StartupforLess.org - Survival Guide for Bootstrapping Entrepreneurs

Editor Profile - Denny K Miu is the Founder and former CEO of two companies, Gigamon Systems and Integrated Micromachines (now Touchdown Technologies). Denny has extensive experience in developing technology, products and business relationships. He has been a Professor, an engineer, an entrepreneur, a team leader as well as an individual contributor.

Denny is currently the Executive Editor of LoveMyTool.com, his third start-up. He can be reached at denny (dot) miu (at) gmail (dot) com. You can also follow him online on Friendfeed.

I am currently finishing chapters of my second book summarizing what I have learned in the last fifteen years as a struggling entrepreneur. I wrote my first book in 1992 when I was in the process of changing career, from academia to entrepreneurship.

What compels me to write this second book is that I truly enjoy the peace that I attain when I organize my thoughts into words. Perhaps it is also a sign that I am ready to change career (again).

I hope you enjoy reading as much as I enjoy writing. The following is a list of the chapters that are finished as well as in progress.

10. Why Startups Fail and Why Gigamon Should've Too
9. How to Turn Your VC into Your Worst Enemy
8. What I Learned From My Dad Who Taught Me How To Ride A Bicycle
7. Make Money Then Make Meaning
6. Team Building versus Bread Making
5. Middle Management Gone Wild
4. Marketing is to Sell Shit that You Don't Have
3. How to Turn Orange into the New Black
2. Entrepreneurship and Love Making
1. The Nail that Keeps the Air From Leaking

Ref: Narrow-casting and "Entre-sumers"
Ref: Why We Must Embrace Rejection to Succeed
Ref: Why We Must Bootstrap to Succeed
Ref: Now is Not the Time to be An Optimist
Ref: A Bridge (Loan) to Nowhere

In addition, I regularly participate in a discussion group trying to keep up with a new generation of web-centric younger entrepreneurs.

--Denny--

November 10, 2008

A Bridge (Loan) to Nowhere

My advise to my (first-time) entrepreneur readers is to focus entirely on your customers and to start to think like a bridge builder. Building a profitable business should be your end goal whereas fund raising is just the means to get there.

If you could convince someone that you know how to convince your customers why they should buy, rent or lease your product, then you have a fighting chance to convince someone to make an investment. Otherwise, you are basically asking for a "bridge (loan) to no where".

Continue reading "A Bridge (Loan) to Nowhere" »

November 04, 2008

America 2.0

It has been thirty seven years since I arrived America. Time has changed and America has changed. The World is now highly interconnected. America is no longer isolated and insulated. Instead of competing with the Soviets for ideological dominance, we now compete with the Chinese for resources and influences. America is still the envy of the rest of the World but most Americans are finding it difficult if not impossible to achieve the America dream.

Tonight we have elected a new President and we have given him an undeniable mandate.

As a country, we have lots of challenges ahead and with a divine wind behind our back, we can start to face up to these challenges.

Continue reading "America 2.0" »

October 13, 2008

Now is Not the Time to be An Optimist

Being the CEO of a startup is the funnest job possible, except through hard times. No matter how much we seem otherwise, CEO's are human too. Telling your employees that they no longer need to come to work is the worst possible part of the job.

During the telecom bust of the 2000, I had to lay off over 130 employees in five consecutive actions, each time thinking that it would be the last time. There is no worse death for a startup than "death by a thousand cuts". The recession that is currently unfolding looks much worse (the telecom industry was only 5% of the total economy).

Good luck to us all.

Continue reading "Now is Not the Time to be An Optimist" »

June 17, 2008

Why We Must Bootstrap to Succeed

Determined entrepreneurs are those who bootstrap their companies through the R&D phase by forgoing salaries. In fact, by recruiting a small group of like-mind co-Founders to completely fill out the team, and convincing each to not take salaries, we are essentially making our own "pre-tax" investment, leveraging many-to-one.

In summary, since we don't need to put money in anyone's pocket (including our own), we don't need to raise lots of VC money. We might need a few tens of thousands of dollars (or even up to a few hundreds of thousands of dollars). But no one needs a few millions or tens of millions to build a company.

