Lean, Lean, and Lean Again – part 0

One of the most difficult things to accomplish in life is quite simple in theory but can be a tall order to implement – keeping one’s promise, commitment or word each and every time and when failing to do so not providing any excuse of any type. It is in the spirit of “keeping my word” that I will seek to address the proverbial question, “If Bootstapping a Money Machine start-up is so wonderful and is so dependent upon customer revenue then why do so few business development workshops and courses teach and train entrepreneurs in the art of ‘discovering’ and ‘developing’ and closing the deal with real, tangible, bona fide, cash paying customer?  I have been pondering the details of this question and its answer over the last number of years.

Every business development course/workshop/training module readily embraces and provides training for a concept called “market research” or a “marketing plan” but what value does this data have to the Money Machine founder?  I once read one source that stated that a good marketing plan contains the following elements

  • Description of the product or service including special features
  • Marketing budget, including the advertising and promotional plan ie “How much money are you going to spend?” on the aforementioned advertising and promotional pieces.
  • Pricing strategy
  • Market segmentation (will one specialize in specific niche markets or a mass marketing strategy)

Honestly, even as I am penning these concepts the process makes my head hurt.  Why, why, why…

  • Would any serious amount of time be spent describing a product or service whose value and demand has not been validated by feedback from potential customers?
  • Would an individual spend a single dime on advertising or promoting a product or service in the hopes that it might attract the attention of a member of a speculative “market segment?”
  • Would anyone define a strategy for pricing a product or service when their is no clarity as to the financial posture of the product’s customer base?
  • Would a conversation be had about “niche” markets vs “mass” markets?  Heck all that a Money Machine founder needs to concern herself about are paying customers irrespective of the type of market camp from which they originate.

For a Money Machine to survive it is not about “market research” but about the process of discovering and developing a paying customer base.   The most full featured tool of choice for working through this process is the science and particulars of the “Lean Start-Up.”  Now using this term is a double edged sword due to the fact that everyone and his first cousin has heard about the “Lean” process and its relationship to start-ups.  Shucks, there are tens of books on the subject matter, hundreds of web-sites, on and on and on and on.  Your have the originator of the term Mr Eric Ries and his book The Lean Startup.  Then there is the world renown guru, one Mr Steve Blank and his internationally recognized The Four Steps To Epiphany  among other wonderful books that he has authored.  These and other books and authors provide some keen insights and business science but they really do not specifically address the intricacies of creating, building and sustaining a Money Machine.  It is in this space that one has to be superly careful not to discard the proverbial baby with the entire tub of bath water.  Here at the “Musings…” we are only interested in the portions of the aforementioned science that suits our purposes, namely, processes and techniques that empower us to create and sustain – a very small scale high tech, maker, craft/creative based, or food start-up or business that provides occupation for no more than three individuals, better known as a Money Machine.  It is in this space that we conduct our first efforts into the “hacking” of the well know/established “Lean Startup” methodology science.

So, where and how does one move forward with this process?  The entire process begins by applying portions of the scientific method to the creation of a Money Machine.  The major component in this process is a tool that has been defined as an “Experiment.”  Please note the details of the following



In applying the concept of an Experiment one works towards implementing the following steps

  • Step 1 – Create an original idea
  • Step 2 – Build or create a product/service around the original idea
  • Step 3 – Measure the acceptability of your product by gathering data from customers/potential customers
  • Step 4 – Learn from the data and allow the analysis help determine whether to…
  • Step 5 – Continue with the development of the original idea or pivot to another concept

Even though this only provides a high altitude view of the process it becomes quite apparent that the key item that results from an Experiment is that Money Machine start-up business development decisions are now based on data and not on the proverbial whim and a prayer.  Shucks, it is great to pray and have an active prayer life in this area but make sure to possess some reliable data over which the prayers are offered.

With this said, the following questions would be considered superly fair

  • How does one create the original idea in an effective manner?
  • Does the revision of the product/service that is offered into the marketplace possess all of the features from the original idea?
  • What measuring methodologies should be used and how is the data gathered?

All are very good questions and are items that, Lord willing, will be addressed in future editions of “The Musings of a Money Machine Hacker.”

The Baby Needs Diapers

Following one’s passion can be an interesting endeavor and following one’s entrepreneurial passion of any type can be a super exhilarating experience as long as one keeps in mind that passion is a double sided coin.  Passion can often lead to dogma and a superly skewed view of the realities of life.  It is in this area where I am appreciative to my Lord and Creator for being innately wired as a left-brained analytic type.  For me, most decisions in life have to be driven by data.  Don’t get me wrong, I believe in faith and prayer.  I would just rather have a set of numbers and/or set(s) of data over which I am praying in order to make a decision.  It is in this area that I have become a most avid fan of a sole form of Money Machine start-up financing – Bootstrapping.

