Reconsider
medium.com
medium.com
I don't really care about growing something as a startup. I don't need to revolutionize anything. I just want to make someone's day better through software. I want to launch a cool product that people find fun, silly, useful, critical to their process, whatever you want, and NOT be beholden to interests of anyone who isn't involved in the daily operations of whatever product that is.
I just want to build something, and make it better every day. Something that I own, that I can change however I want, whenever I want. I shouldn't have felt like I needed a16z to invest in my company to believe that my product is worth something.
In fact, this article isn't even particularly unusual. I feel like we see more articles warning you that startups aren't heaven on Earth than articles explaining that you should try them. I think it's more like HN is a place that considers them a viable option, and that makes it pretty far out in the grand scheme of things because mainstream $X doesn't, for most values of $X.
I think "HN is full of people encouraging you to roll all the dice on startups!" is more about what people think "should" be true than what is actually true.
Plenty of "successful" businesses use other means besides added value to extract rents from customers.
Robert Reich has recently written very eloquently and convincingly about how multi-national corps are using all sorts non-value producing economics to increase bottom lines at our expenses.
For example, Americans pay more for pharmaceuticals than do the citizens of any other developed nation.
That’s partly because it’s perfectly legal in the U.S. (but not in most other nations) for the makers of branded drugs to pay the makers of generic drugs to delay introducing cheaper unbranded equivalents, after patents on the brands have expired.
This costs you and me an estimated $3.5 billion a year – a hidden upward redistribution of our incomes to Pfizer, Merck, and other big proprietary drug companies, their executives, and major shareholders.[1]
The light bulb, steam engine, radio communication, internet kind of value.
But I'm much happier now that I've stopped doing that, and am focusing on just doing a great job at my day job, and relaxing in the evenings with my wife and children. Yes, we still have loads of debt, and we don't all fit in our Pacifica. But there's no rush to solve those, they will come in time. And even once they're solved, there will always be other little problems that need to be solved. There's no end to that until I'm dead.
And frankly, I'm doing a better job at work now than I ever did before, now that I can focus all my mind on it without trying to brainstorm up the next big thing in the background all the time.
Because while that area north of Silicon Valley is busy
disrupting everything, it still hasn’t caught up with the
basic disruption of geography.You might also check https://weworkremotely.com/ (full disclosure, company I work for runs the site).
I agree though, remote work only works if your company is full on remote (culture, comms, hr, etc).
There's also idlewords, the people behind multiple podcasts (eg. Startup Success & Startups For the Rest of Us), and various well received one-person "Show HN"s.
There's plenty of idol adoration and boasting, but I've always felt an alternative was in plain sight if you didn't fit with the "VCistan".
This isn't exactly an HN love story, but it's working out well for us so far, and we're learning a lot. I can't say I regret it, and at the moment I know that I would regret if I had gone after funding of some sort. Right now it's just me and the customer, working out who needs what. Third legs need not apply.
There are tons of sane businesses being sold on there that you can buy up and grow. At the very least, you'll see what actually makes money.
You don't need to buy something from there -- you can simply use the site to find niches where people actually make money.
Making money online can be done. Example: I started a Minecraft server early on, sold in-game benefits, and now make $5-15K (depending on season) per month. A friend of mine makes way more. Here are the stats he sent me recently: https://i.gyazo.com/81718cef2295bbf4df8a6d9892d140c1.png
One of DHH's bits of advice is to find a niche and focus on profiting enough to support yourself. The internet is the best place to do that.
As of 17:51 GMT, this submission is 3 hours old and has 374 points, 68 comments, sitting in position 11 on the HN front page
In position 10 is a submission from 8 hours ago with 100 points and 76 comments (https://news.ycombinator.com/item?id=10505476)
In position 1 is a submission from 4 hours ago with 177 points and 91 comments (https://news.ycombinator.com/item?id=10506338)
edit: This isn't to pass judgment on the merits of the article, which seems a bit conveniently timed to a product launch linked at the bottom. But as a community we should realize what gets flagged/pushed down and by how much.
update: at 18:51 GMT, this is 4 hours old, has 490 points, 97 comments, and is in position 26. In position 25 is a 5 hour old submission with 57 points and 15 comments (https://news.ycombinator.com/item?id=10506372)
final update: at 19:24 GMT, this is off the front page at position 33. Age 5 hours, 536 points, 112 comments. In position 18 is a story from 10 hours ago, 362 points, 192 comments (https://news.ycombinator.com/item?id=10505362); the 10506372 story referenced previously is now in position 31, 62 points, 16 comments, 5 hours ago.
