Start with Nothing

Greg Gianforte thinks he knows the single best way to launch a business. Here's his secret:

"Bootstrap it."

That's how Gianforte launched his first company, software maker Brightwork Development Inc., in 1986. Eight years later he and his partners sold the business to McAfee Associates for more than $10 million -- a move that enabled Gianforte to retire to Bozeman, Mont., at age 33. After realizing that he couldn't spend the rest of his life fly-fishing, Gianforte started his second major venture, RightNow Technologies Inc. In almost five years, RightNow has grown from a spare bedroom in Gianforte's home to 230 employees and $30 million in sales. So it's understandable that he might think that he's onto something good here.

And it's also understandable that a whole new generation of entrepreneurs are suddenly hot on bootstrapping, too. There are only two ways to start a business, after all: with capital or without. And in these uncertain times, capital is scarce. But most would-be bootstrappers don't quite get it. They think the process means building desks out of doors and sawhorses. When Gianforte talks about bootstrapping -- which he loves to do -- he doesn't mean pinching pennies. Sure, he can trade tightwad stories with any bootstrapper. When RightNow was getting started, for instance, Gianforte couldn't afford to spend thousands of dollars on a phone system. So he got a separate line and an 800 number for each member of his tiny sales force. Employees couldn't transfer calls to one another, but each line cost just $30 a month.

To Gianforte, though, that kind of improvisation isn't really bootstrapping. Not the heart of it, anyway. Bootstrapping is both bigger and simpler than saving a dime whenever you can. If you boiled down his philosophy of bootstrapping, it would run something like this: lack of money, employees, equipment -- even lack of product -- is actually a huge advantage, because it forces the bootstrapper to concentrate on selling to bring cash into the business. There's an expression that Gianforte likes to quote: "In war you're either making bullets or shooting bullets." In other words, for the bootstrapper, business is all about just two things: making product and selling product. It's not hard to see which one is closer to Gianforte's heart. "Nothing Happens Until Someone Sells Something" reads the sign in his otherwise spartan office.

In other words, bootstrapping clears away the clutter and makes you focus single-mindedly on the customer, which is what any smart entrepreneur needs to do anyway. It compels you to be creative, and it's an acid test for figuring out whether you've got a real business or just a plausible-sounding business plan. But bootstrapping is a safety net, too, because if you wind up with no sales, no customers, and no business, well, at least all you've lost is time, not money. "You don't make any fatal mistakes" is how Gianforte puts it.

GREG GIANFORTE: "A lot of entrepreneurs think they need money ... when they actually haven't figured out the business equation."

What sets him apart from most bootstrappers is that he practices bootstrapping by choice. After he sold Brightwork, Gianforte says, he didn't have to work anymore. He moved to Bozeman in 1995 because he'd fallen in love with Montana on a junior-high-school backpacking trip, and because he thought it would be a good place to raise his kids. He settled his family in a rambling, cedar-shingled house just outside Bozeman, on a spread big enough that he gets a couple hundred pounds of buffalo meat every year in exchange for supplying a neighbor's herd with hay from his field. In Montana, Gianforte can camp in the summer, hunt in the fall, and ski in the winter.

But all of that recreation couldn't hold Gianforte's attention. Not that it wasn't fun; it just wasn't enough. Mountain-ringed Bozeman, population 27,500, home of Montana State University, was half college town, half cow town, a place that offered gorgeous scenery, an active outdoor lifestyle, and not much in the way of employment. Gianforte decided that his personal mission was to create 2,000 high-paying high-tech jobs in town. He had the talent for starting companies, he figured, so why not put it to use? First, he launched an incubator and started mentoring local entrepreneurs. He then started a venture of his own, an E-mail stock-quote service. But he got impatient. The companies that he was involved with were just too small. He began looking around for a new business to start.

Given his background and his software-industry connections, Gianforte probably could have raised angel money or venture capital. But the incubator experience had crystallized some ideas about company building that he had been turning over in his head ever since Brightwork. Hoping to spread the word, he created a PowerPoint presentation on bootstrapping and talked his ideas up to a couple of local business groups. "And then I used those lessons to start RightNow," he says.

Sales Before Product

Admittedly, when Gianforte talks about how he started RightNow, some of what he says sounds like nothing more than good entrepreneurship, period. For example, look at how he figured out what kind of business to start. Gianforte knew that he wanted to launch an Internet-software company -- not a hard call, given the business climate and his experience. In the early months of 1997 he surfed the Web, searching for a niche to focus on. No one seemed to be making a product that would help companies respond to E-mail from their customers, he noticed.