubiquiti Networks offers no phone support. For a technology company, this is unconventional and smart.
Smart because phone support is expensive.
Talk about figuring out how to bootstrap your business for success.
Ubiquiti achieves this because its mission and culture are all about the customers. And the customers know it.
Habit four of cockroach startups is hiring team members for the mission over money.
VC backed companies buy their talent and the expense of culture and mission.
Do Whatever It Takes To Live Another Day
Bootstrap your business and run it like cockroach startups. Do this, and you’ll do whatever it takes to live another day.
Habit five of cockroach startups is the anthem for every founder and employee. You do whatever it takes to live another day.
From day one Pera did what it took to live another day. It was Pera who took payment up front for a product that didn’t exist.
It was also Pera who had no formal marketing or sales team when Ubiquiti did enterprise products.
When you bootstrap your business, you don’t have the comfort of loads of cash in the bank. At least in the beginning.
Instead, you’ll have loads of failures. If you’re not failing, you’re not trying.
Learn how you can welcome failure for spectacular success here.
And as a result, you figure out how to live another day.
Play Small At First So You Can Play Big And Dominate
Bootstrap your business and play small at first so you can play big and dominate later.
And that’s what Pera did with habit six of cockroach startups.
Embedded radio cards were the humble start for Ubiquiti Networks. WiFi APs, also a wireless product, is a natural extension.
Ubiquiti built out its culture, mission and customer base so it could play big and dominate in WiFi.
Once Pera locked onto affordable WiFi APs for business, he never looked back.
And neither did his top and bottom line.
While you’re at it, ensure you enjoy the journey. The truth is, all you ever have is the journey.
Read more on how to enjoy your journey here.
Bootstrap your business like cockroach startups so you too can play big and dominate.
When You Bootstrap Your Business Every Customer Counts
When you bootstrap your business, you better ensure every customer counts. Because they do.
Unlike VC backed companies who don’t have paying customers, cockroach startups do.
If you have no customers, you’re out of business.
When you put in place habit seven of cockroach startups, you can’t help but do whatever it takes to stay in business.
Having your customers play a large role in end user support says it all for Ubiquiti Networks.
Customers feel the love from Ubiquiti Networks and pay-it-forward. In support, sales, innovation, and future business.
Pera shares how he was ‘forced’ to spend all his time supporting his first customers. From this adversity came customer loyalty, insights, and the building of a brand.
And all on a shoestring budget.
Success resulted, as only success does when you bootstrap your business out of the gates.
Everyone Is In Sales. Founders Included.
Resourcefulness is the result that happens when you bootstrap your business.
[tweet_dis url=”http://jef.tips/bb”]Resourcefulness trumps resources. Every day. All day.[/tweet_dis]
Most businesses that succeed don’t make sense on paper. Ubiquiti Networks is no exception.
Think about it. What company in its right mind enters the corporate market with no sales or marketing team?
When you bootstrap your business and act like cockroach startups, you do exactly this.
In reality, there’s no such thing as selling.
Whatever you’re doing, stop right now and re-read the above sentence.
[tweet_dis url=”http://jef.tips/bb”]True selling is transferring your passion on a topic to others through education.[/tweet_dis]
When those around you become excited about what you’re sharing, they sell themselves. Imagine that.
Read this post on how to find problems you’re passionate about solving.
Pera was passionate about solving the problem of expensive WiFi hardware for companies.
By solving a massive problem for many people, Pera changed the marketplace for the better. And he became a billionaire in the process.
Notice the order.
[tweet_box design=”default” url=”http://jef.tips/bb” float=”none”]When you bootstrap your business you help other first and profit second. Not the other way around.[/tweet_box]
Bootstrap your business and master habit eight of cockroach startups. When you do, you’ll reap the rewards.
The Offering Is Everything And The Only Thing
Bootstrap your business and ensure your offering is everything and the only thing.
If your offering sucks, you’re out of business.
Cockroach startups live and die with habit twelve. Afterall, in a competitive market, you’re nothing without a compelling offering.
Ubiquiti Networks built its business on products that look as good as they perform. And look even better on the customer’s bottom line from the savings reaped.
Pera’s time at Apple served him well as he applies Apple type designs and user interfaces to his products.
Easier said than done.
For more habits of successful entrepreneurs, check out this post.