Perhaps others feel more strongly than I do that this isn't really a solid article.
Even though this narrative is hugely removed from the realities of startup life (most college startups go nowhere, the most successful founders tend to be in their middle age with significant financial stability, etc), it is still romanticized by founders and startup employees and other people who really should know better. So then why do they buy it?
To get people to work harder for you. Spending every waking moment in front of a customer or a computer screen eating bulk ramen sounds like a great montage scene in the movie you'll have an EP credit in, and this distorted reality is even easier to sell to impressionable young college grads who have maybe .1% of the equity (in options!) that founders and VCs get to keep.
Why are jeans and hoodies the fashion choice of founders? Because if everyone is used to dressing like a poor college student, they tend not to notice how little they're truly being compensated.
This isn't some big founder/VC conspiracy, it's complicit common sense.
I can imagine someone semi-consciously optimizing their life in such a way as to avoid middle class normality as much as possible. If you want to get financially independent without doing "boring" stuff like working a stable career and investing in index funds, the notion of a wildly successful startup is perfect: you get to be interestingly poor for years, and then you can suddenly get fuck-off rich, with no intermediate period of dull stability.
Presumably after that you can go off and build canoes with your friends or whatever it is you "really" want to do. Except that probably, for reasons David and others outline, the plan will fail and drag you into decades of pure hypocritical misery.
Because they're comfortable, familiar, and they can get away with it? I think it takes a particularly cynical and angry mind to stretch the choice of clothing to be a tool of oppression on the part of the founders.
It's the same as buying a few pizzas for your employees to get them to code till sunrise instead of paying them proper overtime. Impressionable college grads with little work experience elsewhere will take that kind of behavior for granted, and assume it is the cost of their (measly) equity. Essentially, you want them to be suckers. Comfortable suckers.
Most of these guys telling you what to do, where to live and which technologies or schools that matter are Ivy League alumni multimillionaires. Many from a time before a widespread Internet and grants for poor students. When was the last time you saw any of them sit down with someone who were really challenging their views?
Edit: For somewhat of an example of the last thing there are two episodes of This Week In Startups with DHH.
https://www.youtube.com/watch?v=XDGHxO6N3Ms&t=15m30s https://www.youtube.com/watch?v=jzERXJgi5vQ&t=7m11s
Additionally, after work most of my friends have to change outfits to participate in social events. Business casual dress is useless, now I wear jeans, athletic shorts, and t-shirts to the office.
http://genius.com/Allen-ginsberg-howl-annotated/
Moloch in whom I sit lonely! Moloch in whom I dream Angels! Crazy in Moloch! Cocksucker in Moloch! Lacklove and manless in Moloch! Moloch who entered my soul early! Moloch in whom I am a consciousness without a body! Moloch who frightened me out of my natural ecstasy! Moloch whom I abandon! Wake up in Moloch! Light streaming out of the sky! Moloch! Moloch! Robot apartments! invisible suburbs! skeleton treasuries! blind capitals! demonic industries! spectral nations! invincible mad houses granite cocks! monstrous bombs! They broke their backs lifting Moloch to Heaven! Pavements, trees, radios, tons! lifting the city to Heaven which exists and is everywhere about us! Visions! omens! hallucinations! miracles! ecstasies! gone down the American river! Dreams! adorations! illuminations! religions! the whole boatload of sensitive bullshit!
Essentially, the wealthy have come around to the idea as seeing the poor and middle classes and resources to be exploited, like a coal mine, by offloading their tax burdens onto them. The more people chafe under low pay and high taxes, the more easily they can be tricked into thinking the social support system is unsustainable and should be dismantled before people are taxed to death.
