From Shanghai to Silicon Valley: 3 Tips for Turning Lack of Resources into Strength

63 Comments

oscar_pistorius.jpg
The amazing Olympic hopeful Oscar Pistorius.

Alibaba.com, which pairs non-Chinese companies with Chinese suppliers, rode its IPO to a $26-billion valuation. Its founder, Jack Ma, explains his secret for success:

There were three reasons why we survived. We had no money, we had no technology, and we had no plan. Every dollar, we used very carefully.

Read that one again.

Excuses not to jump into the unknown are a dime a dozen. In the case of entrepreneurship, the “I don’t have” list — I don’t have funding, I don’t connections, etc. — is a popular write-off for inaction.

Little do most people know how often lack of resources is the ingredient that creates great companies.

It forces you to be clever, to dissect problems instead of throwing cash at them, and to innovate instead of imitating better-funded competitors.

The Florida-based PR agency Crispin Porter + Bogusky is a great example of this, as are a few little enterprises you might recognize — Microsoft and Nike come to mind — that started with less than $10,000 in funding.

There is often an inverse relationship between the amount of funding and the ultimate success of companies.

More than a few Silicon Valley angels and entrepreneurs have embraced this concept. In “VC’s New Math: Does Less = More?” from the Wall Street Journal, Peter Thiel of PayPal fame, who has invested in ventures ranging from Facebook (join the 4HWW group here, 433 people strong) to the film Thank You for Smoking, exemplifies the new breed:

His company also reflects how a new type of venture capitalist is emerging, as start-up costs for Internet companies decline sharply. Many start-ups now need a bankroll of no more than a few hundred thousand dollars to get rolling, compared with the millions of dollars required a few years ago.

Keep in mind that the hundreds of thousands still refers to funding, which can now be secured with a good idea and a little testing with rentable Amazon infrastructure that costs in the hundreds (not thousands).

How to re-evaluate your “weaknesses”?

1. Write down the positives of whatever you’ve been viewing as a negative. Don’t know anyone? You’ll be a fresh face and won’t have any strikes against you. No funding? It will force you to find the neglected options and set trends instead of following them.

I focused on blogs for The 4-Hour Workweek launch because I essentially had no other options. If I’d had a huge budget and free reign over the publisher, I can almost guarantee I would have succumbed to outside peer pressure and put the bulk into print or ineffectual PR firms. Hunger and desperation can be good things.

2. Consider the negatives of the opposites. What if you had too much funding? It would create a false sense of security and breed complacency, both of which are more fatal to a start-up than bootstrapping. It could also overexpose you before your product or service is ready. It could give investors too much influence over big decisions. Don’t assume more of something is 100% positive. It never is.

3. Look for dark horse role models.
“I can’t start a company — I’m too old.” Coronel Sanders started KFC after 40. The excuse doesn’t hold up. Can’t compete in sports because of a bum leg? Sprinter Oscar Pistorius has no lower legs and is aiming for the Olympics. You? For each reason for inaction you come up with, ask: has anyone overcome these or worse circumstances to do what I want to do? The answer is: of course.

Embrace your lack of resources, your weaknesses.

Far from a handicap, these are often the pressure points that will take you the furthest… if you’re able to use them instead of excuse them.

###

Odds or Ends:

Just a quick note to Om Malik — get well, my good man. Dear readers, send your good vibes his way, as he just recently had a heart attack and can use the moral support.

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Posted on: January 6, 2008.

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63 comments on “From Shanghai to Silicon Valley: 3 Tips for Turning Lack of Resources into Strength

  1. Being resource starved is a recipe for success:
    - you ask resourceful questions to get your brain in gear (rather than ask your brain why you can’t — you ask your brain how you can … or what if you could …)
    - you turn pressure into results (fight-or-flight is a powerful source of energy, if you focus it)
    - you avoid the complacency trap (a pitfall for mature businesses)
    - there’s no place to go but up
    - going up builds momentum

    One of the lessons I learned was how to build software faster through resource starvation.
    We had tight time budgets and constraints. By splitting the R&D work up into user experience, tech feasibility and business value, we found a better way to rapidly prototype the user experience. By focusing on the user experience first, we churned less on tech feasibility, and business value followed.

    http://blogs.msdn.com/jmeier/archive/2006/12/06/user-experience-tech-feasibility-and-business-value.aspx

    Like

  2. When I had less traffic as my blog started up, I was forced to contact bloggers for link exchanges, article pushes, and sought out with vigor more useful content. Success can tend to breed inaction if we aren’t careful!

