Effects Of Entrepreneurship Of Savings (Graph) | Hacker News Reader

Effects Of Entrepreneurship Of Savings (Graph)

jordancooper.wordpress.com

26 pointsjordancooper12 comments

It's interesting to see that, but not being a follower or a reader of his it's difficult to put that into context.

Are his savings dwindling because his business is struggling and he is not making a profit, forcing him to live on his savings? Or are they dwindling because he's pumping more money into his business to make it grow faster?

On what basis is he extrapolating his experience to all entrepreneurship in general? Entrepreneurship is a complex and difficult field, being a VC doesn't make you qualified to be an entrepreneur any more than being a programmer, engineer or manager does.

Seems like he's having a rough day, and I sympathize having been through a very similar process of watching my savings dwindle to zero. However I believe it's important to realize that effect happens primarily due to a lack of understanding of the process of starting a business and is generally not representative of a good startup.

If you are really interested in entrepreneurship, I highly recommend taking a look at the lean startup concepts - they are specifically geared toward helping people to avoid exactly this cycle.

Entrepreneurship is not about taking the plunge, living on your savings, and hoping you become profitable before you run out of money. That's just a wing and a prayer.

Anyway, sorry for the longish rant, but I get tired of these types of posts.

It's called bootstrapping. I am sure you already know it.

http://en.wikipedia.org/wiki/Entrepreneurship#Financial_boot...

I am now on my second business, and I am a student of lean startup...which by the way perpetuates this graph, not prohibits it. lean startup would argue that you find product/market fit before capitalizing a company and paying yourself a salary. this graph is a result of bootstrapping my first business, taking a half salary after capitalizing it with VC/Angel money, failing at that business, and now bootstrapping my new business until we can prove product/market fit and raise at a 3-4x step up in valuation (as well as prove to ourselves that this is worth replicating/scaling)...

I'm not having a bad day at all...I'm having a great day and time in life in general...I think you missed the point of the post...I sort of laugh when I look at this graph...money is just money my friend...

One of my favorite quotes comes from the movie Quiz Show, where Charles Van Doren says "You'll forgive me, but anyone who thinks money is ever "just money" couldn't have much of it." I agree with the gist of that statement but in a more general sense. I would suggest that anyone who thinks money is just money doesn't understand it's nature. Money is imho, always, far more than just money.

Anyway, that personal note aside. The whole point behind Lean Startups is to avoid or minimize that type of burn rate. I couldn't disagree more that the graph is a "result" of being a lean startup. That graph is a result of living on your savings before the company is generating enough money to support you. I'm not passing any judgment on whether that is a good idea or not, just suggesting that the decline in your savings is independent of the startup type. For instance, some of us choose to work a day job while building our startups so we don't have to burn through our savings - but that is a fairly personal choice.

I'll refer you to this post by Steve Blank entitled "Raising Money Using Customer Development" and then you can tell me how that graph is not the result of lean startup thinking...as for your desire to keep burn low by maintaining a day job while building your company, I'll go ahead and say your aversion to risk and lack of devotion the the mission of your company is uninspiring...enjoy your flat screen tv and 3:00 latte's while the enterprise value in your company grows at 1/10 what it would if you sacked up and worked full time on the startup...i'll check in with you next year when you are still an "entrepreneur on the side..." way to go man...you're a model for us all...way to keep that graph going up and to the right

I tried to make it clear in my previous post that I'm not passing judgment on your choice of living on your money, however your response seems to indicate that you are upset. If I have offended you, I apologize, that was not my intention.

I have been down the "take the plunge" route before, as I alluded in my earlier comment. I watched my savings dwindle and ultimately had to wind down the startup after 3 and a half long years. So while I don't expect you to understand my point of view, your comment comes across as overly general and fairly inflammatory.

I am a long time follower of Steve Blank. I own and have read Four Steps to the Epiphany several times. He makes it clear in the book, and it is alluded to in that post that Customer Development is a discovery process. It's not yet clear that you have discovered a viable business model and/or how long it will take you to reach profitability. During that early stage, he explicitly recommends avoiding raising money because of all of the complications it brings.

The gist of my first post was that I cannot tell from your post or your graph alone if you have discovered a repeatable scalable business system, and you are just funneling your savings to husband your cash and accelerate the growth of your company. If that is the case, then I heartily congratulate you and wish you all the success in the world.

If on the other hand you are living on your savings in the hope that you can refine and discover your business plan, and you can't fairly solidly project your growth - then in my estimation, that is an unwise use of your savings. But as I said, that is a personal choice. At this stage of the game I have a wife and a son, and while I'm willing to gamble on success, I'm not willing to gamble on putting them on the street in the "hopes" that I've hit on a successful business. Yes, my business will progress more slowly, and my customer development does not progress as rapidly as I like, but for me, that is an acceptable price to pay at this time of my life.

Anyway, I wish you luck with your venture. I sincerely hope it works out for the best.

link to Steve Blank attached: http://bit.ly/2Sd87e

Hmmm, looks like a lot of graphs in 2008-2009.

Home values, savings, wages, employment, manufacturing jobs, consumer confidence.

On the bright side, processor energy consumption, cost of entry into software development.

This post might have some merit if the graph included another 10 years of data showing the return on his investment.

Could also be titled: "Effects of Homeownership on Savings".

Rent is also cashflow negative. If anything, it's better to be a home owner in the US; you can stop paying the mortgage and probably still live in the house for 3+ months for free (or even cashflow positive if you rent part of it out).

The part that this graph is missing is the effects of entrepreneurship on savings when you get traction.

Many entrepreneurs I know have a graph like that for a year or two and then what we call "hockey stick" growth in the opposite direction.

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