People who created this mindset and let it fester know who they are. The rich who benefit stay silent. That's why this generation of CEOs who may be highly vocal about social issues tend to be conspicuously quiet about tax policy. For every Warren Buffett, there are a dozen post-exit founders who are happy to leave their capital gains tax rate where it is.
"Come around to"? That's the central essence of capitalism, for which it was criticized by the socialists who put the name "capitalism" on it in the 19th century.
I was referring to the socialist critics of the dominant system in the developed world of the 19th Century who introduced and popularized the use of "capitalism" it as a label for an economic system (who, seem to be first users of the term, though that's somewhat tangential to the main point I was making.)
> The novelist who coined it was writing a satire, but its origin doesn't strike me as implying an intrinsic value judgment.
Presumably, you are referring to W.M. Thackeray's use in The Newcomes in 1854, which is counted on Wikipedia, with reference to the OED, as the first known use of the word in English; this postdates the early use of "capitalisme" in French to refer to an economic system, and even known earlier uses in English of "capitalism" to refer to an economic system [1]. Thackeray's use is somewhat oblique, and there seems to be some discussion among people who care about these things whether it was about wealth per se or some kind of attitude or orientation toward wealth. But, in any case, his use isn't the first (even if it may have been original, not directly following the others) and is a tangent from the use of the term to refer to an economic system.
[1] e.g., W. B. Greene, Equality, 1849. https://books.google.com/books?id=yCQ3AQAAMAAJ&q=capitalism#...
The people writing Emacs Lisp macros are also working on complex Common Lisp or OCaml applications in very high end jobs, and making far more money than the people who are playing these "disrupting" games. Most people in startups work a few years for stock that ends up being worthless when the company goes under, and programmers tend to get hit the worst with this because they give all the short-term-profit to glorified secretaries on the business side of the business.
If you're doing something new, you'll probably own the industry just by virtue of being there first. But you'll also probably not grow to be super-huge, because if you were solving a huge problem, it probably would have been solved already.
The exception to this is when the problem is huge, but the technology wasn't there to solve it before: see search (Google), social media (Facebook), mobile apps (Uber). And even then the conditions need to be just right (an app for calling cabs would probably not have been nearly as successful if it didn't coincide with a legal loophole that allows them to undercut the taxi industry).
But most ideas aren't those ideas. And that's okay. A business that solves a real problem, even if it isn't a huge problem, will likely be able to stay alive, profit, and grow just fine. Those "disrupting" companies that are all style and no substance will crash and burn when the tech bubble pops.
However, DHH's constant railing against the VC backed world seems a little tiresome. There seems to be a religious fervor to his essays that thier way is morally better (e.g. thier business model seems like a honest transaction vs VC backed startups who inflate numbers etc).
I think a lot of people get that raising VC is not the only way to build a business (there is even a nice tradeoff statement (do you want to be Rich Vs King).
It's a choice one makes. It's not morally inferior or superior to raise VCs or to bootstrap.
I mean, this isn't proof or anything. But there seems to be some intuitive truth to DHH's position.
I guess it's possible to build large businesses like Google, Facebook, Uber, Apple etc without taking VC money but its a choice that these founders made that taking VC money helps them increase the odds that they will achieve thier goals.
What's wrong with that?
On the other hand- you have perfectly good businesses like Craigslist, ESRI, SAS, Zoho who did it without raising VC money. Nothing wrong with that either.
Just different choices made by the founders of these companies.
Not that they aren't an example of a company that did not take VC money, just that they may not be a particularly good example for most looking to follow that path.
What does this phrase mean?
In short, 37 signals believe this screen should not display an empty list, but instead serve as a guide to the user. This is commonplace now ("You have nothing to read yet, [button]add someting[/button]"), but first mentions of this are from over 10 years ago: https://signalvnoise.com/archives/000375.php
...and yet so many young founders and employees are swindled into starting or working for the next unicorn of the world, giving away massive amounts of equity in their company. Killing themselves slowly by working 80 hour work weeks.
