Inc.'s editor explains why bootstrapping is the purest form of entrepreneurism, why Garden.com is the quintessential Internet business, and how to deal with the employees that drive you crazy.
I'm not sure exactly when we came up with the idea of publishing a recurring feature on how to start a great company for $1,000 or less, but I clearly recall why we decided to do it in the first place.
We'd been watching the growing attention being paid to young entrepreneurial companies in the mainstream business press, and we'd noticed that almost all of them fit a certain mold: backed by venture capital, headed for an initial public offering. The result, we felt, was a distorted picture of entrepreneurship.
Sexy as the venture world may be, it accounts for a tiny fraction of the companies started every year. The overwhelming majority are financed through personal savings, credit-card debt, loans from friends and family, and more formal sources of private equity. In many cases, moreover, the amount of capital involved is very modest. More than 37% of the 1998 Inc. 500, for example, reported that they got their start with $10,000 or less.
So we decided to put together a package that would add some balance to the image of entrepreneurship being presented elsewhere, and it has become one of our most popular features. Yes, we know that many businesses can't be started with $1,000 or less, but we're out to make a point here: there are also many businesses that can.
Bootstrapping is entrepreneurship in its purest form. It's the transformation of human capital into financial capital, sweat equity into bankable equity. That's what we mean when we talk about "creating value."
Then, for a change of pace, there's Garden.com, founded by Cliff and Lisa Sharples and their friend Jamie O'Neill. Four years ago the three quit their jobs and went out in search of the perfect Internet start-up. Like true bootstrappers, they survived on a steady diet of peanut-butter-and-jelly sandwiches and not much more.
They didn't remain bootstrappers for long, however. Instead, they decided to try their luck with investors, and their luck turned out to be very, very good. As we go to press, Garden.com is preparing for an IPO expected to raise nearly $57 million, on top of the $51.5 million in private equity the company already has. More than $100 million in four years. Hardly the stuff of bootstrapping legend. Bootstrappers or not, the Garden.com founders have done many things right, as you'll learn in Edward O. Welles's superb article about them and their company, " The Perfect Internet Business."
What do you do when an employee who skipped town after stealing $800 from you drifts back into your office a few years later? You rehire the son of a bitch, of course.
You do, that is, if you're Jerry Strahan, general manager of Lucky Dogs Inc. If you've ever visited New Orleans, chances are, you know the company: it puts those 10-foot-long hot-dog- shaped carts out on the streets of the French Quarter. Lucky Dogs was also the inspiration for the fictional Paradise Vendors, the hot-dog company that appeared center stage in A Confederacy of Dunces, John Kennedy Toole's Pulitzer Prize-winning novel, first published in 1980.
Our story, " The Taming of the Crew," is nonfiction through and through and was written by senior editor Leigh Buchanan, a woman with a penchant for things--shall we say?--quirky. What's quirky in this case is a company manned by "drifters, alcoholics, insubordinates, petty thieves, not-so-petty thieves, brawlers, and the occasional psychopath," as Buchanan writes. You'll come away from the story with a new appreciation for the employees who drive you crazy: things could be so much worse.
Street Smarts columnist Norm Brodsky, who is on vacation this month, didn't want to be missing from a whole issue of the magazine, and so he called in this story: Seems that he and his wife, Elaine, recently attended a public roundtable with Attorney General Janet Reno on the "role of business in building safe and sustainable communities." The meeting was held at a manufacturing facility in Brooklyn owned by Pfizer Inc., the multinational pharmaceutical company. The speakers focused on the laudable efforts of Pfizer and other large companies to strengthen inner-city neighborhoods.
Notably absent from the program was any discussion of the good works being done by small and midsize companies in this area--not to mention their leading role in generating inner-city jobs. In fact, only a handful of small companies were even invited. You'd think that the sponsors of such programs would have gotten the message by now. I gather that by the time Brodsky was through, they had.