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You Have to Be A Fool to Start a Company

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Re: You Have to Be A Fool to Start a Company

#21

Post by cynicalkane »

johnrob wrote: post #8
tptacek wrote: post #3

I dislike posts like this because they foster a mindset that you have to "go all in" to start a business, when in fact that's just how financiers want you to do it. You don't. Plenty of businesses start cautiously and grow organically. What you have to be a fool to do is to bank 3-5 years of your life on a 1/20 shot at a 7 figure acquisition. Fortunately, only a tiny fraction of the people who try to do this get fund…

Most of PG's writing on the subject implies the same 'all in' mindset. He himself said that he's hesitant to start another company because he doesn't want to schlep away another 5 years. I'm a fan of the slow organic approach myself. But I also realize that there is a LOT of work that has to be done over the live of an idea, and the slower you work now the longer the whole thing will take.

IIRC, PG does point out a few times that you really do have to be a fool to start a business this way... if you're doing it for the money or other consequences of success, because success is unlikely even for the best. There are other reasons to try starting an all-in style business; reasons that don't appeal to me, but they do appeal to other people.

Re: You Have to Be A Fool to Start a Company

#22

Post by tptacek »

cynicalkane wrote: post #21
johnrob wrote: post #8

Earlier quoted context omitted.

Most of PG's writing on the subject implies the same 'all in' mindset. He himself said that he's hesitant to start another company because he doesn't want to schlep away another 5 years. I'm a fan of the slow organic approach myself. But I also realize that there is a LOT of work that has to be done over the live of an idea, and the slower you work now the longer the whole thing will take.

IIRC, PG does point out a few times that you really do have to be a fool to start a business this way... if you're doing it for the money or other consequences of success, because success is unlikely even for the best. There are other reasons to try starting an all-in style business; reasons that don't appeal to me, but they do appeal to other people.

I really disagree with that hedge you're making there. I'm not a great scholar of Graham's work or anything, but my perception is that he's pretty much saying: "It is a good idea to work your ass off for 5-10 years so that you can work much less hard later on", with the modifier being "Do that when you're young so that if you fail the first time you can pick yourself up and do it again".

I don't recall him writing that it was a foolish thing to do. He acknowledges the risk of failure but doesn't ever seem to come to terms with the consequences of failure. Again, with the caveat that losing 5 years of your 20's isn't the worst thing in the world.

Until you're in your 30's and start thinking about what else you could have done with the time, I guess.

Re: You Have to Be A Fool to Start a Company

#23

Post by gizmo »

tptacek wrote: post #12
gizmo wrote: post #7

Earlier quoted context omitted.

Who are you to say that a year spent working on a startup is a lost year? Why is it foolish spend 3 to 5 years on something that might just change the world, especially if you enjoy the ride? I bet that 20 teams shooting for a 7 figure exit will be on average much more successful than 20 teams building a cautious/lifestyle business. You could even argue that shooting for a 7 figure exit is the selfless thing to do, b…

First, stop kidding yourself. The year everyone loses trying to get funded doesn't teach them anything other than "getting funded is harder than all the blog posts make it sound". The 3-5 years the "lucky" few lose on ultimately unsuccessful shoot-the-moon startups don't teach them anything other than "it is possible to waste a spectacular amount of money without much revenue in return for it, and that's a great way…

You're arguing against a straw-man version of my argument and you're making absurd claims in the process ("you don't learn anything from a startup" / "you spend 60% of your day in meetings"). When you write nonsense like this you can't possibly expect a constructive responsive.

Re: You Have to Be A Fool to Start a Company

#24

Post by tptacek »

gizmo wrote: post #23
tptacek wrote: post #12

Earlier quoted context omitted.

First, stop kidding yourself. The year everyone loses trying to get funded doesn't teach them anything other than "getting funded is harder than all the blog posts make it sound". The 3-5 years the "lucky" few lose on ultimately unsuccessful shoot-the-moon startups don't teach them anything other than "it is possible to waste a spectacular amount of money without much revenue in return for it, and that's a great way…

You're arguing against a straw-man version of my argument and you're making absurd claims in the process ("you don't learn anything from a startup" / "you spend 60% of your day in meetings"). When you write nonsense like this you can't possibly expect a constructive responsive.

See, you think I'm exaggerating or being hyperbolic, and I'm not. I might be wrong. But I'm not just making things up.

