I don't know about other founders, but for me, startups are basically the only vehicle for solving big problems that nobody else will/can solve.
Often the reasons that (nearly) nobody else is trying to solve your exact problem are 1) it is risky/unlikely to monetize well, 2) it is hard, grueling, or boring work that may not even function right in the end, 3) might believe it to be impossible or not worth it.
But if you have a big problem in front of you and you strongly believe it can be solved and should be solved, then what other choice do you have but to start a startup?
There are lots of people (maybe myself? I dunno.) who feel strongly about solving a problem but also feel that they don't have "what it takes" to be a successful startup founder. I have a failed startup in my past. The failure process wrecked me for years, emotionally, socially, financially, the whole thing. I'm okay now, don't worry.
But are there any other reasonable options for "trying to solve a big problem that is otherwise being ignored" other than starting a startup?
I want to solve big problems I care about. I have that ego discussed in the article; often I find I do believe I have the right combination of things to solve a particular problem better than other people. So I feel like it is my responsibility to do it.
But being a startup founder is hard and if your personality or circumstances aren't a good fit, then, what do you do? Just stay frustrated that the problem isn't being solved?
This resonates very strongly with me. Everywhere I work, I find really cool things to invent and business process improvements. Sometimes the biggest impacts these have are at the megacorps due to economies of scale. Often though there's so much friction, overhead, and red tape that it's impossible to get buy-in from team members and managers in the megacorps. This happens even in the best cases where everyone is open-minded and supportive. Sometimes large groups just don't have the excess capacity needed to re-tool. In large companies that don't have the best case cultures, it's nearly impossible to implement improvements or use any cross-team resources (human, physical or digital) to bring an invention to life.
It seems you're absolutely right that a startup is your only option if your idea is a proposed solution to a problem that is outside the mission/domain of (your/any) current organization, and/or if any organizations which would be interested simply can't devote resources and time to developing, evangelizing, and implementing your solution.
However, the risk involved in the process is so damned high. I love working in teams, whether at large megacorps, small contracting groups, or on my own or my friend's startup ideas. I don't love the "burnt relationships, heartache, debt, lawsuits, depression" (as 'irjustin phrased it elsewhere in this thread), that can be associated with startups.
Some startups are well-positioned for co-operative mutual interest VC money (repl.it would be a strange thing to bootstrap). Some startups are fantastic for bootstrapping (Sparkfun/Adafruit), and many could probably succeed just fine doing either (mailchimp, bootcamp come to mind). Still others probably best operate via philantrophic arrangements (OpenStax).
> startups are basically the only vehicle for solving big problems that nobody else will/can solve.
Yeah the number of 6 mo. old "move fast break things" startups with top-candidate covid vaccines is staggering. What do those idiots who got life sciences phds think they're doing?! /s
Going to disagree with you here. In many (I'll even say most) cases, being an executive or respected consultant at a large company with established resources, staff, and customers will give you significantly better opportunity to actually solve a big problem. The vast majority of startups are not, in fact, solving big problems. They are solving small problems for a small subset of people who need problems solved (usually yuppies) because those are the problems they are able to solve efficiently.
What you probably mean is that startups are good at innovating a potential solution to a big problem. But this is an entirely different thing than actually solving it at scale, and is the reason many startups end up getting bought or acquihired before they do anything of large importance.
I like how according to Silicon Valley, a "Founder" is a person that has borrowed capital from VCs. I live in Silicon Valley and there are more businesses here that are not backed by VCs than otherwise. Tens of thousands of small businesses who work as hard as the top dogs sucking up to VCs, yet they're just businesses with owners, not "Startups" with "Founders". Some people still call Dropbox, Airbnb and Uber as "Startups". I am a little annoyed by this just like I am annoyed by buzzwords of today - AI, crypto (bonus points if you throw in the term - supply-chain), and of course, the new kid on the block - "Quantum".
Do you guys not see this and introspect once in a while?
I don't think anybody in Silicon Valley would say the _definition_ of a Founder is someone who takes VC money.
All companies require capital to operate. All capital has a cost. In many high growth companies, the amount of time it takes to build a product and go to market has a significant effect of how much market share that company can acquire. Selling equity or taking on debt is how many companies can reduce that time and acquire more market share.
It just happens to be that the companies Silicon Valley is most interested in are companies that have to raise capital this way, with very very few exceptions.
Now more than ever, VCs will happily tell a a founder "your business is not a business that fits with the VC model well, don't raise VC money." The VCs who say that do not think the people they are are saying that to "aren't founders" - their business just doesn't need VC investment.
I do find it interesting that in spite of the fact that so few companies will ever accept VC money or go public, this model is viewed by many as the dominant or only way to start a tech business. This is in spite of the fact that Technology businesses may very well have the lowest capital requirements of any type of company in history.
It was the same way in the 80s with finance. Even though most finance workers were (and are) accountants working boring 9-to-5 corporate jobs, everyone assumed that anyone in finance worked on Wall Street and snorted coke off of strippers in NYC nightclubs every weekend.
I'm not even sure revenue is that good of a signal of the work put in. Didn't the Basecamp guys start off on just 10 hours a week inbetween their day job.
Its talked about a lot because the VCs are out there beating a drum, as they should. Drawing a crowd. Hopefully an interesting one.
Once you get a crowd, everyone starts doing what the people around them do. Its natural. It takes some time and experience to figure out whether you need to be there or not.
> Technology businesses may very well have the lowest capital requirements of any type of company in history.
Is it? You still have the traditional expenses of sales and marketing, often higher because they're aiming to acquire users at scale. Instead of putting down tons of capital on factories, you have to pay through the nose for quality devs + office space in areas where quality devs tend to congregate.
Besides, capital requirements may be low, but we've seen technology pay massive returns due to its ability to scale so well, so I don't think anybody minds paying a bit more because the expected return is much higher.
Dave McClure had a pretty aggressive talk about why not to do a startup[0] back in 2012 and it resonates with what's written here.
Startups are hard and we love to parade those who made it, struck it rich, but the reality is the vast majority don't. It also requires a skillset/discipline/constitution that is very different than what most people want to do.
In the very large group who don't make it, lies burnt relationships, heartache, debt, lawsuits, depression, even suicide/death. Which on closer inspection, the success group has a lot of the same traits. Only they made it out with IPO, sale, merger, self sustaining business to show for it.
It is scary. It is hard.
But to me, you won't know until you know. And if you want to know, the only way is to try.
Before covid it took me 12 months to find a job. I applied to 100 companies. Ironically, got a job during covid and the job is pretty relaxing compared to the job hunt. During the hunt I thought: society is kinda forcing my hand here.
Also: a lot of knowledge workers have to work a lot of hours and keep on learning (e.g. doctors or programmers).
To me, it feels much more like a pick your poison type of thing.
> To me, it feels much more like a pick your poison type of thing.
The way out is consistently living way under your means (if possible). If you don't live in poverty, this is likely possible in the general case; just pretend you make XX% less aftertax and voila, you have an %XX savings rate. There are non-monetary costs to doing this, but there are also benefits, and the freedom is really hard to beat.
...though I've heard that that doesn't apply to having a family. I don't know exactly this wouldn't generalize to having a family, but I don't currently have dependents, so this blind spot is likely the reason. The main thing I can think of is how expensive schooling is (via or not via housing prices), and the understandable desire to max out the quality of your kids' schooling (my mom took a super-shitty job as a teacher to get my sister and I free private school tuitions, with a bitch of a commute, until we were old enough to get scholarships).
Could you elaborate? As I said, I'm assuming this is a blind spot, but assuming both parents are onboard with trading consumption for security/freedom, I don't understand what specifically would make this unworkable.
That is to say, the same logic applies to a family: If a family making $120k could survive adequately in a given location, then a family making $160k can pretend they make $120k and do the same thing. As I mentioned, the only exception I can think of is wanting to max out education spending: taking for granted that school spending is valuable for educational outcomes, does this explain 100% of the difficulty in maintaining this habit once having a family?
Other possibilities:
1) education/housing spending is often a proxy for class segregation, which I suppose is another factor you'd want to max out for your kid (I have no experience with this: my parents were upper-class in the old country so they hung out with other upper-class old country people (of various incomes) and I got the values they hoped I would without having to pay for it)
2) Perhaps it has less to do with kids than it does coupling up: anecdotally, most of my male friends who are happy to be ascetic need to start flashing money when they start dating, and most of my female friends are far more interested in consumption/comfortable living spaces. I know few people living well below their means, but 0% of them are women, despite my having many female friends. Though this is a pretty low-confidence guess, since as I said, it's based on anecdota.
