Ask HN: Did you start a company whilst employed?
I'd like to learn about entrepreneurs who successfully started companies whilst employed.
- What type of company did you start? - How did your employer take it when you left? - Where is the company at now? - And any helpful advice you could offer someone trying to do the same thing?
109 comments
[ 0.23 ms ] story [ 179 ms ] threadMy advice would be to say upfront and declare what you're doing, and if possible get in writing that this is something you'll own (and not them).
I'm not a lawyer, so this is just my fuzzy recollection of what my lawyers told me. If you've got something serious on the line, a good lawyer's time is a cheap investment that will pay dividends in the long run.
http://en.wikipedia.org/wiki/Restraint_of_trade
Maybe the company and the programmer doesn't care when the code produced is toy-programs/educational code, but it seems like a deal-breaker if the programmer wants to make some open-source code, or maybe even some code to produce some extra income. (I don't see a problem with the latter if it's in another domain than what the programmer is employed as.)
Employment law heavily favours the employer hint we are the "servants" here
While employed, I spent some evenings and weekends trying to find clients. I quit my job when I got my first paying client.
The company I started isn't around anymore -- but here I am 18 years later still happily self-employed and doing well. So I'd say it was a success.
Edit: Last month I gave a convocation address at Syracuse University graduation where I talk about how I got started as an entrepreneur:
https://www.youtube.com/watch?v=Y5RJAN5mNhA
Thank you! (Great talk, and nice dash of humour)
And I also like the "advice" of being prolific, rather to "focus" like we hear often on Hacker News.
What has worked for me in the past (here comes a story, not an advice) is trying many personal projects until I found one that worked on many aspects (financial / personal lifestyle choices / meaning / etc...).
Having too many projects at the same time was very stressful to me, so I found that I could work on one main project and a new side project every month at the same time.
In the end, it is one of the side projects that started to work better than the others.
This week, I am going to be working full-time on it and I am happy about it :)
I'm at a stage where I've worked for a significant amount of time on one project outside work that hasn't really been successful. I'm now working on a few things and trying to validate the ideas with customers before building them out properly.
Why am I getting the Jobs stanford speech vibe in your talk.
That said, great talk, found it pretty inspirational as a jaded 30 year old, so doubtless those kids would have taken away some of your 'stories' and filed them under advice!
pud, you mentioned having been bought out a few times. Did you not have to stick around 'under new management' at any of the places?
One advice I could have used when I started: It is unnecessary to worry about your current employer. The truth is: "current employer" is a blanket name for only a handful of people and most often they don't care very much as long as what you do isn't affecting them adversely. Have non-compete agreements sorted out and always be honest and upfront about your venture.
Do what's best for your customers and for yourself. Ultimately, that's the only thing that matters.
Btw, my then boss was very supportive and we are now doing business with each other.
- Software consultancy business;
- actively supported me
- still alive in it's 5th re-incarnation or so (or should I say 'pivot'?)
- Helpful advice (well, if it is helpful or not time will tell):
If you feel you can trust your boss then be open about it.
Make sure you show that post 'quitting' time you're still available to hold up your end if need be, offer them a (small) discount over your regular rates.
Build relationships, that starts when you're still employed and will carry over into the future when you're acting for your own shop. Deliver quality, don't lower your price in order to get jobs, know your value. Work harder than your competitors, charge the same and show your work.
Under no circumstance should you compete with your former employer for customers they already had while you were working there.
Be sure to stay in contact with the industry you left, including your old firm, stop by for a cup of coffee without being on the lookout to score jobs.
Be honorable. It may take a bit longer to 'get there' but it is a lot more sure than cutting corners and making money over other peoples misfortune.
best of luck!
Any way, whether or not you tell your employee about your startup depends upon how well you know him/her, how comfortable are you with him/her and what your contract says.
Can you convince your boss that the duration for which you work in his organization would be as productive as it were before? Can you convince him that you are not just gathering funds just so you can leave and work full time on your own stuff when you are ready? Even if you have the very best of intentions it is hard to convince others of the fact.
