Roundtable Recap: October 21 – Bootstrapping Comes In Many Flavors

At today’s roundtable, we had some interesting discussions on creative bootstrapping. I am always fascinated by how innovative entrepreneurs get creative when faced with resource crunches.

First up today was Justin Beck with PerBlue, a mobile and social gaming company that makes the iPhone and Android game Parallel Kingdom that has been in the market for a couple of years. PerBlue develops and markets its own game, and today, is at about a $35,000–$40,000 per month run rate from 200,000 users.

Justin is looking for a more efficient customer acquisition model, and my suggestion to him was to look into using distributors instead of trying to do all the development and then also all the distribution himself. With limited resources, this is a tall order, and it seemed to me that Justin’s heart really is in the creative part of the work.

One of the members of the audience asked the question, Is the gaming space too crowded? Well, yes, and no. Is the movie business too crowded? Is the book business too crowded? Yes, but various titles find various kinds and sizes of audience still, and I believe that gaming will go the same way. Today, I think gaming is still in its infancy. I talked about the lack of interesting stories in games today … something that could add a much more sophisticated dimension to games.

Then Aaron Dormer presented Social Affect, an Australian company trying to help retailers provide e-commerce solutions. Aaron’s business concept assumes that Australian retailers who have not really adopted e-commerce much yet, will essentially outsource their online storefront to Social Affect. Aaron wants to provide the service on commission, and assumes that the retailers will do the pick-pack-and-ship.

I think both assumptions have problems: commission-only is a dangerous game. How is Aaron going to cover his substantial costs? And retailers without adequate skin in the game may not have enough incentive to make this a success.

Finally, I am queasy about the assumption that retailers will fulfill their part on the merchandising and logistics side adequately, because other than catalog companies, most retailers do not have the infrastructure to service consumer orders – packing, shipping, inventory management.

Next, Laval Bhatt with Trinity Business Solutions discussed his fledgling consulting company in India that offers business requirements analysis and a set of other services to IT consulting companies and a variety of other segments. Laval is a good business analyst and has so far been “leasing himself” to do this work for certain clients. He is thinking about other services, including corporate training, and he is also looking at multiple countries. Finally, he is wondering if he can raise money for this venture.

Well, investors do not fund consulting companies, so this business will need to be built organically. The summary of my advice to Laval was: Do not spray and pray. You cannot scale this business by being so all over the place. Choose one segment, one service, and one region.

Vinod Soman then discussed D-Logic Inc. Vinod wants to raise a significant amount of money to buy out an IP vendor that sells semiconductor interconnect IP, and offer value added services around them. The IP vendor does about $2 million–$3 million/quarter, but the market leader is EDA giant Synopsys.

In my opinion, EDA is not a space that can attract investment today. The TAMs are much too small, and the M&A activity is very small. I recently wrote an article on this topic, calling all EDA entrepreneurs to build $5 million, $10 million, or $20 million cash businesses that are self-financed, bootstrapped, and built organically. Read EDA Entrepreneurs: Build To Enjoy.

I also advised Vinod to look at the NimSoft case study in which the entrepreneur Gary Read started off as a VAR and eventually bought the company whose product he was reselling. Read Creative Bootstrapping to a $350 Million Exit.

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ methodology, which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to investors and customers through our 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions.

You can listen to the recording of this roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships