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.

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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.

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  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?

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  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.

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  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?

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  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.

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  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.

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  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.

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  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