    Like

  3. I started my company with a computer and 600 between me and my business partner. The challenge of having to seek alternative marketing methods and keeping everything running led us to be a very frugal company and because of it our budgets to this day are very low and profits are always improving.

    Big money to create big business is a dying art. I love that we had nothing to start with, took nothing from others, and did good in the world (and still are). Simple living is the way to go in business.

    Like

  4. I run a church leadership blog and one of the biggest reasons for not doing things better as a church is “lack of funding.” I’ve always agreed with what you said in this post, just never had the balls to say it.

    Tim, you’ve given me balls. Tomorrow, I’m going to adapt this concept for my audience. Thanks and I’ll make sure to give you credit. Just don’t forget to comment!

    Like

  5. As a fellow boot-strapped start-up I can relate. At times it’d be nice to way a magic wand and have millions in funding but at other times I’m glad we’re exactly where we are. Read 37Signals book Getting Real for some additional background on the theory of forced constraints and why it can be so helpful to an early stage venture.

    Like

  6. I am in complete agreement that the lack of resources requires that you bring a lot of creativity to the table. I think this extra creativity and additional patience that you’ll need to really succeed are the factors for success (at least for first timers).

    Now that you’ve got some experience running a company(ies) would you opt for the low cost/low funding approach? or would you take the funding to get the company up and running quicker?

    Like

  7. Great article, Tim. Have you ever read Paul Graham’s essay “The Future Of Web Startups”? He talks a lot about how the barriers of entry to starting a company are lower today than they have ever been in the history of the world, and what implications that has for tech entrepreneurs and the tech industry itself. An excellent read, even for those of us on low-information diets.

    Like

  8. I come from the theatre world, which is perennially underfunded. One of the best actor training programs in the country is at the University of Utah (my school), where they don’t have any money, so they just focus on teaching people really good acting fundamentals. It works out.

    Limitations breed creativity.

    Like

  9. Success stories from people who used massive resources are usually boring anyway. It’s much more fun to root for the underdogs who had to leverage everything in order to stand a chance. And learning from those people gives us things we can actually use.

    Like

  10. Thanks for the encouraging post, it’s always hard to think about starting your own business, but if no one ever did we wouldn’t have such great companies out there! Now it’s just a matter of getting some gonads of my own and going out there and doing it… my question? What do I do with my husband who just wants me to have a 9-5 job more than anything in the world?

    Like

  11. “We had no money, we had no technology, and we had no plan. Every dollar, we used very carefully.”

    Obviously, they had a goal : to make money. And that’s the more important thing.

    Like

  12. When your back is to the wall you will be amazed at what you can accomplish. When you don’t have the funds to start a business it can cause you to really get creative.

    I am running an affiliate marketing experiement that is costing me about $4 a month to try. What the experiement is costing me mostly is time. I have no cash, but I do have some time so I am making use of the resources that I do have. Once I make some real dollars at this venture I can move on a try a few other ideas with the money earned.

    Like

  13. I whole-heartedly agree. And it does not just apply to business but any aspect of life. As the old saying goes, necessity is the mother of invention. I always try to ask “how can it be done?” rather than “can it be done?”. The latter has built in doubt, the first step to failure.
    Thanks also for that very inspiring story of “Blade Runner”. Too often we limit ourselves by common opinion – I am a woman, I am too small, I don’t have enough money, I am too old, I am not trained properly….If you want to see another couple of inspiring stories about people who just believed they could do it, check out this story about a lady who became a body building champion, who started at age 72 and continues at age 86. Or how Lois Lewis built her cob home (this is very hands-on!) at age 72. The second site is a frame site, so I can’t give the direct link – scroll down about half-way and you’ll see the picture with link. More often than not, there is a work-around for your limitations. It is just a way of working it out. I know.

    Like

  14. Tim,

    Completely off-topic, but could you add “How I manage my calendar events, daily tasks, and large project tasks?” to your “blog entries to write” list?

    I’m currently trying to ween myself from the Blackberry syndrome, but have the memory of a… what was I talking about again?

    Thanks in advance, we really appreciate all the time you take for us.

    Like

  15. It’s a little bit like: “Imagine if you needed to accomplish goal X to save your life. How would you approach it?” Under those conditions most of us could reach almost any goal.

    Changing your perspective can open your eyes.

    Thanks for the inspiration.

    Like

  16. Just a minor correction… which lends further emphasis to your excellent essay. Born in 1890, Harland Sanders was in fact 62 years old when he first “franchised” his recipe to another restaurant owner. He was actually 65 when, in 1955, he incorporated under the name of Kentucky Fried Chicken. It’s amazing what honest belief, dedication and plain, old hard work can can accomplish in the face of any presumed negative.

