Why We Decided To Bootstrap Our Business

Shuhan He

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Published: January 16th, 2019

Hi! My name is Shuhan He. My main endeavor is called Conduct Science, and we are a company which provides scientists with the equipment they need to complete their studies.

We also work with a bunch of sub-companies that help us create scientific products across a lot of domains.

About what we do

I will give you a few more details about our partners below:

Maze Engineers makes unique mazes for neuroscience research. Compared to other mazes in the market, these are more sensitive and accurate when detecting changes in animal behavior.
In a similar vein, Conduct Science distributes and creates scientific tools. I consider these two our “hardware” homes, for any scientific equipment we need.
To provide us with ways to monitor health, we work with Qolty which makes digital health research tools. You can do really cool things with new technology in digital health, and I feel like they aren’t often taken advantage of. For example, Qolty provides us with some state-of-the-art geofencing technology - a system which gives a buzz when someone moves outside an allocated zone.
Do you ever get medical texts that you can’t quite decipher? Our Doctorlingo module allows you to automatically translate that ‘lingo’ into plain English. Confusing Latin phrases, obscure phobias, bones in the human body - the app can ‘translate’ all of these and much more into understandable terms.
Another partner of ours, ScienceN.com, has a funky piece of software which sifts through relevant scientific literature and provides a predictive analysis of which scientific items are needed in the next phase of a scientist’s experiments.

We are a bootstrapped company, meaning that we grow with our own revenue. This keeps us grounded, and completely focused on providing the best technology solutions possible. It is an important part of our identity.

What it means to be bootstrapped

Bootstrapping is a model which means that your company runs entirely on its own revenue. You grow with profits and revenue that your company generates, rather than inflate the value of the company with shareholders.

Allowing revenue to drive the company means that you are really focused on the most important thing in business, which is your customer base.

Bootstrapping is a better way to do business

I believe this is generally a better way to do business, although it does lead to slower growth—but to me, a more normal growth curve. Perhaps I do not see the insane rush in growth which would occur should I bring an investor on board, but I love that bootstrapping means that the key relationship is always between us and the product manufacturers.

You serve your customers and solve their problems, in exchange for your profits. This means you need to provide real value, otherwise, the profits you need to expand your business will dry up.

Being a bootstrapped founder

We’ve never taken investment and we have always been a revenue-based company.

We only grow with profits from our business, which is really important for us. It means we need to learn to keep costs low, avoid unnecessary spending, and have the discipline to grow in ways that have a high probability of generating revenue.

If we spend our profits on something that doesn’t help us grow, we have no other way to do so.

Making the right decisions

So we have to make the right decisions. Being a bootstrapped entity, I believe, teaches you more about the fundamentals of being an entrepreneur.

There is no option to play around with an investor’s money, and the hard graft associated with generating your own revenue from your own capital is something quickly learned.

Why I chose to bootstrap

I think that jumping to the opposite end of the spectrum will help me answer this question better. Why, exactly, did I refuse to go down the path of venture capital?

Refusing venture capital for the benefit of our customers

Our customers are scientists, doctors, and technical users. Science has a reputation for solid proof, and things just don’t happen instantly. In science, you have to take time to provide quality evidence to prove things, and because of that, sales cycles take years.

For instance, I cannot rush the development of a new maze in order to please investors, as this would result in a sub-par invention which ultimately disappoints customers.

Taking venture would have meant we would have had to devise all sorts of ways to make money, and then put our customers second. I don’t want to do that.

Refusing venture capital for the benefit of our employees

Gaining a 1000% return in 2 years means our employees have to work incredibly hard in a way that is not aligned with our values.

We respect employees with families, who want to live life fully and work with us for a lifetime. Burning them out in 2 years is not a way to do so. Locational freedom and the ability to work with a smile on your face is something very important to Conduct Science.

Bootstrapping is more in line with my own values

I think it's really important to keep in mind our own personal values of why we do this sort of work.

I want freedom and independence for my family, and also want to make sure the people in my life are taken care of should the need arise. I can’t do that if I’m trying to deliver this for people with capital. I’d rather deliver value to people whom I love and care about.

My patients also come into this equation. As an emergency doctor, I want to be able to give my best to every patient. They are relying on me, and concerns about meeting venture capital expectations would be a huge distraction for me.

I also like winning, and because of that, I value long-term success and sustainable growth models.

Venture money often means taking capital and using it quickly, and if the model doesn’t work, shutting down as fast as possible to waste less of an investor’s money. I wouldn’t do that, because I value progress. Bootstrapping the company allows me to watch success grow steadily.

Bootstrapping has a higher chance of success

I believe there is a higher probability of success with bootstrapped companies than venture-backed ones.

Investors inherently expect a 1000% return, which often means manipulating your company towards taking actions that are against its own best interests, and doing things simply to make more money.

