Entrepreneur Bernard Lunn, co-founder of both IQ Resource and iYogi and a player in the pre-Internet creation of Prestel, has a much narrower view of bootstrapping then most.

Here's an overview of his top 10 bootstrapping tips from Read/Write Web with some comments:


1. Don't self-fund. Bootstrappers get their funds from customer revenues.

2. Don't practice the build then monetize approach. Lunn argues bootstrapping is for selling to business not to consumers so you won't be bootstrapping the next Amazon.com.

3. It's hard to do. (nuff said)

4. Don't be pulled in too many directions but do listen to customer input. (Good advice for both business to business and business to consumer bootstrappers regardless of Point 2)

5. Cash flow is key. (See Guy Kawasaki's article also mentioned by a commenter)

6. Don't bootstrap only to get venture funding. (For another perspective on this check out this comment from VC James Chen, though I'm certain Lunn would disagree.)

7. No bartering or equity traded for services. (And for the counterpoint see the bootstrapper's principle, though definitely not created for software developers)

8. You'll need cash for sales people other than just a pay for success approach.

9. Bootstrapping is not the same as building a prototype to get funding. (Though Matt Rogers of Aroxo would argue for the importance of prototyping in some ventures)

10. Credit cards can be useful as cash flow gaps. (There are completely opposing views on this. Read here and here)

Comments included some dissent:

Mathew Johnson points out:

...there are many examples of very successful, bootstrapped consumer internet businesses, like your fatwallets, and your plentyoffishes, and your shoemoneys - most of these just take a longer time to ramp.

While Jonathan Joseph observes:

With all due respect, I'd disagree completely with most if not all of your points.

1) How do you bootstrap a company that already has revenue? Companies that have paying customers either need an institutional round or nothing. Aren't we talking about consumer internet stuff where there it's free and there are no customers?

2) There are numerous examples currently and many more emerging at a furious pace.

3/4) Ok, entrepreneurship isn't easy.

5) Cashflow? I'm lost as to how cashflow applies to a discussion about bootstrapping. If you are bootstrapping there shouldn't be much if any cash coming in.

6) Current revenues don't impact valuation? Really? Not in any discussion I've ever been involved in. I don't understand why you shouldn't raise VC. Sometimes you should and other times you shouldn't. What if you bootstrapped but will need additional capital to grow the business to the point where you can sell it?

7) Don't trade equity for services? That's a generalization that isn't true in many cases. Trading equity can be a very effective substitute for cash when you are bootstrapping in the right situations.

I must admit, I think Lunn's philosophy is great for the demographic of business to business software companies out there, but hardly inclusive of all bootstrapping. What do you think?