Making SMEs Run Smoothly: René Lacerte’s Cashview (Part 10)
Check other articles in the series...SM: I think you are being very smart with your hiring. Executives cost money, unless they are founding executives and are willing to work for equity.
RL: They cost money, that’s for sure. When I look at all of the businesses my family has started, everyone else has had the money in their back pocket and bootstrapped their way. In both of my ventures, I have taken Venture Capital funding, although there is a mix on this one; there is a bit of bootstrapping here. All of the furniture we have in this building we got for free from a company that was going out of business, and I happened to know somebody. The servers we have were a great deal … we obtained $150,000 of servers for $12,000. There is that part of the bootstrapping which we are doing.
SM: That isn’t bootstrapping, that is plain frugality. That is always a good trait.
RL: A lot of people see the money and forget the frugality. At least in my experience working with other entrepreneurs, when they are backed financially by a lot of money, they do not think frugally. They do not think of it in the same way. They do not think about stretching out payables. When you are bootstrapping, that is all you think about. That is why we stretch out payables and pull receivables to see when you are going to be negative and positive.
SM: The other thing which is different is the issue of exit. If it is your own money you do not have to sell the company. If you have external money, you have to exit and provide liquidity to your investors.
RL: If you are bootstrapping and someone offers $25M for your company, you can take it. But if you have VC money, you may not be able to take it because others have higher return expectations. There are always two sides of the coin. On this venture, the faster I can run, the happier I am. Money helps me run faster here, and I can accept the downsides since the upside of getting someplace sooner is better.
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