Bootstrapping Calculator: Do you have enough savings to fund your business? | Hacker News Reader

Bootstrapping Calculator: Do you have enough savings to fund your business?

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167 pointsDVassallo112 comments

Nice work, I’m going to play with it a bit.

One thing I would recommend to everyone is adding a multiple to your expenses. Essentially, < expenses > * < margin of error >

I manage my personal expenses down to the dollar and have managed seven figure budgets. One thing that always occurs is unexpected expenses. My go-to rule is assuming my expenses are going to be 25% higher than expected, per year I go out. I personally track my error between expected and actual to develop a hard number for my margin of error. However, between 25% and 50% larger than expected expenses is a good estimate to give you breathing room.

This method ensures you can be hospitalized for a week or so and it’ll kind of “be in the plan” so to speak.

What tooling do you use to track your expenses?

As a side note https://www.getguesstimate.com is a good tool that calculates with margins rather than fixed numbers. Love the graphical output too.

Kudos for being extremely financially astute about the decision. But I can’t help but ask - why not just move to a cheaper location? With 1.4 million, you can more or less retire / have a runway of 20+ years if you didn’t live in one of the most expensive metro areas in the country.

I did consider it. But I have a family and 2 small kids, and I promised my family that our lifestyle won't have to change while I do this experiment with my career.

We did seriously consider moving about 30 miles out of Seattle, where houses cost $350/sqft instead fo $500, but my family wasn't enthusiastic about being far away from our community, and it actually wouldn't have made that much of a difference to my runway.

If the circumstances were different, we could have made a different decision. But, in my situation I felt that I didn't have to.

> and I promised my family that our lifestyle won't have to change while I do this experiment with my career.

That doesn't sound right at all.

Why not?

I don't have evidence to support my following claim, but I think that having a stable home life with a supporting family, not subjected to unusual bankruptcies or bad financial surprises, is a key element to startup founder success.

I could be mistaken. But I am a failed founder who disrupted their family and friends lives and lost a lot of goodwill while running the business because of it. So I think I'm at least right some of the time.

Regardless, it's wise to think of your loved ones first, even if it's only a cold business decision to do so; your business will thank you later with smoother revenues and a happier, more capable decision-making process down the road.

I'm not the above poster, but to me the desire to maintain a high standard of living when starting a business for the first time either means someone has a ton of money in reserve or they aren't very serious about starting a business. Now I can partially understand the situation if someone is buying a franchise or some existing business that will almost certainly have revenue from the start, but many of the tech business ideas discussed on HN require a fair amount of R&D before there's any revenue. For a first time entrepreneur I'm not sure 1 year is enough time to get up to speed and learn from mistakes.

OP here. Yes I have 5 years worth of expenses covered in liquid savings. My target is to make enough income to break even with my personal expenses before I run out of savings.

My wife is very conservative about any kind of change, but when it happens, she realizes it is not too bad, and most often even better.

This can be about something as big as where to buy a house to what security system to buy.

Right? I moved for a new job almost across the country and if I had that kind of money in my old town, I wouldn't need income probably for about 30 years. Jesus.

Love the calculator, it’s very useful. In my view it has never been easier to build a technology business than today. The public cloud makes it so you can start small or free and scale as needed and almost everything has been open sourced. All you need is the idea and the will power.

My only beef with the calculator is that I’d like to recommend another approach, that is you don’t actually need to quit your job to make, that is the end goal shouldn’t just be to quit. The costs of starting tech business have never been so low to get a an idea off the ground you can benefit from both a job and the other thing your working on. Steph Smith has a great post on this

https://blog.stephsmith.io/you-dont-need-to-quit-your-job-to...

Yes, quitting your job is not the only way - or the best way for many people. However, it's not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.

Highly recommend Steph’s blog post, she puts it much better than I ever could.

Totally agree that could kill the idea of doing both. At times employers have made folks sign very strict contracts, most though would not stand up in courts as long as you never use their equipment and never do it on work time.