At least my thinking is that there is no need to say anything to anyone in your organization unless you absolutely need to. During the early stages of your startup I suppose even you are not sure if you can be successful with it. Keep it under the wraps see how far you can go with it and then take a decision.
Actually, almost all said to be upfront with your employer. And I really advice you to do so too! If you don't dare to tell him (for whatever reason), that's probably a sign of a not so very healthy relationship with your current employer.
Most employers (especially in the IT industry) are quite supportive about their employees pursuing their dreams. And they should be.
If you start a company whilst employed/contracted elsewhere you will need to have your IP ownership and origin well-documented.
If you cannot get a document from your employer acknowledging that they have no claim to any IP in your company, then you will need to consider providing warranties to the new company that you accept liability for any subsequent claim, etc.
Basically, go speak to a lawyer, but you want to make sure that you don't act in a way now that gives your employer some claim on the company you are starting.
Do no actual work, whilst still employed, until this is resolved.
After a while of using it and improving it based on real-world usage, I pitched launching it as a company. Drew up all the paperwork and incorporated as co-founders. I didn't leave the company, we just all did it on the side.
That was 2009. It's still kicking, but growing really slowly (who knew, bug tracking isn't very sexy :)).
Advice... that's trickier. Every situation is different. I think starting with an MVP and dogfooding is really important. But generally just go for it and see what happens. It will take up a lot of your free time, more than you think, so be prepared for that.
I also agree with a lot of the other advice in here about bringing it up with your boss - I don't think Bugrocket would be a company today if I hadn't 'pitched it' to my employer. Then again, in 2012 I started CourseCraft (an ecourse platform) with my wife and we've been bootstrapping it on the side. It's doing even better than Bugrocket. Like I said every situation is different :)
That original employer was later acquired and I have since left, but it wasn't because-of or related to the stuff on the side.
Through word of mouth; I took on my first consulting client in my "spare" time.
About a year later; I left the full time job and did consulting full time and I have been doing that as my primary source of income for 14 years now.
I gave a presentation about my various business mishaps at a conference called 360|Stack. I called it How to Fail Fantastically.
http://vimeopro.com/360conferences/360stack-2013/video/72773...
- I had the project specifically spelled out in my employment agreement with them since I had already been working on it for a while. I started working for them because I genuinely believed in their mission, and there was a certain allure of a steady paycheck after freelancing for a while. I made the decision to leave after about a year of trying to juggle both.
- By the time I left HubSpot was 50 people and they had plenty of funding, so while perhaps they would have liked for me to stick around, there's nothing I did that has ultimately contributed to them becoming the billion dollar company they are today (a nice humbling lesson for the youngster I was back then...).
- I actually think doing this (as long as you can keep it clean legally and actually own what you're building in your spare time) far outweighs quitting your job before starting a company. I wrote a post on Quora about this in a little more detail (http://www.quora.com/I-plan-to-quit-my-job-at-a-software-com...)
It didn't pan out very well.
Main advice would be to save as much money as you can before you take the plunge. I did not have enough spare money. Also play with timezones if you can. My contractor is in Russia, which meant I could work with him in the mornings if I got up early before starting my day job.
Here is where we are now: http://www.satago.co.uk Got in to the Seedcamp accelerator and raised $1M announced the other day. Going quite well. First employee starting tomorrow. :)
- Was upfront with my employer. (having established such a trust-based relationship for a long-time did really help)
- Told him that while I was using my spare time for my 'business'. If it would start getting more of my time, I was willing to negotiate a part-time position (hey, be honest, and if you are really valuable to your employer, there is nothing you should be worried of)
Believe me, people quit their jobs all the time - what employers do not like is getting caught off-guard. Just give them sufficient time in advance before leaving your job -- that will be appreciated most of the time.
I don't think there's anything wrong with the self promotion! We do have Show HN, and a question like this is just begging for it.
Not only that but I personally like to see what kind of things people can produce in their spare time. It gives me a good impression of what's possible, and perhaps a few tips as well.
