Why Startups Should Not Be Rich In The First Year
VietStartup x The Family: Bootstrapping — Titbits & takeaways from a great evening
A few weeks ago, the Vietnamese doers in London continued their journey at TheFamily’s cosy office in Southwark.
The Family
For context, what is The Family? To quote Oussama, one of its three founders:
“ …we aren’t an incubator, we aren’t an accelerator. We’re creating a new space in the system, as a long-term, strategic and minority shareholder. We’re trying to bring as much added value and support as possible to our portfolio of startups, staying with them and helping them as they grow. The end result of that is that, unlike most of the rest of the ecosystem, we’re not obsessed only with the beginning of startups.”
Acknowledging the differences of the European ecosystem, The Family set out to create a mini-ecosystem to nurture those within it. Dig a little deeper, The Family’s vision revolves around three pillars:
- Education — The Family aims to equip their entrepreneurs with a mindset, drive and knowledge base to aim for the moon. This is firstly achieved through the amazing content on their landing page (I assure you that it will be well worth your time!); then through various talks, videos and the Office Hours with their Partners
- Unfair Advantages — The Family is constantly improving their infrastructure to provide their entrepreneurs with a system of unfair advantages which includes exclusive deals, access to successful founders, thought-leaders, tier-one VC firms, and a data-driven support framework (more on this later)
- Capital — Apart from investing their own money into startups and taking a common stock approach, The Family connects its startups with credible business angels & VC networks
Underlying these three pillars, The Family is a strong proponent of paying it forward, thus is why we are here! Via two VietStartup’s members, Minh & Canh, The Family invited our small community over to speak about a topic which interests many of our members — Bootstrapping.
When you are poor, your scarce resource is time
Let’s start with a definition:
Bootstrapping is a way to build and grow the company with very little or virtually nothing, relying on personal means and revenues rather than outside funding.
Our awesome speaker, Virgile Goyet, started off with a reference to Microsoft’s origin (the well-known garage story) and pointed to the fact that Bill Gates’ father was one of the most reputable lawyers in the state of Washington. The point here was not to take away any of Bill’s brilliance but rather to suggest that there were certain constraints which Bill did not have to work under.
When you bootstrap, you are forced to get good fast.
There are a number of reasons why bootstrapping might be beneficial for startups. Working with limited (financial) resources pushes founders to put on their extra gears, get creative and identify uncommon approaches to finding solutions. In addition, the talent who joins a startup during the poor time is more likely to be more committed and willing to bet on its vision. Last but not least, it helps declutter the founders’ priorities by taking away the involvement of external investors.
An example drawn out by Virgile was the famous smoothie startup, Innocent. Although its founders failed time after time to raise funds at the early stages, that financial constraint pushed them to really optimise everything from products to supply chains.
Another prime case study was Mailchimp which focused on fine tuning their products within a low-key, low-volume B2B business model for 8 years before rolling out to the consumer market.
On the other spectrum, Nasty Gal, which began as an eBay store specialising in vintage clothes, was killed due to too much fundraising and overgrowth.
We were then introduced to a very interesting concept — the banker’s syndrome. The idea is that bankers who transition into entrepreneurship usually are very fundraising-driven. Having easy access to capital through their networks, they would often concentrate and rely too much on presentations, business plans, getting the figures to the cents, whilst overlook the effort to build their products and find their clients.
This is only a generalisation and by no means an attack to the City workers — however, in this context, it does emphasise the importance of having a ‘do’ mindset. Younès from The Family has a fascinating article on this topic.
Being constrained also allows startups to fail fast and identify vanity hire, features, projects etc. When you have an abundance of money, the ‘red’ signals are diminished.
In the Q&A, we got a lot of interesting insights not just from Virgile but also from Naim, The Family’s Director of Finance, here are a few:
- By nurturing their startups in their unique ecosystem and infrastructure, The Family can take a data-driven approach (decision tree as one example) to guide & support their founders
- In their portfolio, the time to achieve product market fit is getting shorter
- Although looking at pitch decks and templates are helpful, having heard thousands of them, VCs appreciate and prefer ones which take a different approach
- The Family’s website is designed to steer people away — so you have partly passed one of their tests if you manage to stay until the end!
Great talk, lovely company and wonderful Che!
All in all, it was truly inspiring to meet the amazing people of The Family, witness their pay-it-forward mentality and hear about their unique ethos.
We also had the opportunity to taste the products of a Viet bootstrapper, Che Desserts by Thao Kin, as well as the awesome summer rolls from Viet Eat (thanks to An Le)!
Speaking of food, VietStartup’s next event will be dedicated to the budding F&B businesses in London — keep an eye out.
Also, we will also have write-ups on our recent Jam and the launch of a community project. Summer is coming so get ready to be excited!!