> That is to say, the same logic applies to a family: If a family making $120k could survive adequately in a given location, then a family making $160k can pretend they make $120k and do the same thing.
Yes, I was trying to agree with you.
I'm married, have a family, and we do exactly what you describe. We live below our means and save as much as possible.
In our case, living below our means worked out as having a single income family, and having a full time care giver in the home. For others, that might mean maxing out two incomes and retiring earlier.
> Perhaps it has less to do with kids than it does coupling up: anecdotally, most of my male friends who are happy to be ascetic need to start flashing money when they start dating, and most of my female friends are far more interested in consumption/comfortable living spaces.
When we started dating, my wife joked she liked me for my crappy old beater of a car. What she meant by that, is she knew a lot of the guys with fancy cars were actually broke because all their money went into their car, and she could tell early on I was more responsible and frugal.
So be careful of over generalizations based on anecdotes. And, frankly, be careful about getting in a serious relationship with someone who doesn't seem capable of living within their means.
I have a family, and we live this way. My wife and I both grew up with stretches of financial insecurity and it has really effected how we see things. We're doing well now but we are still hyper aware of how things can change. Our modest home, modest cars, and modest lifestyles reflect that mindset.
The “you win big or fail” mental model is totally wrong. If you fail, dust yourself off and try again. Doesn’t mean you have to do it immediately. Failure definitely sucks. But people who fail once at something they really want to achieve and then write it off as impossible never achieve anything.
Also the high stakes fat stacks VC hyper growth approach is but one way to create a business.
My take on this is: the only people who should become a founder are the people who can't bear the thought of not doing it. Anyone with less than "Give me libertly or give me death" levels of commitment should not even bother.
I think what most of us want is to be free of the tyranny of employment. And I don’t think founding a company is best way to mitigate that if you aren’t completely into it, you could just go become a freelancer or start a small services Center in your locality.
If that's the case, definitely don't start a company. Instead of being beholden to one manager, you're all of a sudden beholden to dozens... employees, investors, board, customers, etc. Being a founder is just a job.
> An employee is beholden to his/her manager, but cannot "call the shots" but simply takes orders.
This is true only insofar as the value you bring to the company cannot be outweighed by the shots you want to call.
If you are, for lack of a better term, that good (and while I have a dim view of VC-silly startups, the successful ones I know really are that good), that can be a very wide remit. It very well might be "wide enough," even, and it's worth considering.
This seems like a rather naive view to me (and one that I also used to have). As a business owner you are far more accountable to a far greater number of people than you ever will be as an employee. You have the authority to make more decisions, but it’s hardly a “whatever you like” sort of situation. Nearly all of the decisions you make will just be about balancing all the responsibilities you have to other people. As a business owner you might have more authority, but there are many areas where an employee would typically have more freedom. An employee has the freedom to leave all their work problems at the office and go home at the end of the day, or take a vacation. An employee has the freedom to leave the moment a better opportunity comes along. An employee has the freedom to only worry about the problems they’re specifically employed to solve. A business owner would not be expected to have any of that. If your primary concern is a greater level of autonomy at work, then you’d typically be better off seeking and employer who will give you more autonomy than you would be owning a business.
I don’t get “the tyranny of employment”. I’ve had bad jobs before, but within a couple of months I got a new one- in my case always within the same company. My peers in tech have had incredibly dynamic careers as W2 employees.
I’ve toyed with starting a company a few times, but it’s primarily been because there is problem I want to solve that no existing organization I know of is likely to solve it own their own.
I suspect what I really want is a professorship and tenure, but I’d probably be more likely to succeed at creating and exiting a startup successfully at this point.
For the first 16 years of my working life I went through a number of jobs, only one of which I really liked. This probably says more about me than the employers. I think some of us just aren't suited to working in corporations.
Why is it that starting a tech start up is seen as an uber difficult task often resulting in burnout while starting a business in a technical occupation such as electrical or refrigeration is (seemingly) less risque? Surely there are a plenty of opportunities where rather boring software can be applied to business problems. Does it always need to be a monumental technical accomplishment to create a success?
starting a startup is not the same as starting a business. By definition a startup is a type of business whose business model is not yet proven. So you end up with 2 types of risks in a startup - the normal risk of starting a business (like the electrical engineer), as well as business model risk where the model may prove to be unprofitable.
If you're starting an electrical company, you're probably using off the shelf components and using tried and trusted techniques to install them. A tech startup is more closely equivalent to a company designing new electrical components. I wonder how many of those fail?
The difference is in the HN-style (and Bay Area) understanding of the word "startup", which is focused on hyper growth at all costs or bust. Starting a small business in something like HVAC is very different in that you typically start small, with relatively low ambition, and grow the business organically over a long period of time. The latter is definitely difficult and sometimes stressful, but not in the same way as when you have investors pushing you to bump your revenue up by 10x in the next year or gtfo.
There was an article on HN about extremely successful Mormon startups. Interesting that they all manage to leave the office at 5pm (because they all have 6 kids) and build multi-billion dollar businesses.
Would you mind linking? I'd love to read that article. I've anecdotally begin to notice more and more B2B startups from Utah make it onto the map that fit just that profile.
The author has agreed elsewhere in this thread that he’s basically writing about taking VC money.
That being said, the advice applies elsewhere. My dad was a physician in US military and then decided to open up a private practice. He spent decades running a business where he was the sole source of revenue, and as far as I can tell hated dealing with any aspect of it that wasn’t direct patient care. He eventually joined a larger physician group and was much happier in his job.
The term "startup" here implies that you're building technology to provide a scalable product or service. Starting an electrical or similar contracting company is more like going freelance than working on a "startup". You're directly selling your hours so it's very accessible and easy to bootstrap, but scaling it up is far harder.
Startup are (almost) never profitable when they "start up". Hence they need to raise money through investors until they grow enough to develop a mature, profitable product. Delivering this product can take years and require a large workforce. In the meantime the company still needs to pay the employees and creditors.
Traditional businesses like electricians start with a typical business plan. They might need to borrow some cash at the beginning but if the business plan is spot on, they'll start making money quickly, enough to cover the costs and make profit.
For me, the way I thought about it was a bit different. When I did YC I had already worked at Google for a while, and the question I was asking myself was less "do I want to be a founder?" and more "is starting a company something I ever want to try out, in a career that will probably span decades?" If you've had jobs you liked in the past, and you figure that you can probably find those jobs again, and you don't immediately need the big company salary, what is a startup really risking? The worst case is that you work on it for a year or so, it goes nowhere, and you go back to work somewhere else. You miss out on some money but you're going to learn something new in any case.
Same here. I wanted to know what it was like to have all of that responsibility on my shoulders.
I felt like my career was moving at a snail pace within BigTechCo and I was capable of much more. There's no real risk in that situation, unless you're borderline destitute, have dependents who need you, have a serious medical condition that requires a high end employer to support you etc.
Even if you fail, you will have learned many valuable skills and perspectives, and might get hired at your previous employer with a better title.
I remember as I was starting my company, I reached out to a founder of a company you've likely heard of for advice. We grabbed drinks, and he practically begged me to not start a company, for my own sake. I thought he was a dick.
But he wasn't wrong. Write down a list of why you want to start a company. I bet the list involves things like "building something nobody else has," "getting to program and design and do a bit of business-y stuff" or "freedom to work on what I want". That's only true when you start. Pretty soon, you're spending all day in meetings, and only a small portion of your time will go to the things you currently enjoy doing... and you'll feel guilty because there's something more important you should be doing. (Me? I'm currently procrastinating on an investor update, an H1B application and two performance reviews.) You'll spend more time writing emails than writing code. You end up bogged down in organizational issues, not dreaming up cool new features. Rather than having one boss, you now have dozens... investors, customers, employees, etc.
Oh, and the rejection. The non stop rejection. Every single day, hour, minute. Investors, customers, employees, potential employees. It's not personal, but it sure feels personal. Even when things are going great, there's tons of little micro-rejections, non-stop. I wish someone told me that.
It's really hard. I don't know a single founder who hasn't had relationship problems because of their company, or suffered from depression. Hanging out with founders is less like the TV show Silicon Valley, and more like group therapy.
This isn't to say you shouldn't do it. But just be prepared for what being a founder actually entails. Talk to a few founders of medium sized companies about how they're doing. If you're still on board, then maybe you're right for the job. For me, I wouldn't change a thing... I love it. It's incredibly hard, but there's a reason I haven't even thought of leaving. If you're the same way, then go for it!