I quit my job to start a startup while having a family and kids and I consider it a mistake. I’m not sure it would have changed the outcome (successful exit) but it caused a lot of extra stress, and I can safely say that I didn’t quite know what I was doing and it would have been better to have a stronger plan (especially marketing), a longer runway, a more complete prototype, and more evidence of a market, before I took the leap and quit my job. All those things can be done on the side while holding down a job, even with a family. (As long as the job is closer to 40 hours a week than 60 or 70...) $1M is a nice runway, but most people don’t have that, and even with it, the more you have locked down before you quit your job, the better.

Amen.

I think your story is important and why I think we should be pushing people more to this sort of arrangement.

Even VCs will never give you a penny without first quitting your job, but honestly some of the seed stuff I don’t see why one couldn’t do both if there is promise.

Speaking of VCs, part of not knowing what I was doing before I quit my job was not understanding how VCs worked, and how much evidence they need before investing. They spend a lot more money on companies that have $1M/month income than on seeding unknown first timers, even seed funds. There are too many misleading stories of cash being thrown at startups with nothing more than an idea. Maybe it happens once or twice in a blue moon, but the reality is that they prefer a sure thing and don’t often fund companies with no traction. It took a lot longer to raise money than we expected, even after we had what we thought seemed like good traction. And when it takes longer to raise, it means you need a longer runway. It took longer to build than we thought too. I was very lucky to have a couple years’ runway, and it still wasn’t nearly enough, I should have planned on 3 or 4 times as long.

I think more than just money, you have to account for your "mistakes runway".

You WILL make mistakes - a lot of them if its your first business.

When you are 25, you just have a lot longer runway to make those mistakes.

At 35 with a wife and kid, you have limited time to make mistakes and learn from them

Absolutely true. I heard that before starting and (of course) didn’t understand what it meant. And we were optimistic, so we discounted it, assuming we were starter than the average Joe, so we wouldn’t make as many mistakes. Nope, we made mistakes that could be counted in units of years and hundreds of thousands of dollars. And broadly speaking, yeah, nearly everyone does when building companies. The thing that never occurred to me that you put nicely is that you have a finite mistake budget, and you don’t know what it is.

Posts like these is where I realize that the average HN crowd is just way too rich. $500k in liquid savings? $1M nest egg before starting? That's an exit event for me.

So many of the entrepreneurs I know just started with whatever money they had and just made things work somehow.

What evidence is there that this 1 sample is average? I don’t think it is.

Yet, many don't start anything, despite wanting to.

Financial "success" brings with it a problem. Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit.

It took me quite a bit of mental effort to break out of that myself. My approach was to mentally write off everything that wasn't super important to me. This helped me to stop worrying about losing my nest egg (and my career), and start taking speculative risks with it.

> Yet, many don't start anything, despite wanting to.

That's a pretty tone deaf response. Many people don't start something, anything, because they don't have $1.5m in liquid assets sitting around, mate.

I have my own business. I'm writing this from the office we hire. I have tens of thousands in business bank account, not $500k. I have tens of thousands in personal savings, not $500k. You don't need a lot to start, in my opinion, but when you have $500k it's really not a hard decision to start at all.

With $500k you can start, then start, then start, and keep starting and failing over and over, easily, for 5-10 years with that kind of cash.

> Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit.

I believe this is a sign of a deeper problem, Daniel.

If you can maintain a happy lifestyle on (for example) $50k per year, there's no reason you shouldn't be able to maintain the same lifestyle should you "win the lottery" and find your self with $1.5m in the bank... you simply keep living off of $50k. The lottery winnings are just a bonus you can grow on the side.

Worrying about losing it is, essentially, worrying about being poor. And that's a valid concern for some, but it's not a valid concern for you, sorry.

I think you have misunderstood me. I see it the same way as you do. I’m ready to spend it all while trying, trying, trying... But people in a similar situation as mine keep telling me that I’m bold for taking such a big risk, that they admire my courage, and that they don’t have the same risk appetite as I have. What I’m trying to communicate though is that what I’m doing is not risky or bold. I’m not risking anything consequential, even if I lose 90% of my wealth.

