As we have discussed before, Katie and Luke Hrycak, the sibling founders of CommentAir, are bootstrapping their venture around their day jobs, an approach that calls for certain sacrifices.
Business meetings after 9 p.m., letting the wardrobe grow threadbare and valuing every dollar of friends and family financing is par for the course.
“I think the most difficult aspect about bootstrapping is resisting the urge to job search for something that will pay a ton, and also letting it take up all of your time,” Katie said in our first post. “People get accustomed to certain lifestyles and it is very difficult to let that go. You have to commit to a job that is less challenging for less money, but ultimately allows you more time for your own venture.”
In this post, we will talk in more detail about what it takes to keep the lights on, the need to delay gratification and at what point an outside investor may come into the picture.
Taking the lean approach to heart
There is no doubt that these dogged entrepreneurs are living on hope and aspiration. Katie works 30 hours a week, while Luke is full-time and saddled with debts from a previous failed venture. Christmas gifts were covered by credit cards that have yet to be paid and the pair must live vicariously through friends when it comes to trips or shelling out for that fancy new smartphone.
Katie, however, focuses on the upside of having to monitor and curtail expenses.
“It’s made me a bit of a minimalist in a way,” she said. “I’ve sold a lot of my things and live much leaner and without any clutter. If you’re bootstrapping, any spare dollar you earn either from your day job or (any other source) is invested back into the business.”
Lack of a cash reserve keeps them working around the business, which requires a great deal of self-discipline. But the siblings realize that, as CommentAir moves along, they will at some point need to make a choice and commit to building the business full time.
Stuck between the chicken and egg
Luke’s previous experience as an entrepreneur has left him wary of taking out loans and led him to set hard performance targets for the business before he is prepared to do so again.
“The criteria being that we have to have customers, and out of those customers 80 per cent are not serious so you have to be able to survive off 20 per cent of the customers,” he said. “If you can’t survive, then don’t take the loan because your business will fail. This isn’t being risk averse, it’s just being realistic.”
Instead, the siblings have relied on friends and family money and networking to tap into grant programs and government sources. While this “pay as you go” strategy has prevented CommentAir from accumulating any debt so far, it nonetheless leaves the business with a big question mark about where to turn when the FedDev funding dries up.
“It really depends on what we have when our contract ends with Algonquin” in terms of a working prototype, Katie said. “It’s a pretty big turning point where we decide to continue pushing or put CommentAir on the back burner.”
“I have talked with friends and people I know who have money and they’re definitely in, once they see a product,” added Luke. “It’s always ‘until then, let me know.’”
Bumps in the road
A working prototype is crucial to securing the initial stadium contracts which will provide the market validation to make investors and lenders take notice.
The project with Algonquin College was intended to produce the prototype. However, the siblings have been frustrated by a lack of progress and missed deadlines which have left this outcome in doubt.
“Everyone always wants to see a working product in hand before they’ll give you the time of day,” Luke said. “If something comes out of working with Algonquin, we’ll go from there. If not, we’ll re-evaluate and possibly have to accept that we may have to start a new path.”
In our last instalment, we talked about how the priority from a talent perspective is to bring on board a technical co-founder. The siblings agree that the challenge of getting the job done with a student team has illustrated the need to fill this position quickly.
“We’re really starting to see that we desperately need a technical cofounder to jump in and say ‘give me what you have so far, I’m going to build this in a week,’” Katie said.
Meanwhile, the duo keep plugging away. Katie is out there doing what she does best – hustling through her network of contacts and at various networking events to find new supporters and funding programs.
“One thing I have learned is how Katie’s networking skills can find the necessary industry connections to make things happen,” Luke said. “It’s a marketing thing that is going to be very useful in the future in whatever projects we do.”
A recent highlight has been Katie’s nomination for a Bootstrap Award, offered by local startup incubator Exploriem.org.
“It’s nice to know that people see our business as valid,” Katie said. “We have an OCRI event coming up to showcase the business and I’ve been attending a lot of other startup events as well. You have to be careful not to spend all your spare time socializing, but picking and choosing what to go to and which connections to make to find the help you’re looking for.”
In our next instalment, we will take stock of CommentAir’s funding challenges, the continued viability of the venture and what strategies have worked to attract the funding it has secured to date.
This is the fifth article in a continuing series chronicling the growth path of CommentAir Technologies, a startup based in Ottawa, Canada. CommentAir is developing a wireless technology fans can use at sports venues to receive the same real-time commentary as fans watching from their televisions, a wireless technology that also creates a platform for targeted consumer interaction. We invite your feedback.