But don't do it because you want to do it. Do it because you literally can't imagine not doing it.
(If you're doing it now and things are getting hard and you need someone to talk to, my email is in my bio :) )
Do you think some of these issues could be ameliorated by setting out guidelines in the very beginning such as sticking to a simple business model, saying you won’t scale past a small size, and outsourcing business-related work to 3rd party services? Many engineers probably identify with your quotes about “building something no one else has” and “freedom to work on what I want.”
I think many of us would find guidelines like that useful! Because to a corporate engineer drone like myself, starting something small like Pinboard sounds rewarding.
Yeah! I specifically was using the YC definition of "founder" here (VC backed, etc), since that’s what the article is about. Indie hacking is a completely different ballgame!
I've started a few other companies in parallel (for example, https://startupescape.com/) that collectively earn similar to my company salary, and take a few minutes a week to run. You have a limit on how big you can get and how much of a difference you can make, but if you're cool with that then it's definitely possible! In my mind, the only downside is that you're working alone rather than with a team – and it's really fun to have people to share the journey with!
"You'll spend more time writing emails than writing code. You end up bogged down in organizational issues, not dreaming up cool new features. Rather than having one boss, you now have dozens... investors, customers, employees, etc."
why not hire a COO that takes care of it? Don't do jobs that you are not happy with for long. For some short time that is acceptable, but not for long.
I don't count my customers as by bosses. And as long as you don't give yourself the trouble, they are not your bosses. However it is important to focus on them, try to think about them and know what they need before they even know it.
Maybe "boss" wasn't the right word – I should have said "Rather than having one boss, you now have dozens of people you're accountable to... investors, customers, employees, etc."
And sure, hiring can make issues go away (I've definitely done it!), but I think you're missing my point – no matter who you hire below you, if you're the CEO, the buck still stops with you. You're the one ultimately responsible.
The lesser known truth is that the CEO role is often tedious "normal" work and not being Ironman. You can give in to that and hire a CEO that actually enjoys the meetings and stuff, or at least a COO to run the company day to day. Just because you founded a company does not mean you have to do everything but sure, the pressure to take responsibility is high..
>Oh, and the rejection. The non stop rejection. Every single day, minute, hour. Investors, customers, employees, potential employees. It's not personal, but it sure feels personal. Even when things are going great, there's tons of little micro-rejections, non-stop. I wish someone told me that.
THIS! You feel like your back is always against the wall and you have to defend every product decision. You are right it's not personal and probably good the feedback(most of the time...) but you ja it's hard getting rejected 24/7.
And even criticism can later be seen as "rejection" :/ Maybe it's best to view these things not in isolation but on a timeline.. Sure many of the things I produce today, might still suck, but I think it sucks less than my products from 8 years ago. Growth is definitely there.
Yeah, that's how I've always expected the VC-Backed-Startup world to work. It's fascinating to me to watch people going into that, expecting it to work out for them.
It's like watching somebody take up smoking. You can watch the history of people doing this activity as far back as you like, and just hardly ever come up with an outcome that seems to make your life genuinely better. But with lots of examples of it making your life worse.
That's not to say I'm against starting a Business though. I've been into bootstrapping SaaS products for the last dozen-odd years, and that absolutely has made my life better in lots of ways, including those on your list of Reasons To Start A Company.
The big one for me is Free Time. If you stay small, things work out really nicely. Every dollar past breakeven adds to your personal salary. No dividing by 2 or 3 or 10, so a little $10k MRR niche is all you need to be set for life. That's the kind of niche that can be serviced with a few hours of support mails a week (once the thing is built, of course), which means a lot more freedom to go do whatever else you want.
I'm surprised this isn't talked about more. Trading your job for a VC-backed startup is just changing one master for another, with a more uncertain outcome and better upside.
I came to the conclusion I'd much rather own 100% of something small than 10% of a Unicorn. So I changed to part-time work to cover the bills and I'm bootstrapping. I think if I'm ever successful enough to need an HR department, I'll sell the business and move onto the next thing. I don't ever want to spend less than 50% of my day knee-deep in the actual code.
The biggest reason that so pushes me away from VC funding. One Pre-Seed fund reached out, so, and I will most likely pitch the guys. Because VC money allows you to speed things up in ways you can't by relying on free cash flow.
That being said, I'd still prefer the latter becaus I don't want another boss (or multiple ones). Gess it depends on the conditions, so.
And good point about the HR-department moment, that's the thing I fear the most in getting to many customers!
Pre-seed? So that's what maybe $10-$30K investment? Save yourself the trouble and do some contract work for 1-3 months, you can make the same amount with no strings attached.
Agree on this times 10! I am on my second "lifestyle" business, not raising money, and just getting the MRR up to pay for everything. I have done the whole VC game (raised about $20 million) and I thought it was going to be much more fun than it was. Turns out, just doing it the "boring" way works.
Probably projecting here, but the imo the no1 reason to start a business is writing software for others does not scale, while selling software/service is lucrative.
> But don't do it because you want to do it. Do it because you literally can't imagine not doing it.
What about because you can't bear the thought of having to work 8 hours a day for the rest of your life? I realize this is probably among the "bad" reasons to start a business (and it probably sounds disrespectful to people who have and will keep on doing that until retirement), but that is how I feel currently.
It may sound like a burnout problem, but there wasn't anything to be burned out by except... having to actually work full-time. I now freelance 10-15 hours per week and that feels doable but I'm not going to have a fun retirement with that (at least living expenses are covered).
It is a valid reason. Some people start companies to actually make money. If that is your motivation it can be very powerful. I would also say that it’s going to be (probably) years of 12+ hour days that might end in failure.
Thanks. Somehow that doesn't sound as bad, as long as there is reasonable (whatever that means) chance of it working out. Although, logically, it's clear to me that it is harder than working a job. Only way to know is to do it, I guess.
And maybe see a therapist, because this dread of having to work sounds weird now that I put it in writing. And I did it for many years without seeming to suffer too much, at the time at least.
You have to at least try to find a path toward self-actualization at your current job. Depends on how your relationships are with your various coworkers. For example my personal experience is this: Last gig was a startup, but I was stuck with the wrong people. It only takes one bad apple in your group of cofounders to generate enough chaos to plunge the whole thing into the ground. Since I bailed, I started working 9-5 at a job that pays me more than I've ever been paid and I split my time here working on 3 different projects which are all exciting and which I have a good deal of creative control over, and I enjoy working with every single one of my coworkers. It is my belief that the most effective way to move yourself toward the working environment that you want to have is to shape yourself in the image of the type of person that you want to work with. In my experience that has something to do with experience and knowledge... so I do not shy away from opportunities in which I can expand my experience or knowledge especially in the topics that I'm passionate about. And it's also important to proactively share your experience and knowledge. That one is the most genuine way to demonstrate that you know your stuff.
The article is specifically about VC-backed startups, so I was speaking to that. If you’re worried about burnout, don’t start a company. I take a lot of time off, but you can never really shut your laptop off.
That being said, a smaller drop shipping company or something similar could work!
Yep, I know someone who did this, but without a FAANG job, living in a relatively low cost of living area. It took 15 years to get to the first million, and roughly 20 years to get to two. You need to be able to handle a lot of ups and downs, like the dot com crash, great recession, and now corona.
A lot of people, quite understandably, can't deal with that sort of volatility. You'll see $100K+ drops in a month. You'll also see 6 figure gains, of course. Some people give up, put it all into bonds. That's not good, either.
">Oh, and the rejection. The non stop rejection. Every single day, minute, hour. Investors, customers, employees, potential employees. It's not personal, but it sure feels personal. Even when things are going great, there's tons of little micro-rejections, non-stop. I wish someone told me that."
That was definitely the case with my first startup when I was younger. In my second business that I started 10 years later, I couldn't care less. Most of the time such a feedback is given by people who aren't my target audience and who thus don't have the pain that people I target have. If your target audience rejects you, you have a big big problem.
Oh, and the rejection. The non stop rejection. Every single day, hour, minute. Investors, customers, employees, potential employees. It's not personal, but it sure feels personal. Even when things are going great, there's tons of little micro-rejections, non-stop. I wish someone told me that.
Yep. That's been one of the toughest parts of the whole process to me. Probably the toughest. That and the fact that nobody else (unless they've been through the same process) can really understand what you're dealing with. It results, for me, in a very lonely feeling at times.
Not all of them but certainly a few of them. Growing a bootstrapped business slowly meant fewer rejections, less stress about expected growth (hiring, sales) and more control over your role at the company. But eventually you'll hire employees and you will spend less time writing code. I wouldn't necessarily say that's bad though as you might discover that some of those other aspects of running a business are even more satisfying. And you can always make time if you really feel the itch to program something again (once you've hired people to handle support/ sales).
