Do More Faster India, 2nd Edition

Chapter 59Don’t Forget about Bootstrapping

David Brown

David Brown is the cofounder and CEO of Techstars.

I wish David Cohen and I had a program like Techstars when we started Pinpoint Technologies in 1993. We had no mentors other than a former boss or two, we had no funding opportunities, and we didn’t even know what an angel investor was. So, we had to make it up as we went along and, in many cases, we reinvented the wheel.

One of the silver linings (at least with the benefit of my 100% accurate retrospectascope) is that without funding opportunities, we had to bootstrap our business. We had no money of our own, so we were forced to be extremely frugal. Armed with a few thousand dollars earned on nights and weekends doing odd consulting work (including the glorious job of pulling cable and installing a network for a pest control company), we created a prototype and persuaded a prospective customer to lend us $100,000 in exchange for a free product and a repayment of the loan with interest. That product, without any additional investment, spawned a 25-year-old company with $40 million in annual sales and 200 employees.

The value in bootstrapping wasn’t that we retained 100% of the stock when we exited (although that was nice). More important to us was the ability to run the business as we saw fit, making the right decisions for us, for our customers, for our employees, and for the long-term benefit of the business. Conversely, so many companies raise money that then burns ...