EDIT: Well I'll leave the comment here, but this is what I get for leaving the comments page open whilst I do something else and then coming back to comment.
I bought a few VPS in different countries, gave him the password, and it was an instant hit.
They were my first customer, and are still a customer several years later. I launched with like 13 servers. We've got 127 now in 65 different countries.
After I quit my job, I had still a good relationship with them, which made it possible for me to work freelance for them from time to time. This means there was cash flow from the very first days.
Now, a 1 1/2 years later, our product has become passive income with almost no effort now. My co-founder and me worked as consultants/freelancers while we developed our product. Showing off our product gained us trust and some local fame, which lead to many really cool jobs and investments (right now we ware working on a quite cool project, where we are invested in as well).
I'm happy :-)
Seems like most hair salons could benefit from this - it's so hectic in those places.
Quickly I found that I had trouble focusing on the job that was actually paying me and all i wanted to do is build my app. So I quit (my employer totally understood my motivations). That was 6 months ago.
Now I've launched a few week ago and I am realising that I planed a bit short budget wise, so soon I am afraid I'll have to go back job hunting. I wish i had plan for more slack.
The lesson that i've taken form that is that if you want to build a software that you are passionate about soon enough it will take all your focus. So do plan on that. Validate and plan as much as possible while keeping your day job and when you are as ready as you possibly can just take the dive! Good luck.
However after I left the company, we changed the design and did a complete rewrite (switched from PHP/Kohana to Python/Django). Now it is up and running for a few months and growing slowly but steadily.
Would you mind if I ask why you switched?
BTW, nice design on your home page.
Kohana was slowly dying at the time and the development had almost stopped (currently the framework is completely dead). But really I just wanted to try a new stack and Django looked promising. Also had prior Python experience.
In the next project [0] we went from Python/Django to Scala/Play :)
[0] - http://datazenit.com/
Good luck with both!
And your are right about the right tool for the right task. Datazenit naturally evolved into what it is now. Customer feedback and feature requests initiated the switch to Scala.
Thanks!
Currently we are in the process of being acquired by a larger company. I've seen a few folks try to do a start a company this way and they almost always underestimate how much work it's going to be. Everything takes 3 times longer than you think it will and requires 10 times more effort.
I tried to raise seed funding and VC money but failed on both counts, so I can't really give any useful advice on how to do that. I raise this because I spent a lot of time in meetings with potential investors and gathering information for them. Since that ended up being largely unproductive time, now I wish I had just focused on my customers instead.
I'd be interested to hear how other people decide which investor meetings to take and which ones to ignore.
I've raised from angels and micro-vcs, it's frustrating and time consuming. Focus on revenue, keeping headcount low, and and bootstrap yourself to success!
If someone is on salary, "employer's time" is likely to be treated as a shorthand expression; the real issue is whether the employee was acting "within the scope of employment," which takes into account a variety of different factors. See http://www.copyright.gov/circs/circ09.pdf (scroll down to "Agency Law") for a general discussion.
What does "invention" here mean? Is it limited to things that meet patentability criteria? If so, is there a chart for other types of intellectual property like copyrights (most applicable to software, and hardware too), trademarks, etc.
California for example has specific clauses about ownership of inventions, with no clarification on what "invention" means.
I can't think of a case citation offhand, but my guess is that most (U.S.) judges would apply essentially the same principles to unpatentable "inventions" -- defined in 35 USC 101 as any "process, machine, manufacture, or composition of matter, ... [or] improvement thereof" [1] --- that qualified as confidential information of the employer.
(If an invention is unpatentable AND is public information, then normally it's fair game for anyone to use, at least in the U.S. --- EXCEPT that that (A) an employee has an implied duty not to compete with his employer while still employed there, and (B) the employee might be bound by a contractual covenant not to compete for a limited time after leaving employment, which might or might not be enforceable depending on the jurisdiction [California being a well-known case in point].)