From my own anecdotal observations, people with little to lose (no wealth, early career) are much more willing to start their own business than someone with a successful career and $1M in the bank. This was the point of that paragraph you quoted.

Then I've misunderstood. My apologies.

I think you're right. A lot of people are afraid of being poor. Of losing everything and being on the street. They forget that they can just get a job and start again, really. They're lowest point is a $100k+ job, right?

I really do hope young people are taking bigger risks and starting something for themselves. I'm 34 but my brother-in-law is 24. I'm bringing him into my business because I need him to understand that selling his time for money is a bad investment, among other things.

Thanks for clarifying.

HN has a wide distribution of folks at different career stages, employers, career tracks in the tech industry (and a substantial contingent outside), geographies, etc.

Well-compensated engineers at AppAmaGooBookSoft do quite well for themselves. I hope we can temper “This is not a situation everyone has” without swinging over to the common “... they must be lying about that then” because knowing true market conditions is instrumentally useful to many, many HNers.

Many here started businesses with substantially less; I think I had maybe $2k to my name when I went full time.

I was at a tech company that went through a round of layoffs 2 years ago - I took my 3 month severance ($24k) and started my consulting business with that. Getting fired actually worked out really well for me.

I doubt people jump to "they must be lying", but rather wonder why they would listen to the person in the first place? The decision-making process of a person with $1 million is relevant to a very tiny number of people.

It's a wonderful thing in a way.

There's this industry, which anyone with decent intelligence in an industrialized country with access to free time or a university can enter that will catapult beyond the global 1% in income.

Half a million in savings after a decade of aggressive savings in the tech industry is not unrealistic.

People lucky enough to be born in the right place to the right family have always had options.

And with the right skillsets. I was born "good at math" and that makes me feel just as lucky as someone born to a rich family.

That matters much less than most people think. Smart poor kids have worse outcomes on average than mediocre rich kids.

I was "born good at math," too, yet I've seen peers who are far, far less capable achieve much better financial and career success simply due to their head start. I'ma doing quite well. I often wonder how much better I'd be doing if I hadn't been on the verge of homelessness and hunger more or less constantly from kindergarten through undergrad.

This isn't just an anecdote: plenty of studies have shown a correlation between starting socioeconomic position and success.

Having skill and natural talent helps. I don't think it helps nearly as much as having the luck to be born in the right place to the right people.

Problem is: better turn your conscience off before accepting a job at a random MegaCorp.

Is that problem worse in tech than in other fields? It seems the biggest employers in most industries could be considered harmful to society.

Depending on age $500k savings isn't THAT unreasonable. For example, if you worked at FAANG-level companies for a decade and held your lifestyle to a reasonable level this should be doable without hardship. These people are privileged to earn at such a high level, but not shockingly so considering the high cost of living. Even at the "rich person" $300k+/yr income level (common Bay Area BigCo wage for experienced engineers), considering that taxes take about half your gross and rents are high, it still requires discipline to accumulate that magnitude of savings; saving 1/3 of take-home pay over a decade is well-above the average savings rate.

If $500k in savings sounds like a lot to you, I would suggest you have a personal check-in on your retirement planning. I was pretty shocked when I first figured out how much I would actually need in retirement and it helped me really get serious about saving in a way that I hadn't before. To support a $100k income in retirement with 0.04 withdrawal rate I will need a nest-egg of $2.5M. I nearly fainted the first time I heard that. I had been feeling good about myself since I was maxing my 401k, but hitting targets for real financial security requires saving far beyond that.

Somebody bootstrapping is taking a large fraction of their savings and making a big bet on themselves that it will get them to their financial targets faster. I don't have the stomach for that risk but admire those who do.

A small percent (<1 %) of even IT population works at FAANG companies, so I'm not quite sure if your argument shows what you want it to prove.

I was trying to show that while this is not a common scenario it is attainable and probably has been achieved by thousands if not tens of thousands of engineers over the last decade (many of whom read this website). It does not require inherited wealth or participation in past startup liquidity events.

