Ask HN: Should I sell my house to fund my startup? Anyone with the same story?
Everyone says the market is frothy and startups raise unreal sums of money they don't even need at high valuations, yet I'm failling to. I never attended Stanford, didn't work at FAANG and I'm not even from the US, so I don't have relationships with founders/investors. I'm technical, yet need engineers to launch. I built an mvp, pivoted, did customer development etc. I'm full time for over a year, and I'm 25. The market is fairly new and many don't understand it, but I've been working in this space for 8 years, been working with biggest companies. I have multiple ideas I'm confident about if this one will fail. If you had a similar story - please tell it, especially if you failed.
So should I sell my house to fund my startup to some milestone? I don't need cars nor houses, I only care about building stuff and learning, only things that make me happy. Should I YOLO the fuck out of my life?
83 comments
[ 4.8 ms ] story [ 139 ms ] threadMaybe you can consider selling the house (it'll take a while) and pouring SOME of that money into a startup, if that's your dream. But always keep X months worth of your expenses in the bank. Where X is probably >24 or more since you likely won't be profitable right away.
What happens is that if you do sell your house, (assuming you'll pay rent) things will get a lot more stressful for yourself financially, and this will severely hinder your mental performance and chances of success.
An even better idea would be to get a regular job and bootstrap your business in your spare time, on weekends. Once it takes off, you can quit the job and focus full time in it. Successful startups coming from this kind of environments are way more common than those coming from YOLO, all-in approaches you are thinking of. And this is precisely because of the way the mammal nervous system works. The ability to do creative mental work is severely impacted when under a perceived threat (financial doom in this case).
What then?
2. Recognise that you have an opportunity to practice the courage of telling people things that they do not want to hear.
3. Recognise that when you have employees and investors, they'll be relying on you to tell them things they don't want to hear.
4. Recognise that your future self will find it far harder to practice courage if his past self abandoned him to the risk of homelessness.
Pick something also that doesn't need constant human hands/duck tape. E.g. if you are web scraping, and someone changes their site HTML structure on 3pm on a Wednesday, then you have to be hands on to fix it.
If you are running an app that is self sufficient - you put the hours in at the weekend to make it robust, it doesn't bother you during the week, most of the time.
In other words, build stuff that ... scales :-)
Set boundaries / expectations ahead of time. Tell them you will acknowledge an issue within 24 hours and provide a solution within 7 days _if_ it's important.
Whatever works for you.
You should reserve the right to outright reject feature requests without providing a convincing reason beyond "it's not within our scope".
At the $1bn company I would get vendor responses quickly, because we paid for enterprise support. At the scrappy startup I just got used to responses coming a day or so later (especially since I was working with USA vendors while I was based in Taiwan).
If a customer wants a 1-2 hour response time they'll pay much more for it.
Low key, in most cases those people would be better off selling fake healing crystals on Etsy.
anyone know where I could read for stories like this? I want to motivated by the story of success solo founders
https://www.indiehackers.com/start
and
https://www.youtube.com/microconf
It's not the same being homeless than being unemployed.
It’s slower, but the contracts keep you in constant contact with real customers, and it’s lots of small dice rolls until one comes up good, rather than a big one that can’t go bad. Plus the house goes up in the mean time
We’re now scaling up the team and looking at capital so it’s worked well
I’m sorry but you either roll the dice a ton of times with extremely small amounts and hope for a big win Which is very unlikely or you have to play with other people’s money. In case you haven’t attended Stanford, too bad I guess. You’d have to meet rich people some other way.
At this point I regret investing the net worth I accumulated through my companies and investments in more pointless companies of my own trying to shoot for the 9-10 figure net worth. It’s pure nonsense unless you use OPM. I regret not buying a home in bad conditions and fixing it up to luxury and living happily in it with my girlfriend and dog. It would’ve been fun and awesome and wholesome. Then I could’ve done that many times over, slowly building a fancy net worth in decades instead of years but living Vicariously through every minute of it. So since I just turned 24, my plan is to do exactly this.
So no don’t sell your home please
I am curious. Would you be willing to tell us what happened ?
A dedicated founder in a good market is often fundable.
Market is just above 4B$ and is growing well, but it's not like everyone in the world needs this thing.
I have no startup experience, not an amazing dev (barely made an mvp) , never attended Stanford and live in a third world country, so I don't even have connections and rely on highly personalized cold emails.
It sounds like you need someone to translate this effectively from “techno” to “MBA”.
Messaging is the single most important thing when talking about your amazing product with complete strangers. Don’t discount it.
Maybe look into getting a co-founder?
What the hell is wrong with you?
You have no customers and an idea you can't explain. What makes you think you can build this unexplainable cusomerless thing into a business, let alone LITERALLY mortgage your future for it?
As others have said: No. Under no circumstances should you sell your house to fund... whatever this is. Bootstrap it nights and weekends if you feel passionate, maybe go find a co-founder if you can explain it coherently.
And the other thing: it’s seems like you put part of the blame on not being born in the USA and not graduating from the Ivy League. That’s not a pre-requisite for success though. If you don’t have connections, maybe it’s you and not the place where you live or your social class.
This video from yc explains how most of our conversations with (potential) users are at best useless and at worse misleading, and how to do it better. Based on the book, “The mom test”
https://www.ycombinator.com/library/6g-how-to-talk-to-users
Well, it helps. A lot. It's very hard to build relationships from another country, I know everyone will say it's easy because of covid, but it's not for people from third world countries without prior startup/FAANG experience. I might move tho. And yes, problem is highly in myself, but I'm always trying hard to help people and trying to be more open and communicative.
Maybe you’re right, and maybe you have to learn this in your own way. But it’s often possible to figure out if they’re going to pay for the product without building a full product.
Also, they may have inherited it.
anyway, i don't mean to be judgemental. i'm just thinking aloud i guess, i've known a lot of computer people over the years and some have been spectacularly successful in industry, but i'm pretty sure that no one had substantial equity in property by that age. (or even a mortgage or deed)
to answer OP's question: i don't really know. conventional wisdom is that you should always find investors (not that you shouldn't have skin in the game) but that it's a gamble and they'll be better (and more prepared to take a loss) at making an educated bet than you are. that said, the technology sector is well known for nontraditional and unusual paths to success, so i suppose an argument could be made either way.
i guess the big question is: do you think you can do it and do you have the right people to help guide you along the way?
Get someone to pay for what you are selling. Then find another customer. Iterate and keep building from there.
Once you have established some traction, then you can start thinking about (and ask HN) how to approach outside funding/how to scale the business.
Money follows money. So if you start having success, ultimately you will be able to find outside investment, if you even want it.
Side note: I have worked for several startups. Most in the beginning had investments from friends and family.
My recommendation would actually be to double-down on the house and pay off any mortgage you may have on it. Once you have a paid-off house, you have basically infinite runway for playing around with startups.
All 25yrs olds are confident their idea will work. Only some listen to older people like me and accept that they may fail.
That said, if you really hate having a mortgage, don't buy a home. Don't fall into the trap of thinking you need to own a single family dwelling if renting is more your thing.
Startups the SV way are hard to do, if you are not part of the bubble. As you said, you don't have an "in" so nobody is going to easily give you money. You have two options:
1. consider a different growth strategy, startups are not the only way to grow a business, focus less on growth and more on stable income, try to acquire at least one recurring client
2. build your reputation, then you will get capital, doing no.1 first will also help you with no.2.
Keep going, but find a way that doesn't involve risking homelessness.