You Have to Be A Fool to Start a Company
babblingvc.typepad.com
babblingvc.typepad.com
You don't. Plenty of businesses start cautiously and grow organically.
What you have to be a fool to do is to bank 3-5 years of your life on a 1/20 shot at a 7 figure acquisition. Fortunately, only a tiny fraction of the people who try to do this get funded and shot out of that particular cannon, and they only lose ~1 year of their life to the idea.
I bet that 20 teams shooting for a 7 figure exit will be on average much more successful than 20 teams building a cautious/lifestyle business.
You could even argue that shooting for a 7 figure exit is the selfless thing to do, because you're less likely to make a good living that way compared to a lifestyle business, but you are more likely to make a significant contribution to the economy (+ job creation).
Let me save 5 years of your life for you:
* Getting funded is harder than everything on Hacker News makes it sound.
* You can waste truly spectacular amounts of money without earning anything from customers in return from it, and when you do that, you wind up in meetings with salespeople, meetings with marketing people, meetings with PR people, meetings with engineers about the marketing people, meetings with the CEO, and, oops! Now it's time to go home.
Second: No. Shooting for a 7 figure exit is not a "selfless" thing to do. We didn't do that and we've created more jobs than a lot of funded YC companies have. The difference between companies that exit and companies that don't isn't headcount.
this "significant contribution to the economy (+ job creation)" part is especially delusional.
most of the jobs are still created by small businesses.
A startup often works on interesting problems from day one, and if (!) it becomes profitable the jobs become permanent.
Since larger companies mostly grow by buying startups, a large part of all "interesting" jobs are created by startups/spinoffs.
Is that even true?
To me, the remark sounded like a fanboi of the 'acquisition-target' business model which I personally think is naive and unsustainable.
I am telling you that you probably don't learn more from failing in a startup than you could have in 3-5 years doing something else, and that yes, in fact, if you have the misfortune of getting funded, you can wind up in a job that you're handcuffed to that involves you spending most of your time in meetings.
It worries me a little that people think this claim is so outlandish that anyone making it must be trolling. I'm really not.
pg immediately corrected him, but sometimes I still wonder how pervasive the idea is that most startups will make it big.
If you're in meetings all day you're either not delegating enough or you like being in meetings all day. Either way nobody is forcing you to have meetings all day every day.
I'm a fan of the slow organic approach myself. But I also realize that there is a LOT of work that has to be done over the live of an idea, and the slower you work now the longer the whole thing will take.
I don't recall him writing that it was a foolish thing to do. He acknowledges the risk of failure but doesn't ever seem to come to terms with the consequences of failure. Again, with the caveat that losing 5 years of your 20's isn't the worst thing in the world.
Until you're in your 30's and start thinking about what else you could have done with the time, I guess.
But you can't look at each bite at the apple independently, either.
A failed startup might very well be a better experience than three years at a great company.
But two consecutive failed startups is probably not better than six years at a great company, if you take the company job as seriously as startup founders supposedly do. After a couple years at a great company, an A-player is going to get much more interesting work.
I'm also not trying to argue against starting companies. Starting a company is a great idea. I just think you should be making money from day one, get yourself to a place where you can live comfortably with your startup, and not bank your time on a tiny chance of getting acquired. Time is precious, and 20-year-olds suck at accounting for it.
Only if you're talking about the quality of the experience, and even that's entirely subjective.
If the goal is financial independence there's no comparison. Your shot at making FU money working for someone else is essentially zero. As a founder your shot at achieving financial independence is considerable, and making FU money is at least a possibility.
Your odds of making "FU money" are so remote that it is irrational to bank your career on it. Remember, during all the time that you're chasing the "FU money" (that you again are never going to see), you are also not contributing significantly to your retirement.
There are plenty of reasons to start companies, but money isn't a great one.
I'm not sure what you mean about it having been disproven that starting a startup is a bad way to make money. Presumably the same sort of statistical evidence that would prove that randomly selected people can't do anything hard. But what matters to someone asking this question is not whether random people could do it, but whether they could, and if the right sort of person is asking the question, the answer becomes very different. If the young Bill Gates is asking the question, the odds of making FU money are close to 100%.
(Microsoft was already doing well before they got lucky with the DOS deal.)
Personally, when I had a J.O.B. 8 years ago, I felt it was far more risky. At any point, of any day, with or without notice, my boss could walk in and lay me off.
Done. No more money. No more job.
Being at the mercy of someone else has never felt safe or less risky to me. I was constantly stressed.
Working for myself means that if I need to get paid, I go out and get paid. I make it happen. I don't see how being in control of your OWN destiny is MORE risky. I rely on MYSELF, the person I trust and believe in most.
Sometimes I have to rely on others for contracts, but I'm in control of that relationship too.
I think the problem is that there are entrepreneurs and employees. I don't understand the employee mind-set, but it takes all kinds to make the world go around.
Maybe I'll write the article, "Entrepreneurship is for control freaks. Because I said so."
If you are the owner, it doesn't matter if one or two customers are hard to deal with. All you do is stop selling to them, and you will most likely still be in business.
1. Already sold your company.
2. Didn't really contribute to its founding.
This is like an employee accepting a $10/hour contract, and then complaining later that it was too low.
If you asked my wife and me on our wedding day what our chances of success were, we would have probably said something like "Well, about half of all marriages end in divorce, but we're a little older and hopefully more mature than the average couple of newly-weds, and we talk pretty openly about difficult things. There are no guarantees, but we think we have a decent chance and we're going to do our best".
I have a similar approach to business - as Richard Branson is fond of saying, "Take big risks, but always think about the potential downside".
On the divorce rate, that's across all marriages, and it's closer to 40%. If you marry after 20, both are college-educated, and have known each other for 18 months before getting engaged, your odds are a lot better.