At some point we need to start doing a better job of educating college grads that can program, design, engineer, etc. The more DHH's constant railing continues the better.
Weird, reading this thing, I never got a sense that he was saying that his approach was better, only that it wasn't worse...
This is not necessarily a bad thing. In this case, I'd say it's a good thing.
Our ultimate goal is NOT to get rich, is NOT to be famous, is NOT to be valued billions of rubles.
We want to be free, we want to work on the projects that motivate us, we want to make our own decisions and decide when it's good to work and when it's not.
For me this is the most motivating part of this adventure. I can totally relate to this article and it even gives me hope in our way of doing things.
I've been working on that more than my startup recently.
We could live on $20k annually for at least 4 years. Now I am trying to figure out a SaaS that could generate that within a couple of months. I don't mind fighting with price even though that's what you're not supposed to do.
We estimate that the company should earn around 25k € every month so we could quit our jobs but again our costs are very low so far.
I'm not sure to properly understand your question here ; you want to have a side business so you can concentrate on your main startup?
Anyway, good luck with your business(es)!
Living on savings for now, which runs out in a couple of weeks.
Is this also accounting for retirement? If so, kudos! :-)
Are founders actually so delusional that they're really buying into the whole billion+ idea at the outset instead of thinking of how to make a business? That seems rather silly. (Unless the real goal is to find a way to get a couple million personally out of the first few funding rounds. In that case, perhaps it's not a bad gamble.)
"The web is the greatest entrepreneurial platform ever invented. Lowest barriers of entry, greatest human reach ever. I love the web. Permission-less, grand reach, diversity of implementation. Don’t believe this imaginary wall of access of money. It isn’t there."
This is predominantly false. I would edit Great to mediocre.
I saw the opposite happen firsthand: a company that was about to get steamrolled by a competitor, and they knew it. There was nothing they could do, even though they had over two years to prepare. The reason they couldn't do anything was because their team was mediocre. Last I checked, that company no longer had any job listings.
How many people here have similar stories? It's tempting to believe that mediocre programmers can be mentored, but it doesn't seem that simple.
The vast majority of (moderately successful) startups I see friends and colleagues starting or working for are in this group. For every one friend I see go work for a company like Uber, I see 10 more working for a startup that builds software for expense reports or HR teams or insurance companies or old school cab companies. They will never be billion dollar companies, and they probably won't IPO, and they may be an acquisition target -- but that certainly isn't their end goal. They are gaining customers and growing relatively sustainably, making smart choices about when to (or not) take outside funding.
It's in their request for startups though. Seed funds don't seem to be an area that attracts B2B.
I suspect it's because you have to be in the industry to understand the problem exists in the first place, so a huge segment of the YC applicants simply don't know about those opportunities as they've not worked in industry and only know about B2C opportunities.
https://en.wikipedia.org/wiki/Hoop_Dreams
“Many are called but few are chosen”, Matthew 22:14
I think this says more about the state of VC than startups themselves. Founders feel that if they don't run around banging pots and pans while tooting their own horn/vuvuzela, they won't ever get any attention from investors. Crowdsourcing early funding is just going to make this worse.
However, I personally feel distain for the perspective of how every engineer should maintain a noble sense of worth. No matter the environmental differences of being in SF or elsewhere, people are bad at engineering wall to wall. While there are still successes at both sides of the coin.
Frankly, 'Software eating the world' has nothing to do with us. It has to do with, well, the world. And my own struggle with the tech industry is how disconnected we are in the 'startup and grow' sector.
drops the microphone
What a great article. I am glad someone finally said something.
I wanted the best odds I could possible get at attaining the tipping point of financial stability.
And that this is due to the corruption of investors. So I guess the takeaway is that if you raise money, choose your investors wisely.
There are millions of small businesses (in the US) and the vast majority of them are just lifestyle businesses that bring freedom/pleasure/excitement to the owner with perhaps a possibility of earning more, but there are many that earn less than what they could make at a regular job with their same experience.
This whole world domination startup thing seems to be localized to SV really. Nowhere else is this considered normal.
