Rob Fitzpatrick: Take a Long Term Approach to Bootstrapping to Build Assets and a Safety Net
Here are some excerpts from a briefing by Rob Fitzpatrick at the May-1-2020 online Bootstrapper Breakfast. He has been invited to attend the New York Bootstrapper Breakfast Online on May 28 at 8:30am EDT. You are welcome to register at no charge at https://www.eventbrite.com/e/105339577512/
I Poured Everything Into my First Company
I poured everything into my first company, both financially and emotionally. I had chosen a business that looked real good on a spreadsheet and the investors liked it — huge market, lots of upside, very trendy. But that’s not so helpful when you’re going out of business. And what I realized during that painful transition was that everything I built was being reset to zero; there was essentially nothing I could take with me because that business had been serving the advertising industry, and I didn’t want to serve them again.
A Healthy Entrepreneurial Career
And I was like, “Oh man! That truly was wasted time.” And so after that, I shifted my goal and I stopped thinking of it as trying to build one company and I started thinking of it as trying to build a healthy entrepreneurial career. This experience led to a pair of epiphanies:
First, you’ve got to avoid blowing up. If you start a company and it doesn’t work–which happens sometimes–you need to craft a graceful ending to be able to start your next company. If you have a ton of personal debt, then you’ve blown up and you have to go get a job or you’re prevented from being entrepreneurial. And I was mighty close in my first one. I was in debt. I was emotionally burned out. It was a big hole to dig myself out of.
Second, I realized that I wanted each of my subsequent companies to build a long term edge or advantage such that my second company was easier than my first, and my third easier than my second. I wanted to feel that my career as an entrepreneur was progressing and going uphill rather than restarting from scratch, every time I started a new product or a new company.
This is something that I had missed in my first business. After that, I made an intentional effort that no matter what happens with the product or the company, I’m going to build an edge and I’m going to protect against blow up.
Three Key Assets
This led me to plan for and manage three categories of resources or assets. I consider them entrepreneurial or founder resources–as founders you own them. They don’t belong to the company, they belong to you.
If I had been pursuing a traditional career, each job that I moved through would get easier because I would have an expanded network, additional expertise, and additional credibility. I started looking for the equivalents for an entrepreneur and came up with three:
- Industry insight and connectedness
- Access to strong cofounders and partners
- Established audience and activated network.
A long term approach confers two advantages on bootstrappers:
- It cuts the friction associated with early customer discovery, customer validation, and early sales.
- It provides a safety net if you need to shut down via either jobs, freelancing, or quick opportunities
About Rob Fitzpatrick
Rob is an entrepreneur of 12 years. He went through YCombinator (s07) with an attempt to figure out social advertising before Facebook managed to do so, which obviously didn’t work out so well. He has raised funding in the US and UK, built products used by customers like Sony and MTV, designed and Kickstarted a card game, cofounded the education agency Founder Centric, rebuilt a little sailboat, and has built and launched countless silly hobby and side projects which have (so far) managed to keep the wolf from the door. He’s a techie who (grudgingly) learned enterprise sales. He now specializes in the gathering of unbiased customer learning and taking an idea from nothing through to its first dozen or so paying customers.
Rob is the author of "The Mom Test" book about how to talk to customers and learn if your business is a good idea even when everyone is lying to you. Taught at top universities including Harvard, MIT, UCL, and many more. Rob has a five part series of short YouTube lessons on applying the Mom Test principles when you are interviewing customers remotely Rob is on Indiehackers at https://www.indiehackers.com/robfitz
Related Blog Posts
- The Startup Toolkit: Unfair Advantages Grow From Irrational Habits
- The Startup Toolkit: I prefer Effectuation to Lean Startup --Sorta
Which includes his summary of Effectuation: “to look for Effectual ideas, ask yourself which resources you have: Who are the people who would help you, even for a small (but important) favour? Which companies take you seriously enough that they might partner? Which industries do you know or have credibility in? Which important skills do you have (or have access to)?” - SKMurphy: Saras Sarasvathy’s Effectual Reasoning Model for Expert Entrepreneurs"
More at [Bootstrapper Breakfast Blog: Rob Fitzpatrick on taking a long term approach to bootstrapping](https://bootstrappersbreakfast.com/2020/05/06/rob-fitzpatrick-on-taking-a-long-term-approach-to-bootstrapping/