I generally encourage interested people to start their own companies. But I advise against taking VC except for a few use cases that make bootstrapping unrealistic.
I've bootstrapped several businesses. The stress is there but its different and highly depends on the situation (how much money you have saved up, what market you're in etc.)
I woke up with knots in my stomach for months thinking about the things I would have to do to get customers and the non-stop rejection the day would hold as I worked to get a foothold for my startup.
There was no VC to call me to account, or VC firm to help with areas you I didn't like or couldn't do.
If I hadn't been able to hold myself accountable to do the things that I dreaded my startup never would have gotten off the ground.
It sounds similar to the advice for a number of other disciplines I've seen in my family tree: classical musician and ministry. That is, you do it because you can't imagine doing _anything_ else because the dedication you need to succeed is so great it crushes almost anyone with less than fanatical devotion. But being a successful founder in tech has on average a _lot_ better rewards and social recognition overall than either of the other "tournament" style careers out there, so it's worth the downsides.
The attitude is essentially that of "Find What You Love and Let it Destroy You" quixotic work-centric nihilism that seems both understandable yet ridiculous. For folks that ascribe this worldview though, I do expect them to do fairly well in whatever they do... and to be miserable to be someone unfortunate enough to love them.
> you'll feel guilty because there's something more important you should be doing. (Me? I'm currently procrastinating on an investor update, an H1B application and two performance reviews.) You'll spend more time writing emails than writing code. You end up bogged down in organizational issues...
Somewhere out there in the world is someone incredibly excited to do just that. They aren't necessarily an "ideas" person but wrangling org just get's the heart racing. It's a shame that they're as hard to find as good ideas are
This excerpt from Lex Fridman's podcast with Stephen Schwarzman provides a fairly good assessment of the situation...it's a rough ride. - https://www.youtube.com/watch?v=jdt4PPY09rQ
Some folks can handle many things at once and have a structured mind for progressing them all forward simultaneously. My wife had that kind of mind. I do not. I struggled mightily managing a company and ultimately tapped out.
The commitment point is very true, and extends to employees and clients if you're in certain spaces and want to maintain a clean record in civil or moral court.
The rest of these arguments seem like bad framing. From a certain school of thought, entire point of a startup is to leverage your risk taking ability relative to incumbents in the market and your economic peers. Working at a startup forces you to learn more, faster; and you're challenged by real market factors, not artificial incentive structures created by a large org or academic institution. You also wear a ton of hats that you have no access to early in your career at larger orgs or in academia. Hiring, management, sales, accounting, taxes, finance, product ideation and refinement, etc - early years at FAANG or medium sized orgs will not expose you to all of these. Even an experimental team that lets you play with cool technological toys.
"Not being at school" is an silly way to describe, "4 years of school is sometimes a poor choice of use of the best risk-taking opportunities of a person's life".
"Your VC is not the one at risk here" is a reason to avoid VC, subvert some of the incentives that VCs give you, or ignore a subset of the advice they they give you, not a reason to avoid risky ventures.
It's important to note that the author here is an 18 year old and has no significant real-life perspective on either running a company or being part of a larger org. Nothing about that affects their ability to accurately pontificate on the pros and cons of running a startup, but there also isn't a lot of skin in the game or experience to back up that perspective. The bayesian prior here is negative.
If you're partway through a uni degree or similar learning program, or an incumbent engineer at a small or large org, then you should look at starting or joining an early-stage startup as a great way to take risks that you will be less able to every year (because of increasing costs of living, commitments to a new generation of your family if you marry and have children, incentives to purchase real estate, etc). The payoff will hopefully be huge and will be distributed across potential exits, experience, and personal growth.
Title is a bit misleading, 3/4 of the arguments against being a founder in the article are conditions that may not apply.
1. Reliance on a co-founder is stressful 2. VC vs founder risk profile 3. Don't dropout to found a company
I think these all apply more to the "get rich quick" approach and sure, I agree that is a bit of a moonshot.
But instead of writing off founding, why not look at ways to mitigate risk? Complete an education, spend some years working in an industry, or start a bootstrapped company in a niche that you learn from the industry. Or any combination of those that fits your risk profile.
And have an exit plan in mind, for either the success story or the failure. That solves the sense of self- a calculated business plan that didn't work out does not have to be devestating.
Yes, I always think working in business for a while is useful because you see so many inefficiencies that give you ideas. Like the guys that made millions on ski resort management software. Who knew that was even a thing!?
This article has such a strong mental bias towards the Bay Area worldview. It assumes so deeply that the two types of people in the world are VC-backed startup founders and engineers at top tier tech companies. This is so completely off. Many people (including me) decided to start bootstrapped companies that are profitable on day 1 (or soon thereafter), with richly rewarding work. Many folks literally can’t get a job because they have no marketable skills and their only solution is to create something brand new. Other folks just want to have a good story to tell about trying to change the world. It’s really in this small bubble that you can create an equivalence between tech founder and tech employee.
Hm okay, thanks for acknowledging! I guess the reason I had strong words for this was that the mental bias I observed is actually extremely pervasive among people here in the bay. In fact the first question I get about my firm is whether/how much I raised.
I'm afraid of Bay-Area-view-of-the-world-being-inaccurate sorta things, was kind of sad to see it in myself (though my scope was narrowed partially because my only experience was choosing between industry vs startup)
If you're interested in the wider world of startups you might like the "Startups for the Rest of Us" podcast (https://www.startupsfortherestofus.com/) and the community around it. Some examples:
They are probably closest to the Silicon Valley startup world in the kinds of businesses being built.
Getting further away you have things like affiliate marketers and drop shippers. The "Tropical MBA" podcast (https://www.tropicalmba.com/) is more in that space.
"Startup" is not really synonymous with "small business". It may not be a universal view but it does seem really common nowadays for the word "startup" to imply attempts at fast-growing, VC-funded new companies.
Also while most people don't work at the big-name sexy tech companies, I think the author's point was about what people should aspire to as the pinnacle of a career. Not what people commonly settle for.
Not really mentioned by the author, but my own experience is that you need to strongly consider the 80/20 rule for founders. If you start a business, you will spend 80% of your time doing the business things you don't want to do, and only 20% of your time doing the things you enjoy.
What this means in practice is that if you want to start a company because, for example, you just want to build products without dealing with manager/team bullshit, you are going to have an awful time. You need to be very honest with yourself about your ability and dedication to do all the things that actually get a business off the ground, not just the things you want to do and imagine you'll spend all your time doing.
You may not wish to be a founder if you believe the only way to succeed is to chase venture capital.
If you value freedom over becoming a billionaire there's an alternative and that's bootstrapping. Plus your odds jump from under 10% to as much as 50%. If you don't quickly reach product-market-fit it's a short journey. Sometimes having that pressure early brings clarity to the mind.
> A lot of people claim that startups are less money, but I find for signicant number of founders, that's not true -- not because they'll definitely have a good exit, but because they're skilled in ways that allow them to raise enough money to pay themselves like they would at a big company. If that applies to you, then going to a startup probably is your best shot at getting rich! For other people, the expected value of industry (particularly joining a well-founded early-stage startup) is usually higher.
I've never heard this before. Raising enough VC money to pay yourself a corporate salary (i.e. 6-figure or beyond) sounds like fraudulent use of VC money?
Why not? You might be the CEO of your new wannabe company, but your landlord is still going to demand his monthly rent. Bills still need to be paid. It’s unrealistic to be burning through your savings, because you probably don’t have enough.
And if you had enough money, you’d probably have self-funded your startup idea yourself, instead of having to deal with pesky VC investors.
I successful founded startups since 20 years, starting in the age of 16. In none of them, I founded together with partners that I realy trusted like I trust my wife. However we worked together on a professional level and figured it out everytime.
Why could we do that? because in the end it is a work for roughly 5y and if you stop even thinking about working 24x7x365 you have enough free time for recreational activities. I'm on vacation around 6 times a year, but available to the company on critical stuff.
Yes sometimes it's hard, sometimes you have so much work that even 24 hours a day wont be enough, but then again you need to focus on the important work and think about yourself.
Btw I only did the bootstrap way with every company founded on 25k€ and no VC/Angle/Bank/External money and very low income in the first years (I hire people ASAP). As of today, in average over the last 20y this gave me more then 500k€ yearly salary with the exit money. Not bad and definitive much better than I would have had in in any Employment.
