Are Irrational Design’s Ideas Strong Enough to Bootstrap?

By ADRIANA GARDELLA

Last week, we published a case study that discussed the challenges facing Irrational Design, a technology start-up that is determined to bootstrap. Its co-founders, Jared Cosulich and Adam Abrons, say they believe they will be freer to take risks and experiment without pressure from investors seeking a quick return. But operating on a shoestring has meant releasing imperfect products — a datingWeb site, an application that serves as an online suggestion box for businesses, and a goal-sharing message board.

Irrational Design plans to stay the course, ultimately bringing its disparate offerings together under an umbrella brand that can compete with online consumer and lifestyle communities like Yahoo. “We’re not simply throwing Web sites against the wall to see what sticks,” said Mr. Cosulich, who emphasized the importance of taking the time to build communities around each product.

Reader comments were overwhelmingly supportive of Irrational Design’s decision to fly solo, which didn’t surprise Mr. Cosulich. “It’s a shame that out here in the Valley, in tech, V.C. funding has become the default,” he said. The comments, he said, reflected his opinion that bootstrapping shouldn’t be “out of the norm.”

There were, however, some naysayers. In a brief interview, Mr. Cosulich reacted to a few of the challenges raised by other owners and readers.

Q: Elizabeth Charnock, chief executive of Cataphora, noted that a better-funded competitor could easily replicate your simple products. Does that concern you?

Mr. Cosulich: Not necessarily. It’s not a matter of copying features. Look at Craigslist. It doesn’t have a lot of features, and yet no one’s been able to copy it because it’s about community, not features and functionality.

Q: One reader doubted that Irrational Design was serving its customers.

Mr. Cosulich: I think we are. We’re not offering a lot of features, but we’re focusing on the important ones. People are staying with us — sticking to their goals and posting updates on Secret Goals and dating on The Matching Game.

Q: Another reader suggested that venture capital was not even an option for a prerevenue company like yours. Do you agree?

Mr. Cosulich: No, you don’t have to be making money to raise it. Plenty of start-ups raise capital before they even have a product.

Q: So you think you could have obtained venture capital for Irrational Design had you chosen to do so?

Mr. Cosulich: I think we would have had more luck finding angel investment. I’m guessing our long-term vision may be too ambiguous for a traditional V.C., but a smaller angel may be willing to invest in a crazy idea if they think the founders can deliver. Down the road, if we had significant traction in any of our products, I’m sure we could raise venture capital, but I think we would struggle if we tried now.

Q: What’s the biggest misconception about bootstrapping?

Mr. Cosulich: People think that, if you’re bootstrapping, you’re only interested in building a lifestyle brand, and you’re not taken as seriously. It’s too bad that that’s the mentality. While V.C.’s do bring a lot to the table, there’s no proof that a bootstrapped company can’t grow and build long-term value. Our philosophy is that it takes time and patience to build a fantastic business.

View article: http://boss.blogs.nytimes.com/2011/02/23/are-irrational-designs-ideas-strong-enough-to-bootstrap/?partner=rssnyt&emc=rss