Now let’s begin by describing what Bootstrapping is not

Bootstrapping ≠ Self Funding

Many would be Money Machine founders with a glimmer of tech start-up bliss glowing in their eyes one day finally build up enough gumption to dive into what is for many the great unknown, also known as entrepreneurship.  It is amazing at how many individuals often say, “You know, one day I want do that business thing and BE MY OWN BOSS.”  Really?  When one creates a Money Machine and it has customers is this individual really her/his own boss?  Sounds like the topic of a future post within the “Musings….”  Let’s just say that this is definitely not the case and for now please simply trust this fact prior to additional proof being provided.  So the budding Money Machine founder finds the courage to move forward and the first thing on her mind is “I am going to need  X number of months worth of salary so that I can continue my current standard of living.  For this I will need to

  • Cash in a portion or all of my 401K and retirement so that I can have some start-up seed funding


  • I have a certain amount of equity in the house or property, I’ll just get a home equity loan, ie a “second mortgage”, to provide the necessary seed capital for the start-up


  • The family will need to cut back while we (more like I) follow our (more like my) entrepreneurial dreams and launch the business operation


While this is great stuff and the entrepreneurial juices are now flowing at an all time high, over in the corner observing all of this is a significant other, sometimes known as a spouse, who is saying to herself/himself

“I’m all about you following your passions and dreams and your desire to be an entrepreneur and founder of a Money Machine and all but just don’t get so caught up that you forget the fact that the baby needs some diapers and momma has to have her nails done this coming Friday and btw, the nail stylists recently increased their prices.”  This same analogy could be used for daddy and his golf playing, deer hunting, fly fishing hobbies.  It is all the same set of circumstances.

To be quite candid, self funding a Money Machine can be a key ingredient in creating the greatest of turmoil within any set of family dynamics.  In many ways the pressure to succeed and to provide a return on the initial investment is far greater than the pressure that is often exerted by lending institutions and investment firms.  Let’s dare not mention the first cousin to this form of sourcing start-up funding – borrowing money from any form of a relative.  This act can cause Thanksgiving, Christmas, Fourth of July holidays, reunions, funerals and any other form of family gatherings to take on a entirely different vibe and atmosphere.  It is definitely a form of family get together that the Money Machine founder should seek to avoid creating.   8^)

Well if all of this is true, what is the aspiring entrepreneur left to do?  At this time it may be advantageous to quote a luminary in tech community space – Mr Tim Oreilly, founder of Oreilly Media, roughly a $100 million company, from a 2010 Inc Magazine news article (which is worth reading in its entirety)

“But Tim was following his inner talents.  O’Reilly never raised outside capital; he funded his projects through profits. ‘There is a wonderful rigor in free-market economics,’ he wrote in an early company manual. ‘When you have to prove the value of your ideas by persuading other people to pay for them, it clears out an awful lot of woolly thinking’

This brings us to a place where we need to narrowly define the term Bootstrapping.  Essentially,

Bootstrapping – the art of funding a Money Machine through the creation of revenue derived from customers

nothing more, nothing less.  Creating a product or service that provides another individual or entity so much value that they are willing to exchange real currency for the aforementioned product or service is the GREATEST form of entrepreneurial validation.

With this being said, the question that now arises is whether or not there is any science that elaborates on the intricacies of Bootstrapping.  There are hundreds of books on Silicon Valley type business methodologies, venture capitalism, angel investment, crowd and seed funding mechanisms but where would one find similar content on such a narrowly defined posture of Bootstapping?  Glad you asked.

This will be the core of our conversation in the next edition of the “Musings of a Money Machine Hacker.”  Until next time…

PS  For more insight into the terms “Money Machine” and “Hacker” please take a few moments to peruse the content of this previous post.  It may help clear up a tad-bit of mental muddiness.

So You Need An Investor? – part 1…

“Would it be possible to introduce me to a few of the regional bankers?”  “Why won’t those angel investors return my calls/emails/knocks on their office doors?”  These inquiries are often asked by many first and second and third… time start-up founders and while listening, from which I often develop ear aches.  It was around year two when one of the best things that ever happened to me during my entrepreneurial career occurred – a Senior VP of a local bank turned down my request for a unsecured line of credit.  That particular year was super transitional for me as a start-up/Money Machine founder and was the culmination of the entrepreneurial escapades of my first couple of years attempting to manage a tech start-up and the source of many of the upcoming topics within this blog.

