Bootstrap 5 Quotes

You need to bootstrap when you first start your business, but once money starts coming in, it’s important to focus on your strengths and hire people to do everything else.

Don’t you dare ever hope for more. There’s no such thing as living happily ever after or pulling yourself up by your bootstraps. The world is how it is and there always has to be bottom-feeders. People like you and me, we’re it, and the world might want us to believe we can have more, but the moment we try to break out of the water they’ll shove us down into the mud. It’s better to know the truth. It hurts less if you accept society’s crappy rules.

But being short something where your loss is unlimited is quite different than being long something that you’ve already paid for. And it’s tempting. You see way more stocks that are dramatically overvalued in your career than you will see stocks that are dramatically undervalued. I mean there — it’s the nature of securities markets to occasionally promote various things to the sky, so that securities will frequently sell for 5 or 10 times what they’re worth, and they will very, very seldom sell for 20 percent or 10 percent of what they’re worth. So, therefore, you see these much greater discrepancies between price and value on the overvaluation side. So you might think it’s easier to make money on short selling. And all I can say is, it hasn’t been for me. I don’t think it’s been for Charlie. It is a very, very tough business because of the fact that you face unlimited losses, and because of the fact that people that have overvalued stocks — very overvalued stocks — are frequently on some scale between promoter and crook. And that’s why they get there. And once there — And they also know how to use that very valuation to bootstrap value into the business, because if you have a stock that’s selling at 100 that’s worth 10, obviously it’s to your interest to go out and issue a whole lot of shares. And if you do that, when you get all through, the value can be 50. In fact, there’s a lot of chain letter-type stock promotions that are sort of based on the implicit assumption that the management will keep doing that. And if they do it once and build it to 50 by issuing a lot of shares at 100 when it’s worth 10, now the value is 50 and people say, “Well, these guys are so good at that. Let’s pay 200 for it or 300,” and then they could do it again and so on. It’s not usually that — quite that clear in their minds. But that’s the basic principle underlying a lot of stock promotions. And if you get caught up in one of those that is successful, you know, you can run out of money before the promoter runs out of ideas. In the end, they almost always work. I mean, I would say that, of the things that we have felt like shorting over the years, the batting average is very high in terms of eventual — that they would work out very well eventually if you held them through. But it is very painful and it’s — in my experience, it was a whole lot easier to make money on the long side.

In late 2008, one of my business partners, Clayton Christensen offered his opinion that the recession would have an “unmitigated positive impact on innovation” because “when the tension is greatest and resources are most limited, people are actually a lot more open to rethinking the fundamental way they do business.” This theory is supported by the Kaufmann Foundation statistic that “51 percent of the Fortune 500 companies began during a recession or bear market or both.” Whether launching a business or pursuing a dream, there are many high-profile instances in which a lack of resources ultimately proved to be a boon, rather than a bane. If we dig a bit, each of us can uncover examples among friends and family, and ourselves. Would most children have as many opportunities as they do in sports, music, or other extracurricular activities without parents, mothers in particular, who are accomplished at bartering as a way to stretch limited family budgets? Would kids have as many chances to explore their interests if their parents weren’t so adept at arranging for carpooling, chaperoning, and borrowing, thus enabling their kids to participate? Without the constraints of time, money, and health, would the online retailer Shabby Apple exist? (For a reminder of how that business came to be, see chapter 5.) If my parents could have paid for college, would I have caught an early glimpse of corporate life during the Silicon Valley heyday? Would I have ever set foot on Wall Street had I not needed to work to put my husband through school? All of us have had the opportunity to bootstrap if we look hard enough. Men seem to know how to do this in the business world: 88 percent of the founders of Entrepreneur magazine’s Hot 500 were men. But I wonder if women aren’t better at bootstrapping than we think we are. Chronically under resourced (whether due to the gender pay gap or ceding our resources to conform to societal expectations), women continually feel the tension of having too little budget and too little time. Because of this tension, we are expert at rethinking how to get things done. Many of us know how to turn scarcity into opportunity.

Hence, after this foreshortened discussion of the major considerations, we once again enunciate the same basic compromise policy for defensive investors—namely that at all times they have a significant part of their funds in bond-type holdings and a significant part also in equities. It is still true that they may choose between maintaining a simple 50–50 division between the two components or a ratio, dependent on their judgment, varying between a minimum of 25% and a maximum of 75% of either. We shall give our more detailed view of these alternative policies in a later chapter. Since at present the overall return envisaged from common stocks is nearly the same as that from bonds, the presently expectable return (including growth of stock values) for the investor would change little regardless of how he divides his fund between the two components. As calculated above, the aggregate return from both parts should be about 7.8% before taxes or 5.5% on a tax-free (or estimated tax-paid) basis. A return of this order is appreciably higher than that realized by the typical conservative investor over most of the long-term past. It may not seem attractive in relation to the 14%, or so, return shown by common stocks during the 20 years of the predominantly bull market after 1949. But it should be remembered that between 1949 and 1969 the price of the DJIA had advanced more than fivefold while its earnings and dividends had about doubled. Hence the greater part of the impressive market record for that period was based on a change in investors’ and speculators’ attitudes rather than in underlying corporate values. To that extent it might well be called a “bootstrap operation.” In

