This realization finally came to me several years ago as a business partner, Ron Porter, and I were writing a book titled Bootstrap Business: A Step-by-Step Business Survival Guide. As we wrote this book, we decided to start a business in order to test, prove, and illustrate for our readers the principles we were writing about. As I had done with several other successful startups, we each anteed up $2,500 for a staggering total of $5,000 in capital. That was it. We could have brought more money to the table, but we were out to prove that we could bootstrap a business with limited financial capital and turn it into at least a million-dollar asset.
With no idea of what this business was going to be, but with our working capital in place, the first thing that we did was assess our resources. We had $5,000 in cash, several contacts in New York, some solid business and technology experience, and combined expertise in web development. We then ran what we called the “Porter Model” on various possibilities we had identified, ultimately deciding to create an online entrepreneurs’ social network.
We started down our chosen path by developing and then revising the website, www.bootstrapbusiness.org. But we very quickly realized that it would take a lot more money than $5,000 to reach our goal. So we immediately detoured and accepted some search engine optimization (SEO) consulting engagements with several large east coast corporations. Why? We had to chase cash.
As soon as we were turning a profit with our consulting, we veered in the other direction by hiring software engineers to do contract labor for several of our new clients. In doing so, we were adding resources to our business. And, serendipitously, we now had at our disposal developers who could work on our original website as well.
We then made another course change and started doing web link building. This is how we were able to start scaling our business as we created several supportive viral websites.
Before we went to press with Bootstrap Business, we were able to claim victory with the company we had named CastleWave. This little test case that we started with $5,000 cash ended up being profitable every single month. It grew to become a multi-million dollar business, it won many awards in the community, and we sold it to a publicly traded company.
Midway through the development of CastleWave, Ron and I were sitting at our whiteboard, plotting the paths we were taking toward our target. Originally, in keeping with the mindset I came out of business school with, we had outlined our starting point and our end goal. It was essentially a straight line. Somewhere along that line, however, we realized we needed a million to a million and a half dollars to hit our goal. Seeing that our original course was just not possible, we started drawing a sequential series of steps that needed to occur.
As we stepped back, we realized there was a big “Z” on the board. More specifically, there were three distinct targets we needed to hit in order to meet our first series of goals. First, we had to get to cash. Second, we had to add resources. And, third, we needed to scale our business. Each of these steps required an entirely different mindset from the step before.
Even after having been subjected to Vish’s scolding years before, this was my moment of full clarity, as I realized that—just like skiing down a ski slope—getting to our goals requires a deliberate set of zigzags. This was the moment when the ZigZag Principle was formally defined.