I went to a pretty interesting talk yesterday at the Houston Technology Center where Bijoy Goswami was speaking. It was a great chance to network with a bunch of other entrepreneurs.

One of the biggest take aways I got from the talk was when he outlined the 3 basic types of startups that you can do:

1. The Cookie Cutter
   This is a startup where the business model is tried and true. It has been done a million times and is usually lower risk and lower reward. Think franchises like Subway or real estate investing. You may even be able to get funding for something like this from a bank.
2. The Funded Model
   This is where you are trying to something no one has done before. It’s big. Think Twitter. It has a low chance of success but if it does, man you are going to rake in the cash. Typically you’d seek funding from a VC or angel investor for an idea like this.
3. The Bootstrap
   This is where you aren’t seeking any funding. You are just putting your ideas out there as soon as possible and letting early users start to give you feedback. Obviously this is very low risk and works well with web based businesses which require little capital.

The idea of getting funding has a negative connotation for me personally. If you fail, you could wind up in a lot of debt/bankruptcy or with some venture capitalists/angel investors taking your company away from you. Think it can’t happen? Ask Steve Jobs at Apple.

So of course I’m a big fan of the bootstrap, as Bijoy was. Most of my ideas don’t work so I like to test out lots of them quickly with low risk.

One other nugget of wisdom I remember from the talk: He said getting funding can be the death of a company. It’s like adding gasoline to your rocket ship. If it’s pointed in the right direction (i.e. you’ve got your business model right) then it can be great but otherwise it’s just going to take you in the WRONG direction faster.

Bootstrapping is all about testing and refining your business model constantly. You’ll know when you’ve got it right because your customers will start PAYING you. It doesn’t matter if they SAY they like it, wait until they actually “vote with their dollars”. It pays to get this right before seeking any funding.

South By Southwest Conference Pre-Party

South by Southwest interactive is a huge entrepreneurship conference in Austin that I’m considering going to, and they threw an awesome pre-party in Houston a few days ago to generate some buzz. They also do music and film at this conference, but it’s huge for tech as well – or ‘interactive’ as they call it.

This was a great opportunity to network again. One person I ran into (for the second or third time) was Carl Walker, who is president of the Houston Angel Network. The Houston Angel Network is the largest network of angel investors in Texas. Basically they are a bunch of old rich guys who have made their money and now enjoy investing in startups.

I’m not looking for any investors at the moment but Carl seemed like he might be a good mentor for me because he has a lot of experience. Plus, as part of the angel network he gets to see a TON of business plans. I wanted to get his feedback on my UniversityTutor.com site, so we set up coffee for next week. Hopefully it will be refreshing for him to know I’m not trying to pitch him or get any investments, so we can just relax and talk business.

Final thoughts…

Get yourself around like-minded people and other entrepreneurs! It will do wonders to your motivation. I’ve been really surprised with the number of entrepreneurial organizations I’ve discovered in just the last week.

Entrepreneurship is hard. You’ll probably give up or lose interest at some point unless you have the right support group around you. Look for business or marketing classes at your local universities. Visit SBA and SCORE events. Go to South by Southwest. Look for groups on MeetUp.com. Get on emails lists. Try to setup a regular meeting once a week or month with some other entrepreneurs. And get some good mentors – people who have ALREADY done what you’re trying to accomplish.

Until next time, keep breaking free!
Brian Armstrong