For me it is absolutely no choice to be employed or working in larger companies. I want my own freedom :)
Thanks for the inspiring story. I’m guessing that the 25K€ probably referrers to a GmbH in Germany :)
If so, would you say the GmbH/UG (Limited Liability Company) route is a good idea from the start for a solo founder of a bootstrapped SaaS?
I’ve been doing my research and maybe I’m wrong, but it seems like it has quite a lot of overhead for a first time solo founder like myself.
To clarify, I’m an expat in Germany, but I’ve even looked into setting up an LLC in the US or another limited entity because they appear more lightweight to operate than their counterparts in Germany. But then I end up in a complicated international tax situation.
I’m not seeking legal advice, just wondering if you have any tips now that you’ve gone that path several times successfully.
You can start out with an Einzelunternehmen (Sole Proprietorship) which means your personal finances and your "companies" finances are the same, but it's very little hassle and cost to set up, basically an online form and a few Euro. Then, when you want to grow your business, limit your financial liability, take in outside money or just better control the flow of capital you can set up a GmbH (don't bother with an UG if you have the €25k at hand). Bonus points if you think it likely that you'll sell your business you can set up two GmbHs in a Holding structure which has big tax benefits in the event of a sale. You still only need the €25k once in that case.
Do not do an Einzelunternehmen to start. Do a UG. Not worth exposing yourself to the unforgiving and extremely aggressive Finanzamt when they decide they want to collect money you didn't expect to owe.
My tax adviser told me I should go for a Einzelunternehmen (especially use the Kleingewerbe during the first year) because of the reduced costs (registration costs 25EUR and thats it) and not having the overhead.
I’ve heard that registering a UG costs about ~500EUR + yearly costs of around 1500 EUR.
Given that this is during a beginning to try things out - without having too much money laying around to play with it.
Would definitely like to know about risks before getting myself into it.
I know enough smart people who have been pursued by the Finanzamt because their accountant and the Finanzamt had a different interpretation of the law.
> Given that this is during a beginning to try things out - without having too much money laying around to play with it.
If that's what you want to do, then a Einzelunternehmen (without Handelsregistereintrag) should be fine and less beaurocratic overhead. Especially for bootstrapping or side-projects it's always useful to have a Gewerbe registered.
As long as you follow the best practices (specifying 0€ expected income in the first year, etc.) and don't try to do any financial trickery, Finanzamt also shouldn't be a problem. However once you start to turn a decent profit (100+k/year) and/or start to hire people, you will be required to do more bookkeeping anyway, at which point it makes sense to found a GmbH (or even two layered ones).
GmbH gives you limited liability, that's its main purpose, to encapsulate risks and create a body on its own. You can just as well just register as a freelancer if there's no significant risk of going into debt suddenly or being sued. The overhead is not that big though, you have to submit tax returns, do proper accounting and you might want a tax consultant for this - that removes most of the headache, and costs you 3k€ a year. The pains start with employees, but I've also outsourced that to an HR company, costs me 30€ per employee per month - removes most of those pains too. Often tax consultants do that too. Bigger pains start at 10 employees, but by then ure hopefully large enough to have a few experienced people around you to take care of those :) All in all, I've found Germany to be less painfull than expected.
> You can just as well just register as a freelancer [...]
Beware: If you're registered as a "Freiberufler", you're not allowed to sell or re-sell any physical or virtual products, including any kind of SaaS (but you're allowed to have employees). If you want to do that, you have to register a Gewerbe. To put it simple, as a Freiberufler you can only sell your time or that of your employees (it doesn't matter whether you use fixed-price contracts or hourly rates), but you can't sell your software.
Yes it's all Germany based. Don't go the UG way, just found a GmbH.
Please note it is possible to found it with 12500€ and have to provide the other half of the 25k€ later.
My first company was without the GmbH protection and benefits. It was ok but I would not do or suggest it to anyone. Hell of a pain to migrate to a GmbH later.
I heard, that transition from UG to GmbH might be associated with additional costs. Also some older folks don’t like UG in general, because it is “immature” company status for them. Personally I don’t like (haftungsbeschränkt) at the end. It’s longer than actual company’s name and just does not sound good.
There are some fixed costs with transitioning to a GmbH (notary, Handelsregister, etc.), along with all the time you have to spend to change the name all over the place, which quickly amounts to a few thousand bucks.
Given that the 1€ founding is an illusion anyway, as you will need to have some money in the company to pay your accountant, Berufsgenossenschaft, (the salary you are living off if you are working full-time), etc., the benefits of requiring somewhat less (maybe 5k instead of 12.5k) are not that great.
If you found with 1€, the moment you place the signature your company is insolvent as it can't pay the resulting invoice. Even if you found with 1k it is often quite near to overwelm the newly created company.
Beside that, UG has very bad reputation and if you need something your company rating will lead to problems like prepayment when ordering goods. New GmbH is not the best either but increased quite fast.
In addition, transition from UG to GmbH is a bit of a pain, as you need a let your books be checked (costly) or by just paying the amount to reach the GmbH money.
Can you explain a bit more about the migration process?
I’ve read that the “most straightfoward way” is to create a new GmbH and transfer all the IP away from the Einzelunternehmen. It seemed kinda complicated though. (As everything is when dealing with the Finanzamt IMO)
As they stated, they are an expat in Germany, so as long as they stay there for more than 6 months of the year, the are at the minimum required to pay income tax.
> For me it is absolutely no choice to be employed or working in larger companies. I want my own freedom :)
Living the dream, what are/were a few of them?
I still have too much psychological/mental stuff from my Fintech startup I left in 2018 to seriously consider doing it again, even though this pandemic put the Industry I focused on as an 'essential' Industry despite denying them access to financial services and payment processing at the same time.
I also now have made friends with an accountant at a very reputable Accelerator with connections to Silicon Valley VCs. Still, it'd be tempting to get to do it all again for not having to work for anyone again, even though I also bootstrapped and had to have a day job for the first 3.5 years.
Not true there are lots of regulatory-light fintech applications you can try like building applications on top of banking APIs. Very few people ever really use bank APIs you may find the bank will be glad to talk to you.
You likely (but not always) need a legal entity, but thats a prerequisite for setting up any business.
Not everything needs to be B2C. There are a ton of problems to solve for B2B - for example reconciling buy side transactions to the street. In this space though usually a bank/fund will spin off a product they developed in house but there are a few companies that have started from scratch.
There are a lot of bootstrapped founders, actually the vast majority of them since the percentage of companies that VCs fund versus the number of pitches is tiny, so this doesn't seem that accurate. Just look on www.indiehackers.com for more info on these types of founders.
I think the commitment aspect of a startup is mostly underrated by people
Freedom? Closing the work laptop at 6PM is freedom. Not having to worry about office rentals, trash collection, bathroom cleaning is freedom. Fine, you could go WeWork for that, or just stay at home (aren't we all) but something will go off at night, or your future self will regret your past self decisions.
If something goes off at night or if you have an idea and decide to put in a few extra hours at 6pm, it's an opportunity to do some work to improve things for the future of your project. You don't have to. Some people like such low-hanging fruit though.
Office rentals and bathroom cleaning are responsibilities like those pretty much everyone has to deal with in adult life. They can feel like a burden if you have Peter Pan Syndrome, but are consequences of life decisions and not special commitments that need to be questioned every day.
The value of starting a company is you can hope to accomplish something which other people have not. It is a bit like being an explorer finding new lands like Columbus. It is an adventure. But you might end up marooned.
Whereas if you just work for someone else you accomplish some income. You can pay your rent or get a mortgage maybe even buy a sports-car! But you don't have real job-security and in the US you don't even have the security to know if you get fired you could still keep your health insurance.
You are serving someone else's goal which probably is to maximize their financial profit. When you work for them you are their opponent. More for you is less for them. It's not full zero-sum of course but if they are the kind of person who just wants money they will view you that way, as somebody they can make money from. It's a game and they can win big, but you really can't. Your benefit is you learn things but after some years you start thinking you are wasting your life that way taking orders from some clueless greedy business-person.
Mostly valid arguments. Founding a startup with a co-founder can be like being in a marriage, and there are a lot of frustrations on the path to success (or failure).
That said, she doesn't seem to realize how privileged she actually is, having to choose between a high-paying job at a SV company or accepting to join one of the most famous startup accelerator programs... I don't think she does that on purpuse, just seems a bit out of touch (but then again this is HN so maybe not).
It is really a choice between wanting freedom while accepting the troubles that come with it or sitting under the shade of employment with the occasional bug bites.