By the way, there's a lot of confusion with just the term "startup" in general when it should really be reserved for something new (biz model, innovation, etc). If you're just doing something that's already been proven, which is completely ok, then it's just a small business.
Basecamp with 50 people is still small to me, I'd say companies need at least 100 people before they can be called mid-size.
Trying new things means the other spun-out companies are startups. Basecamp itself is nothing new, just different software solving the same problem as hundreds of other project management and collaboration tools.
I think new can be summarized as a new business model, new way to monetize something, new innovation like a product or service that didnt exist before, new industries in general, etc.
There can be multiple startups doing the same problem but most "startups" in SV aren't really doing anything new, just a more modern approach or revamped UX of existing solutions so I wouldn't call them startups. There's nothing wrong just being a small business that grows into a medium and large business.
Not everything has to be brand new and it's not always worth it either.
Unicorns happen over time. Smart founders have patience and resilience to weather many storms ahead.
They are everywhere... but we are quieter than high-growth startups. Many of us work for them. We enjoy it. If anyone was not aware of their presence, step outside of the VC-driven culture. There is a whole other world out there.
Most of us don't care about winning some ridiculous lottery where smarmy Wall Street types stakehorse tech wunderkinds.
Things have a way of balancing themselves out.
I see this repeated as a truism all the time by the anti-VC crowd and it sounds great. But is there actually any evidence whatsoever of it?
The success rate for startups which have raised a Series A is substantially higher than the success rate for startups and small businesses in general. If it were true that avoiding VC funding somehow gave me a 30% chance of building a $1M business, I'd be happy to give it a shot (at least for a year or two). But I just don't see any evidence of that.
If anything, it seems like companies which accept VC money have dramatically better odds of success than other startups. The only reason it seems like VC has a high failure rate is that nobody bothers to write a news article when a random small business fails.
EDIT: Downvoters, kindly provide any evidence that avoiding VC funding increases your odds of success by 10x.
It is not stating that chances themselves are correct.
But, based on DHH's other rants and the context of this piece, it's clear that he does in fact think the odds of success are higher without VC. (After all, if he didn't, this line would work against him.)
I think what is clear is that the odds of success are higher for the type of business VCs are not interested in. VCs may be better than those numbers at choosing the winners from that pile, but what of all the "VC-pattern" business that get passed over and almost inevitably fail as a result?
Not to me. Would you mind providing any evidence to support that point?
In my experience, the vast majority of so-called "lifestyle businesses" and "small businesses" do fail.
That said, I do think the odds of success are higher for a non-VC-pattern business. I do not have hard numbers or any sort, though. Of course, it depends on what you consider "success". A VC company has a nice, fairly-cleanly-defined success point in the exit. What is "success" for a business run as a going concern without an exit as a target?
It's not so much, avoiding VC increases your chance of success by 10x. It's not easier to reach a $1M business without VC than it is to do so with VC. However, if you don't have VC, then a $1M business is probably a relatively stable company. But if you do have VC investment, they're looking for a high return on that investment, and so they won't be satisfied with a $1M business. They'll want that $30M business, which is harder, since the goal is so much higher.
I think the math works mathematically in a very abstract sense but has zero basis in reality.
From what I gather, taking VC money helps improve success rates in part because the process of applying for the money is a valuable experience wrt clarifying what your business is all about, what your goals are, etc AND VCs typically serve as experienced consultants that help guide you.
So I will suggest that if you want success without the financial strings attached of taking VC money, you should try to replicate those parts of the process.
Is Uber in a winner take all market? If so, they have no choice but to operate the way they do: http://www.vox.com/2014/12/4/7336433/uber-worth-
We see it in regular job markets more generally (where we call it job polarization): http://economics.mit.edu/files/5554
We see it in "art, sports and culture" markets (where we call it the Superstar effect): http://www.nytimes.com/2014/02/23/business/winners-take-all-...
http://marginalrevolution.com/marginalrevolution/2010/09/win...
http://www.nytimes.com/2010/12/26/business/26excerpt.html
We see it in newspapers:
http://thinkprogress.org/yglesias/2010/09/10/198480/technolo...