Average lifetime income for Americans:

- High school graduates (88% of the population, per 2015 Census numbers): $900,000

- Associate’s degree (42.3%): $1.1 million

- Bachelor’s degree or higher (32.5% with bachelor’s, 12% with advanced degrees): $1.8 million

https://www.cheatsheet.com/money-career/how-much-average-ame...

I think that if you have that much money you are in the top 1% of the world. (_maybe_ 2%)

I don't know a single person with that kind of cash. The most wealthy people I know (they live in $500k+ home, their neighbours have million dollar homes) in rich area of Chicago and makes a combined $400k (estimated) in income between him and his wife, don't have even close to that in the bank.

(what they do have they have to budget to save up, though they live really well despite this...)

I really think Silicon Valley is disconnected from the rest of the world's realities.

Go read "The millionaire next door" -- it's eye-opening, particularly about the relative importance of saving and keeping a cap on expenses.

Saving $500k should be trivial on the $400k annual income you describe. Dual income, put $46k per year into tax advantaged retirement accounts (401k + backdoor Roth). Wait 8 years including interest. Done.

Edit: Found a PDF online: https://www.pdfdrive.com/the-millionaire-next-door-book-mant...

(and verified that it actually downloads).

They pay over 12k a year in property taxes alone. They pay tons of local and state taxes, etc... Yes of course they could do more and be smarter with their money, but it's really expensive to live where they are at, but it's also why they make so much as well.

I've read plenty of books on getting rich, and all it takes is a couple disasters or huge expenses (adopting kids, legal fees, tax audits, etc...) and all those money making plans are worthless.

They don't solve real life problems, they only work for those with charmed lives.

I think you are surrounded by rich people and don't realize the vast majority of people live pay-check to pay-check or worse.

I'm not talking about normal people. I'm talking about the couple you described that makes slightly more money than I and my wife and yet has less than half the savings I do.

Edited to add: And I'm surrounded by academics more than anything else. To quote the millionaire next door (page 136):

> Isn't it interesting that a disproportionately high number of used-car shoppers come from the ranks of teachers and professors?

> How did Dr. Bill, an engineering professor who never had a total household income of more than $80,000 become a millionaire? [...] His success in accumulating wealth is based on living well below his means. The professor is a classic example of a used vehicle-prone shopper. [...]

You'd be surprised how well that description fits me and many of my colleagues. So in a sense, yes, I'm surrounded by rich people, but they're rich because they're comparatively frugal, not because we all earn bay area tech salaries (trust me, we don't -- I grouse enough about this that I wrote a blog post about it a few years ago: https://da-data.blogspot.com/2016/12/finances-for-recent-cs-... )

So was I...

The phenomenon of high-income low-net worth is described in detail in the personal finance classic The Millionaire Next Door. I strongly recommend it even though some aspects are quite dated.

You didn’t give an age for your $400k/yr couple but they are well-positioned to accumulate significant wealth in a short amount of time if they prioritize saving. The lesson of TMND is that it’s very easy to be an under-accumulator of wealth on any income if you are not prioritizing savings and budgeting.

I completely agree that Silicon Valley is disconnected from the reality in many other places.

This entire discussion is really an eye opener. People are worried that $1M in the bank in their 30s isn't enough, or that $300k salaries aren't good. I mean, $300k would make you a rich person outside of literally 5 cities in the world.

You can just take your $1M in savings, move to a cheaper city, and live off it for years. Heck, it doesn't have to be some third world country either; a city like Atlanta will give you a huge house for $400k and plenty left over to live off for a decade.

The Bay Area is divorced from reality

I have a client that spent over $1M in medical expenses alone for one of his kids. It's destroyed his finances.

People that think "just read this book on investing" to solve financial problems either don't have kids or have never suffered devastating financial hardships.

My plan is to move outside of the US - the quality of healthcare in the US is one of the worst in the world, unless you are rich. But if you saved 1m to retire on, and something expensive happens, oops, you won the American bad luck medical lottery, you're kaput.

Make money in SV or another high paying locale, don't piss your money away on silly cars that drive themselves or homes to impress your friends, and when you're ready move to a place like Spain, France, even Canada if cold is your cup of tea.

