Bootstrapping in Minnesota: Praful Saklani, CEO of Pramata (Part 1)

Minnesota seems to be developing well as a hub for tech startups. With a strong culture of bootstrapping, we’re seeing a lot of entrepreneurs building high growth businesses.

Sramana Mitra: Let’s start at the beginning of your personal journey. Tell me a bit about where you were born and raised and in what kind of circumstances.

Praful Saklani: I was actually born in the United Kingdom. My family is from North India. When I was four years old, we moved from the UK to Minneapolis. Throughout that whole process of growing up in Minnesota, I also traveled back to India, at least, once every two years. We’d spend a lot of time with my family there. I would say that I actually grew up both in the US and India. Even when I visit India, I would actually spend time in villages and up in the mountain. It’s a nice broad perspective of a good mid-western upbringing and a good north Indian upbringing too. That’s a bit of a cultural context.

Sramana Mitra: I spoke to somebody else who’s from rural Minnesota who has built a $5 million company with no outside financing just before you. >>>

Bootstrapping to $55 Million from Rural Minnesota: Tom Fallenstein, CEO of Fun.com (Part 1)

Tom has built a kick-ass e-commerce company out of rural Minnesota that he hopes to build up into a billion dollar business.

Sramana Mitra: Let’s start with your personal journey. Where are you from? Where were you born and raised, in what kind of environment?

Tom Fallenstein: I was born in Minnesota in a small town about an hour and a half south of Minneapolis. I’ve lived here all my life. I grew up just outside of the city. I went to school in Mankato for Computer Science and Graphic Design. Our mom was a seamstress. We loved Halloween. We always had the best costumes when we were little. When we got older, all of our friends wanted to borrow those costumes, so my sister decided to rent them out. That’s how the business started. >>>

Making Mass Customization Work: Jodie Fox, CEO of Shoes of Prey (Part 7)

Sramana Mitra: On your website, I cannot get the shape of the boots. I don’t have the flexibility to be able to change the shape of the boots. You have a certain structure to the boots that you’re offering. You offered customization on the heels, leather, and colors but in terms of the shape of the boot, I didn’t see that I have any option of changing that shape.

Jodie Fox: Currently, no. That’s something that we would love to get to in the future. It just depends on a number of things that we would need to align.

Sramana Mitra: Team-wise, what’s happening now? How much of the company is in Australia? How much of the company is in Hong Kong and US? What has been your evolution in terms of building the company and the organization?
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Making Mass Customization Work: Jodie Fox, CEO of Shoes of Prey (Part 6)

Sramana Mitra: The seed round was mid-2012. Then two years later, you raised what you’re now calling Series A – the $5.5 million.

Jodie Fox: Yes, we did do bridge rounds in between. In November 2013, we raised $1.75 million.

Sramana Mitra: What else is interesting in your story that is worth highlighting in the journey?

Jodie Fox: Probably the manufacturing side of it. In June 2014, we opened up a manufacturing facility. On Christmas Eve in 2014, we opened our second facility that could do 10 to 22 times the output of the first facility. I think what’s interesting about that is making things one at a time is very difficult to scale. >>>

Making Mass Customization Work: Jodie Fox, CEO of Shoes of Prey (Part 5)

Sramana Mitra: Did you have the ability to manufacture at a large scale with your design partner and did you have all the shipping and handling set up at that point?

Jodie Fox: Yes, we did have the setup for the shipping and handling of international orders. We didn’t necessarily have the correct manufacturing setup. We were fortunate that we didn’t drive those big sales straight away because we would have messed it up.

Sramana Mitra: How many audience did you get when you ran this campaign without the design site fully thought through? How did you tackle that?

Jodie Fox: I actually don’t have that number. We had 90,000 people enter the competition. Once we sent it, the Wall Street Journal piece went live. It got in front of the right people and it permanently tripled our business. >>>

Making Mass Customization Work: Jodie Fox, CEO of Shoes of Prey (Part 3)

Sramana Mitra: Before you resigned, the site had already gone live?

Jodie Fox: That’s right. The website broke-even within the first two months. We still have savings that we were relying upon, but it meant that there was financial security in the company.

Sramana Mitra: When you say it broke-even in the first two months, what kind of revenue are we talking about? How many customers did you get in the first couple of months and how did you acquire those customers? >>>

Billion Dollar Unicorns: Bootstrap First, Raise Money Later

I have started 2015 with the launch of a new book called Billion Dollar Unicorns. Writing this book took me through the extensive process of talking to entrepreneurs who have built tech companies with valuations above a billion dollars. While there is a tremendous amount of serendipity involved in any extraordinary success story, one recurring theme comes up in these case studies. I am particularly excited to share this nugget because it applies broadly to all classes of entrepreneurial ventures.

Bootstrap first, raise money later.

That’s what Fred Luddy did when he founded ServiceNow back in 2005. Leveraging his domain knowledge and expertise in IT ServiceDesk software, he rapidly acquired 12 customers before raising funding. Initially, he started charging $25 per seat and the 12 customers paid up. He raised $2.5 million in venture capital WITH 12 customers, and ample validation.
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Making Mass Customization Work: Jodie Fox, CEO of Shoes of Prey (Part 2)

Sramana Mitra: What year are we talking?

Jodie Fox: We went live in October 2009. The idea started to come together at the end of 2008 and the beginning of 2009.

Sramana Mitra: How did you get it off the ground? Did you self-finance it? How did it all come together?

Jodie Fox: We bootstrapped for the first two and a half years and we put our own money over a period of a year. Each left their full-time jobs to work on the business.

Sramana Mitra: All of you quit your jobs to go full-time with the business?
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