We see it in attention more generally (which has second order effects, like everyone use just one or a handful of large platforms(!) and where we call it variations of "winning in the Attention Economy"): https://en.wikipedia.org/wiki/Attention_economy
So the choice is sometimes (perhaps even often today) not between "get big" or "stay small/medium", but get big (where big may represent firm size, level of knowledge/skill, fame, or a number of other attributes depending on the area) or "get (almost) nothing." When the distribution of customers/eyeballs/rewards are as lopsided as they are in many areas, the only choice IS "get big or go home."
More:
http://www.slate.com/articles/business/moneybox/2011/12/how_...
http://marginalrevolution.com/marginalrevolution/2010/09/win...
http://prospect.org/article/talent-and-winner-take-all-socie...
I don't knock dhh, and this is one of those posts I actually want to agree with, but it doesn't neatly comport with extant realities. I think even this advice, just like the advice to "get big" needs to be taken very carefully. All of these roads entail risk (obviously), but the choice of big versus small isn't as simple as implied.
From where I'm sitting, I see the exact opposite. There are very few businesses that have few competitors.
Search Engines Top four market share: 98.5% Major companies: Google: 64.1% Yahoo: 18.0% Microsoft: 13.6%
Arcade, Food & Entertainment Complexes Top four market share: 96.2% Major companies: CEC: 52.2% Dave & Buster’s: 35.0%
Soda Production Top four market share: 93.7% Major companies: The Coca-Cola Company: 41.2% PepsiCo: 33.6% Dr Pepper Snapple Group: 15.4%
Lighting & Bulb Manufacturing Top four market share: 91.9% Major companies: General Electric Company: 32.9% Koninklijke Philips Electronics NV: 31.7% Siemens AG: 27.3%
Major Household Appliance Manufacturing Top four market share: 90.0% Major companies: Whirpool Corporation: 43.8% AB Electrolux: 20.7% General Electric Company: 17.1% LG Electronics: 9.2% Market concentration
Mobile OSes (iOS and Android) are another, even if no one can make money on the software itself anymore.
Banking software (FIS, Fiserv, Jack Henry, and D+H): 96% total
Internet service providers (a few large players, with a smattering of regional ones. Some areas are served only by a single company.)
Wireless providers (AT&T, Sprint, Verizon and T-Mobile) have roughly 80% of the market.
Here's a nice infographic:
http://www.theatlantic.com/magazine/archive/2013/04/the-char...
This is not to say that this applies to every market. There are competitive markets without clear winners (in some of the above cases, the markets are competitive oligopolies - but that doesn't help the "I just want to make a nice living as a small player" idea - you still need to be huge in those cases.) However, with the increase in mass communication, economies of scale, picked low hanging fruit, clustering effects, and concentration of talent/capital/connections, the trend has been towards winner-take-all (either through pure domination, like search, or industry consolidation, like health insurance.) Eking out a living at the margins is possible, but as I stated in the other comment, has its own set of attendant risks.
These types of businesses are very much startups, but have a more traditional philosophy and generally plan to stick around for longer than a few years. I'd say such businesses are often a lot riskier for the owners as they're generally risking their own money and time to get it developed rather than someone else's money. Spending someone else's money is not risky at all. Failure in a silicon valley startup isn't a real loss: it's expected.
The people who venture out on their own and take their own risk with their own capital and time should be applauded for trying to create sustainable businesses that might be beneficial to the wider economy and society rather than creating ones that try to dominate a market for a couple of years and then almost inevitably fade out (as most startups do both before and even after IPO), not really adding much to the economy or society at all, while, of course, screaming the obligatory "I will change the world" mantra. In fact, it's this idiotic mantra and the lies one must tell oneself to actually believe it that turns off a lot of great talent form the silicon valley startup version of a business. Most smart people can eventually see through such simple, repeated, dogmatic ideas easily, and don't like to be associated with the brainwashed masses for whom these ideas are reality.
Because the terms they use for themselves indicates how they see themselves and the value of their role. They invest money in order to make money, but want to be seen as—and want other people to refer to them as—saving angels.