There's nothing riskier than not working, not having Medicare and not being very rich in the US. How do you know you don't have a chronic medical condition that manifests in your 50s?

OP here. I got health insurance from ACA. $15K/year premium for a family of 4, no lifetime claim limit, and no health requirements to enroll. Sure $15K a year is expensive, but not “rich” expensive. I lived in 3 different countries (EU and US), and the health care quality in the US is superior by far. The problem in the US is that it’s not available to everyone.

It might not be "rich" expensive, but $15k per year is more than a third of the take-home pay of the median income. That's certainly "well above average" expensive, and prohibitive when necessities like housing and food are factored in. It may as well be "rich" expensive to most by far.

Those with median income will get subsidies on ACA though. IIRC, subsidies were available for household incomes less than ~$110K in my state, and the subsidies grow the lower your income is.

Not disagreeing that it's expensive though. Basic healthcare should be universal, like fire and police protection.

I'm a little confused about your comment, as the $500k appears to originate from people talking about liquid assets, which your pension (at least in the UK) is _not_.

In the US, contributions to 401k retirement plans are not liquid or available for penalty-free use. But the tax-advantaged contributions are capped ($18.5k last year) and people with significant savings often have other money in unrestricted brokerage accounts, savings accounts, CDs, etc.

Are you sure that you aren't setting the bar unreasonably high? 100k income in retirement is quite a lot, I don't think anyone really needs to plan for that much. Don't get me wrong, it's definitely better to have a larger amount saved, but 100k/yr is more than most people make during their working years. It's great if you can hit those targets, but I don't think the bar actually needs to be set that high.

I’ve seen some fairly out of touch HN comments before but this one really takes the cake. You have zero idea how ridiculous you sound, talking as though 300k salaries and 2.5M in savings is something normal. Most Americans don’t have 50k in savings, never mind millions.

To be honest, a $500k to $1m nest egg is a 28 - 35 year old who is making an average average nation wide salary in tech. They would likely not have kids and doesn’t buy the shiny new objects (like a Tesla), but invest in a 401k with a company match.

As long as you keep expenses low, and you don’t have too much debt starting, it’s fairly easy to build that if you’re patient.

For reference, many of my friends in their late 20’s already have a nest egg of similar size. (No kids, low expenses, high end tech jobs)

You're in a tremendous bubble.

The average software developer makes around 100k (https://money.usnews.com/careers/best-jobs/software-develope...). This average includes fresh college grads as well as 40 year veterans. So let's say the average 22-30 year old makes 90k a year.

Take out fed, state, sales and property taxes and that's 60k a year. Even if you save 20% of your after tax income (vastly, vastly higher than the normal savings rate), you're going to have a hair over $130k saved by age 30 assuming you invested all of it and the stock market did it's usual 7% thing. (And this doesn't count first paying off the average college debt of $30k...)

The average software developer salary is not $200k or $300k - that's top 10% salary. Even in SF, the average household income (including all earners) is around 100k.

This isn't sour grapes, by the way - I make in the top 10% myself. But we can't fool ourselves into thinking that's the average.

90k typically doesn’t include benefits (often ranging from $10k - $25k a year, 401k marching, etc.)

Typical income loss to taxes is around 20% as well (effective tax rate). So if you graduate at 23 years and average around $90k that gives you ~8 years of saving (31 years old) and at $30k savings a year (expenses around $2k/month), plus the growth of investments, it’s reasonable to assume that they can save $500k.

Again it really depends. However, I know people who started right around $100k at 22 and are now late 20’s who had that much saved. The trick is to be frugal, which many people are not. Also id argue $90k in Chicago goes a lot further than $150k in the bay (having lived in both). It’s actually easier to save and live frugal elsewhere.

Quite a few developers I know save more than 50% of their after tax income.

If you look at mrmoneymustache.com the vast majority are software engineers and other technologists.

It's probably due to that introspective nature that developers typically have. Our needs are often fairly modest. We're pretty happy to have shelter, food, internet, computer, and eat out a few times a week, etc.

