Case Study Bootstrapping - Facebooks example of bootstrapping

When Harvard dropout Mark Zuckerberg wrote the Facemash program during his second year at the university, few could have expected that he was laying the groundwork for the future of social media.

When Facebook took off in 2004, spreading across college campuses like wildfire, it was clear that Zuckerberg had created something whose potential for growth seemed unlimited and the company finally received its first major investment from PayPal co-founder Peter Thiel later that year.

But for college students who first got a chance to play with this earliest iteration of Facebook, it was clear from the second they created their profiles that this social network would not go the way of Friendster or Hi5.

Most notable though is how Zuckerberg created all of this with the help of several other students who later sued him for approximately $300 million in shares and how Facebook grew through both actual and digital word of mouth.

Simply put, it was the first social network to truly gain such traction and give its audience exactly what they wanted, something Facebook continues to do at the time of writing through its constant expansion of features that include live streaming video and messaging.

What Zuckerbergs case shows is that the quality of an idea and a team willing to help one realise it could change the world, all without the need of big funding to get started.

eBays example of bootstrapping

As with most of the businesses listed on this page, eBay started at home too. Though in this case, it wasnt a garage, but a fateful living room that would transport Pierre Omidyar to the forefront of both the first internet bubble and well past it to its place in the canon of established internet businesses at the time of writing.

Omidyar could be considered a pioneer of online business with the creation of AuctionWeb, dedicated to bringing together buyers and sellers in an honest and open marketplace, as read in its initial mission statement.

Over the following years, Omidyar grew his business in alignment with the growth in internet usage and demand for such services.

By June 1996, $7.2 million worth of goods had been sold on AuctionWeb, but that number would pale in comparison to the $500 million in Beanie Babies that would be sold on the site during the Beanie Baby mania of the late 90s and which still extends to this day.

What eBay managed to do was create a sustainable revenue model that could grow continuously for years.

At the time of writing, eBay is considered the top online auction site in the world and provides an outlet for online shoppers and sellers everywhere to get things for cheap or make a full-time living.

Microsofts example of bootstrapping

While it may seem unfathomable that the biggest computer company in the world would have started with bootstrapping finance, Bill Gates was a tenacious bootstrapper.

Starting Microsoft a year earlier than Apple in 1975 with his partner Paul Allen, Gates and Allen had begun back in 1972 with the creation of their first company called Traf-O-Data, which tracked and analysed traffic data from vehicles.

Their big breakthrough came in the form of a 1975 Popular Electronics feature on the Altair 8800 microcomputer. Allen believed that the two of them could develop a BASIC interpreter for the computer, despite not having a working model.

Instead, Allen developed an Altair simulator and Gates programmed an interpreter that ended up performing perfectly during the demonstration. Soon after, Microsoft was born and history was made.

What Gates and Allen demonstrated is that the bootstrapping approach requires an immense amount of work for no guaranteed pay-off. But by keeping the faith and working hard, the most talented seems to make it through.

Discussion

Conduct a comparative analysis of the three case studies and discuss how new ventures could apply the approaches used in these case studies.