Slam dunk strategies for bootstrapping

Anders Heie is a veteran of the tech world, having worked at mega firms like Nokia (NYSE: NOK).  He even has several patents to his name.

Over the past couple years, he has put together a new software company, called KaDonk.  However, he has forgone the venture capital route.

As a result, he’s had to get creative with spending.

What are some of his strategies for bootstrapping?

According to him:

“For Kadonk, we wanted to find out if we could develop LiveProject to a ‘tipping point’ where it could grow business organically and spread virally. At the tippingpoint, income from sales would be used to further spread things, without additional investments from the founders.
 
“To get to that point, we needed to bootstrap the company using our own resources and time. For example, we found a law firm that was willing to help us out on a line of credit, to be paid back once we became profitable or raised more than $1 million. This allowed us to get incorporated, and work out several legal kinks in the startup process.
 
“We then pooled the founders’ money to handle day-to-day expenses. For a small software company, expenses are surprisingly small. We needed some computers, hosted servers, phones, etc. The real investment comes from hours worked.
 
“Two of the founders decided to quit their full-time jobs, and take half-time contracting positions. This freed up 2 full days per week for KaDonk, plus the implicit evenings, weekends, and nights. For about 2 years, our average workweek has been around 80-90 hours. As an investment, this is roughly equal to $300,000 or so.
 
“For sales, we decided early on to mostly sell online. This works great for smaller businesses, but does not adequately address Enterprises.
 
“Then, early in 2007, we had a brilliant idea: Hire a sales representative in India. Not only are wages more favorable there, but all the major companies around the world are represented in India. Again, pooling our own money, we opened up a position in India, and in September of 07 we hired a great guy. We have the luxury of having many Indian contacts, so the process was relatively simple.

“Selling LiveProject online without a sales rep means it we had to make the product extremely easy to use and install. We decided to use Microsoft Click-Once technology. This not only allows for an almost seamless installation process, it also gives us the ability to upgrade (push) new releases to customers. For customers that prefer zip files (there are always some), an alternative method for installation is also offered.
 
“Finally, to kick-start a viral marketing campaign, we needed something that adds value to a business. Offering LiveProject as a free project viewer was an obvious choice, as our main focus for LiveProject really is collaboration. A free viewer allows customers to get acquainted with the application, while seeing that there are options for ‘more’ features. It’s a back-door into companies, as many employees will download and run it just to try it out.
 
“Mostly for our own sake, we also build support for Bugzilla into LiveProject. Our original thought (and it’s still very much alive), was to add more and more types of viewers and collaboration features. Our bugzilla viewer has turned into a popular download for the open source community, and many of our website visitors are referred from the Mozilla pages were we are listed.
 
“So far we have sold licenses to companies located in the US, Europe, North and South America, and Asia. As sales pick up, we plan to use the revenue to further ramp up our offshore sales approach, and to add people to engineering.”