So my point is?  The content of the previous post from 07.30.2015 gave a few individuals some entrepreneurial heart-burn but why was this the case?  If you happened to be a start-up founder you possibly developed heart-burn due to the fact that you have become enamored with the tales of the “one technical wizard against the world” who while just starting his firm possesses an idea so outstandingly great that a superly wealthy venture type provides her a gazillion dollars simply for this idea.  News flash – The probability is 99.99999999999999% that for 99.99999999999999% of Money Machines and start-ups


I see soooo many founders heavily engaged on what could be coined “The Begging Tour” where they go from pitch session to pitch session conducting presentation after presentation in an attempt to get some initial “seed” funding.  A few ironies of all of these efforts include

  • The individuals to whom the founders are pitching often do not possess the problem(s) for which the Money Machine’s service or product provides a solution ie the pitchees are not potential customers.
  • If there is an interest on the part of the potential investor, she or he will inevitably ask the founder(s) the proverbial start-up question – “So, what’s your traction?” translated “How many customers do you currently have?”

This particular process quickly becomes a study in convolution with the founders soon running out of a launching runway due to the fact that they spend far too much of their time chasing seed investment monies which rarely materialize instead of working towards developing a better product while seeking to identify, understand and more fully obtain the only thing that really matters to an early and latter staged Money Machine –


The funny part about all of this is that when a Money Machine has customers the probability is stupidly high that a founder will not have to seek out investors but investors of all types will seek him/her out.  It is almost like being an athletic prospect playing at a small/rural high school or college.  There was a time when the stage on which one performed really mattered but not in today’s Youtube/super-hyper, social, sharing climate.  If you have any type of athletic skills, the coaches, schools and teams will find you.  Likewise, if you have a Money Machine with paying customers, the investors will find you, so much so that some will even begin having broker types blowing up your company’s phones like a telemarketer in an attempt to determine if you are in the market to sell the entire business operation(s).  BTW, It’s a trip when this happens.   8^)   Simply stated, in today’s investment market, very few investments provide an investor the type of financial return as getting in early on a solid tech/maker/creative/food start-up.  Now many of the readers of this post may find this fact hard to believe but please don’t take my word on this matter.  Simply consult a world renowned expert on angel investing – David Rose of Gust.  BTW, his book is a very good read.

The other side of this coin is that if any form of an investor is offering loads of cash as an investment in a Money Machine without customers, even if he is some form of a business sage and can clairvoyantly predict the billionaire status future of a firm’s founder, the probability is also quite high that she/he will be requesting a large, majority, ownership share of whatever type of a Money Machine that has been created and guess who often ends up navigating this particular type of entrepreneurial ship – that’s right, definitely NOT YOU nor YOUR CO-FOUNDER(S).

The short message is this – that for a start-up of any type but especially for a Money Machine, conversations, strategies, design & development, etc all start, end and are all in between about

YOU, the start-up founder(s) and YOUR CUSTOMERS

quod erat demonstrandum or Q.E.D.  Please note that a few individuals such as Professor Lynn Stout have gone as far as to refer to current and modern concept of shareholder value as simply a “myth.”  Her book – The Shareholder Value Myth is an excellent and enlightening read.

Some may be curious as to what happened after my nascent Money Machine and me were denied that line of credit a number of year ago.  Well, initially I was mad as fire, started pouting and whining while asking questions similar to those that now are the source of my aching ears.  Its was during this time that a junior banker trainee pulled me aside and gave me the following advice.  Advice that I still use today.  He said “If you want the senior people to take you seriously this is what you need to do.

  • Build up your customer base
  • Collect cash payments from aforementioned customers
  • Accumulate and save cash collected from aforementioned customers into a bank account, preferably in our bank.
  • Allow cash to remain in the Money Machine’s bank account(s) while the account(s) stay dormant for 12-18 months

Once this is done then revisit the Senior VP.”

I took his advice but as I began focusing upon discovering and developing customers and these customers began to exchange real money for products and services provided by my Money Machine, I noticed something quite remarkable.  I noticed that the accumulation of cash allowed my Money Machine to become its own bank!

Now how did/does this process work?  Well let’s discuss these particular details during a future installment of the the Musings of a Money Machine Hacker.  Until next time…

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