Bootstrap your business and ensure your offering is everything and the only thing. Because it is.
Bootstrap Your Business Like Shutterstock: From Massive Failure To Mindblowing Success
John Oringer, the founder of Shutterstock, knows a thing or two about failure. On Oringer’s blog he says:
“It took me 10 tries to get to Shutterstock. Most of my startups never made it off the ground.”
What is Shutterstock, you ask?
Shutterstock is a matchmaker between photographers and people wanting to buy stock photos. You can choose from over 120 million royalty free stock photos from over 100,000 contributors.
But I’m getting ahead of myself.
Building An Empire From Solving A Problem
In 2003 Jon Oringer had yet another business failure. This failure was one of many in his string of attempts to launch a successful business.
It was during this failed business attempt that Oringer stumbled upon something. In looking for stock photos, he found the process time consuming and expensive.
Oringer wondered if he could do two things. First, leverage his passion for photography. Second, offer cheap stock photos to businesses over the Internet.
Oringer had obstacles. Lots of obstacles.
For starters, Oringer had no money, and he didn’t know how to program.
Six months later Oringer took over 100,000 images from the $800 camera he purchased. While learning how to program, Oringer whittled down his library of images to 30,000.
Running from servers out of his apartment, Oringer launched Shutterstock.
Shutterstock opens up a world of possibilities for photographer and marketers.
Before Shutterstock, one image could cost $500 and take many phone calls to track down.
Photographers could now earn money while they slept. Customers saved money and time for every picture purchased.
And Shutterstock was only too happy to be the matchmaker to help people first, and profit second.
Why You Reap The Rewards When You Bootstrap Your Business
To save money, Oringer setup and ran Shutterstock’s servers out of his apartment in New York.
In the winter months, Oringer didn’t have to heat his apartment. The servers generated a lot of heat.
Oringer knew the gig was up when he started to trip the circuit breakers, all the time, in his apartment building.
To better understand his customers and to save money, Oringer answered all emails.
In this interview, Oringer shares:
I am proud to say that Shutterstock revolutionized the stock image industry by throwing out all the complex rights and offering a simple subscription model.
In the same interview, Oringer shares that when he created Shutterstock,
“It wasn’t just that I understood the pain points in the process- I learned from my own frustration trying to use a traditional stock-imagery company, and I looked for ways to make it better.”
The Customer Is King When You Bootstrap Your Business
For Oringer, customer feedback is everything. From Oringer’s humble beginning through to today customers are everything.
Oringer shares, that:
As the CEO, that commitment to customer service starts with me. I learn something new on Twitter every day, paying close attention to what people are saying about us and our products.
From the start, Oringer focused on profits. In this interview, Oringer shares that:
The best way to start a company is by bootstrapping it yourself.
In 2007 Shutterstock accepted a small private equity investment. But unlike VC startups, Shutterstock accepted private equity from a position of strength.
In this interview, Oringer shared that he wanted to scale from a 40 person company to 200 people. And to do this, he needed connections and help.
In 2012 Shutterstock went public. As of this writing, Shutterstock’s market cap is $1.53 billion.
The Secrets Behind The Sweet Success Of Shutterstock
When you bootstrap your business like John Oringer, you position yourself for success.
Bootstrapping is a challenging but wonderful process because its forces you to focus.
When you bootstrap your business, you focus on the important. And in the process, you ignore everything else. You have no choice.
VC backed startups are the opposite. Founders who are rolling in VC money focus on pleasing investors. Customers, mission, culture, and profits take a distant second.
Like most cockroach startups, Shutterstock solved a painful problem affecting many people.
Did Oringer launch Shutterstock to become a billion dollar public company?
Oringer, an astute entrepreneur, stumbled upon a problem from his last failed startup.
In every sense of the word, Oringer failed his way to success. For Oringer, Shutterstock was a way to solve a problem that he was passionate to solve.
As important is Oringer’s belief in himself.
Many entrepreneurs today believe they need millions of dollars and a team of people.
Oringer charged forward despite having little to no money, couldn’t program, and was a one man shop.
What Oringer didn’t know, he learned. No big deal.
And this, my dear reader, is what separates a true entrepreneur from a wantrepreneur.
While Shutterstock follows all thirteen habits of cockroach startups, five habits stand out.
