Disrupt Yourself, With a New Introduction by Whitney Johnson

Author:Whitney Johnson [Whitney Johnson]
Language: eng
Format: epub
Publisher: Harvard Business Review Press
Published: 2019-11-11T16:00:00+00:00

Money

One common constraint is money. And that’s a good thing. The lack of money makes business owners impatient for profits, and makes individuals hungry for discernible progress. Real estate entrepreneur Nick Jekogian shares, “When I started my business, money was the biggest constraint. I found ways to turn that into an advantage, and ten phenomenal years ensued. When easy money came into the picture in 2007, because I stopped focusing on innovation, substantial problems with our business model ensued, and we experienced significant losses during the downturn.”

In 2007, Entrepreneur magazine compiled a list of the five hundred fastest-growing companies in the United States.9 I was intrigued by the various ways these companies had funded their growth, rather than taking outside cash. Only 28 percent had access to bank loans/lines of credit, 18 percent were funded by private investors, and 3.5 percent received funding from VCs: as many as 72 percent of these successful businesses were pulling themselves up by their bootstraps. I believe these companies were successful not in spite of, but because of, their constraints.

A prototype for bootstrapping is Pluralsight, an online training library for developers and information technology professionals. In 2004, Aaron Skonnard and three software developer colleagues launched Pluralsight on a shoestring budget of $20,000. Growth needed to be funded through cash flow, so they were highly incentivized to get the business model right. By 2007, they had grown the company to $2.5 million in revenue. After they pivoted from classroom to online training in 2008 and demand exploded, Pluralsight finally took in outside money in 2012, raising $27.5 million to fund future growth. In 2014, they generated revenue of $60+ million, and CEO Skonnard was recognized as an Ernst & Young Entrepreneur of the Year.

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