Reality of Bootstrapping

sasha uritsky

Aug 17, 2015

Going after investors? Do you know that less than 1 percent of startups actually raise VC (or angel) capital, which means that the vast majority are self-funded. Yet the main reason for it simply lies in the inability of most companies to find investors.

Bootstrapping, however, has several strategic advantages for your company's future growth. Perhaps the biggest is retaining the majority of shares and control over the strategy and direction your company is moving towards.

It also teaches financial discipline. Bootstrapping at the start helps to understand the importance of revenue and cash flow, as opposed to unabridged product development, and keeps you connected to your company's financial reality. Only when profitability increase do you then green-light new opportunities, increased risk-taking, and growth acceleration.

In reality, the founders are expected to be flexible. While entrepreneurs have certain intentions and philosophies when they are starting out, a hallmark trait for successful founders is the ability to adapt to changing environments and opportunities.

Sometimes, that means waiting a long time to generate the financial metrics that really matter, revenue and profit. By challenging your leadership team to focus on building the business organically and figuring out how to make the company consistently profitable on a model that can scale without VC capital, you make your company more valuable to future investors.

Interested in reading more? Check out our other blogs:

Lessons for Businesses from Brazil’s World Cup Disaster

1. Mental, or psychological, state of your team is important: you can put so much pressure on people before they crack. Brazil players didn’t become unqualified professionals overnight. They failed because they were overwhelmed by their country’s expectations, distorted sense of history, and the right to win considered divine. They were too emotionally charged, not in the proper state of mind to compete. So better keep calm, relaxed atmosphere in your team even before launch, or important deadline.

2. Manage customer expectations. Brazil were ramping them up unreasonably. Aggressive messages like the 6^th[title] is coming, statements by their coach about two more steps to heaven massively backfired by creating an unhealthy emotional frenzy in the society, which in return influenced the players (see 1.)

3. Logic, organization is the key to successful execution. Germany are not a great team. But they are very well organized. They had a detailed game-plan where every team member knew his task and several different scenarios where prepared. They were able to adjust when the situation on the field changed to squeeze maximum advantage. Sounds simple? That’s because it is.

Towards smarter data - accuracy and precision

There is a huge amount of information out there. And it is growing. To make it efficient and increase our competitive advantage we need to evolve and start using information in a smart way, by concentrating on data that drives business value because it is accurate, actionable, and agile. Accuracy is an important measure that determines the quality of data processing solutions.

How accuracy is calculated?

It is easy to do with structured data, because the requirements are formalizable. It is less obvious with unstructured data, e.g. a stream of social feeds, or any data set that involves natural language. Indeed, the sentences of natural language are subject to multiple interpretations, and therefore allow a degree of subjectivity. For example, should a sentence ‘I haven’t been on a sea cruise for a long time’ be qualified for a data set of people interested in going on a cruise? Both answers, yes and no, seem valid.

In these cases an argument was put forward endorsing a consensus approach which polls data providers is the best way to judge data accuracy. This approach essentially claims that attributes with the highest consensus across data providers is the most accurate.

At nmodes we deal with unstructured data all the time because we process natural language messages, primarily from social networks. We do not favor this simplistic approach, as it is considered biased, inviting people to make assumptions based on what they already believe to be true, and making no distinction between precision and accuracy. Obviously the difference is that precision measures what you got right, and accuracy measures both what you got right and what you got wrong. Accuracy is a more inclusive and therefore more valuable characteristic.

Our approach is

a) to validate data against third party independent sources (typically of academic origin) that contain trusted sets and reliable demography. Validating nmodes data against third party sources allows us to verify that our data achieves the greatest possible balance of scale and accuracy.

b) to enrich upon the existing test sets by purposefully including examples ambiguous in meaning and intent, and providing additional levels of categorization to cover these examples.

Accuracy is becoming important when businesses move from rudimentary data use, typical of the first Big Data years, to a more measured and careful approach of today. Understanding how it is calculated and the value it brings helps in achieving long-term sustainability and success.