Most of all, I am glad that there is this awakening that one questions their situation and wants to change things up. That to me is growth. Thanks for sharing this.
This made me sad to read. Not everyone should found a company. Frankly, in school, the people who annoyed me most were the ones who vowed to be an “entrepreneur.” Always sounded pretentious. But, as someone who has garnered wealth and happiness from creating something from scratch, I do hope we continue to celebrate, if not idolize, that. And, I hope, we remember the humble beginnings of Yahoo, eBay, Google, Dropbox, Facebook, AirBnB, Cloudflare, etc. Not everyone needs to be a founder to be successful. But I hope everyone will continue to believe they can be one. Not for themselves, but for what they can build for the world.
Also, it’s a distinctly SV mindset that startups and entrepreneurs is this zero/hero dichotomy. The world is full of “moderately” successful startups that throw off a few million in free cash flow for a relatively small team.
If I were to give advice to other founders, it would be stop building for an IPO/acquisition. Build for the middle ground, and take opportunities to step on the gas if you see them.
She misses the most important difference between owning a startup and owning a project in a company: actual ownership. You don't own the profits in a company. I mean, really??
Anyone can write articles like this. Be careful who you learn from.
244 comments
[ 2.8 ms ] story [ 244 ms ] threadI don't know about other founders, but for me, startups are basically the only vehicle for solving big problems that nobody else will/can solve.
Often the reasons that (nearly) nobody else is trying to solve your exact problem are 1) it is risky/unlikely to monetize well, 2) it is hard, grueling, or boring work that may not even function right in the end, 3) might believe it to be impossible or not worth it.
But if you have a big problem in front of you and you strongly believe it can be solved and should be solved, then what other choice do you have but to start a startup?
There are lots of people (maybe myself? I dunno.) who feel strongly about solving a problem but also feel that they don't have "what it takes" to be a successful startup founder. I have a failed startup in my past. The failure process wrecked me for years, emotionally, socially, financially, the whole thing. I'm okay now, don't worry.
But are there any other reasonable options for "trying to solve a big problem that is otherwise being ignored" other than starting a startup?
I want to solve big problems I care about. I have that ego discussed in the article; often I find I do believe I have the right combination of things to solve a particular problem better than other people. So I feel like it is my responsibility to do it.
But being a startup founder is hard and if your personality or circumstances aren't a good fit, then, what do you do? Just stay frustrated that the problem isn't being solved?
It seems you're absolutely right that a startup is your only option if your idea is a proposed solution to a problem that is outside the mission/domain of (your/any) current organization, and/or if any organizations which would be interested simply can't devote resources and time to developing, evangelizing, and implementing your solution.
However, the risk involved in the process is so damned high. I love working in teams, whether at large megacorps, small contracting groups, or on my own or my friend's startup ideas. I don't love the "burnt relationships, heartache, debt, lawsuits, depression" (as 'irjustin phrased it elsewhere in this thread), that can be associated with startups.
Some startups are well-positioned for co-operative mutual interest VC money (repl.it would be a strange thing to bootstrap). Some startups are fantastic for bootstrapping (Sparkfun/Adafruit), and many could probably succeed just fine doing either (mailchimp, bootcamp come to mind). Still others probably best operate via philantrophic arrangements (OpenStax).
Yeah the number of 6 mo. old "move fast break things" startups with top-candidate covid vaccines is staggering. What do those idiots who got life sciences phds think they're doing?! /s
What you probably mean is that startups are good at innovating a potential solution to a big problem. But this is an entirely different thing than actually solving it at scale, and is the reason many startups end up getting bought or acquihired before they do anything of large importance.
Do you guys not see this and introspect once in a while?
I don't think anybody in Silicon Valley would say the _definition_ of a Founder is someone who takes VC money.
All companies require capital to operate. All capital has a cost. In many high growth companies, the amount of time it takes to build a product and go to market has a significant effect of how much market share that company can acquire. Selling equity or taking on debt is how many companies can reduce that time and acquire more market share.
It just happens to be that the companies Silicon Valley is most interested in are companies that have to raise capital this way, with very very few exceptions.
Now more than ever, VCs will happily tell a a founder "your business is not a business that fits with the VC model well, don't raise VC money." The VCs who say that do not think the people they are are saying that to "aren't founders" - their business just doesn't need VC investment.
It was the same way in the 80s with finance. Even though most finance workers were (and are) accountants working boring 9-to-5 corporate jobs, everyone assumed that anyone in finance worked on Wall Street and snorted coke off of strippers in NYC nightclubs every weekend.
It has taken me 5 years to bootstrap a niche b2b saas to $1m ARR. It is both awesome and terrible.
I wouldn’t really isolate the “day job” part here, it was sort of the quintessential dogfood SaaS.
Once you get a crowd, everyone starts doing what the people around them do. Its natural. It takes some time and experience to figure out whether you need to be there or not.
Is it? You still have the traditional expenses of sales and marketing, often higher because they're aiming to acquire users at scale. Instead of putting down tons of capital on factories, you have to pay through the nose for quality devs + office space in areas where quality devs tend to congregate.
Besides, capital requirements may be low, but we've seen technology pay massive returns due to its ability to scale so well, so I don't think anybody minds paying a bit more because the expected return is much higher.
Startups are hard and we love to parade those who made it, struck it rich, but the reality is the vast majority don't. It also requires a skillset/discipline/constitution that is very different than what most people want to do.
In the very large group who don't make it, lies burnt relationships, heartache, debt, lawsuits, depression, even suicide/death. Which on closer inspection, the success group has a lot of the same traits. Only they made it out with IPO, sale, merger, self sustaining business to show for it.
It is scary. It is hard.
But to me, you won't know until you know. And if you want to know, the only way is to try.
That is reason enough.
[0] https://vimeo.com/15799330
Before covid it took me 12 months to find a job. I applied to 100 companies. Ironically, got a job during covid and the job is pretty relaxing compared to the job hunt. During the hunt I thought: society is kinda forcing my hand here.
Also: a lot of knowledge workers have to work a lot of hours and keep on learning (e.g. doctors or programmers).
To me, it feels much more like a pick your poison type of thing.
The way out is consistently living way under your means (if possible). If you don't live in poverty, this is likely possible in the general case; just pretend you make XX% less aftertax and voila, you have an %XX savings rate. There are non-monetary costs to doing this, but there are also benefits, and the freedom is really hard to beat.
...though I've heard that that doesn't apply to having a family. I don't know exactly this wouldn't generalize to having a family, but I don't currently have dependents, so this blind spot is likely the reason. The main thing I can think of is how expensive schooling is (via or not via housing prices), and the understandable desire to max out the quality of your kids' schooling (my mom took a super-shitty job as a teacher to get my sister and I free private school tuitions, with a bitch of a commute, until we were old enough to get scholarships).
It 100% applies to having a family. (Source: have family.)
That is to say, the same logic applies to a family: If a family making $120k could survive adequately in a given location, then a family making $160k can pretend they make $120k and do the same thing. As I mentioned, the only exception I can think of is wanting to max out education spending: taking for granted that school spending is valuable for educational outcomes, does this explain 100% of the difficulty in maintaining this habit once having a family?
Other possibilities:
Yes, I was trying to agree with you.
I'm married, have a family, and we do exactly what you describe. We live below our means and save as much as possible.
In our case, living below our means worked out as having a single income family, and having a full time care giver in the home. For others, that might mean maxing out two incomes and retiring earlier.
> Perhaps it has less to do with kids than it does coupling up: anecdotally, most of my male friends who are happy to be ascetic need to start flashing money when they start dating, and most of my female friends are far more interested in consumption/comfortable living spaces.
When we started dating, my wife joked she liked me for my crappy old beater of a car. What she meant by that, is she knew a lot of the guys with fancy cars were actually broke because all their money went into their car, and she could tell early on I was more responsible and frugal.
So be careful of over generalizations based on anecdotes. And, frankly, be careful about getting in a serious relationship with someone who doesn't seem capable of living within their means.
Thanks for your perspective!
Also the high stakes fat stacks VC hyper growth approach is but one way to create a business.
a founder has the power to make changes to his job. An employee doesn't.
Even tho a founder is beholden to their investors, board and customers, the founder is also empowered (after all, he/she calls the shots).
An employee is beholden to his/her manager, but cannot "call the shots" but simply takes orders.
This is true only insofar as the value you bring to the company cannot be outweighed by the shots you want to call.
If you are, for lack of a better term, that good (and while I have a dim view of VC-silly startups, the successful ones I know really are that good), that can be a very wide remit. It very well might be "wide enough," even, and it's worth considering.
