Running Out of Money When Building Side Projects Helps You Succeed | Hacker News Reader

Running Out of Money When Building Side Projects Helps You Succeed

microfounder.com

83 pointsraunometsa36 comments

If you're looking at past examples, they'll all be successful because the ones that ran out of money and still failed are on the streets panhandling $10/hour.

Maybe people fail at even higher rates when they tunnel onto their currently unsuccessful projects, but the advice appears good because instead of writing a post-mortem that everyone can read the failures are hunting for copper wiring in people's empty vacation houses.

Baye's Theorem: P(successful | desperate) * P(desperate) = P(desperate | successful) * P(successful)

There's a LOT of desperate people on the streets, and not many rich millionaires. 21% of millionaires inherited their money, upper-bounding P(desperate | successful), so P(successful | desperate) seems like a really low number.

Also, this advice would imply you should give away most of your life savings to someone to create a panic'd deadline. Maybe hit up a casino so you have a 50% chance of getting rich gambling, and a 50% chance of losing and getting more motivation for your startup to be successful.

You could have summed up your point with 2 words: Survivorship bias.

If the ratios are 10% success and 90% failure, then we need to write 10x as many negative words as the article author wrote positive words so that the reader later recalls random positive/negative points in the correct ratio.

It's always like that when I try to see why some startups succeed. People tell me there's a "survivorship bias."

Well, fine, I get that I look at startups who "succeeded" and yes there are many others who didn't succeed. But I still believe there's some truth in this – when your personal runway starts to end, you'll really need to focus on making money or admit that you failed.

And most of all I think it's the mindset: you stop tweaking the css and get real. You start selling, and if it doesn't sell, you try to understand why it doesn't sell, and then you change things, or start a new project.

But we don't need to run out of money to have this mindset. We can, instead, just to decide to have this mindset.

What do you think?

This line of discussion is one of those "Goddamnit HN" types of things, not dissimilar from the infamous Dropbox / rsync post of old.

When one comes along and says "Oh, just do X and you'll succeed because that is what I did." - THAT is survivor bias.

When one comes along and discusses what happened to them, how it affected them, motivated them, pressed them to change their behavior and outlook which lead to their hockey-stick sales graph... that isn't unto itself survivorship bias. Catastrophic events absolutely have a way of causing many folks to "buckle down" and "get to brass tacks" instead of fucking around with CSS and starting on that Angular to React to Vue rewrite.

Personally, I'm sort-of in that boat in that I'm solo-founding a document signing software (pursuing a GitLab model, the only real market differentiator to this point). Well, I am doing this as a side-venture. There's no need to make it work, I don't have to hustle, I can say "Ya know what, lemme shave that yak and add in some nice test coverage charts." In doing that, I do what I'm good at and what makes me comfortable - software. I'm an engineer. It also leads to me not doing important things like marketing... actually getting my work out in front of my audience, whatever it is.

Of course, I can "justify" this all to myself because as much as I would love this to take off and grant me my "freedom" (which with my remote, uber flexible, well paying job isn't really all that free anyway) I'm not in dire straits. I have to catch myself and force myself to stay on track.

If someone reads this post and is able to use that to reflect on their own position, that's not only NOT survivorship bias but a really good thing.

Thanks! I enjoyed reading your comment.

1. This was beautifully said: "instead of fucking around with CSS and starting on that Angular to React to Vue rewrite."

2. Yeah, so you're exactly in this place. You have money to live. You work on your product. You (probably?) enjoy it. But will it "succeed" in that it will start making enough money for you to live off it?

Btw here's one more post I wrote that's related: https://raumet.com/marketing

3. If you want to share what your product is, I'd be happy to look at it. Doc signing pursuing a GitLab model sounds interesting... my email is rauno@raumet.com

Just to provide an anecdote: I sunk probably around 20k into a startup over the course of a couple years. The startup went absolutely nowhere however I learned a ton. Not only technically but about myself and time management.

That 20k turned into a new job, which I would not have been able to get otherwise, that greatly exceeded the money I spent failing.

Sometimes success is not exactly what you could have imagined.

I like your attitude - not dwelling on the negative, focusing instead on the positive. There are some lessons there. Could you please elaborate with details?

I would say my main lesson is money spent on side projects is money spent on you. It's professional development with the potential upside of your idea taking off.

I realized that investing in side projects is a win-win; either the idea takes off or I've gained a lot of operational knowledge at executing on an idea.

There is the emotional toll on being tied to the success of the idea but it's much healthier thinking about the idea as a byproduct of your drive to learn something new.

This is only for projects that I've worked on alone, in isolation though. I haven't worked on a startup where other people's livelihoods are at stake.

Why not just say "Wow! I'd like to hear more!" ?

He wanted to give praise that was more sincere and more specific than "wow".

Why not just say "Grr! Too many words, you!" ?

It wasn't that it was too many words.. it just sounded patronizing. Less words would've avoided that issue.

Nice! And side projects > resume

The most important caveat is that the side project already generated revenue when the author still had a full time job.

Trying to turn a project with 0 revenue into something, while having no fixed income is most likely going to fail, and ruin you in all sorts of ways.

Oh yeah, I totally support having a fixed income while building a side project. Otherwise it's too much stress. When you're alone, fine, you can get your monthly expenses to minimum and say to yourself: "ok, i'll try this thing out, i think it's a great idea, i'll focus on it for a year, i live more simply so i wouldn't need that much money, let's see what happens"

But when you have a family, it's a different game. This is where, I think, calmfund.com etc can be very helpful (although they usually want to see some MRR I think).