LOW: Churn Churn is the percentage of people canceling their subscription each month, and it’s the Achilles heel that kills (or plateaus) SaaS apps. If you can keep churn low, growth is much easier. If churn is high, it’s a force that’s very hard to outrun. Focus on revenue churn. To calculate this, divide the gross MRR that canceled in a given month by the starting MRR for that month: As a general rule, for most bootstrapped B2B SaaS businesses: Gross churn > 10% = Catastrophic Gross churn 8–10% = Not Good Gross churn 6–7% = Meh Gross churn 4–5% = Fine Gross churn 2–3% = Good Gross churn < 2% = Great With this caveat: if you are focused on high-priced contracts, say, above $25,000, your churn should be lower than the chart above. In that case, I’d categorize fine churn as 2–3%, good churn as 1–2%, and great churn at or below 1%. Churn is such a critical metric because it helps you calculate when revenue will plateau. At some point, the number of new customers you acquire will equal the number of customers you churn out each month. This causes your growth rate to effectively hit zero. You’ve hit your maximum number of customers (and revenue) that you can achieve without changing something in the business.

In 2012, President Obama signed the JOBS Act into law. This bill, among many other things, included the ability for private companies like Gumroad to sell shares to the general public, making it possible for almost anyone to invest in the business. On March 15, 2021, the legal limit for regulation crowdfunding went from $1.07 million to $5 million. These new rules also allow for “testing the waters,” allowing companies like Gumroad to see how much demand there is to invest in the company before committing to a crowdfunding campaign. I believe that crowdfunding will reorganize the funding landscape. There will always be a place for venture capitalists, but who better to fund a business than its customers, who understand how valuable its offering is? And once founders can vet demand before committing, we should see the numbers skyrocket. In the old way, the number one downside of raising money was that you created two distinct sets of stakeholders: your investors and your customers. This new practice will allow entrepreneurs to minimize complexity by turning customers into investors. All of a sudden, you have a single group of people you are serving: your community. I can speak from experience: On March 15, 2021, I used Regulation Crowdfunding to allow some of Gumroad’s creators to become part-owners. In 12 hours, we raised $5 million from more than 7,000 individual investors. Now we have thousands of our creators as our investors too, keeping our interests more cleanly aligned. For the businesses that neither need to bootstrap completely nor want to go the venture-backed path, I’m hopeful that Regulation Crowdfunding will offer a middle ground. But the ultimate long-term goal remains profitability (read: sustainability). Once you’re in control of your destiny, you should never let it go.

He looked fit and healthy, a vibrant seventy-something. The kind of man who was superb at caring for himself. Organic food and facial peels and a weekly massage at the racket club. The kind of man who marveled at why others couldn’t just keep their heads above water like he did, who didn’t understand that if you don’t have any boots, you can’t pull yourself up by your bootstraps.

1. Opportunity. What is the best opportunity for a new entrepreneur to build a successful business? Why is now the time to do it? How does the new landscape of e-commerce and social media create an environment of opportunity? And how do you fit into it all? You will discover why now is the perfect time to create your pie, and why there are others who are ready and willing to buy a slice. 2. Mindset. There’s a reason not every wantrepreneur becomes a successful entrepreneur, and psychology is a big piece of the puzzle. I’ll take you through the development of the right mindset to take a business from zero to one million in a year. 3. Getting customers. A million-dollar business doesn’t start with a product; it starts with a person. Your first step in building your business must be identifying your customer, and then answering his or her need. This builds a real brand, not just a revenue stream. If you get this piece right, you will have droves of repeat buyers who will eagerly “overpay” for your products, thank you for it, and tell all of their friends about you. 4. Product. Choosing your first product will be the biggest hurdle you face. It will take research, patience, and determination. Most importantly, it will require listening to what your customer is saying. I’ll take you through the whole process, from ideation to prototyping and refinement, helping you clear this hurdle in no time flat. 5. Funding. Sure, you’ve got a great product, and you know to whom you’re selling—but how do you fund your inventory? Here’s how to bootstrap, borrow, and build your way to a self-sustaining revenue machine, without stressing about money. 6. Stacking the deck. How do you nearly guarantee that your first product is successful, right out of the gate? Once you’ve decided what business you’re in, we will work to ensure that you don’t get stuck holding a product no one wants; this is where you stack the deck so your launch day is set up to blast off. 7. Launch. Your first product is ready to launch. What do you do now? Do you just let it ride? No. Here’s where building relationships and a few strategic marketing tips will take your business from a single product to a world-class brand, as we cover what you need to do to reach the key growth point of twenty-five sales per day.