As Sens. John McCain and Barack Obama work out their policies for supporting entrepreneurship, they need to invest some intellectual firepower in understanding the needs of bootstrapping entrepreneurs. Such people don't need the boatloads of money that the traditional venture capital industry brings, but they can be a powerful weapon for mass reconstruction of the U.S. economy.  In the last month, I have dedicated several columns to topics related to capital-efficient entrepreneurship. I strongly feel that if entrepreneurs all over the world can learn how to build sustainable small businesses without requiring large amounts of outside financing, the global economy will function better. Of course, some of these ventures can then go on to seek large scale expansion capital, and build bigger enterprises. But even those that don't grow to a huge size can enjoy the pride and privileges of being a small business owner.  Join the discussion: Is the venture capital community overrated? How much economic growth can come from small businesses? Tell us what you think in the Readers Comments below.  One of my favorite examples is the story of Scott Wainner of Dallas, who at 15 started an online community. "I was really big on trying to tweak the performance of my computer, so I started SysOpt.com as a way to reach out to other people to get their help tweaking my computer. That was in 1994." Yes, that was a year before Netscape went public. Talk about a precocious kid!  By 1999, SysOpt had grown to 500,000 unique users and several million pageviews a month without any marketing investment. The magic of the Internet took over. As it was years before Google (nasdaq: GOOG - news - people ) launched its now famous AdSense network, Wainner sold ads himself. From a start of selling the first banner ad for $25 a month, his little online community business became a $100,000-a-year cash cow in five years. The only investment: an inordinate portion of Wainner's personal time.  Soon, young Scott Wainner had to make a choice. His dream of becoming an aerospace engineer had propelled him to seek admission at Texas A&M University, but by his sophomore year, what had started as practically just a hobby was generating serious cash and demanding more and more of his time.  Wainner dropped out, moved to Portland, Ore., and focused full-time on his budding entrepreneurial career. He launched another site, ResellerRatings.com, where people reviewed various online retailers.  At the height of the dot-com frenzy, acquisition offers started surfacing. "I went out on my balcony and screamed, because I was just 20 years old," recounts Wainner, with the ripe perspective of age. (He's now 29.)  Eventually, Earthweb bought both SysOpt and ResellerRatings. It was a strange negotiation, at gunpoint almost, Wainner recalls. He remembers acquirers telling him: "We will give you a $350,000 cash bonus if you sign our offer today, but if you walk out of the office, that is it."  Wainner joked that if they would let him fly back to California on their Gulfstream jet, he'd sign the deal. They said 'sure,' so he got to ride in the cockpit of the jet on a $20,000 flight. "It was an amazing experience for a 20-year-old with no business training. My hobby paid well," he remembers with a smile.  Not everything went well at EarthWeb. Eventually, Wainner bought back ResellerRatings.com, and within a year, revitalized it to a thriving community generating $1 million a year in revenue. That was 2004. Today, the site generates a couple million dollars in revenue. Wainner is busy launching new sites and growing his business at a steady pace.  What surprises him still is how much money he sees sloshing around in start-ups. "I look at some of these sites that have received $10 million in funding and I wonder what they are doing with all of that money. I don't need it. I do it slower. For me, being an entrepreneur is so much trial and error that I would rather make the mistakes in the lower dollar range than at the Super Bowl advertising level." (Read my interview with Scott Wainner here.)  What Wainner's story embodies is the incredible wealth-creation opportunity at the bootstrapped entrepreneurship levels created by the Internet. Not every company needs to be a Google; entrepreneurs can build lifestyle businesses, family businesses, cash businesses. They might not generate enough returns to fund union pension funds or university sports stadiums--and so are ignored by the mainstream venture business.  Some homegrown companies do become venture-funded, major enterprises, as Ramu Yalamanchi's Hi5 shows. Also a bootstrapped online community, San Francisco-based Hi5 took six months to hit the 1 million-user mark. Today, it's adding a million users a week and is the No. 1 social media site in Portugal as well as much of Spanish-speaking Latin America.  While Facebook and MySpace conquered the U.S. market, Hi5, quietly created an enviable position in the international markets with simple yet profound touches. "We thought about little things like colors. In certain countries, certain colors have certain meanings. Black has a connotation in the U.S., as does purple in Thailand," says Yalamanchi.  Hi5 hit 5 million by the end of 2004, the year it was launched. In 2005, Hi5 grew to 20 million; it now boasts more than 80 million registered members. All that funded by a paltry $250,000 from genuine friends and family.  The company became profitable in 2004 through ad revenue generation. "Early on in the business, we worked with traditional ad networks, which included a division of Monster called Tickle, [which] we still work with today. Tickle has been a great partner [that] has helped us monetize at a level that would have taken us 12 months or so to reach," says Yalamanchi. (Read my interview with Ramu Yalamanchi here.)  In 2007, however, Hi5 decided to raise outside capital of $35 million ($20 million in equity from Mohr Davidow Ventures and $15 million in debt). That kind of financing means it can continue to hold its own--or even challenge--the likes of Facebook.  Both Wainner and Yalamanchi have created great businesses--great for their customers, their employees and for the economy.  The world needs these kinds of boostrappers. Let's hope the next U.S. president knows how much we need them, too.  Join the discussion: Is the venture capital community overrated? How much economic growth can come from small businesses? Tell us what you think in the Readers Comments below.  Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy. She has a master's degree in electrical engineering and computer science from the Massachusetts Institute of Technology.
Rebuilding the economy doesn't have to depend on the traditional venture business. It just takes sweat and guts.