Does that mean we don't need VC's? No, not at all. We do need them. I am just arguing that we don't need them to provide initial "R&D" capital. After we have a working product and a workable revenue model, we can then go to the VC's to provide "working" capital to grow the company.

On the other hand, often we can even bootstrap the company to the point where we are generating sustainable profits. Then it is a seller's market. It is quite easy to find late-stage VC's to buy off shares from the founding team, taking money off the table but yet allowing the company to continue to grow.

Continue reading "Why We Must Bootstrap to Succeed" »

March 20, 2008

6. Team Building versus Bread Making

It takes a lot to build a successful startup. You need to start with a good product idea. And if it turns out that your initial (or even subsequent) idea sucks, which is often the case, then hopefully you have the tenacity and the credibility to continue to evolve your business such that you eventually come upon a good product idea. Then you need to build a good team. Finally you need good execution and good timing.

And that's pretty much the order. In other words, if you start with a bad idea, then even a top-notch team can't help you push a square peg through a round hole (without hurting something or someone). And if you have a great idea and a great team but bad execution, then good timing simply makes it more obvious that you have completely squandered your early-mover advantage (while wasting a lot of blood and treasure along the way).

In this article, I will focus mainly on the lessons that I have learned in connecting the most important dots inside the company (i.e., building the initiate team).

Continue reading "Team Building versus Bread Making" »

February 05, 2008

A Proud Day to be an American

My daughter is old enough to vote this year.

Our country is ready for change. We are in desperate need to move beyond 9/11, to move beyond Iraq and Katrina, and to move beyond divisive politics. We are also ready for a generational change. No doubt we will elect another baby boomer as President but it would have to be one that is endeared by my daughter's generation, who are now old enough to vote and yet again young enough to be inspired.

My daughter should be proud today. I believe of all the elections that I have been privileged to be part of as a naturalized American, this is the most inspiring and it is the one that is most reflective of our country's collective values.

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January 10, 2008

7. Make Money Then Make Meaning

An entrepreneur's never ending job is to align moving vectors. To succeed, we must figure out what rocks our hearts, our minds and our souls, providing our constituents with what they need and what they want. So clearly making meaning is an important part of our repertoire.

But as the company grows and as more and more people are brought together, I have learned that the only thing that everyone has in common would be money. So my experience is that from the beginning, as an entrepreneur, we must focus entirely on making money and when we are successful in making money, we will be making meaning as well (because it is so damn obvious). But if we focus on making meaning, chances are that we won't make any money and even if we do, everyone would still argue over what meaning is.

So this chapter is about making money and is about how to financially structure a startup such that we can make the most money. And I try to answer the first question first which is "Should we form a C-Corp, S-Corp, or LLC? Which one is best for bootstrapping entrepreneurs, netting us with the most take-home cash while giving us adequate protection and maximum flexibility?"

Continue reading "Make Money Then Make Meaning" »

January 07, 2008

You Too Can Bring About Change

LoveMyTool.com is a shared community built for the multi-billion-dollar network tool industry by the industry. All participating vendors compete with each other but cooperate in this particular venue to aggregate customer testimonials and third-party product and technology reviews in order to better serve their common customers.

LoveMyTool.com is a unique marketing vehicle in that it is a direct communication channel between manufacturers and customers. We do not accept advertisement and we are not agents for anyone.

Continue reading "You Too Can Bring About Change" »

December 21, 2007

Advocacy Marketing (Example of a Bootstrapping Startup)

When writing about the success and failure of startups, I talked a lot about luck being the most important contributing factor to the success of any startup, but I also talked about the importance of being a "surrogate customer". In other words, if you can identify a problem that you personally experience but currently has no solution, and if you can be passionate about it and fundamentally believe that it is an industry-wide problem that affects a sizable community, then you have identified the cornerstone you need to build a company.

The problem that I have identified is one where I want to find potential customers, customers who have never heard of us and could never find us on their own. And the only solution available to me (PR firms and conventional media) is inherently "channel-inefficient". So what do I do ... I do the only thing that entrepreneurs know how to do which is to force a paradigm shift. The new paradigm is an innovative marketing channel and it is called LoveMyTool.