I’ve toyed with starting a company a few times, but it’s primarily been because there is problem I want to solve that no existing organization I know of is likely to solve it own their own.
I suspect what I really want is a professorship and tenure, but I’d probably be more likely to succeed at creating and exiting a startup successfully at this point.
For the first 16 years of my working life I went through a number of jobs, only one of which I really liked. This probably says more about me than the employers. I think some of us just aren't suited to working in corporations.
That being said, the advice applies elsewhere. My dad was a physician in US military and then decided to open up a private practice. He spent decades running a business where he was the sole source of revenue, and as far as I can tell hated dealing with any aspect of it that wasn’t direct patient care. He eventually joined a larger physician group and was much happier in his job.
Traditional businesses like electricians start with a typical business plan. They might need to borrow some cash at the beginning but if the business plan is spot on, they'll start making money quickly, enough to cover the costs and make profit.
I felt like my career was moving at a snail pace within BigTechCo and I was capable of much more. There's no real risk in that situation, unless you're borderline destitute, have dependents who need you, have a serious medical condition that requires a high end employer to support you etc.
Even if you fail, you will have learned many valuable skills and perspectives, and might get hired at your previous employer with a better title.
But he wasn't wrong. Write down a list of why you want to start a company. I bet the list involves things like "building something nobody else has," "getting to program and design and do a bit of business-y stuff" or "freedom to work on what I want". That's only true when you start. Pretty soon, you're spending all day in meetings, and only a small portion of your time will go to the things you currently enjoy doing... and you'll feel guilty because there's something more important you should be doing. (Me? I'm currently procrastinating on an investor update, an H1B application and two performance reviews.) You'll spend more time writing emails than writing code. You end up bogged down in organizational issues, not dreaming up cool new features. Rather than having one boss, you now have dozens... investors, customers, employees, etc.
Oh, and the rejection. The non stop rejection. Every single day, hour, minute. Investors, customers, employees, potential employees. It's not personal, but it sure feels personal. Even when things are going great, there's tons of little micro-rejections, non-stop. I wish someone told me that.
It's really hard. I don't know a single founder who hasn't had relationship problems because of their company, or suffered from depression. Hanging out with founders is less like the TV show Silicon Valley, and more like group therapy.
This isn't to say you shouldn't do it. But just be prepared for what being a founder actually entails. Talk to a few founders of medium sized companies about how they're doing. If you're still on board, then maybe you're right for the job. For me, I wouldn't change a thing... I love it. It's incredibly hard, but there's a reason I haven't even thought of leaving. If you're the same way, then go for it!
But don't do it because you want to do it. Do it because you literally can't imagine not doing it.
(If you're doing it now and things are getting hard and you need someone to talk to, my email is in my bio :) )
I think many of us would find guidelines like that useful! Because to a corporate engineer drone like myself, starting something small like Pinboard sounds rewarding.
I've started a few other companies in parallel (for example, https://startupescape.com/) that collectively earn similar to my company salary, and take a few minutes a week to run. You have a limit on how big you can get and how much of a difference you can make, but if you're cool with that then it's definitely possible! In my mind, the only downside is that you're working alone rather than with a team – and it's really fun to have people to share the journey with!
why not hire a COO that takes care of it? Don't do jobs that you are not happy with for long. For some short time that is acceptable, but not for long.
I don't count my customers as by bosses. And as long as you don't give yourself the trouble, they are not your bosses. However it is important to focus on them, try to think about them and know what they need before they even know it.
And sure, hiring can make issues go away (I've definitely done it!), but I think you're missing my point – no matter who you hire below you, if you're the CEO, the buck still stops with you. You're the one ultimately responsible.
Of course, CEO is much more prestigious than the other C-level roles. But like you said, it has its own price.
THIS! You feel like your back is always against the wall and you have to defend every product decision. You are right it's not personal and probably good the feedback(most of the time...) but you ja it's hard getting rejected 24/7. And even criticism can later be seen as "rejection" :/ Maybe it's best to view these things not in isolation but on a timeline.. Sure many of the things I produce today, might still suck, but I think it sucks less than my products from 8 years ago. Growth is definitely there.
It's like watching somebody take up smoking. You can watch the history of people doing this activity as far back as you like, and just hardly ever come up with an outcome that seems to make your life genuinely better. But with lots of examples of it making your life worse.
That's not to say I'm against starting a Business though. I've been into bootstrapping SaaS products for the last dozen-odd years, and that absolutely has made my life better in lots of ways, including those on your list of Reasons To Start A Company.
The big one for me is Free Time. If you stay small, things work out really nicely. Every dollar past breakeven adds to your personal salary. No dividing by 2 or 3 or 10, so a little $10k MRR niche is all you need to be set for life. That's the kind of niche that can be serviced with a few hours of support mails a week (once the thing is built, of course), which means a lot more freedom to go do whatever else you want.
I came to the conclusion I'd much rather own 100% of something small than 10% of a Unicorn. So I changed to part-time work to cover the bills and I'm bootstrapping. I think if I'm ever successful enough to need an HR department, I'll sell the business and move onto the next thing. I don't ever want to spend less than 50% of my day knee-deep in the actual code.
That being said, I'd still prefer the latter becaus I don't want another boss (or multiple ones). Gess it depends on the conditions, so.
And good point about the HR-department moment, that's the thing I fear the most in getting to many customers!
Can be lucrative. I know many people who have tried to start a business and failed and were never making money.
What about because you can't bear the thought of having to work 8 hours a day for the rest of your life? I realize this is probably among the "bad" reasons to start a business (and it probably sounds disrespectful to people who have and will keep on doing that until retirement), but that is how I feel currently.
It may sound like a burnout problem, but there wasn't anything to be burned out by except... having to actually work full-time. I now freelance 10-15 hours per week and that feels doable but I'm not going to have a fun retirement with that (at least living expenses are covered).
And maybe see a therapist, because this dread of having to work sounds weird now that I put it in writing. And I did it for many years without seeming to suffer too much, at the time at least.
That being said, a smaller drop shipping company or something similar could work!
Probably the lowest risk strategy to solve this problem is get a FAANG job and invest at least half your salary in mutual funds for 10 years.
A lot of people, quite understandably, can't deal with that sort of volatility. You'll see $100K+ drops in a month. You'll also see 6 figure gains, of course. Some people give up, put it all into bonds. That's not good, either.
That was definitely the case with my first startup when I was younger. In my second business that I started 10 years later, I couldn't care less. Most of the time such a feedback is given by people who aren't my target audience and who thus don't have the pain that people I target have. If your target audience rejects you, you have a big big problem.
Yep. That's been one of the toughest parts of the whole process to me. Probably the toughest. That and the fact that nobody else (unless they've been through the same process) can really understand what you're dealing with. It results, for me, in a very lonely feeling at times.
I generally encourage interested people to start their own companies. But I advise against taking VC except for a few use cases that make bootstrapping unrealistic.
I woke up with knots in my stomach for months thinking about the things I would have to do to get customers and the non-stop rejection the day would hold as I worked to get a foothold for my startup.
There was no VC to call me to account, or VC firm to help with areas you I didn't like or couldn't do.
If I hadn't been able to hold myself accountable to do the things that I dreaded my startup never would have gotten off the ground.
The attitude is essentially that of "Find What You Love and Let it Destroy You" quixotic work-centric nihilism that seems both understandable yet ridiculous. For folks that ascribe this worldview though, I do expect them to do fairly well in whatever they do... and to be miserable to be someone unfortunate enough to love them.
Somewhere out there in the world is someone incredibly excited to do just that. They aren't necessarily an "ideas" person but wrangling org just get's the heart racing. It's a shame that they're as hard to find as good ideas are
Some folks can handle many things at once and have a structured mind for progressing them all forward simultaneously. My wife had that kind of mind. I do not. I struggled mightily managing a company and ultimately tapped out.
The rest of these arguments seem like bad framing. From a certain school of thought, entire point of a startup is to leverage your risk taking ability relative to incumbents in the market and your economic peers. Working at a startup forces you to learn more, faster; and you're challenged by real market factors, not artificial incentive structures created by a large org or academic institution. You also wear a ton of hats that you have no access to early in your career at larger orgs or in academia. Hiring, management, sales, accounting, taxes, finance, product ideation and refinement, etc - early years at FAANG or medium sized orgs will not expose you to all of these. Even an experimental team that lets you play with cool technological toys.
"Not being at school" is an silly way to describe, "4 years of school is sometimes a poor choice of use of the best risk-taking opportunities of a person's life".
