Bootstrapping to the Extreme (or "Consulting Your Way to Millions")
I've wanted to write a quick note on here for awhile but kept getting tied up. However, reading Paul Graham's recent essay, "A Fundraising Survival Guide" (www.paulgraham.com/fundraising.html), it touched upon some aspects that I had wanted to write about and how it relates to my latest venture.

PG wrote about bootstrapping and how that equates to consulting. Yes, bootstrapping DOES work. I've taken that idea to the extreme .. quite literally. My third company, Boylston Technology Group, is purely driven by consulting. The site is www.boylstontech.com, but a web site overhaul is slated to happen very shortly in the future so please excuse the ambiguities that currently exist.

At the moment, we have 15 people with offices in a great location in downtown Boston (directly above a Starbucks and the Arlington T stop). We work with large clients and have even managed to secure an endorsement from Maria Shriver for the firm (She is great). We expect to grow out of these offices shortly, although since we've only been here 9 months, we may use this space as a satellite office until the lease is up. Our revenue is in the seven figures and we are profitable.

This is my third startup and when I was doing my first two, Y Combinator didn't exist so I had to learn through trial and error. The lessons I learned from i2hub and from other ventures were invaluable.

However, I am not building to flip, but building to last. I am very metrics driven and have a need to see gains and losses in a measurable concrete way. Revenue is a strong focus for consulting services, as that business is the corner stone of a larger strategy. I'll get to that in a minute. I've also invested in infrastructure internally: we've custom built a platform to run our business. It runs off of webdevelopment.net, a domain we own. Every member of our company uses this system and our clients use it as well. It allows us to manage, plan, communicate internally as well as externally with the client.

My larger strategy is to get the consulting services to a point where it runs itself and is a foundational support piece of a larger business ecosystem with other companies we operate. Once it runs itself, it then effectively becomes a funding engine and will fuel the development of the other companies. One part is product R&D. We think we have a good web-based product and have begun development -- far enough where we've got paying piloted customers. A two-day trial brought $36K worth of licenses.

The other company-to-be is an internal financial trading tool. We've created an alpha version of a software that automatically trades commodities with a proprietary algorithm. The algorithm and the software was tested last year for two months on a small segment of the market and it produced $250K in revenue. To test it on a larger scale will require more attention from us, and to this end, we've secured about 100 servers in preparation.

Mid to long-term, I'd like to form symbiotic business relationships between the three entities and leverage the strengths of them:
consulting services will provide the technical skillset and the initial funding,
the product development R&D will provide greater potential scalability business-wise,
and the automated commodity trader will later on provide diversification as well as additional funding.
Once the trifecta has been created, the plan is to then expand to another business either through ground-up or via acquisition.

As you're probably already thinking, with several different types of businesses, management will become an issue. To this end, we've already started scouting a management team. One of our recent hires has over 15 years experience in project management and is writing a book on project management processes. We're also currently looking for a senior sales director, and then shortly after that we will be looking for a general manager for the consulting business. This will escalate me out of the consulting business and allow me to then focus on either product R&D or the financial trading tool and repeat the stabilization process there.

So, if you only need capital and not the great ancillary benefits belonging to YC gives you, bootstrapping does indeed work, and has allowed our company to grow and scale without outside funding. In my scenario, bootstrapping became a business unto itself.

Quick about me:
My first startup was, at the time, a top-rated news site which ranked higher than craigslist, nike, and walmart, etc. My second startup, i2hub, was the number one file sharing service on colleges, with some interesting partners (one which eventually became the creators of the Graffiti app on Facebook, and the other was the Winklevoss brothers from ConnectU). Between my first and second startup, I also had a lot of experience working with companies like the original Napster with Shawn Fanning and Sean Parker, and several others. I've also either written or been involved with projects such as Lancraft, Tribes 2, TetriNET 1 & 2, Nestea2, and was an IRC Admin on the oldest network, EFNet. Full profile with more details available through LinkedIn under "Wayne Chang".

Oh, and for the ones that were around during the first bubble, MyAdvantage ("Get Paid to Sleep") was one of my creations that may have contributed a bit to your pocket change ;-)