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Tap Workers for Computer Capital

Internally financing your start-up by asking employees to buy their own computers.
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When consultant Marc Lorenzen founded PTI Environmental Services, in Seattle, he bootstrapped it. The 1987 start-up needed 15 office computers, but Lorenzen could barely afford half that many. So he turned to his employees with a hard-to-resist proposal: if at least eight of them would go out and buy their own desktops, PTI would lease each of those machines for a year at 50% of the purchase price, payable monthly. Within those 12 months, either PTI would be a going concern and could afford its own computers, or employees would "own some partly paid-off hardware to take back home." The only restriction: employees were told not to get something too fancy.

The internal-financing tactic eased PTI over its initial hump, and sure enough, in year two cash flow allowed the company to buy its own computers. But a number of employees refused to switch. They were so delighted to have participated in the launch that they volunteered to stay with their own computers at no further charge. Of course, it didn't hurt that Lorenzen had made them stockholders early on so they'd see the wisdom of pitching in 50-50. -- Michael P. Cronin

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Last updated: Nov 1, 1992




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