LoveMyTool is all about "Advocacy Marketing".

LoveMyTool does not post press releases nor marketing collaterals. Instead we post only customer testimonials and technical reviews by third parties (i.e., advocates who "love" their tools and are passionate about our industry).

Continue reading "Advocacy Marketing" »

October 26, 2007

The Art of the Start (by Guy Kawasaki)

With permission from Guy Kawasaki, we bring you a unique post which brings a different kind of tools to your life, tools that could help you succeed in business as well as technology. Guy Kawasaki is the author of eight books including The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. Guy is currently the Managing Director of Garage Technology Ventures, an early-stage venture capital firm, a columnist for Forbes.com and the Founder/CEO of Truemors.com. Previously, he was an Apple Fellow and Chief Evangelist at Apple Computer where he was one of the few individuals responsible for the early success of the Macintosh computer. For more information on Mr. Kawasaki, please go to his personal website or his daily Blog.

This video is truly inspirational.

Continue reading "The Art of the Start (by Guy Kawasaki)" »

October 25, 2007

8. What I Learned From My Dad Who Taught Me How To Ride A Bicycle

In this post, I focus on an unfortunate part of the journey which is how to recover from a spectacular failure. Please note that I am writing from the perspective of a Founder/CEO which is a very unique breed. If you are a Founder but not the CEO, you can blame the CEO. If you are the CEO but not the Founder, you already know what to do. Being a Founder/CEO means that you have no other marketable skill and you're on your own.

My experience is that after the downfall, I was unbelievably exhausted, both physically and emotionally, which unfortunately tended to cloud my judgment and drive towards misbehavior. But fortunately for me, I had the benefit of a strict old-world upbringing and I could hear my dad's stern voice demanding that I get up from the dirt. If it weren't for that, I would have preferred to just lie there and enjoy the warmth of the sun.

After crashing your startup, you really only have two choices. Your first decision is the most important one if you were to eventually recover from your failure. Either you walk away from being an entrepreneur forever and never look back, or you can get up off the ground and start riding again.

Continue reading "What I Learned From My Dad Who Taught Me How To Ride A Bicycle" »

October 4, 2007

9. How to Turn Your VC into Your Worst Enemy

Prior to starting Gigamon in 2003, I had started another company and prior to that, I was a faculty member at UCLA. I left academia in 1995 because I was interested in becoming an entrepreneur. In summary, I ended up raising $65 million in four rounds of VC funding but burned through all but $3 million before I was fired from my own company in late-2002.

VC's have been my best friends and my worst enemies, in ways that are not always within my immediate control.

On the other hand, ironically, I have come to respect Venture Capitalist as a profession, which I believe is the least understood if not the most misunderstood. I am convinced that the mistakes I have made with VC's were a result of my inexperience as a CEO compounded by a total lack of understanding of who VC's are and what they do for a living.

It is with this in mind that I summarize my lessons in the following, in hope that they will remind me of what I have learned. It is also my hope that perhaps these reminders could even help others who share a parallel journey as a fellow entrepreneur.

Continue reading "How to Turn Your VC into Your Worst Enemy" »

September 13, 2007

10. Why Startups Fail and Why Gigamon Should've Too

Having spent the last decade and more as a struggling entrepreneur, I understand all too well the twin irony of accidental genius and reluctant warriors; nothing out-performs good execution like good fortune. In all honesty, the fact that we have taken no VC money was not part of our original financing plan. Between the summer of 2003 and the fall of 2004, I must have visited nearly 50 VC's, all of whom have turned us down. So Gigamon succeeded in spite of my initial failing.

Over the last four years, I spend much waken hours soul searching and I have summarized what I learned in the following which are the top three reasons why we were turned down by the VC's and why Gigamon should have failed as predicted had it not been for the good timing of the ever changing market and the enduring quality of its team (intelligence, integrity and inventiveness).

1) Gigamon does not have a rock star CEO
2) Gigamon Founders are all engineers
3) Gigamon contradicted Gartner

Continue reading "Why Startups Fail and Why Gigamon Should've Too" »