How to Startup Founders finance the transition between employee and Founder? | Hacker News Reader

How to Startup Founders finance the transition between employee and Founder?

2 pointssabana2 comments

There are lots of blogs, articles, and posts giving advice for early-stage startups, but I haven't seen any that provide insight or advice into how a Startup Founder financially affords to make the leap between employee and Founder. How does a Founder who is currently employed by a company, with rent, bills, a car, and some debt finance the leap? What happens directly after they quit their job? How do they have the money to lease office space and keep up with their other financial committments? This is an important question to me because it's also relevant to Co-Founders.

Surely the answer isn't "The founder must be financially independent and have savings", "The Founder resigns to a life of semi-homelessness and poverty", or even "The Founder works full time despite potential legal IP issues with their current employer, works every spare minute they have, then launch a MVP until the fledgling company brings in revenue enough to pay themselves a living wage"? How does the common Founder, who exists in a normal world with normal worldly constraints, make the financial leap to being an independent product owner?

How do they have the money to lease office space

One of the ways to make the leap is to avoid spending money on anything that does not have an immediate business benefit or meet an immediate business need.

(Business) Insurance is a good example. If there's no product, then there's no need for product liability insurance. If there are no clients, there is no need for errors and omissions insurance. If all the work is done in your house, there's no less need for general (business) liability insurance.

The attraction of leasing space is that it is easier to do than finding customers and delivering product. Spending money is always easier than making it. Squandering time on designing business cards; selecting office furniture, and building a website is always easier than going out to sell and getting repeatably rejected.

The money is actually easier. Take on debt. Sell your stuff. Reduce expenses. Accept the risks. If the risks are too high, that's ok. Security does not imply complacency, sloth, or incompetence. Strong aversion to '"semi-homelessness and poverty"' is not a character flaw.

It can require a certain multiple of the dedication & focus normally excercised by casual employees. More energy too.

>Surely the answer isn't "The founder must be financially independent and have savings", "The Founder resigns to a life of semi-homelessness and poverty"

Well, that's not the only two possibilities, just two of the extremes, so not the complete answer. Most will fall somewhere in between.

I would avoid IP issues by bringing productive technology to employers rather than taking it away, with outside efforts separated by a distant tangent at the closest.

Independence involves a lot more leaps than only financial, and any aspect can be a gamble.

You might want to have great confidence in your wagering ability, based on a realisitc foundation.

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