1. Bootstrapped to
Profitability
A repeatable system for founding a
company (without VC or angel
investment)
John Rood

2. • Founded Next Step Test Preparation with
$5,000 in personal savings
• In 3 years, to 50+ instructors, 5
marketers, and 15 markets
• Yes, profitable
• Before that, 3 years of management
consulting
• Teaching online marketing
JohnRood.net

3. • Why bootstrap?
• Identifying a Market
• Creating a Product/Service
JohnRood.net

4. The Wantrapreneur*
“I WANT to be an entrepreneur but…”
• I don’t have any capital
• I don’t have an in to any venture capital firms
• I need to spend several years learning x skill first
• I don’t have technical skills. I need a co-founder
• I should work at a big company first to get experience [what?]
None of these are good excuses. An entrepreneur starts a company. A wantrapreneur has
100 excuses for waiting, for getting a corporate job, or for being in “stealth mode” for 5
years (but going to all the meetups)
*Shamelessly stolen from Noah Kagan, appsumo.com
JohnRood.net

5. All around you, your peers are starting businesses designed
to be profitable today. They are using these businesses to:
• Avoid corporate work
• Travel and work remotely
• Support themselves while they work on a larger business or not-for-profit
• Make gobs of money
You don’t hear about most of these
businesses because they are not on
TechCrunch, don’t make the Inc.
500, and aren’t backed by VC firms
JohnRood.net

6. The reality of the venture capital / Tech
Crunch / startup accelerator industry:
0.02% of new businesses receive venture capital funding.
Most new companies do not get featured on TechCrunch
They are not in sexy industries
You can’t rely on SBA loans, StartUp America, or any other source to
reliably secure new business funding
Y Combinator accepts 2% of applications (harder than Harvard or
Stanford)
JohnRood.net

7. TechCrunch/VC Un-Cool Small Biz
Sexiness High Low
Chance to change Medium Low
the world
Addresses a Varies High!
Customer Need
Chance of Success Low Medium/High
Chance of paying Low Medium/High
bills
Chance of you Low ????
actually doing it,
starting today
JohnRood.net

8. There’s nothing wrong with the VC / accelerator /
TechCrunch Route!
They’ve led to GREAT companies.
If your goal is to do whatever it takes to have a famous
company in a short time, that might be the right match.
You just need to understand that the vast majority of
profitable companies don’t play that game.
JohnRood.net

9. The Unsexy List of Most Popular Small
Businesses, 2011
1. Fitness and Recreational Sports Centers (71,394)
2. Full-Service Restaurants (72,211)
3. Homes for the Elderly (62,331)
4. All Other Amusement and Recreation Industries (71,399)
5. Used Merchandise Stores (45,331)
Awesome 6. Meat Processed from Carcasses (31,161)
7. Landscape Architectural Services (54,132)
8. Beauty Salons (81,211)
9. Carpet and Upholstery Cleaning Services (56,174)
10. Child Day Care Service (62,441)
What do these businesses have in common?
JohnRood.net

10. Think there are 56,172 entrepreneurs
excited about Carpet and Upholstery
Cleaning Services?
JohnRood.net

11. • The Mindset
• Identifying a Market
• Creating a Product/Service
JohnRood.net

12. To test his theory, Mr. Zhardanovsky and his co-founder, Joe Speiser, set up a
Web page in 2009 with a form that asked customers if they would be
interested in signing up for regular deliveries. They then placed a few ads
online and waited to see what happened. “We had an overwhelmingly
positive response from our customers who wanted to sign up for the service,”
said Mr. Zhardanovsky, who lives in New York City and who proceeded to
introduce PetFlow in 2010.
http://www.nytimes.com/2012/03/08/business/smallbusiness/selling-online-products-
by-subscription-is-all-the-rage.html?_r=2&adxnnl=1&adxnnlx=1331266759-
RNaVXgkDRDD+eDZWcEnfjw
JohnRood.net

13. What’s the #1 factor that
will determine your level
of success if you were to
open a Chicago-style hot
dog stand?

14. Businesses that succeed
QUICKLY and RELIABLY meet a
demonstrated customer need.
If you have to sell the
need, your chances of success
go down.
JohnRood.net

15. Development of the test prep industry
Tutoring
Value Live Class
Online class
Online video
Scalability
JohnRood.net

16. JohnRood.net

17. Blue ocean strategy for entrepreneurs
• Professionalize Mom & Pop operations (1-800-GOT-JUNK)
• Dominate a segment with demand that’s a lower priority for a
major company (Next Step Test Preparation)
• Solve a pressing problem for a small niche (Paperless Pipeline)
• Solve a small problem with a unique solution (Coffee Joulies)
What else?
JohnRood.net

18. In 2012, where do people go to
express their needs?
JohnRood.net

19. In 2012, where do people go to express their needs?
JohnRood.net

20. High-probability business owners define their market with quantitative
research and testing – not through introducing a world-shattering
invention or web app
JohnRood.net

21. Or….find a problem in a high-value market
-- Unearth problems during interviews. What keeps them up at
night?
-- Focus on groups willing and able to pay
-- Test before development
-- Ideally, get paid to develop your product
JohnRood.net

22. • The Mindset
• Identifying a Market
• Creating a Product/Service
JohnRood.net

23. Your customers care about them. (Not you.)
Most businesses forget this the second they start
product development.
Never forget the problem is more important
than the technology.
JohnRood.net

24. Step 1: Minimal viable Product
It’s critical that you create a minimally viable
product (MVP).
This now has a trendy name….
But entrepreneurs have been using these
principles for years
JohnRood.net

25. Step 2: Test market acceptance
Most businesses that can make $1,000 can make
$100,000+*
Do this as cheaply as possible
You need to figure out if you can sell the product
– this step is not about feasibility
*Within reason.
JohnRood.net

26. Direct response marketing vs. brand
marketing
• Scientific Advertising, Claude Hopkins
• Advertising Secrets of the Written Word, Joe
Sugerman
• AppSumo (appsumo.com)
• I Will Teach You To Be Rich
(iwillteachyoutoberich.com)
• Mixergy, www.mixergy.com
• Ultimate Guide to Google Adwords
JohnRood.net

27. If you can sell it 5 times on Craigslist you can probably sell it 50,000
times

28. Step 3: Web Presence
Put up a basic website with dedicated landing pages for this
product.
If you don’t know how to put up a basic website, you need to
either learn how or hire a contractor.
Learn the difference between a home page and a landing page
-- Unbounce
-- Wordpress
JohnRood.net

29. Step 4: Scale (the easy way)
• Easy SEO
• AdWords
• Facebook Ads
• Blog Outreach
• Aggressive referral programs
Remember, you’re trying to reach your customers – not
your peers. Most customers don’t read the same blogs
you do or know what Tech Crunch is.
JohnRood.net

30. Thank you!
Remember that you can start today
Your excuses do not make you a unique
snowflake
john@nextsteptestprep.com
@johnrood
JohnRood.net