As an example, this article by Investopedia gives a concise run-through of the potential negatives of obtaining venture capital. A loss of control and a necessity to run any decision past your investor are the main stumbling blocks here for me. Tasks would take twice as long, and they would have to be geared towards pleasing the investor.

The personal benefits of bootstrapping

I still get to practice medicine. I see patients in the emergency room at some of the best hospitals in the world. I am lucky to be able to help people with serious issues on a daily basis and watch their health improve. If I was constantly preoccupied about my business making money, I’m not sure I would be able to have this privilege.

Not only am I lucky enough to have this great position - but it also helps keep the capital rolling for Conduct Science. If I need some extra funds to complete a project with Conduct Science, I know that I can put in some more time as an emergency doctor. This way, I can always avoid having to reach to an investor to fund my business.

At work yesterday, I coded a young man who fell 45 feet off a bridge, put a central line in a septic patient, and intubated a seizing man who had a hemorrhage in his brain. These are experiences I take with me for life and I couldn’t ever trade it off for faster growth and slightly more money to pump into my business.

Another benefit, for me as a scientist, is that it allows me to treat fellow scientists with the respect they deserve. If I was under the pressure of venture capital, I would know that profits were very important. Therefore, I might be more tempted to accept any lucrative invitations that come my way, to the detriment of Conduct Science.

In fact, this constitutes a key challenge of bootstrapping. Recently, I had to turn down an offer from a very high-profile organization which wanted to purchase some equipment from Maze Engineers.

They wanted us to implement the equipment in ways we knew were impossible within the two-week timeframe we were given. I had to turn their offer down, knowing that it would have compromised the quality of our testing.

While bootstrapping gives you quite a lot of freedom, it also means that you must stay grounded and realistic in your decision making.

What I’ve learned from bootstrapping

Leading on nicely from my point above about rigorous testing, I have noticed that my clinical methodology has a lot in common with my entrepreneurial practice. Below is an analogy as to why.

In the midst of uncertainty about a patient’s wellbeing, the first thing I always do is issue a high-sensitivity test.

A high-sensitivity test is one in which you will detect a disease marker but might get some false positives.

Take the troponin test. If you’re having a heart attack, this troponin enzyme will be in your blood. However, it could also be in your blood because of kidney failure, or because you did some intense exercise.

This is a really useful mindset when evaluating new equipment for Conduct Science. For example, when we are creating products it’s really important we ask questions that cover any possible issue, and may even throw up some false positives. Bootstrapping allows me the time to do this, without the pressure of an investor on my back.

I try to take this high-sensitivity when designing products. We do a high-sensitivity test, and then confirm the findings with subsequent tests. This really helps us progress and allows us to make scientific decisions when designing products as opposed to relying on guesswork.

The thing is, developing medical equipment also requires lengthy patient monitoring in some cases. Having the IRB approve patient studies can take up to a year, and being bootstrapped allows me to grow at the same time as these patient studies can occur. We can align our revenue model with this speed of growth, knowing there is no outside pressure to meet.

Essentially, bootstrapping allows me the time to be able to “conduct these tests”, as I am not concerned about meeting a revenue deadline, or “jumping straight to the high-specificity test” in order to make money faster.

Should you bootstrap?

I have another analogy which I love to apply to bootstrapping vs. venture funding. If you are unsure which route to go down, consider whether or not you are on land or water.

If on land, you can compare yourself to Genghis Khan. You take on each new challenge and “conquer lands” with your own strength and your own resources, without relying on anything else. If you are in the water, you need a ship to get yourself where you want to be. You are more of a Christopher Columbus type entrepreneur. You need to invest in a ship (acquire venture investment) to be able to reach your goal.

Personally, I always want Conduct Science to be bootstrapped. It allows me to keep the quality of equipment testing as high as I want it to be. At the minute, we are aiming for 50% year-on-year growth.

Basically, I think that deciding whether or not to bootstrap depends on where you are as a company. If you can see the way towards your next goal, bootstrapping will give you the time to work on this without worrying about making up an investor’s money. However, if you are unsure about the method required to reach the next stage in your business, it might be a good idea to consider venture capital and outside help.

In my experience with Conduct Science, bootstrapping has allowed me to work at the pace I need whilst still being able to aim for lofty revenue goals. Of course I would recommend it!

Thanks for reading!

The Conduct Science network is currently involved with over 500 universities, military, and pharmaceutical companies helping to develop drugs and health tools with the objective of improving people’s lives. We make the scientific process more efficient and cost-effective, by increasing the reach of limited funds. Click here if you wish to learn more about all the members of our network.

If you’re interested in science analytics or you’re a life science company, email us at [email protected] and we’d love to help point you towards some of our services.

If you’re a physician or researcher looking to understand patient data better, and want to make use of digital health monitoring tools, you can write to us at [email protected].

If you’re interested in getting involved with Conduct Science in any capacity, or want to learn more about our work, visit us at https://conductscience.com/work/.