So far he was just identifying an opportunity, like any other smart entrepreneur. But here's where it gets interesting. Gianforte started trying to sell that nonexistent product. Armed with a data sheet outlining what such a product might do, Gianforte sat in a spare bedroom and cold-called customer-support managers at hundreds of companies. After talking them through the sheet, he told them that the product would be released in 90 days and asked whether they would use that type of software on their Web sites. If someone said no, he asked why. Sometimes the potential customer needed a feature that Gianforte hadn't thought of. If he thought that he could deliver it in 90 days, he added it to the data sheet.
Some might say that Gianforte was peddling vaporware -- the much-criticized practice of hyping the imminent release of new software that is far from ready. Gianforte disagrees. The key is not to promise anything that can't be delivered within the specified time frame. "You never want to lie to your customers," he says. What he did, he says, is "really sales as a method of market research. It allows you to determine very quickly, without much money, if you have a viable business idea."
The same approach will work for bootstrappers outside the software industry, Gianforte insists. Say a would-be entrepreneur wants to open a retail store, he offers. Don't sink capital into leasing space and ordering inventory. Instead, reach out to customers from day one. Advertise the kinds of products that you plan to offer, hand out flyers, put up a sign. Keep it cheap. If you get orders, that's when you rent the storefront.
Get Something Out the Door
Although rapid prototyping is common in the software industry, Gianforte took it to extremes, says David Bayless, a former venture capitalist in Bozeman who advised Gianforte during RightNow's start-up phase. "Watching the process and seeing it really work was pretty cool," Bayless says. "It struck me as unusual for someone with his technical background. They usually want to polish it and make it perfect before you get it out in front of the customer. He got it in front of people who could actually give him useful feedback."
After a couple of weeks of calling, Gianforte knew exactly what his potential customers wanted. That's when he got around to building the product. He spent two months writing a basic program that allowed a company to judge which information to publish on its Web site, based on E-mail queries that it received. "I don't even want to call it 1.0 -- it was the .8 release," says Gianforte. "But it was enough that people said they'd start using it."
But he still hadn't closed any sales. At first he gave the software away to anyone who would use it -- a move that might seem counterintuitive, given a bootstrapper's appetite for cash. But Gianforte was still working out of his house with no employees and no overhead. It was important to get the product out into customers' hands and hear their reaction, he says. "This is an iterative process," he says. "[The customer] says, 'Uh, that does what your data sheet said, but we really expected this.' Well, that's good input. You could say, 'Well, you signed up for that data sheet. You have to take that.' Wrong answer. You go and put those features in."
Gianforte began charging for RightNow software within three months of its release. He set the price point deliberately low -- offering customers a two-year license instead of a perpetual one -- to jump-start his sales. "He could have tried to sell it for $50,000, and it would have taken six to nine months to get his first sale," says Cindy Taylor, RightNow's former vice-president of field sales. Indeed, most of the other entrants into the Internet customer-relationship-management market have introduced more-expensive software, says senior analyst Charles Rider of Patricia Seybold Group Inc., in Boston. Priced at $5,000, with discounts of up to 50%, RightNow's software attracted a handful of paying customers by September 1997. That year the company's total revenues were a paltry $20,000. But by early 1998 all new customers were paying customers, and Gianforte was selling about $30,000 worth of product a month. "It wasn't until that point that I really concluded that there was a strong business there," he says.
Before that time, Gianforte had invested less than $5,000 of his own money in RightNow, which paid for a computer, a Web site, a phone line, and other office necessities. Now, after selling his share in another small software start-up, Gianforte was ready to put $50,000 of the proceeds into hiring his first employees -- and, more important, to devote himself full-time to the business.
Sell, Sell, Sell
Every business needs sales. But a bootstrapper has to be single-mindedly obsessed with sales. How else can you get the cash to keep the business afloat? For his part, Gianforte takes a near-mystical view of selling as a higher calling. He's a natural salesman, whose secret weapon is the sheer confidence and optimism that he exudes rather than backslapping bonhomie. "A lot of companies think sales is like a necessary evil," he says. "Sales is really the most noble part of the business because it's the part that brings the solution together with the customer's need."
And in RightNow's Montana setting, it made a lot of sense for Gianforte to focus on building a sales organization instead of trying to develop the most technologically sophisticated software package available. Thanks to the presence of Montana State University, Bozeman had more computer programmers than most towns in Montana did, but it was still a long way from being Silicon Valley. "He had the opportunity to grow quickly, but not if he had to put wave after wave of top-notch technical talent into the fray," says Bayless, who's done a study of the relationship between place and entrepreneurial success. (See " Know Your Place," in the August 2001 issue.) "Part of his strategy was an honest assessment of human resources in a small town in the middle of nowhere."