    Like

  17. We all have what may appear as handicaps, but in reality they are the tools we need to succeed. Many great points Tim! Being in the position we are in, we all have advantages if we choose to look at them as such.

    I did not grow up with a silver spoon in my mouth and I’ve had to find other ways to enjoy life. That creativity has given me the ability to be one of the happiest people I know. Constant attention to tweaking and improving can be accomplished by anyone and everyone if they give themselves the chance.

    Like

  18. i immediately think of “The Matrix”: film one, little money – best of the trilogy. as soon as they had success they were given money and support and then look what happened, two lesser films (in many people’s opinions). Though probably still financially successful, so maybe that spoils my point slightly. *shrug*

    but initially the wachowski brothers had to struggle and rely on their creativity, even making another film first to prove they were worth investing in.

    Anyway, great post – v.inspirational. :)

    Like

  19. Definitely a great article Tim. It has particular relevance to me, as I’ve decided to try starting a muse business of my own while maintaining a shoestring budget of under $100 to get everything rolling.

    I’ve found that with the different business ideas I’ve come up with, the ones that I planned less for are the ones that seem to be more successful. It must be the artificial sense of urgency that comes up as various issues come up that need to be dealt with, versus getting stuck in planning mode trying to think of every potential problematic situation and all the potential contingency plans, creating imaginary limits in the process. In fact, I’ve seen extremes of both ends of the spectrum while doing government consulting, but that’s a ramble for another time…

    Like

  20. I think too many people want to be the next Google, so they spend huge amounts of effort sucking up to VCs. But you really don’t need much money to start a software/web business if your aims are a bit more realistic.

    I ‘bootstrapped’ my software business with just £2000 of savings and it was making a profit within a few months. I just had to use hard work and a bit of creativity to make up for a lack of cash. best of all I get to keep all the profits and don’t have any investors telling me what to do.

    Like

  21. Hi Tim!
    I have been reading your blog on the sly for two months and I have finally decided that yours is a blog i’d like to partake in. I’d love to join your little ‘loungeroom’.
    And so… hello everybody!
    My name is Isabella and I’m from Melbourne, Australia.
    So! Another pinot noir, anybody? Let’s all squish in to create a little more space on the couch.
    big brains…

    ###

    Welcome, Isabella! Plenty of room here :)

    Tim

    Like

  22. Nice Blog,

    It is best in life to just make the effort to gravitate towards your passions and as you come closer to your goals, more resources become available.

    Best

    Jose Castro-Frenzel

    Like

  23. I tend to veer between enthusiastic and skeptical when reading your blog, but this post is *excellent*. As yet another person who started in the “no cash, no experience, no plan” boat and did pretty well out of it, I’m tremendously enthusiastic about this message.

    And even people like me who started out like that need to be reminded of the advantages of cash-strappedness frequently (I’ve forgotten and got my ass kicked on several ventures because of too much rather than too little funding in the plan).

    An uber-pennypinching point – Amazon EC2′s actually arguably rather expensive for a bootstrapped Web startup. Somewhere like Bytemark or Nearly Free Hosting would be – well, will be, actually, in about two months – my choice for a new startup’s web home.

    EC2′s a darn good alternative to a dedicated server, though, when the traffic starts rolling in.

    Like

  24. This stuff is totally unscientific, while limitations may breed creativity, from a scientific and physics perspective – you always need energy and stuff before anything can get done.

    Try building a business if you’re starving in a wartorn country for instnace, environmental resources still matters no matter what anyone here says, whether they be people, or smaller amounts of resources, ideas (i.e. strategies for people networking). You still need resources. Cognitive or otherwise, period.

    Like

  25. [quote]I focused on blogs for The 4-Hour Workweek launch because I essentially had no other options. If I’d had a huge budget…[/quote]

    What happened to huge income you were writing about?

    ###

    Hi MCB,

    I have plenty of disposable income, but I set my budgets. I know people who’ve spent 7 figures on book promo, only to miss the lists. I wasn’t going to be one of them, so I placed constraints on my budget to force smarter, non-discriminate use.

    Hope that helps!

    Tim

    Like

  26. this is one of my favorite posts!

    my marketing guru mentor Dan Kennedy used to tell me… “If you can’t make money without money, you won’t make money with money either.”

    at first it seemed like a catch22, but he meant, if you aren’t creative enough to find a way to bootstrap yourself, you’d just blow it all if someone gave you the funding.

