A Defining Time for Bootstrapping and Survival—Lessons From Business Leaders and Baron Munchausen

5/29/09Follow @bvbigelow

When the CEO of Carlsbad, CA-based MaxLinear cited a 1785 translation of “The Surprising Adventures of Baron Munchausen” for the term “bootstrapping,” it’s safe to say nobody in the audience knew where the discussion was headed. But MaxLinear’s Kishore Seendripu was making a point during a panel discussion on “bootstrapping a business” that was hosted yesterday morning by the San Diego Venture Group: bootstrapping can mean different things to different people.

To Seendripu, bootstrapping means “a self-sustaining process that proceeds without external help.” He explained that nobody was funding fabless integrated circuit startups in 2003, when Seendripu and seven other veterans of the semiconductor industry started MaxLinear. So the co-founders bootstrapped their business by generating revenue from consulting projects. Seendripu even provided some RF consulting for the company’s first landlord.

Fellow panelist Kenneth Potashner agreed, saying, “I’ve seen companies that confuse bootstrapping with cutting costs.”

With a clear understanding of what they were talking about, the panel’s discussion moved to some good anecdotes and creative suggestions for surviving through hard times. Aside from Seendripu, the panel was comprised of Potashner, chairman of the Newport Corp., an Irvine, CA, maker of laboratory fixtures, and Nicholas Cavarocchi, founder and partner of Cavarocchi-Ruscio-Dennis Associates, a Washington, D.C. lobbying firm. The moderator was Ted Alexander, a managing partner at San Diego’s Mission Ventures.

Here are some highlights I gleaned from their discussion:

—Federal funding. The economic stimulus package has allocated $50 billion to fund innovations in science, energy, and healthcare, but Cavarocchi says funding agencies lack knowledge about startups. So don’t wait for the regular research funding announcements from the National Institutes of Health and National Science Foundation that appear in April, August, and December. “They’re saying they would really rather have people come in and talk to them about what they’re doing and what they need money for,” Cavarocchi says.

—Leverage existing relationships. “Innovation is built by people, not corporations,” says Seendripu. He recalls how a onetime business associate at Mitsubishi helped him gain access to business customers throughout Japan.

—Outsourcing. “If you’re the best at something, that’s where you put … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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