Comment by mb21 | Hacker News Reader

Comment by mb21 | Hacker News Reader

seriously not trying to be a downer, but doesn't this smack of starting a company just to start a company? they all took $0 in salary in 2008, I wonder if they are making live-able wages now in 2011. They took on their first employee and maybe had to again cut their salaries to afford it? YC worries me that it convinces everyone to start a company rather than go to school, work for another company as an employee or follow a different dream. We're being sold someone else's dream of "starting a company is the best thing in the world to do". The talent pool is being severely diluted just like too many expansion teams in a sports league. The end result? Less success for everyone. I admire their persistence, but I wonder if Octopart is in a market where they can build a company that can hire and pay the employees or maybe even generate a larger lump of cash. I may not get the new model yet, but I still think that revenue generation is the goal of a company. However, it's just roughly 3 years into their lifespan, so maybe they will eventually build a nice business. I definitely wish them luck if this is truly their dream.

Or maybe it's just the experience of building a company that is the reward. I don't know.

Actually, this is exactly what it's like to bootstrap a company these days. You scrape along with no success and no money for a long time before it grows into something that can support you. Hitting the $1000/founder/month profit mark is a huge milestone since it means you can just barely squeak by without digging further into your personal savings. It means that if you can keep growing the business, you're going to win.

You'll notice that it's a completely different game than starting with big VC. And as you mentioned, it doesn't fit a lot of people's definition of a "business".

That's fine. Just remember that there is in fact another definition. Revenue Generation is still part of it, but it's not the end goal. Generating enough revenue to live comfortably on while minimizing the amount of time and effort you need to expend is the ultimate goal for a lot of us. In that context, a company that brings in $20k/month and runs on autopilot is the highest form of success. For a lot of people with different definitions, that would be classed as complete failure.

Anyway, enough talk. I'm off to Scotland for a week or so to get some fresh air while my business runs itself without me.

Thanks for the comments - this was my first HN post. I hope you didn't see it as being pessimistic - As someone who has started companies in the past and wants to do it again, I am trying to understand this new movement.

I love the thought of building a self-running business. Is that realistic? Is that realistic statistically? $12,000 profit per month after taxes is not livable in the US, and probably not Canada. Continuing to grow past $1000/month doesn't mean you are going to win; it could mean you win for a little bit and then lose all at once when something goes wrong, or someone else decides your idea is good and scoops it up. Maybe, maybe not. Again, I don't know. I do know that you can live frugally and without a cushion for only so long if your dream involves a family.

Pulling out of a phd program may be the right choice, but you are giving up on a tangible asset before you cross the finish line. Education isn't the be-all end all, but it still means something to a lot of people and that's a nice back up if your company doesn't work out.

I noticed you live in Thailand now which was apparently your dream. That lowers your costs significantly. Congratulations on that and the success you've had!

For me, living in a first world country changes the calculus. I'm not promoting the "big vc" route and I don't think YC invests in companies so the founders can make $20k/month and take vacations when they want. Your final point I'll assume wasn't trying to rub my face into the fact that you have this freedom that perhaps I don't have.

Again, congratulations on your success, and I think I'm going to try out your web meeting product.

cheers.

Guys, don't downvote self professed newbies without explaining why you are doing so.

$12,000/month after taxes is $144,000/year for a single founder company. U.S. median family income was $45,018/year before taxes in 2003. Even for programmers working in Silicon Valley, $144,000/year after taxes is pretty decent.

For comparison purposes, if you sold your company for $3.6 million, invested the money at 4% above inflation, and lived off the real interest, you'd earn $144,000/year.

Now, that's clearly not as nice as an $8.5 billion acquisition by Microsoft, but it's still pretty sweet. If nothing else, you can comfortably feed your family while working on a new startup. :-)

yes - typo. $1,000/month or 12k/year is not livable in the US.

Thanks for pointing this out. I actually did reread the post, but pre-coffee.

$1,000/month is great beer money. How much work goes into day to day operations?

One of the things to keep in mind that if something 'only' makes $1,000/month but only takes two or three days out of your time a month its "effectively" paying you $15K - $20K/month because you have those other days to do something else. People who set up linkbait pages (I'm looking at you content farms) which bring in 4x their operating cost just replicate the crap out of them.

1k/month before taxes :( If you are already doing a full time job in software dev, you are probably paying 30-40% tax already.

Just for the record, I was not one of the people who down-voted your comment. I personally think that your perspective is interesting.

"$12,000 profit per month after taxes is not livable in the US, and probably not Canada."

It seems to me that $12,000 per month is an eminently livable wage. Did you mean to write $12,000 per year there instead of $12,000 per month?

(Just a quick HN related tip. Something that helps me is to review a post carefully after I've posted it. It has helped me to catch myself saying some strange things a few times.)