They are making under $100k too, and putting away $30-40k/year. They started working at 21-22 years old and the time they hit 30 years old, they've probably ended up close to $500k assuming their investments compounded.

> You're in a tremendous bubble.

$100k/year pre-tax is still a tremendous bubble by most of developed world countries and out of reach for the most of the developing world average people (or even engineers) out there.

The whole US is in a bubble.

> the average HN crowd is just way too rich

What does too rich mean?

I don't think this is what the person you're replying to meant, but for me it means not having the financial drive to succeed. Plenty of startups never get to revenue because the founders don't need money coming in. That leads to distractions, arguments, and ultimately failure. "I'm going to starve if I don't start making money immediately" is a strong motivator. It's something to remember if you have a long runway available (from savings, investment money, or just a low burn).

You might be able to live for years before making any money, but it's likely that your startup can't.

If all you want is to bank 1M and get out, get a job at Oracle or somewhere high paying for a decade. They have jobs across the country that pay 200k.

Thanks, I appreciate this. My main motivation for starting my own business is to be independent. From what I've seen of management at companies that accept investor money, it's not at all an independent lifestyle. Whereas at a bootstrapped company the management can do much more of what they want (for better or for worse).

If you can bootstrap with $2000 in the bank, that's awesome. But I'm more traditional with money and would heed the "three years' worth of expenses saved up" mantra before quitting my job to start a business.

I tried the calculator and actually my savings would last well over 10 years (probably more like 20-25 years even if you account for inflation).

I spend around $1.000/month and that includes a new car (paid off), rent for 2 bed-room with a garden, eating out regularly. It doesn't include extensive traveling (which I have been doing in the last couple years).

I think the two key points here:

1. Having a family is expensive. If you are considering this track, you may want to postpone having a family/kids.

2. Living in cheaper cities can save you a whole lot of money. Obviously, I would not recommend doing that with a family or if you need extensive networking. But if you want to do 3-4 years of discovery without burning a whole in your savings, then there is countless countries to pick from.

It would be absolutely reckless to try this with a family to support. Just do it on the side of the day job.

OP here. I’m doing it with a family, and I don’t think I’m doing anything reckless. I’m not risking anything consequential. Worst case scenario I go get a job again, and my family’s lifestyle wouldn’t have changed one bit during the whole thing.

What happens if you can't "go get a job again"? Is it assured you can just walk right into one?

Nothing is ever certain obviously, but I feel very confident I can find a $150K/yr job in 6 months. If I don't manage, I'd have to adjust my lifestyle (sell house, move somewhere cheaper, etc).

The OP is in the US. He'll be fine even if he doesn't get a tech job.

Nice work. Since you can't easily pull request an excel sheet, I'll propose a change here:

After the text "If you include retirement funds, also subtract early withdrawal fees." I'd add something like "Most experts suggest not using retirement funds for anything other than retirement." or similar discouraging of that action.

(Those people who really ought to use retirement funds to bootstrap something will find a way to blow through whatever caution you put there; most people shouldn't, and I'd rather they at least see/feel the small speed bump...)

The answer should almost always be yes (you have enough funds) because in most cases it’s wiser to stay at your day job and bootstrap a side project.

I don’t know why general advice is to leave the day job and go all in. IMHO that is terrible advice.

I addressed this in another comment, but it is not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.

Let's say you manage to carve out 2-4 hours a day to work on your side project while remaining a decent person to your wife and kids. Leaving your job means you could spend 11-13 hours a day on it instead. That's an enormous difference and could easily mean the difference between failure and success.

Not only that, but you are putting yourself in precarious legal territory by bootstrapping a side project. Your employer could easily claim ownership of all your IP.

OP was a senior software engineer at AWS, how difficult do you think it would be for him to re-enter the workforce with a competing cloud provider nor even coming back to Amazon?

Exactly. And I think nearly everyone in tech is able to re-enter the workforce within < 6 months.

Excellent DIY solution! For more nuanced planning, I found web-based apps https://startuprunway.io and https://hiringplan.io to be very helpful for budget forecasts.