Let’s look at each of these four habits that happen what you bootstrap your business.
Profitability Is Everything
When you bootstrap your business, you will be out of business if you don’t focus on profits.
Many VC backed startups, aka tomorrow’s unicorns, focus on everything but profits.
It’s the insane running the asylum.
Habit one of cockroach startups is key to your success. Profits come first.
Right out of the gates Oringer charged for his services.
And this is what you must do when you bootstrap your business. People value something based on what they pay.
While you think about that, here’s something else to think about.
How did Oringer come up with his business model?
Oringer offered payments to photographers that he would want if he were one. While he was at it, Oringer asked himself what he would want to pay for a royalty free picture if he was a customer.
No need for expensive consultants. And there’s no need for theory.
Oringer lived it.
Oringer felt the pain of looking for royalty free pictures in his last failed startup.
And let’s not forget that Oringer took 100,000 pictures on his own when starting Shutterstock. Oringer knew the trials and tribulations of taking pictures in public.
Oringer was not after perfection. Instead, Oringer knew that good is good enough.
If you’re a perfectionist, you’re a dreamer and doomed to fail. Read this post here to become a doer and enjoy sweet success.
Follow the lead of cockroach startups when you bootstrap your business. Put profitability front and center.
Resourcefulness Trumps Resources
When you bootstrap your business, resourcefulness becomes your currency and path to success.
I should know. Remember, I’m the kid who built an 8 figure business that later morphed into a half unicorn.
And I did it without experience, money, or a team. My savior was and still is resourcefulness.
In the early days, you can’t write the check even if you wanted to. As painful as this can be, it’s the best thing that will happen for you.
When Oringer starter Shutterstock did get himself a fancy
hosting provider and expensive programmer?
That’s what a VC backed startup would do.
And it’s wrong. All wrong.
Oringer made his apartment his ‘data center,’ and while he was at it, he learned to program.
Did Oringer run expensive focus groups for his website design and business model?
Not a chance. Oringer figured it out as he went along.
And did Oringer give everything away for free so he could stack up users in the hopes that one day they will pay?
Last time I checked, ‘one day’ doesn’t exist on the calendar.
Leave ‘one day’ to VC backed startups.
When you bootstrap your business, follow Oringer’s lead and charge for your services.
At every turn, Oringer’s resourcefulness led the way for innovation and success.
And so should you.
Habit two of cockroach startups forces you to build a better business. Resourcefulness trumps resources. All day. Every day.
Everyone Is In Customer Service. No Exceptions.
When you bootstrap your business, every customer counts.
Cockroach startups know this and live it every day.
For a VC backed startup, customers are often as mythical as the unicorn the startup is trying to become.
From day one at Shutterstock through to today, customer service is front and center.
Oringer knows this.
In this interview, Oringer nails it when he says:
If you run a company from inside a closed-off world where the only people you interact with are your own executives, you’re not doing your job right. Everyone here is responsible for customer service to some degree.
Happy customers lead to thriving, strong, and profitable businesses. This as true today as ever before.
Today, customer trust of companies is at an all time low. The future of companies, big or small, rests on creating raving fans from their customers.
Habit nine of cockroach startups is a must if you plan to play the long game.
Oringer knows this.
And so should you, particularly when you bootstrap your business.
The Bottom Line Is The Bottom Line. Always.
When you bootstrap your business, the bottom line is the bottom line. Always.
You can take that to the bank.
It’s sad but true that many VC backed startups believe that profits will happen ‘some day.’
In this BBC interview, Oringer can’t say it any clearer:
Mr. Oringer says he was focused on profits from the very start – unlike tech companies such as Twitter and Foursquare, who have struggled with revenue generation.
Click on the picture above to watch the interview.
As with all the other habits of cockroach startups, habit eleven is everything.
If you’re not profitable, you don’t have a business.
Although you may not be profitable out of the gates, this must be your focus.
[tweet_dis url=”http://jef.tips/bb”]When you focus on the bottom line you’re forced to say ‘no’ to distractions and say ‘yes’ to success.[/tweet_dis]
Don’t play the fool’s game and believe business is not about profits.
Business is all about profits.
Afterall, when you bootstrap your business if you have no profits, you have no business.
