Bootstrapping or Angel Funding? (And Why I Don't Regret Partnering With Penelope Trunk)

My company Brazen Careerist is in a position that nobody wants to be in – out of money and in a recession. And because our CEO is Penelope Trunk, and we practice complete transparency, we're living the whole thing publicly.

Penelope recently wrote a post about the tough times we're having. As I read through the comments, and the strings on forums that picked up her post, I noticed many people said things like the business model sucked, Penelope was unstable, and we weren't going to make it. They asked questions like, why did we have to burn through cash so fast? Why didn't we bootstrap?

There was another minority who were more positive, they liked the business model and wished us well. That was nice.

Luckily, I already had my breakdown last month. I blamed myself and I blamed Penelope for letting the company blow through so much cash instead of trying to bootstrap the whole thing. But after a month of beating myself up, I realized that we made a conscious decision to go big and bring in funding from day one, and we knew what we were getting into.

We could debate for days which way is better, but here are a few things to consider before you decide between bootstrapping and angel funding for your internet business.

How Long Can You Survive Without a Paycheck?
If you and your business partners can survive without a paycheck for a year, then bootstrapping your company is a good idea. On the other hand, if you don't live in your parent's basement, have little in your bank account, and have monthly bills to pay, pursuing funding is probably your best move. At Brazen, we calculated that we could make it six months without funding, and that's about how long it took before we raised the initial round.

Can You Make Money Fast?
If you can't survive without a paycheck and you don't take in funding, you need to start generating revenue, fast. Unfortunately, most internet companies take time before they start making money. And even if you do bring in some revenue, what about operating costs? Can you afford hosting, servers, office space, freelancers, insurance, etc., and still have enough to take a paycheck that keeps you above the poverty line? Make sure you can before you decide to bootstrap. If you can't, it's probably time to investigate your local angel network.

How Many Co-Founders Do You Have?
The more founders there are, the more cash you need to pay them. This gets even stickier if your partners have a family. Not only are they risking their own livelihood, but they're putting their kids and spouse at risk by not taking in angel money. It's hard to start a company alone. But it's also hard to generate enough revenue to pay three or more people. Not taking in money and "staying lean" probably also means "staying lonely." If you want to bootstrap your business, you may be best off starting it with one other person at most, or keeping your day job.

What Skills Do Your Co-Founders Have?
Let's assume you're an internet start-up. Are the founders all developers? If they are, you should consider bootstrapping. Developers can do the work needed without freelance costs. But what happens after you develop the software? How do you market it? How do you create a sales strategy? How do you sell? What if your site becomes popular? Who has the connections and negotiating experience to raise the money you will need to scale your business? Co-founders who can do the work needed to keep costs down are good, but so is a little variety in experience.

How Fast Do You Want to Scale?
Most entrepreneurs are not patient. It's not in our blood to wait around and see what happens. By the time Brazen has launched a new product or feature to the public, I'm already embarrassed that it's not good enough because I'm ten steps ahead in my own mind. In a world of constant information and customer feedback, you better be able to respond to your customers' needs. And if the business does begin to take off, you better have the resources to scale it. Can you do this if you bootstrap? With the right team members and preparation, maybe. But it's never easy.

What Do You Want to Learn?
Taking in funding has taught me how to hire people, how to manage people, how to let go of people, how to manage a budget of hundreds of thousands of dollars, and how to pitch a big idea to potential investors. If we bootstrapped, I would have learned a lot too, like how to manage a tight budget, how to be frugal, and how to make a high pressure sale. Each way teaches you a ton, but the question you need to ask is, what types of things would you rather learn?

What Percentage of the Company Do You Own?
Bootstrapping is a great idea for young people with nothing to lose. Typically, founders split the pie evenly when starting a company. But if all the founders are young, inexperienced, and have never run a business before, this isn't always the best move, because your fifty percent equity share has a good chance of equaling $0 if the company goes under. On the flip side, if you partner with someone who's been there before and can provide some guidance, connections and money, you might only get fifteen percent, but that small percentage may have a higher probability of putting some cash in your pocket when your company is acquired.

