Shit I Learned Burning through My Family's Life Savings on a Failed Startup
kevinjmireles.wordpress.com
kevinjmireles.wordpress.com
When you're out of college, you're used to living on a shoestring budget. You can get by without quite little because you haven't really raised your standards of living around a big salary.
When you've worked for a few years, you've likely saved up a decent amount of cash (unless you live a life filled with consumption). You may have to cut back on all the perks but you can still get by.
Most of the people I know who want to start a company don't want to risk their current cash flow. Yet all of them have been working long enough where they've likely saved up enough money to go a long time without making money and be ok. I think the only thing is that people raise their standards of living (more expensive rent, big car payments, high rent/mortgage) such that they feel they must continue to make their current salary in order to "survive."
Losing all of your $20k savings at age 25, DINK family: hurts, but not life-changing in any way (as long as your spouse is OK with it, and you'd better be damn sure they aren't lying to you when if they say it's OK)
Losing all of you $200k savings at age 35, two small children and stay-at-home spouse: extraordinarily painful and will impact every decision you make for a long time.
If they are telling the truth, win.
If they are lying, it's best to find out now. Better your spouse gets 50% of a failed startup now and alimony based on your nonexistent income than 50% of your cash later.
I wish he could come up with a way to give us more concrete details that add nuance to the broad lessons. Memories will fade, and if all he's saved of them is this blog post, the lessons will follow the life savings. And that would be tragic.
I appreciate the encouragement and challenge to write some more. I'll see what I can do to live up to your request but no guarantees as I'm trying to put some of the lessons to use=).
Know when 80% is good enoughWhile I've learned valuable lessons from my (many) failures it's a nice reminder that there is also a lot to be learned from our successes.
This section describes a people problem, and I think the headline should be narrowed to that realm. Otherwise, a good, honest list that I believe will ring true to many HN readers.
The "looks like/is a goose" one reminds me of looking for a "market alternative" (from the book "Crossing the Chasm"). The market alternative is how potential customers presently deal with the problem the new product solves, and it has a name and an existing budget. This helps to communicate what the product is to the customer.
If it's hard to find such a market alternative, it's a sign that the product isn't ready to 'cross the chasm' into the mainstream - that is, it won't be attractive to pragmatists (who just want a percentage improvement on existing methods, with minimal change). It's still in the non-mainstream pre-chasm realm populated by techies and visionaries (who think the tech is cool in itself, or who can see a new way to use it to make money, respectively).
It might also be that the target market selected isn't suitable, i.e. there might be another application of the technology and for another group of customers, for which there is an existing "market alternative".
I think the nature of the failed startup is irrelevant as much of the advice is raw, yet vague enough to apply to many areas. Almost all startups are based on a good idea, their success or failure rests almost entirely on the back of the choices you make along the way. Thanks for sharing this.
Then invest proportionally to the revenue.
With cheap VPS in the $20 and say $500 in average design, I fail to see how you should over spend in chasing a dream highly probable bound to fail.
The cliche of the macho startup entreprenuer working 100 hours weeks and burning through cash for five years is not how many people become successful. Plenty of people start quietly in their spare time and build as they go along.
Startups require risk and sacrifice - yes, this is true. But not all businesses demand your internal organs and your wallet.
But if you count your own time, which is worth AT LEAST $20/hour (if not $100), then you aren't going to get very far if you're only willing to commit $1000. Even if you don't count your own time, many opportunities require significantly more than $1K.
Success in a startup comes from tenacity more than anything else. If you aren't willing to make a real commitment (as the GP was suggesting), you're setting yourself up to fail.
So fail quickly is about taking risks, making mistakes and learning as rapidly and as cheaply as possible - so ultimately you can be successful in the long run.