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Comment by seibelj | Hacker News Reader

My 2 cents - As an investor or potential employee when analyzing a startup, pay close attention to how scrappy and capital efficient they are. Do they have excessively nice office space? Are the founders making too much in salary? Does it seem like the executives are working like animals, or do they have the big company mindset where they take it easy? Startups are nothing like established, revenue-generating companies and the mindset should be entirely different.

The #1 thing a startup can do to survive is to be as stingy as possible with their capital.

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It’s all a balance act. My last startup went bust in part due to the fact that we avoided hiring as long as possible in order to save money. In doing so we missed our inertia when we first started and we’re hot, and as we dragged on we didn’t have the diversity of talent to help do the things we were bad at (and didn’t want to do) ourselves.

Obviously super fancy offices, lavish meals, etc should be red flags, but you can’t generically say “be stingy” – it’s more like find the most efficient way to use your capital (which may include seemingly inefficient things that are actually required).

> My last startup went bust in part due to the fact that we avoided hiring as long as possible in order to save money.

While not going bust, I had a similar experience. In the early stages, you think you can do everything yourself, and you can. Network, hardware, software back and front, systems, the lot.

So once we had a little success I found it very hard to get my cofounders to spend a bit of money on some relief. Ended up paying up for some guy who wasn't compatible, and let him go soon after, which soured their taste for hiring entirely.

Lean, not stingy. It's about reducing waste. I'm on my third company, stingy would kill us, waste would kill us. But, gotta buy the things you gotta buy, when you gotta buy them. Critical difference between Lean and stingy. Maybe frugal is the right word.

> gotta buy the things you gotta buy, when you gotta buy them

I would add, I think it's usually best to wait until the need is crystal clear. "We think we're going to need this in a few months" is not generally a good reason to spend money now, even if the case seems airtight. Circumstances can change. Of course the exception is when the purchase is needed to start a chain of events that you need to initiate, even though it won't come to fruition for a while.

i have been lucky - multiple exits, 1 unicorn (and more importantly half a dozen fails)...and in that experience stingy always wins in hindsight. if it doesn't feel painfully stingy, be more stingy. the future You will thank you every single time, regardless of outcome.

I was part of a startup where the founders were older and the team was older. The technical competence and the competence of the team were amazing but I wouldn't characterize the team as "working like animals." However, the founders were pretty loaded and put in the initial 1-2M. We had a pretty good exit after less than 2 years.

Surely you can succeed without working like an animal? You probably can't take it easy like with a larger established company, but it doesn't mean you have to run yourself to into the ground in order to be successful.

Normal employees should work hard but not ridiculous amounts. Executives, whose compensation is highly tied to stock value, should be animals, at least in the early pre-revenue stages. That is my opinion.

Well, it's a marathon, not a sprint. A CEO that isn't taking care of him/herself isn't taking the long view. Sacrificing your health and not making time for thinking big thoughts is a bad way to lead a company.

There's a big difference between working super hard and working so hard that your health fails. If you aren't pushing 60 hours a week, you aren't even trying. At a startup, so many things are out of your control, but one thing you can control is working hard. All that time and effort, and failing because some other company out-hustled you is the worst reason to fail of all.

Burn-out is a thing. A CEO that isn't making time for focussed reflection can very easily get stuck in 24x7 fire-fighting mode. A tired, burnt-out CEO won't be finding creative solutions to problems.

There is a small subset of people who are able to work 80+ hours weeks without end (and are also intelligent, conscientious etc.). I think a significant portion of highly successful people belong to this group.

Most ideas don't exist in a vacuum and until you get your name associated with your market you're running the risk of someone faster stealing the buyers' hearts.

The game of international capitalism is one where if you aren't working both smart and hard then somebody else is going to eat your lunch and leave your company's corpse on the side of the road.

When you see startups blow millions a year on AWS spend because its "easy", when you could do the same on dedicated hardware for 1/10th or even 1/100th the price, it always shocks me.

Yes, queue the comments about "Total cost of ownership", past the point where you cant afford an OPs person(s) (which you will eventually need for AWS anyways) AWS is a money-sucking black hole.

For RDB? Sure. For EC2? Depends on many factors. Storage per safe, backed up and versioned gigabyte? Can't see anyone competing there.

It's not about the hardware. It's about what happens when it breaks--which it will--and when you need stuff you can't reliably build off the top of your head--which you will.

The axe you're grinding is profoundly weird, and indeed a large part of my business is because the stuff we build is extremely cost-competitive with dedicated hardware. Difference being that I can open up the console and start shooting servers and nothing breaks. You're not saying the same with the overwhelming majority of naive "dedicated hardware" deploys, especially at the levels of skill and expenditure that small companies can employ.

I don't see anything "profoundly weird" about it (a bit specific, maybe, given the rest of the conversation).

You're right, of course, about naive deployments. But it just isn't that hard to build reliable systems, assuming some experience. And if you're doing anything more interesting than pretty CRUD forms (say, atypical storage or bandwidth requirements), DYI becomes much cheaper, fast.

To reiterate, yes, you need someone who knows what they're doing on the systems end. But you will anyway at some point, and making that hire earlier can pay for itself.

I am a huge proponent of self-hosting, but there's other considerations when it comes to doing something like cloud - namely, CAPEX vs OPEX (Capital Expense vs. Operating Expense).

Having your own equipment is a CAPEX and investors don't like to see those on a balance sheet at all due to various accounting reasons. Mostly its seen as a burden. Cloud is an OPEX and investors seem to prefer renting to owning.

Personally I don't understand why spending 3x more is more attractive to investors, but often the technical reason being right is superseded by the business logic.

https://www.recode.net/2017/2/2/14492026/snap-ipo-2-billion-...

Hahaha. Work like an animal for some guy who is semi-retired. Pass on that deal.

Do you have the money to fund it yourself? Do you have the network you need to greatly increase your chances of success at each stage? If so, definitely take that option. If not, the semi-retired guy isn't semi-retired because he gives his money to people that aren't highly motivated and hungry for success.

If you don't want to found a billion dollar company from scratch, you don't have to. Someone else will.

Are any of those things issues at Angel stage?

It's pretty much the same issue as with FizzBuzz: You'd be completely shocked at the insane ratio of people passing already the very basic smoke tests of good due diligence.

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