[MUSIC] Joining us now is Sramana Mitra. Sramana is the founder and the CEO of what I believe is the world's only global virtual accelerator. She helps businesses all around the world grow faster and Sramana, it's fantastic to have you with us. Thank you so much for coming on board. >> My pleasure John, it's great to be here. >> So, on the blog that you write so regularly and in your book. You're an outspoken advocate for bootstrapping a start up and then for funding it with its customer's cash. Why do you feel so strongly about that, and what drives you to do that? >> So John, I've been in this industry now for 20 years, and I've been on all sides of the table. You can possibly imagine. I am a serial entrepreneur, this is my fourth Company. And I operate in the heart of Silicon Valley, in Menlo Park, California, right off Sand Hill Road. >> Right. >> So I grew up kind of in this venture capital, highly biased perspective. And this is the perspective, it seems that the world is buying into that people believe. Quite wrongly so, that entrepreneurship equals financing. And I saw that, I saw that in my work, I saw that here. And then the other thing, that, because I've been an insider in the venture capital world. I realize that over 99% of the entrepreneurs out there, who go out to seek financing actually get rejected. So then, however, there are tons of companies out there that can be successful without venture capital financing. Venture capital is a very specific type of business. Venture capitalists fund companies that are hyper fast growth. Hyper large TAM, total available market businesses. That is the only kind of companies VCs are interested in. Most companies don't fit that bill. >> Exactly, exactly. >> Most companies will be steady growth, linear growth, reasonable sized companies. Maybe $2 million, $5 million, $10 million, $20 million, $50 million companies, and I see nothing wrong with those businesses. Except they're not venture fundable. That doesn't mean the company is failing. A company that makes $5 million in profitable revenue is not a failure. A company that makes $50 million in profitable revenue is not a failure. But somehow or the other, and it irritates the hell out of me. The media has positioned venture capital funding as a success parameter for the whole entrepreneurship universe. And it maddens the hell out of me. >> [LAUGH] >> But I founded One Million by One Million. >> Yeah,So So, it maddens you, and it maddens me too. But why then do you think so many entrepreneurs still believe that raising seed or early stage capital from an angel or a DC is their holy grail? >> Because the media and the business schools are misleading them. In every single quote unquote ecosystem, there is a crazy system going on. In that everybody's being taught that the minute you decide you want to be an entrepreneur. You need to go raise money. It's being taught by a bunch of ignorant fools. And it's being taught at a wide scale and it's being amplified a bunch by a bunch of ignorant media fools. That's why it's happening. >> Yeah, a strong statement. So, tell us a couple of stories if you would. About companies you've seen, that have chosen to take another path, and how it's worked out in practice. >> So, I know huge numbers of entrpeneurs. And in the last ten years I've talked to more than 600 entrepreneurs. That I have done meticulously detailed case studies on, and this is my entrepreneur journeys body of work. You can read it on my blog, there are 12 volumes of entrepreneur journeys books. That we have published and this is also the body of work that we use to teach the one on one in curriculum. So, we have case study after case study, I'll just give you a couple of examples. One of my favorite entrepreneurs actually, is a guy called Girish Navani. He runs a company called eclinical works, and the company is over $300 million in revenue. There's not a penny of outside financing that has gone into it. Similarly, there's a guy called Sridhar Vembu, who has founded a company called Zoho. Also, close to $300 million in profitable revenue, not one penny of outside financing. These are actually quote-unquote unicorn companies. If you read my Billion Dollar Unicorns book, it has a section called Bootstrap Unicorns. And these are bootstrap unicorns, we value these companies. They will have legitimate $3 billion evaluation in the public market, sustainable public evaluation [CROSSTALK] >> Legitimate's really important, right because [CROSSTALK] Many of evaluations were seeing today of these unicorns are nuts, right? >> They are smoke and mirrors. If you look at Dropbox, the last round of financing valued it at ten billion dollars. There is no way Dropbox is going to sustain, I don't know, maybe a billion dollar valuation would be a stretch. So, these are not legitimate valuations. Where as if you look at Zoho or eClinical, these are legitimate valuations. There's another class of companies, that actually have followed a methodology that I like very much. Which is bootstrap first, raise money later. So, much as I have used very strong statements in speaking against this madness, mad pursuit of venture capital. I actually think venture capital is a very useful tool. >> In the right place and time. >> Venture capital >> In the right place and the right time [NOISE] used in the right way. So, our philosophy in one million by one million, is boot strap first, raise money later. So, let me tell you a story of, again, I have numerous case studies of this methodology doing phenomenally well. One of my favorite entrepreneurs is Greg Gianforte founder of Right Now from Montana. Which is not a hub by any stretch of imagination. Greg bootstrapped right now from 0 to $6 million dollars. Then raised his first round of financing. This was in the bubble times that are around 1999, 2000 time frame. His first round financing, seriously financing, valuation was $130 million. >> Fantastic. >> That was a series A. This company eventually went public and was finally acquired by Oracle for $1.5 billion. Great success story, great entrepreneur, but the fact that it bootstrapped to that extent early on, gave him immense leverage. >> Yeah. >> So, my philosophy on all that, is if you're an entrepreneur, don't go to VC's as beggars. Go as kings.If you have the metrics, they will come after you. That's the situation you want. >> And, and the way to be a king, the way to get a cue of V.C's outside your door, instead just one guy from whom you're begging money. >> Zero. Or zero guys. >> Well yeah. That's the mean lengtj the cue is zero most of the time. So, the way to get them a queue of multiple VCs, in your view. Is get genuine customer traction first and then when you [CROSSTALK]. >> Absolutely. >> Proven you've got technology works, you've got customers who want to buy it, then you go raise capital. >> That's right. >> Okay. >> That's right. >> So you're not saying VC is bad. [CROSSTALK]. >> Not at all. >> You're just saying VC raised too early, is the wrong thing to do. >> So, 15 companies every year, that actually become really, really successful, venture funded companies. >> Fifteen in the USA? >> One five. >> One five, scary number isn't it? Yeah. So tell us the Zoho story if you would. You said they got to where they are today with no external financing. Many of our participants here are in the very early stages of their companies. They've got an idea maybe, or they've built something in a lab. And they want to get it going and they think they need capital. But how did Zoho in its very, very earliest days get over that hump? [MUSIC]