Module overview:
** The hazards of technologist with cash:
** Some cause of unexpected cash flow issues in tech ventures
** The art of frugality
** Benefits of bootstrapping
** Principles of bootstrapping
** Cash-based strategic decisions

Causes of Company X problems
* Too much money will give technologist the wrong focus
* Took a long to time to industrialize designs and to get products to the market
* Made some poor IP investments that had to be written of
* Bad projects should have been killed sooner
* Over-estimated the value of the technology on its own

Deprivation or strategic philosophy?
* Gave example of verisign:
** \$200K,- profit
** \$100M,- of venture capital
** \$512M of public offering

Analogy:
http://www.businessinsider.com/what-sunk-veoh-and-joost-too-much-cash-too-soon-2009-7

The strategic benefits of bootstrapping:
* Forces strategic focus:
** Highlights tough choices
** Less likely to take on too much
* Promotes discipline & care
** Less likely to burn resources on developing something nobody wants
** It can encourage creative use of resources
* Raises returns to all stakeholders
* Encourages true entrepreneurship

Principles of bootstrapping:
* Be realistic about how limited your resources really are
* Operate in experimentation mode (potential deal killers)
* Focus on doing the few important things well
* Try to delay or avoid activities that have a distant revenue prospects
* Bring revenue prospects as far forward as possible
** Finish one product first (do not bet on multiple products)
* Where you can't earn any income off what you are doing, ask yourself whether it is still worth doing and if so for how long
* Seek to draw down the future value you may create for suppliers
* Share out your risk
* Negotiate everything
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mbi_public
created
Fri, 05 Nov 2010 10:42:34 GMT
creator
dirkjan
modified
Fri, 05 Nov 2010 10:42:34 GMT
modifier
dirkjan
creator
dirkjan