Many people complain about the shortage of early-stage capital these days, but you don't need institutional money to start a great company.

Lurita Doan is up to her old bootstrapping tricks. Whenever papers come around for her to sign, the CEO carefully removes the "sign here" stickers and puts them on the front of her computer monitor so that she can recycle them in the future. All the freebies from her vendors -- paper cutters, briefcases, calendars, day planners, and the like -- go into bins that serve as ersatz supply cabinets for employees in need of such items.

Pens? Doan wanted to have just one type throughout the company because she could then save money by ordering in bulk, but her employees put up such a fuss that she relented. Now there are two types of pens in use at her company. Ditto for pencils and Post-it notes. And don't even think about Post-its in colors other than standard yellow. They're a complete waste of cash, she says.

Then there's the stationery issue. Doan's company has fairly elaborate stationery, costing 79¢ to 83¢ a page. But damned if she's going to spend that kind of money on a letter that's being faxed. Instead she has her staff use photocopies of the stationery, which cost about half a cent each. Since the company faxes at least 1,500 pages a month, the annual savings come to more than $15,000.

Even more impressive is the amount of money Doan has saved on her office space by insisting on doing her own leasehold improvements. Normally, the landlord would perform the work, which is largely cosmetic, and then charge a higher rent. By having her people make the improvements, Doan figures that her company has saved at least $140,000 in rent over five years -- or $28,000 a year.

Now, all that may sound like the behavior of a very eccentric company owner or perhaps someone with a small home-based business for whom a penny saved is literally a penny earned. In fact, Doan is the CEO of a $29-million corporation, New Technology Management, based in Reston, Va., which provides surveillance and data-transfer technologies to the federal government.

She is not alone in her commitment to bootstrapping as a way of life. Consider Greg Gianforte, whom senior staff writer Emily Barker profiles this month in " Start with Nothing." After building two successful companies from scratch, Gianforte is convinced that bootstrapping is the only sensible way to launch a business -- so convinced, in fact, that he's bootstrapping his third start-up, even though he could have all the venture capital in the world if he wanted it.

But the virtues of bootstrapping seem to be lost on most of the young entrepreneurs I meet these days. They come up to me after speeches and bemoan the shortage of early-stage venture capital that is forcing them to start their new companies on a shoestring. When I suggest that they might actually be better off in the long run by having to pinch their start-up pennies, they look at me as if I must be from the planet Zircon. Having grown up during the heady days of the late 1990s, they think the current period is an aberration. They don't realize that the late '90s were an aberration -- or that the vast majority of successful new businesses are self-financed.

Look, for example, at the well-known companies that have appeared on our Inc 500 list over the past 20 years, including the Sharper Image, Domino's Pizza, Microsoft, Solectron, Oracle, Patagonia, Jiffy Lube, Bertucci's, John Paul Mitchell Systems, Jenny Craig, Princeton Review, Stonyfield Farm, Gateway, Intuit, Morningstar, Comp USA, Qualcomm, Kingston Technology, Pete's Brewing, Clif Bars, Jamba Juice, Fresh Samantha .... The names go on and on. And remember, when those companies appeared on the Inc 500, they were all privately owned and at least five years old, indicating that few, if any, had been started with institutional capital.

It boggles the mind to contemplate the economic value those companies have created, which is -- of course -- what business is all about. Bootstrapping has always been, and continues to be, one of the best ways around to do that. Take Lurita Doan. She estimates that her company's penny-pinching adds about $100,000 a year to its bottom line. If Doan were to sell her company for, say, 10 times earnings, those savings would translate into an additional $1 million in equity value.

Suddenly, recycling "sign here" stickers doesn't look so crazy after all.

You can write to George Gendron at

Please e-mail your comments to

Published on: Feb 1, 2002