Bootstrap Your Business Like Craigslist: An Empire Built Through Helping People
Craig Newmark can write the book on how to bootstrap your business, and if he did, you’d do well to read it.
If you haven’t heard of Newmark, you’ve heard of his company Craigslist.
Let’s start at the beginning. It’s 1995 and Newmark is out of a job from Charles Schwab. With time on his hands, Newmark decides he wants to give back.
Newmark starts an email list focusing on technology and art events in San Francisco. People liked Newmark’s list. A lot.
Before he knew, Newmark received requests from strangers to add them to the list.
It was at this point that the list took on a life of its own. People started to email each other on the list to sell things and hire people.
Newmark, and his email list subscribers, never looked back.
What’s more impressive is that most of the $690 million are NET profits.
And get this, Newmark never raised a single dollar.
Why Helping People Around You Is Also Helping You
So what was the motivation for Newmark, you ask?
Newmark’s motivation for Craiglist was to help those around him. According to the interview, Newmark says,
People were already paying too much for less-effective ads, so we could provide a simple platform where the ads would be more effective and yet people would pay less.
Newmark shares his business philosophy that he applies to Craiglist:
Doing well by doing good is a business model, and Craigslist is about having a business that helps people help one another out.
One common criticism of Craigslist is its simple interface. For many, Craiglist is a throw back to the 1990’s when websites were text.
Naysayers call out Craigslist as a dinosaur that will fail if it doesn’t update its look. Competitors like OfferUp and Letgo hope this is the case.
In fact, it’s reported that these two competitors have raised $600 million and still can’t make a dent.
Why does Craiglist continue to dominate?
For Newmark, it’s all about the customers. Newmark shares,
The evolution of Craigslist was based on listening to people as to what they wanted and what was needed … People consistently told us they didn’t want fancy stuff; they wanted something simple, straightforward, and fast.
Newmark follows the habit of cockroach startups and listens to his customers.
And here’s the best part.
Most of the ads on Craigslist are posted for free.
Playing Big By Playing Small
So how does Craiglist generate an estimated $690 million of revenue?
Craigslist charges for job postings, real estate ads and a few other areas. The rates range from $7 to $75, depending on the area.
Craigslist is a living example of Pareto’s Law.
By giving away most of its services for free, Craiglist attracts a large audience. The minority of paid ads on Craigslist generate the massive action.
It’s a beautiful thing Newmark has created.
When you bootstrap your business, follow the lead of Newmark who has a large business but a small team.
This article shares that Craigslist has, are you ready for this, only 30 employees.
Jim Buckmaster started off at Craigslist as an employee. Newmark hired Buckmaster as a programmer.
Credit to Newmark who saw Buckmaster’s talent was beyond programming. Buckmaster is now the CEO of Craiglist and co-owner.
Let Your Customers Be Your Guide
From the beginning, Newmark let his community drive the business. Case in point is the name Craigslist.
Newmark shares that people on his email list started to call the list ‘Craig’s list.’
The name stuck, Newmark never looked back, and a legend was born.
How did Craigslist go from sharing local events in San Fransico to jobs?
Once again, Newmark listened to his customers. This article shares that,
Newmark was surprised when people started using the list for non-event postings, most of which were to fill technical positions. This lead to the addition of a category for “jobs”. Additional categories were added in response to user demand. Ever growing in popularity, community members demanded a web interface and thus the now super popular website, Craigslist.org went live. It was 1996.
When you bootstrap your business, follow the lead of Craigslist. It doesn’t get any better.
Craigslist’s Formula For Success
What would you say if I told you that there’s this company that never raised a dime of outside capital. The interface is simple and even clunky.
The mission of the company is to help people and do good.
And get this, there are only 30 employees, but the revenue per employee ratio is $23 million.
Speaking of numbers, most of that $690 million in yearly revenue represent NET profits.
If you’re like most people, you would say I was dreaming.
Craigslist is no dream.
And once again, the experts are wrong.
Craigslist is yet another example of where truth can be stranger than fiction.
As important, Craigslist demonstrates what’s possible when you bootstrap your business.
Craigslist follows the classic thirteen habits of cockroach startups.
In particular, three habits of cockroach startups stand out for Craigslist.
Let’s take a deep dive and examine these three habits of cockroach startups.
Small Teams. Big Results
When you bootstrap your business, you don’t have the money for a large team. And this is the best thing that can happen to you.
