- Bootstrappers are entrepreneurs determined to make a business pay for itself. The freedom from relying on capital invested by VCs is a great motivator,if one knows how to acquire it from the right sources.
- Their secret weapon, is being nimble and cutting through the bureaucracy to grow faster.Most are entrepreneurs, who have a drive to learn and better themselves in all fields related to their start-up. They use unconventional means to raise funds for their business,without spreading out their arms.
- A small initial size helps them to focus by realizing that they have little to lose, and they are quick to catch on trends and exploit them. But, how do they do all of this and survive the bloody battles on the tilted corporate battlefield? In this series of articles we delve into some of the nuances of this seemingly esoteric method of raising money.
Part 1: What you've got and they've got
- You’d be clobbered by the current brands and be out of business while they won’t be losing a moment’s sleep.
- Successful bootstrappers know that just because they can make a product doesn’t mean they should. Instead, they are well aware of the traits they need to have and the advantage they have over the major market players.
- Some of these advantages are : A mindset of ‘We’ve got nothing to lose’, being happy with the small fish, direct presidential input , Rapid R&D, being the underdogs, low overhead costs and controlling the time of deliveries.
- We will elucidate on these points in the next issues, but let us close on an example much closer to home. I am sure there are many who remember id software’s ‘Castle Wolfenstein’. Following the huge success of their game, the 4 developers decided to take on the major players with a unique strategy. They developed another path breaking game called ‘Doom’ and gave it away… for free!
- Millions of people downloaded the game off their servers and id had captured a huge pool of trusting customers. They launched a bigger version of the game with more levels and gameplay and made it available at a price. It was a huge success! Without having to go through the game retailers, or spend more than 50 cents on marketing they had used an unusual strategy which helped them cut out the middlemen and avoided losing capital as ‘commission’ yetfirmly carve a niche in the gaming industry.
- It's easy to make a buck. It's a lot tougher to make a difference
- - Tom Brokaw
- Financial Bootstrapping: Smartly funding your start-up
- Vision India 2020
- This is the first article of the series Vision 2020 by Sramana Mitra describing which she says, “This is a new series in which I invite readers to take a journey with me into the future through the minds of multiple entrepreneurs, who by addressing the opportunities I see today, will perhaps shape the future of India.But in this series, we will close our eyes, and exist in this future, and BE each entrepreneur”.
- Enjoy!
- 12 years ago, in 2008, it was clear that the labour arbitrage based IT services industry that had made India a player in the global technology market, was facing a threat. The key issue was supply-demand equilibrium. India’s engineering education system simply could not keep up with the demand for talent.
- Engineering schools below the top tier (IIT, IISC and a few others) were struggling due to lack of faculty.Anyone who knew any engineering had multiple multinational companies dangling job offers in front of their nose. Why would they go teach in a small engineering college in a small town?
- Against that backdrop, we started a for-profit, private companto train engineers in India. At the time, Susan Hockfiel was the President of Massachusetts Institute of Technology (MIT). MIT had also taken a leadership role in the Open Course Ware (OCW) movement, systematically putting every lecture by the institute’s faculty online, freely accessible from anywhere in the world. We convinced Dr. Hockfield to take equity in the company on behalf of MIT,
- and let us do the project under the MIT India brand, extensively leveraging OCW content. We could, however, only certificates, not MIT degrees.
- When we launched MIT India in 2010, we were handsomely financed by contracts from Intel, Infosys, Cadence, Autodesk, Tata Motors and IBM, and hardly raised any outside financing until much later, when we were ready to scale. In addition, companies like Cadence and Autodesk donated CAD tools which our engineering students could learn with.
- Our model was simple. We worked directly with major corporations interested in hiring trained engineers. Our customers, thus, were the companies, not the students or parents.
- To the youth of India, however, we brought a different value proposition. We carefully recruited a set of high potential students with High School Education only, but who
- were not going onto great colleges or universities.
- These students, upon acceptance into the MIT India program,were already guaranteed a job at the sponsor company for which we were training them. They participated in a rigorous curriculum focused on the engineering discipline of the sponsor’s choice. For example, Tata Motors, had us train Mechanical Engineers, while Intel had us train chip designers. We had 6 centers in our first year of 500 students each,aligned with one of our sponsors.
- They were geographically dispersed, and most certainly not in Bangalore, which wasalready bursting in its seams. IBM’s center was in Kolkata,Tata Motors’ was in Thane, Cadence and Autodesk were in Kanpur, Infosys in Indore, and Intel in Kharagpur.
- We solved the faculty issue by recruiting a group of talented engineers who were passionate about teaching,and offered them market salary that they would normally get working for MNCs. And our faculty followed MIT syllabus,OCW content, problem sets, exams, etc. As batches of students finished our 2-year intensive program, we renewed our contracts with the sponsors, recruited new sponsors, and opened up new centers all over India.
- These contracts were extremely lucrative for us, and allowed us to finance great infrastructure, afford and attract faculty, and address the engineering education crisis that India would have otherwise faced, had we tried to work within the government-approved channels.
- We made a few key strategic choices that made it possible for us to build the $6 Billion a year company that we have today with 1200 MIT India centers, each teaching 2 batches of 500 students. Each year, we train a total of 600,000 engineers.
- First, we framed the engineering education problem as a problem of the Corporations who need to recruit talent and asked that they pay for a quality solution. They did.
- Second, we did not allow compensation to be a deterrent for hiring talented faculty. We paid them handsomely, such that they did not feel they were making a career sacrifice by teaching. This enabled those with passion for teaching to choose an academic career.
- Third, we chose to do this under the MIT brand umbrella,gaining instant credibility among the sponsors, the facultyand the students.
- Thoughts lead on to purposes; purposes go forth in action; actions form habits; habits decide character; and character
- fixes our destiny - Tyron Edwards
- Time is like money, the less we have of it to spare the further we make it go - Josh Billings.
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