Bootstrap entrepreneurs find ourselves constantly juggling multiple activities. Some of these directly generate revenue, others do not. How to prioritize and order them? Here is a simple model to understand and prioritize your efforts.
Your activities generate one of three kinds of capital: social, working and bootstrap. All three are vital to the bootstrap entrepreneur and serve a particular purpose. It's also important to balance your activities amongst them. Creating only one or two types of capital does not provide motive power to the venture.
Social Capital is derived from any work you undertake that does not generate revenue. Activities range from giving time to others (coffees, lunches), sharing your expertise (in forums such as Bootstrap Austin), or being a Contributor in a community (such as leading a Bootstrap Subgroup). Social capital is the easiest to generate and also vital because it creates a network of resources that can, in turn, give the bootstrapper access to valuable help. Social capital also generates collaborators of all kinds who are willing to work on your project. It also figures most prominently in the Ideation Stage of the venture. Since social capital is easy to generate - simply offer your time/knowledge/skills where needed - one can also fall into the trap of overdoing it. Pure social capital is not sufficient to make a successful bootstrap venture.
Working Capital is $ generated from a skill or knowledge. You bill out your time and make an hourly rate. Working capital pays for your basic expenses. As a bootstrap entrepreneur, you have already reduced your personal burn rate and are living a simple and frugal existence. Generating ongoing working capital ensures you have an infinite runway. It figures most prominently in the Valley of Death Stage of the venture. Another way to generate working capital is through a spouse who continues with their day job. However, as we will see later, there is another reason for you to continue to generate working capital, even when you have spousal support. Solely generating working capital does not make a successful either since you are still in a linear relationship between your time and revenue. It's also unlikely you are innovating if you purely generate working capital.
Bootstrap Capital is where the long-term potential lies. This is revenue generated from bootstrapping a unique product, service, experience, community, etc. Of the 3, this is the hardest capital to come by as you are creating something new and unknown in the marketplace. Often, you don't know what it as as you iteratively demo/sell/build and eagerly await what emerges. Bootstrap Capital is key to the Growth Stage of the venture.
An equation that helps describe the relationship between the 3 types of capital reveals:
social + working = bootstrap
When creating social capital, innovation naturally occurs, leading to a Demo. Think of Steve Wozniak sharing his computer designs at the Homebrew Computer Club. The feedback he received helped him advance his ideas to what would eventually become the Apple I. You might not be able to immediately capitalize on social capital, but you gain a deep understanding of a particular domain and build your community of fell0w-practitioners. Working capital provides access to customer problems. While solving generic issues, the bootstrapper is given insight into non-generic problems that customers face and this also helps uncover unmet demand for solutions. Combining social and working capital leads to bootstrap capital, the gold that creates a long-term business.
Be aware of your expenditure of time and continually seek to balance the three types of capital in your venture. Even as a particular kind of capital occupies a core focus during a particular stage, do not neglect the other two.
Every month the bootstrap community focuses on a key principle of the bootstrap journey. This principle will be shared on twitter via @bootstrapaustin and using a "#" term.
This month's principle is #knowthyself. While it starts in the YOU Stage and is the primary focus of this stage, knowing yourself is a continuing aspect of the bootstrap journey. As we proceed through the various stages and challenges unique to them, we come to know ourselves, our cofounders and team members.
Indeed bootstraps are different from other ventures in that they are literally extensions of their founders passions and talents. A way to illustrate this - redraw the Bootstrap Map with the founder(s) at the center and the other aspects such as product, customer, organization in concentric circles. Therefore, knowing yourself (and developing your talents) is essential.
One way to start your self-knowledge journey is to use a personality model. There are a number of these - Myers-Briggs, Enneagram, DISC, Strengths Finder, MRE - and all are useful to varying degrees. Please tweet about your experiences, especially if you found a particular model to be useful. MRE (Maven, Relater, Evangelist) is the model we use in the bootstrap community. You can discover your core energy at MREmap.com.
Please join the discussion on twitter by following/responding/RTing and use #knowthyself in any relevant tweets from your own twitter account. Additionally, every bootstrap subgroup will spend 15 minutes discussing the principle at their meeting this month.
The Bootstrap Experience Subgroup enjoys exploring various Austin businesses known for creating lasting, favorable experiences for customers.We've investigated the world of improv theatre downtown at the Hideout, the epicenter of Austin's run/walk scene at RunTex with founder Paul Carrozza, and next will delve into one of Austins best-known experiences:The Alamo Drafthouse.
Join Bootstrap founder Bijoy Goswami, Experience Subgroup lead Heather McKissick and SPECIAL GUEST Alamo co-founder Karrie Leagueat the Alamo South Lamar as they explore the Bootstrap Experience model and talk about how the Drafthouse has earned its reputation as one of the best movie-going experiences in the nation.
Understanding how to apply the Bootstrap Experience Model is important for anyone who creates or wants to enhance the customer experience.The model is relevant for all types of organizations.
When: Thursday, July 23 from 4:00PM to 6:00PM Please arrive early for a 4pm sharp start. Informal happy hour to follow at Maudie's on South Lamar.
There will be no Bootstrap Austin meeting on July 12.
Bootstrap Austin started with a pure focus on bootstrap entrepreneurs in the Valley of Death (VoD) stage. As our community grew, we expanded the scope to include other stages - Ideation,Growth - as well as various subgroups on topic areas - Art, Web, Community , Experience, Cause , Inner Journey, Style , etc. During this time the main 2nd Monday meeting took on a "general meeting" feel as we used it to stand-up these subgroups and launch initiatives such as Boot Boards, etc.
Now that we have this infrastructure in place, the main meeting can return to its core focus: Valley of Death. VoD is the heart of the bootstrap journey - where customers are found, teams are built, the product is evolved, and ultimately, where our business model is discovered. We come most directly into the principle, constraint creates innovation and learn how to use constraint to innovate i.e. Baron Munchausen exiting the swamp by pulling himself up by his bootstraps.
As with other subgroups, the VoD Subgroup will have new coleads. We are organizing this subgroup in July and will launch it on August 10 - keeping with the second Monday meeting time slot. If you are interested in helping out with it - by speaking, blogging, organizing meetings, etc. - we will let you know how you can do so and who to contact in the coming weeks. Our August VoD meeting will feature fellow bootstrap member Lou Ellman, founder of RoyaltyZone, Lou will share lessons learned during his two year journey making progress in the VoD.