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> is there a chart for other types of intellectual property like copyrights (most applicable to software, and hardware too)
I can't think of how copyright might apply to hardware, at least not to functional aspects of it. I suppose that aesthetic-design features of hardware might qualify as a "sculpture," which under 17 USC 102 (a)(5) would be eligible for copyright protection [2] But under 17 USC 102(b), that protection wouldn't cover functional aspects: "In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." [2]
As to software, that depends on (A) whether the software counts as a "work made for hire," which in this context means that it was created by an employee within the scope of employment [3], and (B) if not, whether the employee signed an agreement giving the employer rights to the copyrighted work. [4]
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> ... trademarks, etc.
In the U.S., trademark rights arise from use of the mark in providing goods or services. (You can file an application to register a mark in the USPTO based on a bona fide intent to use the mark "in commerce that may lawfully be regulated by Congress," but the registration won't be issued unless and until the applicant shows that he / she /it has actually begun using the mark in Congress.)
That's not to say that an employer might not try to claim that a confidential idea for a particularly-good trademark belonged to the employer, e.g., because the employee who came up with the idea was working on a company project when she did so.
[1] http://www.law.cornell.edu/uscode/text/35/101
[2] http://www.law.cornell.edu/uscode/text/17/102
[3] http://www.copyright.gov/circs/circ09.pdf (scroll down to "Agency Law")
[4] http://www.law.cornell.edu/uscode/text/17/201
A.
[1] Defines inventions as '(a) The term "invention" means invention or discovery.', which means the normal English meaning applies. That clearly means for example that exceptions like California section 2870 [2] do not help employees for software side-projects (since software is subject to copyrights, not necessarily inventions unless some invention is involved in the developed software).
This clearly means an employment agreement could make all software belong to the employer if developed while being employed, even if the clauses applicable to inventions in [2] like "developed in employee's own time" are satisfied.
And that means that people with software side-projects while being employed elsewhere most likely in a software company may be having an issue since majority sign employment contracts without reading (and are surprised when I tell them about these things). I have commonly seen employment contracts stating "any invention, whether patentable or not, ... works of authorship, whether copyrightable or not, ... developed during the course of the employment ... are a property of the employer ... with the exceptions noted California code 2870 ..." (which as I now know, does not cover software by itself).
Please let me know if my understanding above is not correct. :-)
B.
Hardware copyrights: Hardware, as you would know, has extensive design documents and blueprints that include circuit schematics, layouts, digital logic specified in hardware description languages (just like software), all of which involve creative expression. These then result in the actual hardware embodying these design blueprints that I guess would be a "tangible medium of expression" [3]. Integrated circuit layouts for example carry a nearly verbatim copy of the layout of the design, just like a printout of the same layout would.
I now understand that "functional" aspects would not be copyrightable. I am surprised to see "system" listed in [3] though, which I thought could be considered a tangible medium of expression. From a scientific standpoint, a CD-ROM for example can readily be described as a "system". So would be a piece of paper. As I am reading [3], a CD-ROM carrying a software would not be subject to copyrights if the CD-ROM could be considered to be a system. I am wondering now if there is a formal definition of that is a "system". :-)
I understand the remarks you made about trademarks fully. Thanks for noting the specific details there too!
C.
What does "compete" with the employer mean? :-) If someone is developing an iPad app (software) while working for a company that makes enterprise software and does not have any current or anticipated line of business making mobile apps, would that be competing? I am guessing 'yes'. Now what happens if a company is making CR-ROMs for a software they sell. Would someone making music CDs and selling those be in competition? I have been guessing that if the employee's business is within the same trademark code of the employer's current or anticipated line of business, that could be considered competing. If and only if so, all computer/electronics related stuff seems to fall in the same trademark code [4], which means clear trouble for all the people having technology side-projects.
[1] http://www.law.cornell.edu/uscode/text/35/100
[2] http://law.onecle.com/california/labor/2870.html
[3] http://www.law.cornell.edu/uscode/text/17/102
[4] dctoedt ↗ Alok -- alok-g ↗ Thanks again for detailed answers. I'll be reading reference 2 you cited in more detail.