In my experience of running an eight figure company, more people are not the answer to problems. Often, an unintended consequence of too many employees is more problems.
Your goal to live another day, when you bootstrap your business, starts by keeping your team small.
Habit three of cockroach startups is pivotal for your survival and success.
A smaller team means lower expenses, a more vibrant culture, and easier communciations.
Craigslist takes the prize with its 30 employees.
Less is more.
What’s more, Newmark realized what he’s good at and what he’s either not good at or doesn’t enjoy.
Newmark did what any entrepreneur should do and ensure that your not the smartest people in the room. Leverage your weakness by finding people who are smarter and better than you.
Read more about this here.
Between Newmark and his CEO, Jim Buckmaster, they’ve struck the perfect balance.
Things get done with a minimal team.
Customers enjoy low costs. The culture thrives from a small team. The company prospers.
When you bootstrap your business follow the lead of Craigslist and keep your team small.
Bootstrap Your Business. Forever If Possible.
Once upon a time entrepreneurs avoided VC money like the plague. It was a badge of honor to bootstrap your business.
And for good reason.
Too much VC money corrupts startups and makes them fat, dumb, and lazy.
Unfortunately, this message doesn’t resonate with many of today’s entrepreneurs. Dreams of becoming the next unicorn, backed by VC greed, rules the day.
There is a time and place for VC money. Facebook and Google will tell you all about it.
But when you bootstrap your business, your focus is to live another day so you can enjoy success.
Craigslist has done exactly that, with plans to bootstrap forever.
And why not!
There are no costly legal fees and lawyers that a public company faces. You answer to nobody but your customers. And your time is your own to do as you see fit with your business.
It’s freedom at its best while you serve a social good.
It doesn’t get any better.
My dear reader, I can you hear now. You’re saying how much ‘bigger and better’ Craigslist could be if it went public or took on VC money.
Why, you ask, should you bootstrap your business forever?
The answer is in the next section where we explore habit 13, the final habit, of cockroach startups.
Your Only Exit Is the One On Your Office Door
When you bootstrap your business know that the only exit for you is the one on your office door.
Let’s put an end to delusions of grandeur that you’ll sell the business for a gazillion dollars.
This isn’t why you started your business.
Take it from me, I should know.
When I started my first company I had no money, experience, or team.
My savior was being passionate about solving a problem that affected many people.
Thirteen years later I was running an eight figure company with high profits.
I had a burning desire to be successful but had no idea how successful the business would become.
Compare this to my second business. I had the experience and money in the bank.
I launched the company and three years later I had a company that was at the seven figure mark.
Seven figures of losses.
What happened, you ask?
I started the company looking for a fast exit. Who knows, I thought to myself, maybe I’ll be the next unicorn.
There’s no telling what would have happened if I followed my own advice of the only exit being the one on my office door.
Newmark knows this. In this interview, Newmark shares this exit strategy when he says,
Death is my exit strategy.
Do you want to be rich and successful?
When you bootstrap your business follow the lead of Newmark at Craigslist.
If you’re looking for how to build a successful business, stop your search. I have three words for you.
Bootstrap your business.
Yes, when you bootstrap your business you face extreme pressure and challenges.
Before you say ‘no,’ remember that a diamond only becomes a diamond from extreme pressure.
Today the trend is to get VC money right out of the gates. A lot of it.
But if you’re serious about success, this is the worst thing that you can do.
In my books, just because you can write the check doesn’t mean you should. And most times you shouldn’t.
Play the long game and bootstrap your business.
When you do, your resourcefulness will take you far and help build a rock solid company.
For your journey to success, you’ll require two things.
First, bootstrap your business.
Second, master the thirteen habits of cockroach startups, discussed in detail here.
To help, I’ve shared real companies who broke through to massive success.
Ubiquiti Networks, Shutterstock, and Craigslist provide a rich learning ground for you. Bootstrapping your business and running it like cockroach startups, up-close-and-personal.
It doesn’t get any better.
And guess what?
Everything you need to be a success, you already have right now. It’s within you.
Always has been and always will be.
If in doubt, look to Robert Pera, Jon Oringer, and Craig Newmark.
You’re in great company.
So, what are you waiting for?
Here’s to you and your success!
Your Raving Fan,