"Your VC is not the one at risk here" is a reason to avoid VC, subvert some of the incentives that VCs give you, or ignore a subset of the advice they they give you, not a reason to avoid risky ventures.
It's important to note that the author here is an 18 year old and has no significant real-life perspective on either running a company or being part of a larger org. Nothing about that affects their ability to accurately pontificate on the pros and cons of running a startup, but there also isn't a lot of skin in the game or experience to back up that perspective. The bayesian prior here is negative.
If you're partway through a uni degree or similar learning program, or an incumbent engineer at a small or large org, then you should look at starting or joining an early-stage startup as a great way to take risks that you will be less able to every year (because of increasing costs of living, commitments to a new generation of your family if you marry and have children, incentives to purchase real estate, etc). The payoff will hopefully be huge and will be distributed across potential exits, experience, and personal growth.
1. Reliance on a co-founder is stressful 2. VC vs founder risk profile 3. Don't dropout to found a company
I think these all apply more to the "get rich quick" approach and sure, I agree that is a bit of a moonshot.
But instead of writing off founding, why not look at ways to mitigate risk? Complete an education, spend some years working in an industry, or start a bootstrapped company in a niche that you learn from the industry. Or any combination of those that fits your risk profile.
And have an exit plan in mind, for either the success story or the failure. That solves the sense of self- a calculated business plan that didn't work out does not have to be devestating.
* https://microconf.com/
* https://tinyseed.com/
* http://bootstrappedweb.com/
* https://indie.vc
They are probably closest to the Silicon Valley startup world in the kinds of businesses being built.
Getting further away you have things like affiliate marketers and drop shippers. The "Tropical MBA" podcast (https://www.tropicalmba.com/) is more in that space.
Also while most people don't work at the big-name sexy tech companies, I think the author's point was about what people should aspire to as the pinnacle of a career. Not what people commonly settle for.
Are you aware of the forum guidelines governing comments?
What this means in practice is that if you want to start a company because, for example, you just want to build products without dealing with manager/team bullshit, you are going to have an awful time. You need to be very honest with yourself about your ability and dedication to do all the things that actually get a business off the ground, not just the things you want to do and imagine you'll spend all your time doing.
If you value freedom over becoming a billionaire there's an alternative and that's bootstrapping. Plus your odds jump from under 10% to as much as 50%. If you don't quickly reach product-market-fit it's a short journey. Sometimes having that pressure early brings clarity to the mind.
I've never heard this before. Raising enough VC money to pay yourself a corporate salary (i.e. 6-figure or beyond) sounds like fraudulent use of VC money?
And if you had enough money, you’d probably have self-funded your startup idea yourself, instead of having to deal with pesky VC investors.
Why could we do that? because in the end it is a work for roughly 5y and if you stop even thinking about working 24x7x365 you have enough free time for recreational activities. I'm on vacation around 6 times a year, but available to the company on critical stuff.
Yes sometimes it's hard, sometimes you have so much work that even 24 hours a day wont be enough, but then again you need to focus on the important work and think about yourself.
Btw I only did the bootstrap way with every company founded on 25k€ and no VC/Angle/Bank/External money and very low income in the first years (I hire people ASAP). As of today, in average over the last 20y this gave me more then 500k€ yearly salary with the exit money. Not bad and definitive much better than I would have had in in any Employment.
For me it is absolutely no choice to be employed or working in larger companies. I want my own freedom :)
If so, would you say the GmbH/UG (Limited Liability Company) route is a good idea from the start for a solo founder of a bootstrapped SaaS?
I’ve been doing my research and maybe I’m wrong, but it seems like it has quite a lot of overhead for a first time solo founder like myself.
To clarify, I’m an expat in Germany, but I’ve even looked into setting up an LLC in the US or another limited entity because they appear more lightweight to operate than their counterparts in Germany. But then I end up in a complicated international tax situation.
I’m not seeking legal advice, just wondering if you have any tips now that you’ve gone that path several times successfully.
Cheers!
My tax adviser told me I should go for a Einzelunternehmen (especially use the Kleingewerbe during the first year) because of the reduced costs (registration costs 25EUR and thats it) and not having the overhead. I’ve heard that registering a UG costs about ~500EUR + yearly costs of around 1500 EUR.
Given that this is during a beginning to try things out - without having too much money laying around to play with it.
Would definitely like to know about risks before getting myself into it.
If that's what you want to do, then a Einzelunternehmen (without Handelsregistereintrag) should be fine and less beaurocratic overhead. Especially for bootstrapping or side-projects it's always useful to have a Gewerbe registered.
As long as you follow the best practices (specifying 0€ expected income in the first year, etc.) and don't try to do any financial trickery, Finanzamt also shouldn't be a problem. However once you start to turn a decent profit (100+k/year) and/or start to hire people, you will be required to do more bookkeeping anyway, at which point it makes sense to found a GmbH (or even two layered ones).
Beware: If you're registered as a "Freiberufler", you're not allowed to sell or re-sell any physical or virtual products, including any kind of SaaS (but you're allowed to have employees). If you want to do that, you have to register a Gewerbe. To put it simple, as a Freiberufler you can only sell your time or that of your employees (it doesn't matter whether you use fixed-price contracts or hourly rates), but you can't sell your software.
Please note it is possible to found it with 12500€ and have to provide the other half of the 25k€ later.
My first company was without the GmbH protection and benefits. It was ok but I would not do or suggest it to anyone. Hell of a pain to migrate to a GmbH later.
Given that the 1€ founding is an illusion anyway, as you will need to have some money in the company to pay your accountant, Berufsgenossenschaft, (the salary you are living off if you are working full-time), etc., the benefits of requiring somewhat less (maybe 5k instead of 12.5k) are not that great.
Beside that, UG has very bad reputation and if you need something your company rating will lead to problems like prepayment when ordering goods. New GmbH is not the best either but increased quite fast.
In addition, transition from UG to GmbH is a bit of a pain, as you need a let your books be checked (costly) or by just paying the amount to reach the GmbH money.
I’ve read that the “most straightfoward way” is to create a new GmbH and transfer all the IP away from the Einzelunternehmen. It seemed kinda complicated though. (As everything is when dealing with the Finanzamt IMO)
Living the dream, what are/were a few of them?
I still have too much psychological/mental stuff from my Fintech startup I left in 2018 to seriously consider doing it again, even though this pandemic put the Industry I focused on as an 'essential' Industry despite denying them access to financial services and payment processing at the same time.
I also now have made friends with an accountant at a very reputable Accelerator with connections to Silicon Valley VCs. Still, it'd be tempting to get to do it all again for not having to work for anyone again, even though I also bootstrapped and had to have a day job for the first 3.5 years.
Insurance by app?
Stock trading for free?
You likely (but not always) need a legal entity, but thats a prerequisite for setting up any business.
Freedom? Closing the work laptop at 6PM is freedom. Not having to worry about office rentals, trash collection, bathroom cleaning is freedom. Fine, you could go WeWork for that, or just stay at home (aren't we all) but something will go off at night, or your future self will regret your past self decisions.
If something goes off at night or if you have an idea and decide to put in a few extra hours at 6pm, it's an opportunity to do some work to improve things for the future of your project. You don't have to. Some people like such low-hanging fruit though.
Office rentals and bathroom cleaning are responsibilities like those pretty much everyone has to deal with in adult life. They can feel like a burden if you have Peter Pan Syndrome, but are consequences of life decisions and not special commitments that need to be questioned every day.
Whereas if you just work for someone else you accomplish some income. You can pay your rent or get a mortgage maybe even buy a sports-car! But you don't have real job-security and in the US you don't even have the security to know if you get fired you could still keep your health insurance.
You are serving someone else's goal which probably is to maximize their financial profit. When you work for them you are their opponent. More for you is less for them. It's not full zero-sum of course but if they are the kind of person who just wants money they will view you that way, as somebody they can make money from. It's a game and they can win big, but you really can't. Your benefit is you learn things but after some years you start thinking you are wasting your life that way taking orders from some clueless greedy business-person.
Just my feeling at the moment.
You don’t need a VC/funding.
You don’t need to over identify self with business.
That said, she doesn't seem to realize how privileged she actually is, having to choose between a high-paying job at a SV company or accepting to join one of the most famous startup accelerator programs... I don't think she does that on purpuse, just seems a bit out of touch (but then again this is HN so maybe not).
If I were to give advice to other founders, it would be stop building for an IPO/acquisition. Build for the middle ground, and take opportunities to step on the gas if you see them.
Anyone can write articles like this. Be careful who you learn from.