HostiFi had a good $3k MRR when the founder got fired. And I think reaching the initial $3k or $5k is so important because it shows that people are willing to pay for your product.

But the other startup Bannerbear actually didn't have a decent revenue, making only $234 MRR. The founder contributes the MRR growth to a mindset change:

"I think that mental switch was important. Getting a job was no longer an option, it was Bannerbear or bust."

Been there, totally agree. It also makes you think things through less introducing sloppiness, cuts corners introducing bugs, spikes stress aggravating the situation, causing near certainty to miss the final deadline.

I'm the 2nd example in the post (Bannerbear.com) and I wasn't in a full time job when I started it. There was definitely a feeling of existential motivation...

Are humans always doomed to fall for survivorship bias?

I'm sure there are many other founders who were running out of money and didn't succeed! :)

But I still believe that running out of money is super motivating, although we shouldn't look for it. It's just we need to focus on making money with our side projects. When we're not running out of money, it's easy to focus on everything else, postpone stuff, etc.

Survivorship bias should mainly apply to the project, but be separated from the founder.

For startups - I think everyone should intuit and realize that the chances of success are low. A startup's natural state is death - because a founder has to put in excruciating effort to push it alive across market, product, customers, revenue, etc. Death is the default state for ALL of these areas.

This means a founder might not succeed on tries 1,2,3,4,5....10. Mainly because of the combination of multiple factors to get growth AND the founder and founders teams skills. However, if one's outcome IS to exit successfully - it could take years, decade(s) but still possible.. Each founder has to determine if it is worth it.

If one cannot fathom working 60-80 hrs a week for 7 hrs for little to no pay for the possibility of exit - please don't do anything more than start small side projects.

This resonates with the KLF's "The Manual: How To Have A Number 1 The Easy Way" [1]: "Firstly, you must be skint and on the dole. Anybody with a proper job or tied up with full time education will not have the time to devote to see it through... Being on the dole gives you a clearer perspective on how much of society is run... having no money sharpens the wits. Forces you never to make the wrong decision. There is no safety net to catch you when you fall."

Personally though, I wouldn't and couldn't take a stance.

https://archive.org/details/TheManualHowToHaveANumber1TheEas...

> Being on the dole gives you a clearer perspective … There is no safety net to catch you when you fall.

The dole is the safety net.

$100 USD/week [0] is not much of a safety net.

[0] https://researchbriefings.files.parliament.uk/documents/SN06...

> be skint and on the dole

If you succeed, eventually setting fire to a million pounds in cash helps one go back to that initial state

Desperation might build motivation, but it will also ensure short-term thinking (needing to pay one's bills and feed one's family tends to do that). The most successful companies adopt a longer view, and this might be far easier without the immediacy of insolvency looming.

Getting from zero to paying one's living expenses is probably the most difficult growth phase of any start-up. In my personal experience, this phase is best funded by technical debt. I suspect this is an unpopular opinion because cleaning up technical debt is no fun. None-the-less, I've seen it over and over -- a quasi-technical founder knows someone willing pay for XYZ, then that person makes it just well enough to work. A company is born, the rent gets paid, and perhaps an acquiring company cleans-up the tech stack.

I agree that it's the most difficult growth phase. "Funded by technical debt" is an interesting way to say about building something quickly and well enough to work. Loved it.

HostiFi was for sure funded by technical debt. I hacked the MVP together on WordPress plugins and Python scripts. That got us to over $1M in ARR then we spent about $100K to rewrite the entire thing and migrate to Laravel PHP and (better) Python scripts.

I believe it, for some definition of success, if you're already proven that people will pay for your product by the time you run out of money. Having a bunch of extra time to work on a side-project probably helps more than running out of money though.

Yeah, having a bunch of extra time is helpful, but running out of money can be very motivating.

Why? Let's say I have a full time job that covers all my expenses. I work on my side project after work, some weekends. But will I focus on making money if I don't need it to live? I continue adding some features, tweaking css here and there, postponing marketing etc, because where's the hurry?

But when I see that I have a personal runway of, let's say, 6 months, then I focus on making money almost every day. Because I know that when I have 3 months left, I have to start applying for jobs.

And this is why I call this "a felt urgency of running out of money." It's something that you feel deeply in your experience: I have to make money with my startup, or I have to go to work, and then I don't have that much time to focus on my startup and it fails.

Actually, this is maybe on of the TOP reasons why so many side projects are not going anywhere. You work on something on your evenings/weekends and you don't focus on making money, because you actually don't need the money to live right now (your salary covers your life).

Running of out money is a reason why I think some of these startups (like HostiFi and Bannerbear I mentioned in the blog post) succeed. Yongook's Bannerbear is a great example – he had many projects before that, but he had money to live and he knew that at one point he can get a job when he wants to. But then COVID happened and many companies went on a hiring freeze and the world looked uncertain. He says this himself very nicely: "I think that mental switch was important. Getting a job was no longer an option, it was Bannerbear or bust."

But it's true that when we don't have to put ourselves into this position or wait when that happens to succeed. I think just to realize this is important.

If money running out were the only reason, I’m sure we’d be seeing a ton of successful projects all over the place. I think in your analysis you neglected the fact that these side projects were already successful, just without a growth engine. They were fired because they were already making a decent chunk from the side project. When they suddenly had free time, they were able to turn on the growth engine.

This article is talking about people who made their side project their main project. This is not really talking about the success of side projects.

This is painful to read for failed founders. There is very real survivorship bias applied here. Of course motivation and frugality play a part to success though

i ran out of money and burned out.

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