FusionCharts @ Startup Saturday, Bangalore Bootstrapping your business Pallav Nadhani Co-founder & CEO
FusionCharts @ Startup Saturday, Bangalore Disclosure #1. Views are personal and biased towards products #2. There is no one-size-fits-all startup strategy
FusionCharts @ Startup Saturday, Bangalore About Me Started FusionCharts when I was 17. It wasn’t actually meant to be a product. It was originally a way to make pocket money Have offices in Bangalore and Kolkata, with 60+ members Totally bootstrapped company with over $5M in revenues. No external funding till date Today we’ve 20,000 customers and 450,000 users across 118 countries, including 80% of Fortune 500 companies Power over 1 Billion charts per month
FusionCharts @ Startup Saturday, Bangalore Why we never raised money? In the early days, no VC would have funded a 17-year old guy with plans for world domination VCs wouldn’t have perceived charting as a viable business at all Would have taken focus away from developing better products to getting funded and building hypothetical financial metrics Raising money could hurt us, as we would then have always waited for the "perfect" product, when the "good enough" version got us customers and more importantly feedback Money from VC doesn’t guarantee increased business We love cash from customers way more. Gives us operating freedom.
FusionCharts @ Startup Saturday, Bangalore And why I suggest not to raise $$$ before validation Getting funded by a VC is NOT a market validation of your idea If you do not have a validated idea, you do not have any leverage against the investor. And hence you might be giving out equity for cheap. Getting funded takes time, much more than you think. You may find it easier to raise capital once your business has further developed its technology and has a sales track record. Starting a start-up is so much more cheaper now. So why not give it a shot?
FusionCharts @ Startup Saturday, Bangalore “The odds of raising venture capital are equal to the odds of getting struck by lightning while standing on the bottom of a swimming pool on a sunny day.” ~Bill Reichert, Garage Technology Ventures
FusionCharts @ Startup Saturday, Bangalore Bootstrapping a self-sustaining process that proceeds without external help
FusionCharts @ Startup Saturday, Bangalore “a common sense approach to building a business by spending all the available resources as frugally as possible at the launch and using your own personal assets to fund the early stages.”
FusionCharts @ Startup Saturday, Bangalore Reasons you would bootstrap You want to run the show You want to validate the idea, before raising money You have not been to able to raise money, but still believe in the idea
FusionCharts @ Startup Saturday, Bangalore What personal assets would it take to do so? Personal Savings Credit Cards FFFs Or, if you have a service business or consultancy by the side to fund the product
FusionCharts @ Startup Saturday, Bangalore Specific areas where bootstrapping works better Niche areas, where larger players wouldnt have interest owing to small market size Research oriented field, where you have made a significant discovery and monetize it Where demand is pull based, rather than you having to educate the market, create a need and subsequently fulfill the need When pitching against an existing larger player with existing market share, by being better in a specific area
FusionCharts @ Startup Saturday, Bangalore 3 phases of bootstrapping Finding product-user fit What product to build? Finding product-market fit How/whom to sell? Scaling How to keep growing?
FusionCharts @ Startup Saturday, Bangalore Phase 1: Finding the product-user fit What you have at this stage: a vision and a set of untested guesses Objective: to find a problem worth solving How to do it: formulating a set of hypotheses and then talking to prospects, surveys, landing pages, reading competitors forums/blogs How long does it take: Few weeks to a couple months, normally
FusionCharts @ Startup Saturday, Bangalore Is there a need for such a product? Is your product a pain-killer capsule or a vitamin capsule? Is the customers pain beyond his tolerance level that hell need to fix it? Do enough people have this pain, to classify as a market? Is the pain long temporary or long-lasting? What are the current ways to fix it and how effective? Will people pay for the fix? Will they pay up-front, or near the closure of the deal, and not ages after (think government projects)?
FusionCharts @ Startup Saturday, Bangalore How can you reach such prospects? If you want it to reach a global audience, the distribution has to be through Internet. Costs nearly nothing and helps you become global. But, what if your audience doesn’t buy online? If local, how local? How many people can your founding team reach out each single day, after doing all other activities? Is there an existing demand (pull based), or will you have to create a demand (push based)? Do you have to invest in and wait to acquire a large audience, before you start monetizing (think Twitter, Facebook)? Will you need to change the habits or culture of your target audience, for your product to be adopted (think iPad)?
FusionCharts @ Startup Saturday, Bangalore What internal capabilities does founding team have? Can the founding team design and build the product, or would it take a very large team to build the first version? Would it take a lot of capital in terms of machinery, real estate or other assets? Would it need a large sales team to get early meaningful revenue?
