Ask YC: For the love, or the money? | Hacker News Reader

Ask YC: For the love, or the money?

5 pointsnilobject8 comments

In my spare time, I've been working on a product that has a fair amount of interest around it. I have no doubt that once I get the product finished, the company will be successful and profitable. I see some market opportunities that is making me want to push harder and get done sooner, but with a day job paying my bills, I can only move so fast.

Thus, I think to myself, how about getting an investor or a loan? Loans are pretty much out of the option, as far as I can tell, because I don't have enough assets personally (and if I did, I wouldn't need one!). And when looking at investors, it appears that most of them look for some "big money" event.

But that's the conflict of interest, I suppose. I have no problems making money, but I'm not doing this startup because I want to make a ton of money going public or being acquired. I'm doing the startup because it's something I love, and something I want to be able to use myself.

Inevitably, I resign myself to the double life of my day job and my passion. So the question to everyone here is: what's a guy like me to do? Are there options that would allow me to dedicate my entire life to this that I haven't considered and won't make me feel like I'm selling out?

With my first startup I saved up about $30k, then went into "hotdog mode". This is when you cut your expenses down to the point where your only overhead is hot dogs, tap water, and rent/mortgage/utilities. You have no gas expenses because you don't drive anywhere, and no entertainment expenses because you do nothing but code. I could have lasted 18 months that way.

In the first year, I built the software, found two co-founders, and got some favorable press, which led to a small angel round--I actually turned down money in the angel round because I didn't want to give up too much of the company at a low valuation. That bump was enough to get the product launched, start paying ourselves, and have revenue coming in. We later raised real capital, but by then we had a solid product, reputation, and quickly growing client base. I retained >50% of the stock when we sold the company years later.

I've always been amazed that founders will so readily give up their equity just to raise capital, or to get prestigious advisory/board members. Do your startup for the love, but keep your eye on the end-game and don't give up equity unless you have no other choice.

I was in the same situation and I was able to make progress by consulting and paying outsourced coders on the side, then taking time off occasionally and working on it myself. It was hard but it worked out.

Friends and family is worth thinking about. It's a big responsibility to take on, but if you're really confident and know people who trust you it might be the best option.

How much do you really need? Find some short consulting projects, borrow up to 25k on prosper and get going.

Not a ton, but I can see myself burning through at least 50k in the next 6 months including marketing/creative expenses.

But that is a good suggestion. Perhaps the answer is to put this project on the back-burner and get some more consulting gigs.

Or think of how you can reduce your expenses.

The math is actually pretty simple.

How long do you need to be without income? How much will you need on Day 1 on No Income to make it to Day Z?

If you cut your expenses to the absolute bare minimum and kept working full time (maybe even adding some side work), then you can calculate Day 1. Then you commit to doing your project starting Day 1. Period. Problem solved.

The real beauty of this plan is that you don't have to pay anyone back, you don't have to share equity, and you don't have to depend on events outside your control (getting accepted into something). Of course, once you have something to show, you can do any of those things on your own terms.

WARNING: When I say "bare minimum", I mean it. No more restaurants, candy bars, beer, hookers, etc. It's very easy to lose sight of this while "good money" is coming in. Never forget: that money is already spoken for.

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