UMKC ?Process of Bootstrapping Discussion Questions Listen to this podcast on the link and use the pdf attached to answer the three questions: https://gim

UMKC ?Process of Bootstrapping Discussion Questions Listen to this podcast on the link and use the pdf attached to answer the three questions:

https://gimletmedia.com/shows/startup/6nhr5r/our-company-has-problems

In a minimum of 1-page, double-spaced, answer the following questions (roughly one paragraph per answer):

1) Based on the Chapter 12 lecture, describe the process of bootstrapping.

2) Early in the podcast series, there was discussion about whether or not to bring on Matt as a co-founder. Do you think they made the right decision? Why or why not?

3) How do you think it’s possible for a likely multi-million dollar acquisition to happen, given what’s going on internally at Gimlet (founder conflict, high burn-rate, etc.)? From Investopedia
1
From Forbes
https://www.forbes.com/sites/dileeprao/2013/07/22/why-99-95-of-entrepreneurs-should-stop-wasting-time-seeking-venture-capital/#16ce1eb46eb5
2
• Most businesses require at least some money to start
• Web-based businesses may be less capital intensive
• Businesses dealing in physical products are often more capital intensive
• Less than 1% of entrepreneurs will ever receive venture capital
investment
• Most banks will not give a loan to someone with an idea on
paper
• Even when/if you get a loan from a bank, as a new business it
will usually require your personal guarantee
3
Bootstrapping
• Growing through revenue
• What can you get for free? What can you get low cost? What expenses
can you push off until later? What can you exchange services for?
• Using QuickBooks rather than hiring a bookkeeper when first starting
• Or, even cheaper – using Excel to track your expenses and sales before spending money on
QuickBooks!
• Getting a free website before paying for your own domain
• “.us” domains are free
• Alternatively, you can get a free website through places like Wix, Adobe, others
• Personal savings
• Crowdfunding
• Credit cards
• Greenies
4
Advantages or opportunities
• Limited resources imposes financial displace on the founders –
only things that truly need to be purchased will
• Limited resources also tends to increase the creativity of the
company – if you can’t afford to go out and buy everything you
need to run the business, you get more creative about possibly
making some of these things yourself, or considering if you truly
need a tool
• Founder(s) retain 100% ownership and control of the business
5
Disadvantages or challenges
• Slower growth
• More (or all) of the risk is directly on the founder(s) of the
company (no investors or bankers to spread risk out)
• Cash flow management becomes even more critical
6
Examples
7
• Jason Fried is a co-founder of Basecamp
• Basecamp is an extremely successful software company with
an estimated valuation of $100 billion, according to some
• Basecamp has been 100% bootstrapped for more than 20
years, and has never taken any investment from venture capital
funds, nor do they have any interest in doing so
• In this video, Jason Fried shares his thoughts on why VC
investment isn’t necessary
8
9
From Investopedia
10

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