Starting a successful company is incredibly complex and expensive.
There are basically two ways to accomplish this: find outside investment funds, or fund it yourself (aka “bootstrap”). We decided to prioritize the good we can do for the world above maximizing our potential income. This goes against most investors’ goals of maximizing the return on their investment, so we needed to figure out creative ways to bootstrap our company with the limited funds we had available to us.
Bootstrapping has been wicked hard. Appropriately rewarding people for the time they work for a company is usually the largest expense, so the hardest part was figuring out how to get people to work passionately and effectively on a startup-schedule for as little actual cash as possible. We found seven key motivators that work best when used proactively and frequently in combination:
- Define a positive, fulfilling mission, and make it a daily priority.
From the start, we chose to prioritize maximizing the good we could do for the world over maximizing profit. Our Corporate Principles were one of the first things we put on our new website, and we make sure people agree to them before we even begin discussing bringing them onto the team. Not only has this inspired people to work with us, it has set the expectation that our successes are defined in much more positive ways than just cash.
- Find like-minded people to work with. Look for shared ideals, goals, and motivations.
It helped us to work with people we already knew and had strong relationships with.
- Give everyone something that they want to do.
Challenge them to do something they’ve never done before, but something that they are clearly capable of.
- Figure out how each person wins, no matter what – we call this “FailSoft”.
This includes resume building, actively extending social networks, and even allowing maximum freedom of schedule. Anyone can work for us for as much or as little as they want; They choose the hours, they can leave at anytime with no animosity, and they (mostly) help choose the deliverables and the deadlines, with the expectation that they will complete those things they commit to. Encourage them to check job postings regularly to see how much their new skills are worth. Challenge them to look for places that will give them a better opportunity for the next 3-6 months, not as an “ultimatum”, but instead as a feedback loop on how much value and personal growth they are getting by working with you. Encourage them to take an opportunity if they find one that’s better for them. This not only makes people happy, but also serves as a repeat reminder of how much you value them, how significant they are to your company, and how much you care about their personal growth. By freeing them from the contractual shackles of a traditional work obligation, they’re more likely to want to stick around to help you through the tough times.
- Create a system where everyone wins together.
We chose to do this through a system of Profit Sharing that treats everyone equally: A portion of all sales and company income is distributed equally among all consultants, including the Founder and CEO, regardless of the product or the team that made it happen. Shares are determined by (number of hours worked) * (the market rate for the skills used). We basically create one big pool of “time invested,” recorded as the cash we would have paid out in consulting fees. We then distribute profits to everyone. Each person’s share of the profits is equal to their share of “time invested”. This kind of system is especially motivating for people during the 18+ hour work days that are common in a startup — the more they work, the larger their share of the rewards.
- Make sure everyone has the tools they need to do their job, and give them shiny new “toys” to play with to keep them interested.
Ideally you can combine the two — purchasing a cool new laptop to work on can be worth more in startup happiness than double or triple its value in cash.
- Acknowledge participation from the very start.
We did this by making our “Credits and Thank You” page auto-update every time our app starts. Whenever someone new comes on board for the project, we add their name to the Credits page. We also make sure they see their name in the app before they leave their first work session. People who had worked for big software companies were BLOWN AWAY; Getting their name in the credits for those big projects was a many-month bureaucratic process of requests and approvals, if they ever got their name added at all. We asked them what name they wanted in the credits before they even started doing any work. Instant recognition goes a long way.
Combine these tips with being frugal about all other expenses.
For instance we worked hard to find creative solutions for office space (offered in exchange for participation in the profit sharing pool), non-cash payments (drinks and home baked cookies for the beta testers instead of cash), and bartering for goods, services, and press.
Using these techniques, we were able to build a world-changing iPhone app and company over 14 months with 30+ people involved for less than $70K. We hope these ideas can help you too.
Imagine what we’ll be able to do with our next $70K! We’d love your support. Email us to learn how you can help.
We look forward to your ideas, in the comments, on how we could do even more for less!