Great calculator. I have previously used the Startup Runway Calculator for similar purposes. It allows for greater itemization than I saw in your screenshots. Might be nice for folks who like this project to also check out:

https://startuprunway.io

Ok I have to ask- is 500k pa a rare dev salary for FAANG or is it fairly normal - I mean that's insane levels

$450k is approximately the package (salary, bonus, 1 year of RSU vesting) for the “career level”, the point in the ladder that all devs are expected to make if they’re not fired. AppAmaGooBookSoft people can tell you the exact name of it at their firm.

It’s not insane, it’s the market.

was going to call BS until I saw your username. Would love to be hitting those numbers. Only been doing this 20+ years :/

E5 (the terminal level) at FB is more like $325-350k. I think Google's terminal level is L4, which would be around $250k.

$450k is totally within reach for people willing to put in the effort to hit E6/L6, but it's definitely not the norm for terminal level.

Source: personal experience and https://www.levels.fyi

Google's terminal is L5, which would be around ~340 k$/yr. I do think patio's overstating things by saying 450 k$/yr.

But ... I am having to readjust my understanding of "the market"

Ok so is this just the global tech firms, who have a 1-2 billion user base so every good and bad software decision gets multiplied by a lot of zeros and it's worth the cost.

Or is this a function of tech firms in the valley - a function of supply and demand (plus house prices)

Or are the non global reach tech firms also having to join this bidding war - this is the part I have trouble believing

I have worked for the past several years in a major US bank - and I do very well for a UK contractor - but no where near this well.

And I am not noticing that there are people on a large multiple of me as a daily rate. I am sure there are but this seems ... common ... at FAANG

In short, Do I move to silicon valley and get any job, do I apply to Google any location or do I just wait for the rest of the world to catch up?

FB and Google pay the same for all their US locations and significantly less in non-US locations. Most non-FANG companies, even in SV, are not close on comp.

I am unsure that my rant above was helpful - I needed to seperate "why don't I get the cash" from "is this an indicator of something important"

So I think my main question is, is software eating so many jobs that it is reasonable for a "mid level" software dev to capture so much of the cash, or is this a function of specific tech firm structures (SV scarcity, amazing stock options right now, etc)

Looking at the levels.io site it indicates that there is a massive FAANG/ non Faang gap - so I think the later might be accurate.

But it is a scary thought for any company competing for talent ...

just because its the market doesn't mean its not insane.

OP has been at Amazon for 8 years, so their annual comp will include vesting of RSUs that have grown enormously in value.

Stock appreciation accounted for about $100K in the last 2 years. Before than, the impact was not that significant: ~$10-20K. I sold everything as soon as it vested.

Nice, too bad I'll be too poor for the foreseeable future to do anything like that. (50k EUR/yr)

I've read your blog post. A million is a nice nest egg for bootstrapping.

Just a thought: You can generate $15k of monthly passive income directly with $300-350k investment. If the bootstrapped business fails to make money fast, there's always this option with your amount of money.

Developers often miss those obvious ways to make money because these ways aren't technically intricate.

Source: I do affiliate marketing. This are the usual ROIs.

Good luck on your journey!

edit: wrt. the downvotes - that's one of the reasons I don't want to talk about this in public. I agree that it sounds unbelievable, but most people also don't believe in $500k salaries. Many people dismiss those opportunities because they don't believe it's possible.

"You can generate $15k of monthly passive income directly with $300-350k investment"

$15k/month is $180k/year

$180k/year passive return on $350k/year is over 50%

Can you please share something about how you achieve that level of return? If 50% IRR is 'usual' for affiliate marketing, why isn't competition pulling those returns down?

(genuinely curious, not doubting you!)

Because most people who make those returns don't sell their businesses openly. You need to know the right groups or people and you need to have specific knowledge to assess a web project properly.

edit: To clarify - most people don't sell them because they're literally money makers. Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare.

> Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare.

But when they do sell them, why for so little?

2-3x on EBITDA is a pretty common multiplier for small businesses earning less than $500k/year. Especially if that EBITDA doesn’t include an owner taking a salary.