    I’ve bootstrapped all my new ventures not due to lack of funds, but because it FORCES me to be creative. It surprises me the things I can come up with when I just keep pushing.

    Joint ventures, buzz marketing, trade for services, customer financing, vendor financing… all these require zero investment.

    Your buds Andrew Krauss & Stephen Key (and me) teach “forget the patent & prototype, instead, just create your promotion and send it out” not only is this the ultimate way to test market, but when you get the orders, you just got the financing you need to produce your first batch.

    maybe risky, but it wouldn’t be real entrepreneurship if there was no risk!

    thanks Tim for all these unique perspectives on life!

    Like

  27. I have balls of steel – for a girl, that’s pretty interesting. I’ve done plenty of [business] things that others near me (or far from me) wouldn’t do – when I get complacent is I forget about my own successes from those balls of steel.

    Interesting that you use a pic of Oscar Pistorius – I’ve been interested in his efforts since I read a Wired article which dissected how he actually uses his legs in a different way than most runners, which discounts people saying that his prosthetics give him an advantage… I also think about triathletes Rick and Dick Hoyt – father pushes his wheelchair-bound retarded son; not only have they competed in many Ironman competitions, marathons, and hundreds of other races, but the son graduated from college despite being unable to speak or write. They floor me: my role models for trying anything.

    Balls of steel – and the willingness for sociability while working those balls.

    Like

  28. Tim,

    I thought you’d be interested to see that Oscar Pistorius is being disqualified from the Olympics because of the claim that his prosthetic gives him an advantage:

    http://althouse.blogspot.com/2008/01/when-amputee-is-barred-from-olympics.html

    I think Ann Althouse gets it right: “When the amputee is barred from the Olympics because his prosthetic legs give him an advantage… then you know how wonderful technology is. But too bad for Oscar Pistorius.”

    Like

  29. Well done. Another example of how in today’s business world there will always be a reason for failure…but never an excuse for faling to try. We are blessed to live in a time where we can do more sitting in our underwear than the CEO’s of 20 years ago could do with a staff of 1000 and unlimited resources. The face behind many of today’s “Big Business” is just like you and I..

    The most dangerous man is one with nothing to lose and something to proove. The same fire than drives a Thai boxer sleeping on a dirt mat to be a champion is the very same that drives the new entrepreneur to succeed. Lack of resources = an abundance of creativity.

    Like

  30. I am looking for venture capital companies to speak with about raising capital for our company in China that manufactures drill bits for minning. Any recommendations on venture firms to try and contact. Also, we are looking for people who can assist us with helping us expanding our business and I would like to outsource as much as possible so I am not doing everything. I have considered contacting one of the VA firms.

    Like

  31. Thanks for the awesome post Tim.

    Hey I just want to let you know I have been listening to the audiobook of the 4 hour work week. I’m loving every minute. I am professional MMA fighter myself, I have traveled to Thailand and I run a business doing web marketing. I want to apply your pricincipals so I can get more time to sleep and socialize (and travel more).

    Peace

    Chad “the white collar brawler” Klingensmith

    ###

    Thanks, Chad! Good luck with all, and just remember: better trap in training to a heel hook and save your ankle from permanent damage. Second rule: if someone tries to get you in a hard heel hook in training, make sure the instructor knows and can deliver a beat-down :)

    Tim

    Like

  32. Hey Tim

    I just competed in San Jose, Costa Rica. I won my fight via rear naked choke in rd. 1.

    While I was flying from Phoenix to San Jose I read the hard copy of your book “the 4 hour work week”. My goal was to hard copy your principals into my work habits. I always had a nebulous idea of where you were coming from, but then I listened to your audiobook and my dream became tangible!!! Thanks for putting name to what was on the tip of my tongue…

    As for the BJJ heel hook….well i’ve never been caught in one (I’ve been caught in a knee bar at grapplers quest a while ago…learned from that). However I have done it to other people and I yell at them to “tap!!!!”. If they don’t tap it sounds like a carrot snapping….not exactly pleasant sound to hear…especially considering I’m a nice guy.

    Anyway keep up the good work. I look forward to meeting you in person someday while we are sipping martinis. You are the man!!!!

    Send me a private message of your mailing address and I will make sure to send you my new motivational poster (no charge).

    Peace

    ###

    Hi Chad,

    Congratulations! Rear naked is a satisfying finish. That is a great pic, btw — is it you? I’m moving so will have to ping you when I have a wall, but be aware that your “about” and “contact” links aren’t working.

    As far as the carrot snapping bit, it makes me sick just thinking about it. Great description, though, and accurate.