How Big Is Your Idea?
Do you want to be the next Facebook, Amazon or Salesforce.com? Or do you just want to have fun and make a few bucks? Most entrepreneurs think big. If you bootstrap, be prepared to think small, at least at first. Once you find a niche and begin to take off, you can start to think big and pursue some cash. But shifting from thinking small to big right in the midst of it all is not an easy task.

At Brazen, we knew from day one that we were taking in funding, scaling a business and hopefully making a big splash. I don't regret the decision for a second. We've all learned a ton and had a lot of fun. Now we're learning how to cut costs, change a business model and make it through the toughest financing environment in history.

Bootstrapping is one way to run a company; another is to take on investors. Whichever you decide, be sure you know what you're getting into before you start. And don't forget to have fun.

A New Year, A New Blog (And, Why I'm Doing It)

It's been a long time coming. It started months ago when people started asking why I didn't blog anymore. It sure felt like I was still blogging. And I was, just not on Employee Evolution.

What I realized is that I'm not that passionate about writing on careers anymore. When I was sitting in a cubicle every day it was great, I was living it. But that's just not the air I'm breathing anymore.

Today, I live and breathe community. In retrospect I always have. So as hard as it is to say goodbye to EE—the blog that started it all—I've decided to move into something I can be more passionate about.

I'm feeling a lot like I did during my last semester of college—anxious. I guess that's fitting since I bought my domain (ryanpaugh.com) at about that time.

I was sitting around with a couple or friends—drinking tequila—and talking about what we would be doing after graduation. I decided that it would be a good idea to own my domain name. So I hopped on GoDaddy, whipped out a credit card and made the most intelligent choice I'll probably ever make while drinking tequila.

I squatted on that domain for going on three years. Today, it's finally being debuted: My new bachelor pad on the World Wide Web.

The landing page (ryanpaugh.com) is nothing more than an introduction to who I am, where I've been and what I hope to accomplish through the site. My real focus will be at ryanpaugh.com/blog, where I contribute regular content about personal discoveries, social media and community.

Here are a few things you can come to expect week to week …

Blog posts about community: Online, offline, in popular culture, etc. I'll continue to focus a lot of my attention on Generation Y.

Brazen Community profiles: Every week I'll feature a member of the Brazen Community as part of my continuous quest to bring great Gen-Y voices into the spotlight.

Brazen Community updates: Every week I'll blog (or vlog) about what's going on at Brazen HQ. One of my big goals in 2009 is to bring better streams of communication to our Brazen Community. This is the first step in that process.

Lots of pictures: I love taking them. Now that I'm out meeting the stellar people of the Brazen World, I want to be able to share the experience with all of you.

So now that we've gone over the basics, go subscribe to the site! Leave comments! Your feedback is really important to me, and I'll be making changes based on what you say.

Thanks to everyone who has supported Ryan Healy and I with Employee Evolution. It's really sad to walk away (I feel like I'm neglecting a child), but it's a good decision. Employee Evolution will be a more focused blog, and I'll finally have a place to explore my own passions more deeply.

I hope you'll come and join me for the ride!

*Special thanks to Benjamin Jancewicz and the team at Zerflin. They go above and beyond with their work and I'm happy I had the chance to work with them again. Check them out. They do everything, online and offline.

**And congrats to the Jancewicz family on their new baby boy!

5 Reasons Every College Student Should Start Blogging In 2009

Since founding Brazen Careerist, I've blogged less and less each month, to the point that I only posted three times in December. And that's not cool. Especially since blogging has given me more value than any other activity I do on a day-to-day basis and is the reason I have my dream job today. In short, blogging has changed my life.

So here are five reasons why every college student that wants their dream job needs to start a blog in 2009.

1. You stand out from the crowd
Jarred Taylor works in the legal department at Google in Mountain View, CA. As far as dream jobs go, Google headquarters is probably right there at the top of a lot of lists. Jarred loves his position, and he's pretty convinced that he got the job because of his blog.

"Everyone who interviewed me," Jarred says, "from the recruiter in the phone screen to the senior attorneys during the videoconference, asked me about the blog. 'What do you blog about? Why? Give an example of something you've learned from what you've researched.'"

His blog didn't have a huge following or a ton of readers, but the interviewers at Google understood that if Jarred took the time to write about his career interests in his free time, he would also go above and beyond at work. Including his blog on his resume allowed Jarred to get his dream job by standing out from the crowd.

