These days RightNow doesn't ask customers to pay development costs for new features, as a rule. "We reached a point where the product was mature enough," says Myer. But Gianforte still wants his top software developers to talk to at least five customers a week. "We say to the developers, 'Your job is to build a product that sales can sell. Figure it out."
Bootstrapping may be the best way to start a company, but is it the best way to continue to build one? Not always, says Gianforte. "There comes a point in a business where you start to understand the business equation," he explains. "You've got a product you know the customer is willing to pay for. You have a sales strategy that works. And the business is growing. That's all given. But you believe you could grow the business faster if you had more resources." Then it makes sense to look outside for funding.
But, he cautions, "it's a slippery slope. I think a lot of entrepreneurs think they need money to build the business faster when they actually haven't figured out the business equation yet."
By December 1999, Gianforte was confident enough about his business equation to raise $16 million through a private placement as a first step toward going public. The company filed for an initial public offering in 2000 and got as far as launching its road show, although Gianforte pulled back in the fall of 2000 after the IPO market cooled.
Why go after outside money? Larger competitors of RightNow -- like Kana Communications Inc., Servicesoft Inc., and E.piphany Inc. -- had emerged. Gianforte wanted to open sales offices elsewhere in the United States and overseas. "The window was open," he says. "We needed to jump through it." With the outside funding, RightNow has opened offices in Dallas, London, and Sydney, Australia. Without the money, says Gianforte, "we would have executed the same plan, but it would have been a little slower."
In its bootstrapping past, RightNow was housed first in Gianforte's home, then in a windowless room in the back of a real estate agency, and later in a former elementary school. Now it's based in a cluster of low-slung, spanking-new office buildings on a field near the university. Once Gianforte began to hire more experienced managers, he had to start thinking about the company's image. "When you're trying to recruit a senior product manager from Hewlett-Packard, he doesn't want to work in a garage," he says. Gianforte built the cluster in partnership with a local developer and leased space in it to RightNow. No reason for the company to sink a lot of cash into real estate, he says.
Today the software that RightNow sells offers far more features than the stripped-down version that Gianforte first designed, and a typical two-year license goes for $75,000, not $5,000. In addition, the company has a 12-person marketing department and a slew of glossy brochures that are aimed at developing and promoting RightNow's once-neglected brand. Still, "marketing is a lot more ROI driven than at any place I've ever worked," marketing director Dan Nichols says. Gianforte still deliberately avoids some popular marketing nostrums. The company shuns big trade shows, for instance. Not only are they too expensive, says Gianforte, but they're a terrible way to meet customers. He makes an exception for smaller, regional shows, where tables run about $1,500.
How do you keep acting like a bootstrapper when outside capital suddenly raises your company to a level of comparative affluence? You continue to think very, very hard about how your business allocates its resources. You spend money only to make money. "Our company is morphing into a more traditional corporation and leaving some of this stuff behind," says Gianforte. "We don't want to leave it all behind."
What of his goal of creating jobs? The average position at RightNow pays just over $50,000 a year. Not bad, considering that the median household income in Bozeman is $30,450. Still, of the 2,000 jobs that Gianforte wants to create, he still has a bit more than 1,600 to go. And a good chunk of RightNow's future growth will likely take place outside Bozeman. So the real test of Gianforte's bootstrapping ethos may be whether he can inspire entrepreneurs around him to create companies and jobs.
"Greg understood that it was important that there would be a business like RightNow Technologies, because people need to see it, touch it, before they can believe it can be done," says Bayless. "There was no company like RightNow here. Greg was out to make the statement 'Look, it can be done here."
Field, president of PrintingForLess.com, has heard Gianforte speak about bootstrapping. Field has come away with a sense of validation. "Greg has big-city, big-company experience, and for someone with that background to come in and say to you 'Bootstrapping is the way to go' is very encouraging," says Field. "I had a natural inclination that way, but I didn't know it was the best way."
Emily Barker is a senior staff writer at Inc.
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Bootstrapping Guide
