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Bootstrapping 101: Use Cheap Web Tools

Using open-source tools that are free on the Internet, Jason Fried and his partners began to devise applications for internal use--and soon sold them on their website.

37signals

Founded by Jason Fried with $150

In 1999, Jason Fried set aside $10,000 to start a Web consulting company, 37signals. Turns out he didn't need nearly that much. "It costs virtually nothing to start a software business these days," he says.

Using open-source tools that are free on the Internet, Fried and his partners began to devise applications, including project management software, for internal use. Realizing that there might be a market for their programs, they began distributing free and paid versions of them on their website. They marketed these products on a company blog, and Fried directed customer support questions to a Gmail account, which he answered personally--fielding questions helped him design better applications, he says.

Today, Fried's Chicago-based company has five products, which have been used by 500,000 people. Though Fried declines to share revenue figures, he claims that sales in 2005 were up 400 percent over 2004. Another way of looking at the company's growth is through its Web-hosting expenses, which have jumped from $150 per month in 2004 to $10,000 a month today. The growth of that line item doesn't bother Fried much. It tracks the popularity of both his paid and free software.

Cheap Web Tools

Free source code isn't the only resource on the Web that's deflating start-up costs. These sites offer a variety of business services at low, low prices:

Site	Go there for	Pricing
Emachineshop.com	Light manufacturing	Starts at $65
Cafepress.com	E-commerce, promos	Starts at $5/month
Associate-o-matic.com	Online retail stores	Basic version is free
Mturk.com	Market research	Pennies per question
Gmail, Hotmail, etc.	Web-based e-mail	Free
Openoffice.org	Ersatz Microsoft Office	Free
Salesforce.com	Customer relationship management software	$995/year for five installed users
Pad2pad.com	Custom circuit boards	Starts at $83 per board