2. People find you
I'm not all that good at seeking out people or new opportunities. I push myself, but it's not my strong suit.

The beauty of blogging is that people find you. When I posted several times per week, the amount of emails in my inbox from seemingly random people was through the roof. Publishers contacted me about writing a book, journalists sent interview requests, generational researchers asked for input, companies requested speaking engagements, and readers wrote in with career-related questions on a regular basis.

On the days I post, good things happen. And I can say for certain that it's not a coincidence. By putting yourself out there with your blog, people will find you, and your dream job could come knocking at your door. Just make sure you recognize the opportunity when it does.

3. You can show your true personality
I get a lot of applications from people applying for a job at Brazen Careerist. We have a special set of questions that we ask everyone to answer when they apply so we can get a sense of their interests, goals and personality. The answers always give me some good insight, but I often want to know more, before we decide to do an interview.

Because of this, I love when someone leaves a link to their blog along with their resume. It's like saying, "Here's a sneak peek into my world. I have nothing to hide." Other than face-to-face interaction, nothing shows who you really are more than a blog.

Unfortunately, we are in a temporary hiring freeze (click here to read more), but if we were scaling the company at full strength, the people who directed me to their blog would be at the top of the interview list.

4. The connections are amazing
I'm confident enough to say that if I needed a job tomorrow, I could skip the typical Monster.com or Careerbuilder job search and find a great one through the connections I've made blogging.

I've networked with executives, authors, entrepreneurs, CEO's, professional speakers and more. I've maintained as many relationships as possible, some as mentors and others as weak-tie connections, but simply having the opportunity to meet such a diverse and influential crowd could have never happened without writing my blog.

5. You grow up, quick
I never would have admitted it at the time, but before I started Employee Evolution I was pretty immature. I thought I knew more than I did, I didn't work as hard as I could, and I didn't fully appreciate all the things I had. Two years later, I still have a lot of growing up to do, but the amount I've grown as a person has been astounding.

Someone tells me I'm wrong on nearly every post I write. Sometimes I listen and rethink my position, while other times I chalk it up to the other person being wrong. But I'm always able to re-evaluate, compose myself and reply with an insightful response or a nice email. Learning to deal with people who disagree, and treating your blog like a business will teach you a lot about how the world works, giving you a huge leg up on your "non-blogging" peers

It may not be easy, and it certainly won't happen overnight, but starting a blog and following through can take you anywhere you want to go. What are you waiting for?

Take a Risk, Start a Blog

Last week we ran a contest on Brazen Careerist that asked our community members a simple question: "How has blogging impacted your life?"

As I read through the entries, I got the chills. The posts were amazing. The ways that blogging and online communities have changed people's lives for the better is unbelievable.

I probably can't compete with our winners, but here's my story.

I always wanted to be an entrepreneur. So much so, that sophomore year of college I created a major called Entrepreneurship. I chose my course load and handpicked the classes that would give me the best all around business education.

But the next semester I spent too much time drinking and partying. I listened to the negative people who told me I couldn't get a job without a "real" major. And my motivation to be the next Donald Trump quickly faded away.

I majored in Accounting, and sure enough, I followed the crowd to awkward interviews and boring get-togethers. I interviewed with the Big 4 in New York and D.C. But the interviews never felt right. I didn't want to be there. I was going through the motions and I was looking down on my life, slowly watching it become what I feared most – boring.

I still didn't do anything about it. I moved to D.C. and started a job with IBM. I did good work. I received two raises in less than a year, and my boss targeted me as a top prospect for a spot in an exclusive graduate program.

But the truth is, I was a walking zombie. I was on a project stationed at the Pentagon. It sounds cool, but every time I walked through the endless rows of people in tiny cubicles, and every time I strolled the courtyard filled with folks trying to escape the monotony of their day, I couldn't help but think, "This is totally depressing."

So I started a blog. I partnered with Ryan Paugh because he was a good friend, and he had a Journalism background. The beginning was fairly innocent. We wrote about work, and life and our jobs. We responded to articles that characterized our generation as lazy and narcissistic. It was fun.

Then one day something crazy happened. Paugh was interviewed by the Wall Street Journal. I snagged one of the copies I found at my apartment complex and made the commute to the Pentagon with the paper under my arm and a smile from ear to ear.