You can only really achieve 10x+ for companies that proce they’re growing or have reached significant and stable profitability.

Thanks. I'm struggling to understand your advice to OP:

"If the bootstrapped business fails to make money fast, there's always this option with your amount of money."

So let's say I'm in OP's shoes and I have the $350k. How do I take advantage of this option that's 'always' available to make $15k/month of passive income?

I also do a bit of affiliate marketing on the side. It's not much, but my site just crossed $1k/month December. I've worked about 20 hours on it since this year. My total investment on it is about $800, excluding my time.

Great to hear that! DIY is a bit cheaper, but it takes its time. Depends on your hourly rate what makes more sense.

Do you mind leaving your mail address? If those returns are stable and you want to sell (in the future, too), I would like to talk. Many others here probably too.

Absolutely, DIY takes just way longer. But it's a great industry in that once you know the "recipe", you can take $50k worth of investment and have a hit almost 8 out of 10 times.

Not looking to sell right now though. This site is in a field I have more than an amateur interest in. I plan to stick around with it for a while :)

So what's the recipe?

From what I've seen, there are two recipes:

1. Great content + organic backlinks. It's slow and takes skill (especially in content ideation and creation) but the results will be enduring

2. Great content + cheap, paid backlinks. This one is much faster but requires a budget and there is a substantial risk that Google will simply shoot down your rankings

You can't compromise on content though

Would you mind shooting me an email? My address is in my HN profile. Thanks!

I’d love to hear more about how this works.

Author here. It is intentionally simplistic (complex plans are useless). There are only 4 parameters, and the only uncertain one is the income. It lets me have a modest income target while starting my business, and it assures me that if I meet it my venture will survive.

Oh yeah, the calculator I get. I was asking about the affiliate marketing scheme.

Didn't mean to hijack this thread, so I'm not going into details here. Just wanted to give OP a tip.

edit: @badfrog - If he'd asked, I would have provided links (e.g. to flippa.com and similar). OP didn't seem to be interested so I thought it might seem disrespectful. But I've provided links in another comment.

> Just wanted to give OP a tip.

Without providing any actionable information, that tip sounds more like a brag.

Do you have a link where we can learn more about these opportunities?

I really like HN, but talking about this topic hurts my karma, so I'll stop.

The big ones are flippa.com and https://empireflippers.com/ , but the deals there aren't good. But you can learn a bit about affiliate marketing just browsing the projects.

Justin w/ Empire Flippers year. Yeah, typically an affiliate site making $10K/month in profit will sell for around $280K - $320K.

I understand why some others have said those returns sound unbelievable. It's because they aren't completely passive. It requires absolutely zero skill/effort to put money in the stock market, mutual funds, etc. It requires skill and effort to put it into an online business and maintain or grow that business. Most people can't (or won't) do it.

You seem like a nice chap, genuine in your comments, so I'm asking an honest question:

Do you have experience yourself getting that specific ROI (ie, 350k USD investment to get 15k USD monthly passive income)?

Or are you extrapolating from a smaller sample that you have direct experience with, or is this all something you've just read about?

Currently I'm at €3k/month with around €10k investment and no time spent (just bought existing projects; I've started July 2018 - planning to invest another €20k in the next 2-3 months to increase it to €4-5k/month - I live in Germany where €3k is the average monthly salary), but very good friends of mine have achieved €15-50k/month (I've seen the proofs and affiliate payments). Those friends are the main reason I've started doing this in the first place. They're a bit more motivated than I am (I have a web agency and affiliate marketing is not something where I can derive a meaning of life from). Another thing: Many of them were rich (500k+) before starting their online businesses, but I personally have around 3 friends who've built businesses with €6-30k/month using their own hands (only time and hard work; e.g. one with a YouTube channel and another one with a lot of niche sites).

The main reason I openly talk about this: Most people won't do something. They're comfortable. So I'm not afraid to share information because 99% will simply ignore it. And for 1% it'll be life-changing.

@mockingbirdy, do you have an email contact ? Would be curious to learn more about your experiences in this area.

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