FusionCharts @ Startup Saturday, Bangalore Everything starts small Build MVP for everything - marketing, website, internal tools etc. Ship early versions of your product and test with customers in the field, rather than perfecting the product before shipping the first release. Cash flows only start when you ship. Test the market. Ask them how they would use it, what features they might like to see and how much they would consider paying for it. Keep reiterating. Measure what works and kill what doesn’t. Dont focus too much on competition. Know your "whys" fully and consistently work towards the same.
FusionCharts @ Startup Saturday, Bangalore For the early versions, if you launch without feeling slightly embarrassed, youre probably too late. Customers will tell you what they want!
FusionCharts @ Startup Saturday, Bangalore It’s ok to suck initially. Everyone does.
FusionCharts @ Startup Saturday, Bangalore It’s not the big that eat the small. It’s the fast who eat the slow. So, do not be scared of competition!
FusionCharts @ Startup Saturday, Bangalore Be efficient with $$$ Start your business at home or share an office Barter for services and products with others Use sweat equity with your initial team, instead of high salaries Buy used, cheap equipment for internal use Avoid travel as much you can. Use web conferencing When traveling, stay at friends place Get free passes for networking events by being volunteer Hire young, cheap and hungry people. Most other biggies wont hire them. So theyll be more loyal to you Use interns, cost effective. Once you have money flowing in, hire adult supervision to manage them
FusionCharts @ Startup Saturday, Bangalore Phase 2: Finding the product-market fit What you have at this stage: a product that solves a pain point for a set of users Objective: validate business model in search of a scalable business model How to do it: figure the right pricing, distribution channels, marketing approach How long does it take: Few months to an year
FusionCharts @ Startup Saturday, Bangalore Figure the initial business model to get enough money Charge your customers Create emotional lock-ins for your customers in your product Focus on cash-flow, not just profit. Try to be get short sales cycles and short payment terms Forecast bottom up, not top down. How many people can I reach today to tell about my products? Keep tweaking the business model to enhance output
FusionCharts @ Startup Saturday, Bangalore Pricing is crucial Do not price too low. People tend to believe you get what you pay for Give multiple pricing options to customers to see which one sticks the most. Keep experimenting with these options to get an optimal value If in a commoditized market, could use competition’s pricing as a benchmark. Figure out how to project a lower 3 year-TCO If highly differentiated product, then use value minus pricing model Build quality of revenue in form of annuities
FusionCharts @ Startup Saturday, Bangalore Focus on marketing, not just sales “On the Internet no one knows youre small”. So, leave a big impression. Use all the free marketing channels you can - guest blog posts, articles, social media, PR, podcasts, videos, whitepapers etc. Figure out creative ways to build credibility, when small. Create a personality around your product to differentiate it from rest Positioning against the leader is a good way to get your word out, without educating the users
FusionCharts @ Startup Saturday, Bangalore Give people more reasons to remember you than just the product Product is just a part of the equation
FusionCharts @ Startup Saturday, Bangalore Phase 3: Expanding on what you did right What you have at this stage: a validated product and model to scale Objective: getting the product to as many customers as possible, building internal processes, automate as much as you can, forming an advisory board How to do it: expanding internal teams, implementation of scalable processes, strengthening your team, hiring business unit heads How long does it take: As long as you want to keep growing, keeping it independent
FusionCharts @ Startup Saturday, Bangalore If you’ve reached Phase 3, you don’t need to listen to my advice! Go ahead and grow your business!
FusionCharts @ Startup Saturday, Bangalore Just ensure You’ve a process that’s scalable enough to handle business that doubles every month. You’re screaming out loud to the world about your success! Success begets success! Automate processes as much as you can, to stay lean. Be very choosy about your employees! Cut down on products or efforts that are not working. Don’t be emotional! Don’t try and do everything! Be very focused!
FusionCharts @ Startup Saturday, Bangalore What next? If youre happy doing what youre doing, have a great team, are making money, and happy with the lifestyle business, keep continuing. Theres nothing wrong with it. Not every business has to be a billion $ business. Raise funding only if you clearly know where you can use it post product-user and product-market fit has been discovered, and that putting in $1 will yield more than $1.
FusionCharts @ Startup Saturday, Bangalore Overall Bootstrapping is a roller coaster ride. You will experience the highest highs and the lowest lows, possibly both in the same hour Cultivate a hobby that can ride you through the lows Have a support group of friends, family, other entrepreneurs and mentors who understand what you are doing. Fix mistakes early. When youre small, you know almost everything about your business. So detection is quick, and so should fixes be. Whatever you do, ENJOY the ride! You got into it by choice.
FusionCharts @ Startup Saturday, Bangalore Funding doesn’t guarantee success… but success almost always guarantees funding!
FusionCharts @ Startup Saturday, Bangalore Thank you Questions?I can be reached at email@example.com or @pallavn