Greg Easley and Paul Frischer can vouch for that. Both men
learned how to build successful companies by the seat of their
pants. Their experiences taught them business lessons they know
they wouldn't have learned in business school.
"Bootstrapping makes you streetwise fast," says
Easley, 28. When Easley and his partner, Kelly Moulton, 27, came up
with the idea of launching New York City-based Bottle Rocket Inc.
in 1996, they envisioned smooth sailing because they were cornering
a unique niche. Unlike conventional Web site development companies,
Bottle Rocket creates online entertainment products for
professional sports teams and major sports leagues to use as
marketing vehicles. "Our business model is simple," says
Easley. "Our clients, the National Hockey League or National
Football League, for example, pay us for the [trivia games we
create], and we get an interest in the sponsorship. For this
reason, we felt investors would be interested in us."
Easier said than done. Neither Easley nor Moulton had enough
money to develop the sophisticated online games that would attract
investment dollars. The only way to get the company off the ground
was to carefully budget and bootstrap so investors would eventually
deem it a hot prospect.
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Easley and Moulton became masters of getting things done
cheaply. They set up a temporary office in Easley's tiny,
two-room apartment. For nearly eight months, the two partners
plowed everything back into the company and built credibility in
the marketplace so investors would be enticed by their prototype
games. "We lived frugally," says Easley. "We did
everything we could to cut corners. The idea was to funnel
everything we earned back into the business."
But while cutting corners on food, telephone and electricity
bills, and walking instead of taking cabs helped, Easley says he
and Moulton were often frugal in the wrong places. "Instead of
hiring an attorney to handle legal issues, we figured we could do
it ourselves but eventually wound up spending more," he
explains.
Fortunately, the partners learned from their mistakes.
"Bootstrapping is scary," says Easley, "but in
retrospect, it's worth it. During those early months, we
learned how to manage [a company] and work with clients. It was
kind of like a test run, allowing us to iron out our kinks and
learn how to use the resources we had. If we hoped to raise
investment capital, we had to prove we were a viable business. A
valuable lesson for any entrepreneur is learning how to function on
a shoestring [budget]. That's what bootstrapping teaches
you."
Easley insists danger awaits companies that start out with too
much too soon. "If we had gone out and raised a million
dollars, about 40 percent of that would have gone to covering our
mistakes," he says.
Easley and Moulton's experience paid off. By reworking their
business plan, they raised $500,000 in seed money after being in
business for 11 months. Within a year after that, they had raised
an additional $1 million to fund their research and development. If
all goes well, the partners expect sales of $1.2 million this year
and $4.4 million next year.
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