How should a startup founder value her time?
blog.asmartbear.com
blog.asmartbear.com
So when it concludes that you can't build something small and profitable, and that you can't do anything other than work yourself into the ground, it's just restating its assumptions as conclusions.
If, on the other hand you're looking for something to replace your $150/hr consultant gig, you absolutely can build something small that brings in a little profit. And you absolutely can build that thing without working "harder than is healthy".
I keep a spreadsheet that tracks the hours I've worked on my startup alongside the profits it has made. It tells me exactly how much my time has been worth for the hours I've spent working on the thing in the last 4 years. And it's creeping up to look like a respectable consulting rate.
I've been doing the startup thing for 5 months now, but as it's my first experiment, I don't think I've created $1000/hour stuff so far.
Still, I don't see it as a problem. The idea is to value your time, yes, but you should also value intangible things like what you're learning doing this startup for example (which give you an edge for this one or the next startup).
How about focusing on the message?
use "their"
If we live in a world where one group of people is the norm and other groups need special distinction to identify them ("he" is a generic hypothetical person, but "she" means the person has to be female) then we have to undergo social change to bring us to center. This is likely to be uncomfortable.
The argument being that 'they' was plural, and therefore blatantly incorrect as a he/she replacement, whereas it was singular and gender-less (though gender-less != gender-neutral (at least, not necessarily)).
Anyone that's read E. Nesbit's The Five Children and It (the 'It' in the title is completely unrelated, as it refers to a mythical being and not any human) would have experienced this oddity of the English language, and <strike>they</strike> it would have probably paused and wondered about the usage of 'it' as a gender-neutral pronoun.
According to Nesbit, saying something like 'A lover and its crush' or, more confusingly, 'The life of a founder, and its priorities' with 'it' here referring to the founder and not his/her's (its <smirk>) life.
Sounds weird? How many times have you said a sentence along the lines of "Was it your father or your mother that was in the Army?" Nesbit's approach was the same, taken a few orders of magnitude further :)
"""
Your time is $1000/hour, and you need to act accordingly. Here’s why:
Let’s say as a consultant who normally charges $150/hour you stumble upon a weird client who asks for the following terms:
“We agree your time is worth $150/hour. However, we can’t pay you for four years, at which time we will pay you in one lump sum.”
But “lost interest” and a premium doesn’t solve the biggest problem with these terms. The problem is: What if this company goes out of business in four years and doesn’t pay you at all?
Supposing this client is an early-stage startup — even if funded — the most likely event is that they stiff you! Because they’re dead. Let’s suppose for the sake of rhetoric there’s a 15% chance the company will exist in four years and pay their bill.
"""
The article then goes on to reason that, therefore, you should value your time at $1000 per hour with this company.
But there's a problem.
IF the company goes bankrupt, then EVERY hour of time you spend with them is worthless, and you should reduce to to 0.
IF the company doesn't go bankrupt, then any number of hours at, say, $300/hour, is worth it for you.
In the first case, if you bill at $1000, the company is just as willing to use lots of your time. If it makes it, it takes off; if it doesn't make it, it's not stuck with the bill.
Absent all other market conditions, if you are a monopolist in what they want to do with you, and they NEED 40 hours of your time to survive, that is how much they will take at $40, $80, $120, and $150 or $1000 per hour. If they believe they can use those forty hours to raise $15million in the next 4 years, they might even "agree" to $150,000 per hour. It doesn't matter. No matter what your price, in this scenario you are out the same 40 hours if you play ball with them.
It's like winning the lottery. It doesn't matter if the expected value is over $1 per $1 ticket, if the chance of winning is the same. Your utility is massive if you win, you're out $1 if you lose.
False reasoning.
What you're getting at is the concept of risk-benefit analysis, which is a bit more subtle than just the expected (dollar) value of the result. I describe it in more (academic) detail here:
you can't do that.
so, when you're faced with depositing a quarter, does it really matter if the expected value is positive or negative? No, due to the variance - not due to how risk-averse you are, simply due to the variance.
Likewise at a startup: you only have one life, in which you can only do so many. The more you can do, the less the variance and the more the expected value comes into play.
Of course Microsoft or Warren Buffett would never 'invest' in lottery tickets when these have a negative expected value; they can buy hundreds of thousands or millions of them. When I buy one lottery ticket, I can buy one, or ten, but basically I have just one. Only the variance matters.
it's not about risk-averse or -tolerant. it's about utility.
people who say "math is a tax on people who are bad at math" simply don't know what they're talking about. People who are stuck in a hopeless life that would be changed by $1 million have just as rational a reason to play the lottery given a negative or positive expected return.
one wonders if the lottery had to be subsidized by corporations, and everyone could only buy one to five tickets (if they wanted) each with an expected value slightly above one, then would mathematicians start buying 5 lottery tickets each?
It has nothing to do with risk-benefit ratio. Even if God could somehow guarantee you access to googolplex googolplex googolplex dollars, but there was only a one in googolplex googolplex chance of your winning it, it would not even be worth the breath to say 'ok' -- try saying that googolplex times -- let alone a penny. Yet the expected value of that proposition is googolplex dollars! So, it's a false 'rationally' to claim that it is worth far more than a penny (given God's guarantee). it's worth nothing.
it's not about risk-averse or whatever. it's simple rationality as an agent who experiences utility here on Earth.
God's proposition is worthless.