    Train hard and remind me not to give you my heels :)

    Tim

    Chad

    Like

  33. Yep thats my pic (this was taken back in December 2006). Mmasuperman.com is actually still in development right now (one of the reasons about/contact aren’t working). I need to order a batch of posters before this website goes live.

    I just got back from snowmobiling trip in Winter Park, Colorado. All of my buddies are successful business owners. During the ride up there we had several conversations relating to your book.

    Anyway I wish you luck on moving. Let me know where to send the poster.

    Peace

    Chad

    Like

  34. Nice article Tim. I’d definitely agree about #2 in particular. While funding is definitely essential if you absolutely need it, it can come with some significant costs (giving up a large part of your company, need for accelerated timelines, and a focus on short term objectives at the expense of long term ones.)

    Like

  35. This discussion highlights the number one factor that stops people from achieving their aspirations in life – and it’s almost NEVER money or other tangible resources. It’s Lack Of Action.

    A hero of mine once said, “Motion Is Superior To Meditation…” The difficulty with achieving extraordinary goals is that you will Never be able to see more than 2 or 3 steps into the future. That’s why most of us stick to our jobs. We we can see the whole “path” laid out for us – and we spend the next 30 – 40 years hating every step of the way.

    It takes extraordinary bravery to be an entrepreneur. The most important thing you’ll ever know as you start a venture is the fact that you don’t know sh*t. Sure you can plan and strategize, but like Mike Tyson said, “Everyone has a plan until they get punched in the mouth.” Whatever your product, content, or service is, you have to get it out in the market place and allow it to fail as soon as possible so you can improve it, adjust it, refine it, and adapt it to what the market is looking for.

    You may have immediate success and should even strive for it, but immediate success is rare and usually short-lived. You absolutely need the feedback, insight, and ultimately the confidence that comes from taking a few punches to the chin.

    This process is scary and beyond the comfort zone of most. Weakness is temporary but that’s the thing – It is incredibly scary to face it. But the ironic thing is, once we decide that nothing, not even temporary weakness is going to stand in the way of our success, our incredible brain goes to work finding ways to either overcome our weaknesses or, in many cases, turn those weaknesses into advantages or “secret weapons” within the marketplace.

    Like

  36. Hi, Tim. Thanks so much for the go-ahead to turn your tips on converting weaknesses into strengths into an article for my goal-setting blog.

    Just thought you would appreciate knowing that it’s now gone live. The tips are attributed to you and will be really useful for readers.

    Many thanks for your support.

    Mervin (United Kingdom)

    Like

  37. This is a great post. I especially love the “Look for Dark Horse Role Models” because that is exactly what I do. I continually study the lives of the people who have achieved what I want to have in life – and the more I do, the more I realise that they ordinary people with extraordinary drive, ambition, self belief and passion. These are all internal qualities that we can cultivate. For me right now, I'm recovering from some financial setbacks so I studied people like Donald Trump who came back from several billions of dollars in debt or Sam Walton who was bankrupt at least twice before having established what is now the world's largest company. I truly believe that our challenges are not unique. Whatever challenges we are facing, someone has already faced and overcome them. So if they can, then so can we.

    Like

  38. Another thought: the best time EVER to start a business is in a recession. I only had 5k that I saved up, but that money stretched to about 20k worth of goods and services because, during “the great recession”, cash is king. Furthermore, everyone was so willing to help me because they just weren’t too busy.

    Isn’t it ironic that the best time to start a business is when many other businesses are failing?

    Like

  39. I am so thankful that Chuck Holton steered me to your blog and after I viewed his video, your book. I am on the fourth chapter right now and can hardly put it down. I currently have four different websites and with the exception of my blogs, the other two have been created with open source software on a very frugal budget. Your book and this blog is giving me the information I need to take my business to the next level. I will be back checking here daily. Thank you so much!

    Like

  40. To paraphrase: For all the bitching people do about ambigous “things” “keepin’ a man down”; most people can’t even identify what it is their being held from. I believe this blog post addresses the critical thinking aspects of running any venture and hits the nail on the head. That being, the ability to sort out symptoms from sickness. Capital can be a remedy but lack of structure and bad deployment makes it a temporary fix. With enough explosives you could put an icecream truck into orbit… but a well designed rocket generally works better.

    Like

  41. ng For Sliding Down On The Snowy PeaksIf you have seen the people skiing on the snow mountain peaks, you have seen that they are packed up in warm clothes, wearing their goggles, using the sliders and the sticks and enjoying themselves while skiing on the snow covered mountains. There is no end to the different styles and designs of the ski clothing which ca

    Like