1. Many of the things you're asking would likely be very sensitive to the specific facts of the situation, and probably at least somewhat unpredictable in outcome. That includes, for example:
+ the scope of copyright protection (see my summary of Oracle v. Google below);
+ the meaning of "compete" with an employer.
Consider the Oracle v. Google case, for example: A highly-regarded federal trial judge in the Bay Area held that Google had not infringed any protectable copyright interest in the Java API. But then a federal appellate court in Washington DC ruled that the trial judge had used the wrong analytical approach to determine what was protectable and what wasn't [1].
2. If you're asking these questions because of your specific situation, be very careful what you disclose publicly, because you might be jeopardizing your attorney-client privilege by doing so.
(Also, for clarity, I'm not acting as your lawyer here, and you shouldn't rely on what I say on HN as legal advice about your specific situation.)
3. I haven't researched the California employee-invention statute recently, and don't remember offhand how courts have interpreted the term "invention" as used there. A quick Google search revealed a published law-student paper, which I haven't read but it looks as though it might be useful [2].
4. As to IC layouts, take a look at the Semiconductor Chip Protection Act [3], which protects mask works.
NOTES:
[1] Oracle v. Google: http://scholar.google.com/scholar_case?case=1233342363690832...
[2] Employee inventions: See Parker A. Howell, Whose Invention is it Anyway? Employee Invention-Assignment Agreements and Their Limits, Cite as: 8 WASH. J.L. TECH. & ARTS 79 (2012), http://digital.law.washington.edu/dspace-law/bitstream/handl...
[3] SCPA: http://www.copyright.gov/circs/circ100.pdf
I indeed do not see this discussion as a substitute for legal advice, and these questions have not been specifically my case. However, many entrepreneurs I have met in person or through HN do have such issues without realizing, possibly including some who have posted here itself [1] about the side businesses they created while being employed.
[1] https://news.ycombinator.com/item?id=7867603
This time, yes. I'm dropping a day a week of salary, and working (with my main job's blessing) on a new venture with some colleagues and others. For the others they feel there's enough spare time to pull it off, but for myself I don't have enough energy left after spending the time I think I ought to with my family, so would rather take the monetary hit to make the time for it.
Too early to say much else, except that I strongly recommend getting formal written approval for what you're doing - and especially so if you're taking co-workers with you.
Vocalix was a tech startup, aiming to "put voice on the web". I'll spare you the details, but I worked on it from 4am to 7am every day, mostly thanks to the wond'rous benefits of Modafinil, after which I would take a one hour nap and then go to work. I did that for 9 months straight. I wouldn't recommend it to anyone starting a startup. I made numerous mistakes, slips, mismanagements, bad technical choices, etc, because I was constantly exhausted, and because Modafinil affected my lateral thinking (though it's great for getting through a task list).
Vocalix was effectively dead on arrival, and within 3 months of me quitting my job we decided it wasn't going to work. Ouch.
My advice: if you're going to start a startup, do it properly. Reduce your costs, learn about startups and obvious mistakes, save up some money - all while still employed. Then when you're ready make the jump cleanly.
Some further thoughts about it here: http://swombat.com/2011/12/15/startup-escape-path
This gave us the freedom to look at alternative financing options, and to pursue any avenue that could lead to continued operation of the site. We eventually found investors, a new board, and a management team - that allowed us to incorporate Codenvy, bring the IP over, the engineering team, and get started. We did all of this while employed and receiving salaries from the original parent venture.
Now the company has raised $9M and we just crossed our 50th employee last week.
In our case, the helpful advice was that we were pursuing something that was in the interests of the parent company. They wanted this side project to succeed, but couldn't see a runway that made sense for them. By doing what was right for the company, we stayed committed to this project, and it just turned out that the best outcome was the formation of a new venture. That venture had allegiances and alignment to the parent that made sense for all, and it turned out to be an easy incorporation, and strongly backed by the parent. There wasn't any need for subterfuge, but these circumstances were unique. Net - you never know what the needs are of your employer, so if there is a business that helps the employer out, they may be willing to extend special arrangements to you during the incubation period.