Flash forward to today, two years later. I'm sitting in my apartment in Madison, Wisconsin, worried sick about how my blog-based company is going to raise a second round of funding in one of the worst economies since the Great Depression, and how I'm going to make my rent in a few months if I can't pull in a salary. And despite all of this, just like that morning that Paugh was in the Wall Street Journal, I'm still smiling from ear to ear.

I'm smiling because the posts I read this weekend, the posts written by the people who are proud to be in the community that I helped build, gave me the opportunity to step back and look at how much a simple little blog has changed my life in two short years. And I've realized; my life is far from boring.

In two years of blogging I've made new friendships that I would never trade. I've taken existing friendships to a whole new level. I've started an amazing relationship with someone I never would have met if she didn't find my blog and leave a comment. I've had the opportunity to live and work with my brother after six years of living in different states. I founded a company that people believe in. I turned a great mentor into a great business partner. I found the discipline to train for and run a half marathon and I demolished my paralyzing fear of public speaking.

And I've had the pleasure of experiencing all of these things with a community of like-minded people who are all conquering their goals and living out their dreams right alongside me.

Blogging is a beautiful thing.

The Brazen Careerist D.C. Recap: Why Bringing Your Online Community Offline is So Crucial

Last week's Brazen Careerist meet up in Washington, D.C. was an important milestone for our team. We've reached a point where we can finally take the community we've created online and use it to establish relationships offline.

I can't think of a more important goal to be able to meet as an online community manager. Because while we all know the Internet can be a powerful vessel for cultivating relationships, nothing beats the personal touch of face-to-face interaction.

So while I just wrote a post giving advice to would-be community managers, I don't mind reiterating one of my most important points. If bringing your online community offline is not one of your principal objectives you're missing a big part of the equation.

Social media use has a short shelf life for many users.

This is true for blogs especially. Most won't last more than 2-3 months. Even within a strong community good bloggers can lose focus or get bored.

I think it's because online just isn't enough. You can spend all day connecting with people all over the world–no boundaries–by the click of the mouse, but you'll be missing out on a whole lot of life. Sometimes a few boundaries are exactly what people need.

Bringing people together on a local level is exactly what some people need to stay engaged on a global level. While talking to some of our Brazen bloggers, it was great to hear people say the meet up gave them motivation to go home and write. It got me motivated too. And we all need that little boost of encouragement sometimes.

Global communities lack local appeal.

When you have a community of like-minded people online, and there are enough of them in proximity to each other to bring them together offline, don't miss out on that opportunity. It's a great way to strengthen the group in a way you normally can't accomplish via the web.

What was really cool about the D.C. meet up was that it won't end after the initial night. A few of our D.C. bloggers are in the process of making Brazen Careerist meet ups more regular. And you know when people don't need an open bar to get together that you must be doing something right.

Tim Ferro put it best. While he was thrilled that we came up and put together the event, he wouldn't mind doing it on a regular basis, with just our local D.C. crew.

"I'd pay for my own drinks just to get this group back together," he said.

A great way to connect your community with other organizations.

CORT Business Services, the official sponsor of Brazen Careerist, D.C., is a perfect example. Not only were they absolutely amazing hosts, but they also knew how to connect with a Gen-Y audience without trying to hard sell us on anything.

Brian Keating, CORT Account Executive, spent the entire evening chatting with community members who could totally relate to what their company does: Help young people like ourselves deal with the stress of job relocation by making the process more seamless and worry-free.

It was great to see a Gen-Y friendly company like CORT come to the meet up. Not only did they benefit from a night with an engaging group of young professionals, but we all enjoyed engaging with a company that's creating solutions to make twentysomething life a little easier.

So for all of you online community managers out there, don't get too lost online. Always look for ways to bring your community together in the real world. It will not only strengthen what you've created, but give you a gauge for where your community can go.

I for one can't wait for our next Brazen Careerist event. It gives me goose bumps thinking about where we can take things next. In my head, the wheels are always turning. But I'd love to hear what you think too.

How can online communities bring more to their members' offline lives?

Click here to check out more photos from Brazen Careerist, D.C.

UPDATE: Brazen Careerist, New York City is underway! Click here for more information.