The Bootstrapping problem.

Why a bootstrapping founder is everyone’s bitch.

7 min readNov 1, 2013

So I’ve been proudly bootstrapping Sourceasy for close to 7 months now. It’s been a fun ride, and I am enjoying it for the most part.

However, as in any operationally intensive business, I face issues from time to time. While most of these relate to Operations / Execution, a lot of issues stem from being a small company, especially in India, working for a globally underserved market, using a business model that has been shunned before.

Maybe, before I continue my rant, I should explain what Sourceasy is trying to do:

<pitch> Sourceasy is an end to end solution for private label manufacturing, sourcing, logistics, distribution and fulfillment. We currently produce apparel. </pitch>

So what we essentially offer overseas customers like private label eCommerce brands, small merchants, Corporate Uniform buyers,and designers is the ability to source and produce small qtys of apparel in South Asia without the overhead or the minimum order barriers of the big boys at a substantially lower price.

While in theory all this is AWESOME, and while we do have the team to pull this off, plotting our growth and streamlining our operations *purely* has been difficult, to put it mildly.

The financing problem:

In any kind of sourcing / contract manufacturing, the key is cashflow. We don’t do unprofitable deals / loss leaders. We make a profit on each and every deal we do — right from 50 units of a Corporate Tee to 50,000 units of Ladies Dresses. Ofcourse the percentages would vary significantly from sector and client pool, qty and value of order.

Thanks to my past life, my credit history is abysmal. I couldnt get credit / loans even if I wanted to. Of course, given all the pain I’ve been through, I wouldn’t want to borrow from a bank in any case. But, even here, we get through with some innovative solutions —

We ask customers put up deposits
We try and split the shipment into part shipments to facilitate cashflow
We work as a distributed team to save on office expenses
We save on travel expenses by working with Agents in manufacturing locations
We’re moving towards a model of finding ready / stock fabrics we can sell our customers.

However, even with all these solutions,It’s an uphill task to maintain the momentum, while juggling financial survival. At the moment, since we’re not in a position to create any kind of surplus / excess in the bank, we live from week to week in terms of payroll, etc. While Sourceasy gives us enough bandwidth to fulfil existing businesses, and running expenses, but is not generating enough of a surplus.

The relevancy problem:

Because we’re a small, bootstrapped company based out of India, we have to fight to command respect, pro activeness and timely coordination.

Even with an extensively vetted network of clients, vendors, agents, and sourcing / sales partners across the Globe, it’s still extremely tough to run productions across the world while fighting deeply entrenched mindsets.

“When what you know is something that will shake up the world, people would rather disbelieve you than embrace you.”

While the solution we offer customers is a desperately needed one, vendors, factories, and suppliers are still steeped in the traditional mindset. That is part of the reason why I don’t hire anyone with apparel experience in our core team. They’d corrupt the culture with their “experience”.

So while I’m selling my customers to work with us, an equally long and arduous task is of selling my vendors / partners to take us seriously.

It’s not easy to be sitting in an AirBnB, in a foreign country, waiting for a partner who works full-time for a company, and who has gracefully “accepted” to work with you on the side, to bring in samples that your buyer has been waiting for over 6 weeks. While factories and offices close for Festivals, you and you alone are hoping against hope that because its not a festival in this country, that things will work faster, better, and at the price that you can accept, because otherwise you’re losing money.

It’s not easy to walk into a factory, and when asked about how much volume your manufacturing program will offer, to look him in the eye and say, “We’ll be doing 180,000 units a month in 6 months from now.” while trying to distract attention from the fact that you want him to make 1200 units in a custom design, and that the samples they’re making are what will determine your relationship with them.

Its not easy to speak to agents, who are dependent on you to supply goods after they've sold customers, and tell them that goods are getting delayed despite having agreed on all terms and receiving deposits from their customers, because you are still trying to work with a factory who does not understand why it should break it’s rules to accommodate you.

The social problem:

Another huge problem, especially in India with bootstrapping your startup is when friends, family and relatives start losing faith in you.

Recently I borrowed $12,000 from a couple of friends, and was unable to return the money on time.

Despite assuring them of an interest component to be added to the loan principal, and assuring that I will repay soon, it’s extremely illuminating how their body language, their communication and their attitude towards you, and your company changes once they have a financial involvement and feel you cannot repay it anymore because you’re in a drowning business.

As a borrower, I have a strong fiduciary responsibility towards my customers, and my creditors. But as a bootstrapped founder, you quickly realize that good intentions count for next to nothing when dealing with impatient creditors.

Parents, Family and relatives, beyond a point in a startup’s struggles start giving up on you, as a person. In India, it’s not cool to be a struggling founder.

There’s a particular social stigma attached to 20 or 30-something guys who are classified as the “breadwinners” who currently either live off savings or their wives while they grow their startups.

At that point, the key is to sit and analyse why *exactly* this startup is so important to you. And why doing it supersedes all those emotional, personal and professional ties that you have built up so assiduously over the years.

The hiring challenge:

While I am keenly aware that Talent is scarce, and that beggars should not be choosers, I’m building out the Sourceasy Core Team and Some Guidelines I follow are:

“No Hired Guns in the Core Team”
I talk with the prospect for close to 3-5 weeks on a weekly basis before I hire them.
I ensure we work part time for 2-4 weeks before we can bring them on full time.
I try to make sure they aren’t over optimising by offering neither salary nor equity in the lead-in period prior to making them full time.
I promise them absolutely nothing as far as funding, growth, ESOP liquidation, or any other kind of “Startup” buzz that they might want to latch on to.
I make sure they work from home for the first few weeks so we can gauge their self preparedness, their discipline and their commitment to completing tasks given.
I do not impose ANY work timings on them. Just project goals.
I make sure from Day ONE, that they know who sets the direction in the Company and what our vision is. While questioning the roadmap and the way to get there is fine, it might not be fine to keep questioning the Vision which is the overarching aim of the Company.
I should be able to go out and have a beer / coffee with them and discuss non-work stuff.

Luckily, I’ve been blessed so far, that most of our hires have been inbound either through referrals or through Angellist (directly or indirectly).

Kunal Bahl in an interview, recently said this about the team at Snapdeal:

“We did a poll among our employees and interestingly, 65% of our people come from small towns. Almost all of them have a relative who runs a small business and they’re aware of the challenges they go through. These people have come and stayed with us because of mission that Snapdeal is trying fulfill. When your company has got this clear, then you will attract the right kind of people.”

Most times, in India, people have some sort of a link with business. Either their Dad or Mom or Uncle or Cousin has started a business at some point, and has either succeeded or failed. I have seen that those candidates are more entrepreneurial, self-starting and ‘get’ Sourceasy.

(p.s. Not to say that I dont like or work with non-businessy people. My CTO / Co-Founder is from a non-business background)

So at the end of it all, with all the pain, all the cajoling, all the begging and all the frustration…

Those who can stick to their vision, not compromise on their values, fight suspicion & disbelief & anger with sensitivity, learn to absorb all kinds of insults without feeling personally slighted, and can grit their teeth and move forward, and be OK with being Everyone’s Bitch? They will win.