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

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

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.