Microbiz Book Review: ‘Bootstrapping: Weapon Of Mass Reconstruction’

Posted on | June 19, 2009 | 2 Comments

Bootstrapping: Weapon Of Mass Reconstruction
Sramana Mitra (self-published)
ISBN 978-1-4392-3451-8, $16.95

The first thing I want to tell you about this book is this: Bootstrapping is not a microbusiness book.

You would think it would be, from the title, but it’s not. As a matter of fact, while Ms. Mitra spends time in this book defending those of us who build and operate microbusinesses (except that she doesn’t call us that), her focus is on the more typical “entrepreneur”: founder of high growth company that makes millions of dollars in revenues and eventually gets sold for buckets of money.

She tips her hand early on, in the Introduction:

As true small businesses — in the eyes of venture capitalists, even a $5 or $25 million business is considered a small business — they do not really fit the framework of professional venture capital. That does not, however, mean these businesses are not worth building. In fact, a $12-million-a-year company fully owned by the entrepreneur is a wonderful situation. Full control. Loads of cash. And true independence. Heck, even a $300,000-a-year business has many of those same attributes, and is more than worthwhile. (emphasis added)

The fact that Mitra even found it necessary to say this is telling, in my opinion. And there’s more of this sort of thing, indicating that she floats around in a different universe from the typical microbusiness owner.

I remain resolute that if entrepreneurs the world over learn to build sustainable small businesses without requiring large amounts of outside financing, the global economy will run without a hitch.

A very nice sentiment but someone really ought to tell her that most of the world’s sustainable small businesses are built without requiring large amounts of outside funding.

For the record, we define bootstrapping as the practice of starting and growing a business without traditional debt or equity financing. The business is started with personal funds invested by the owner — sometimes borrowed from family and friends, sometimes coming directly and solely from the personal savings of the owner, sometimes built on credit card or home equity loans or other forms of consumer credit — and it built slowly by reinvesting earned capital from … um … ’selling everything.’

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Bootstrapping: Weapon of Mass Reconstruction is a collection of interviews with the entrepreneurial founders of thirteen high growth or multi-million dollar a year companies who built their businesses without tapping into the standard VC or even angel funding dance touted as a necessary part of getting a startup started up.

Thus, the entrepreneurs Mitra interviews for this book bootstrapped their businesses but not in any way that would be recognizable to the average microbusiness owner.

The very first one included in the book is Greg Gianforte, who sold his first business for $10 million and then, some years later, “bootstrapped” his second software company by launching it with $50,000 of his own money because, essentially, he got bored with early retirement.

Unlike Gianforte, however, most of us don’t have a spare $50,000 lying around. I don’t know about you but I find it hard to relate to that sort of thing.

Later in the book, she tells the story of Ramu Yalamanchi, founder of hi5 (the international online community, a la Facebook and MySpace but less U.S.-centric). She notes that the company grew to more than 80 million registered users, “all funded by a paltry $250,000 from genuine friends and family.”

Of course, this is not what most of us are talking about when we talk about ‘bootstrapping’. Research from the SBA Office of Advocacy found that startup costs for small businesses average about $6,000. For most of us, there is nothing paltry about a quarter of a million dollars.

So, the bottom line here is that this book is not really about bootstrapping, as that art is practiced by the average microbusiness owner. And, in spite of the title of the book, you will not learn how to bootstrap, or bootstrapping best practices, if you read it.

That said, the book is not a complete wash.

In spite of the narrowness of Mitra’s universe — and her occasional statements in defense of small businesses, lifestyle businesses, family businesses, etc., don’t quite mask that narrowness — and the way in which it is dated by being laced with the 2008 presidential election, the stories of the entrepreneurs revealed in these interviews can be valuable to microbusiness owners.

For one thing, they might prove inspiring if you happen to be one of those folks who is inspired by success stories. In addition, if one of these entrepreneurs operates in your industry sector or is similar to you in some other way, you may find that their tactics will work for you in some fashion or another.

All of which reduces to this: if you don’t come to this book with any expectation of it being uniquely helpful to you as a microbusiness owner, then you are likely to find it an engrossing and educational read.

That is particularly true if you are also a Republican.

For the rest of it, perhaps it would do Ms. Mitra quite a lot of good to sit down and have a nice long conversation with Tim Berry. He could probably tell her a thing or two about bootstrapping for the rest of us.

Have a great weekend, folks!

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