In reference to your original post, Octopart is currently getting half a million unique visitors per month - and still growing. Given that they have low overhead, it is reasonable to believe that they are probably profitable at this point (including hefty owner's salaries).

I am currently in the process of bootstrapping a company in a similar way to the process that they took. I am not doing it because I was "sold someone else's dream of \"starting a company is the best thing in the world to do\"".

I saw a potential market opportunity (and something that I would enjoy working on) and I took action to meet what I saw as a need. Some people are just pre-programmed to want to own their own business. I know that it is something that I have been trying to do for a little over a decade.

I've had a few rough starts and a few no starts, but then that is how the learning process often goes. I realize that I would probably have been further ahead at this point financially if I had just taken a "normal job", but how much would that financial "security" have been worth with that constant feeling nagging me in the back of my head that I should have started my own business.

Did you mean to write $12,000 per year there instead of $12,000 per month

Looks obvious that it was just a typo - the parent mentioned $1000 per month per founder, $12000 would obviously be per year.

I have to say, the kind of business you mention (20k/month & autopilot) would likely be my dream 'job'.

He said runs on auto pilot.

20k/month revenue or profit?

There's nowhere I say that "starting a company is the best thing in the world to do." I describe it as an efficient but intrinsically painful way to solve the money problem.

"Imagine the stress of working for the Post Office for fifty years. In a startup you compress all this stress into three or four years. You do tend to get a certain bulk discount if you buy the economy-size pain, but you can't evade the fundamental conservation law."

And far from trying to draw people out of school, we actually have a bias in the other direction. We're very reluctant to fund students unless they seem like they already want to quit.

I haven't read anywhere that you have said that, but would you agree that starting a company was the best thing in the world for you to do?

My network of company founders is much smaller than yours but I think if I were to ask them if starting their company was one of the best things they ever did, and I know it to be true for myself, they most certainly wouldn't say no.

I'm guessing that's also probably true of the majority, if not all, of the Y-Combinator backed founders. Whether their company is still alive or not.

To answer the parent, starting and running a company through the fight in the trenches is massively rewarding but also massively frustrating in many ways. I know I can't give it up and do anything else and am sure I'm not alone. I don't think anyone would try to sell you on the dream of diving into the fight. It's something you have to want, it can't be sold.

Regarding the talent pool: HN is just the squeaky wheel and doesn't represent the entire market so I would doubt that hackers starting companies is negatively affecting the available resources.

You mean as more than a way of making money? It depends on the type of person you are, and what your ambitions are. If you're (a) the right sort of person to start your own company, and (b) your ambitions in life would be best realized in the form of a company, then yes. So e.g. Steve Jobs clearly has (a) and as far as I can tell has (b), so for him starting a company was in itself a good thing to do.

Yes, I did mean as more than a way of making money. You've stated that you did in fact start Viaweb to get rich. I know a few other founders that also started companies as an attempt to get rich (I am among them) and continue to chase more. But if I were to ask those same people, whether their companies earned them wealth or not if starting their company was one of the best things they ever did I doubt that the money (or lack thereof) would be much of a factor. Realizing other ambitions (b) is a much, much greater factor.

I'm curious now though. The YC application tries to screen for (a) but doesn't test for (b). Or at least, I didn't recognize that to be the case. Why is that? Is it not just as important? I would think so as I think it's realizing those ambitions that seem to keep people going and provide them with the relentless focus on winning. Or am I wrong and you've designed the application to screen for that as well?

Why a founder will continue to push seems as important as the ability to continue to push.

Because (a) is enough. We're cool funding people who are doing it for the money; the startup doesn't have to be their life's work.

That's very interesting, maybe my perspective isn't quite accurate then as your strategy has clearly already been successful. My thought is that to build a large and successful company you need to develop an interest that goes well beyond the desire for money - but I haven't built a large company yet so perhaps I'm naive. Thanks for the reply, pg.

"Imagine the stress of working for the Post Office for fifty years."

Maybe it's a matter of how pain is perceived. I think I'd rather do 10 5-year stints at startups than endure that sort of pain. Nothing against post office personnel, but I've been in government-like operations before and much prefer startups or earlier stage companies I've worked for.

sorry - I knew I'd read an article about enticing people to leave school and associated it to YC. It was actually Peter Thiel: http://www.dawnmontgomerypresents.com/?p=2104 Now, having said that, there does seem to be a lot of pressure to go be an entrepreneur when the chances for success are still extremely small (depending on how you define success of course). success != happiness however and I agree that there are a lot of people out there that will grow immensely if they go take these chances.

I would much rather people go take a chance starting a company than go into finance - that's my personal bias.

Thank you for responding to my post and clarifying.

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