I am telling you that you probably don't learn more from failing in a startup than you could have in 3-5 years doing something else, and that yes, in fact, if you have the misfortune of getting funded, you can wind up in a job that you're handcuffed to that involves you spending most of your time in meetings.

It worries me a little that people think this claim is so outlandish that anyone making it must be trolling. I'm really not.

Re: You Have to Be A Fool to Start a Company

#25

Post by cynicalkane »

tptacek wrote: post #22
cynicalkane wrote: post #21

Earlier quoted context omitted.

IIRC, PG does point out a few times that you really do have to be a fool to start a business this way... if you're doing it for the money or other consequences of success, because success is unlikely even for the best. There are other reasons to try starting an all-in style business; reasons that don't appeal to me, but they do appeal to other people.

I really disagree with that hedge you're making there. I'm not a great scholar of Graham's work or anything, but my perception is that he's pretty much saying: "It is a good idea to work your ass off for 5-10 years so that you can work much less hard later on", with the modifier being "Do that when you're young so that if you fail the first time you can pick yourself up and do it again". I don't recall him writing th…

Well, I could be recalling incorrectly for the first part of the hedge. It seems clear, though, that you and PG disagree on what the consequences of failure are, in that he would not characterize 5 years spent working on a failed startup as "lost". Anyway, I'm not really big on the all-in startup model, but I don't think it's strictly worse.

Re: You Have to Be A Fool to Start a Company

#26

Post by HeyLaughingBoy »

tptacek wrote: post #24
gizmo wrote: post #23

Earlier quoted context omitted.

You're arguing against a straw-man version of my argument and you're making absurd claims in the process ("you don't learn anything from a startup" / "you spend 60% of your day in meetings"). When you write nonsense like this you can't possibly expect a constructive responsive.

See, you think I'm exaggerating or being hyperbolic, and I'm not. I might be wrong. But I'm not just making things up. I am telling you that you probably don't learn more from failing in a startup than you could have in 3-5 years doing something else, and that yes, in fact, if you have the misfortune of getting funded, you can wind up in a job that you're handcuffed to that involves you spending most of your time in…

Don't feel bad. What really made it sink in for me was when someone referred to "the myth" that most startups fail!

pg immediately corrected him, but sometimes I still wonder how pervasive the idea is that most startups will make it big.

Re: You Have to Be A Fool to Start a Company

#27

Post by pg »

tptacek wrote: post #22
cynicalkane wrote: post #21

Earlier quoted context omitted.

IIRC, PG does point out a few times that you really do have to be a fool to start a business this way... if you're doing it for the money or other consequences of success, because success is unlikely even for the best. There are other reasons to try starting an all-in style business; reasons that don't appeal to me, but they do appeal to other people.

I really disagree with that hedge you're making there. I'm not a great scholar of Graham's work or anything, but my perception is that he's pretty much saying: "It is a good idea to work your ass off for 5-10 years so that you can work much less hard later on", with the modifier being "Do that when you're young so that if you fail the first time you can pick yourself up and do it again". I don't recall him writing th…

Working on a startup is probably not the most interesting way you could spend your time, but it will be at least as interesting as getting a job as a developer at an existing company in the same field. So if that is the alternative and you're young enough to bear the financial risk, it makes sense to try.

Re: You Have to Be A Fool to Start a Company

#28

Post by tptacek »

pg wrote: post #27
tptacek wrote: post #22

Earlier quoted context omitted.

I really disagree with that hedge you're making there. I'm not a great scholar of Graham's work or anything, but my perception is that he's pretty much saying: "It is a good idea to work your ass off for 5-10 years so that you can work much less hard later on", with the modifier being "Do that when you're young so that if you fail the first time you can pick yourself up and do it again". I don't recall him writing th…

Working on a startup is probably not the most interesting way you could spend your time, but it will be at least as interesting as getting a job as a developer at an existing company in the same field. So if that is the alternative and you're young enough to bear the financial risk, it makes sense to try.

You're right.

But you can't look at each bite at the apple independently, either.

A failed startup might very well be a better experience than three years at a great company.

But two consecutive failed startups is probably not better than six years at a great company, if you take the company job as seriously as startup founders supposedly do. After a couple years at a great company, an A-player is going to get much more interesting work.

I'm also not trying to argue against starting companies. Starting a company is a great idea. I just think you should be making money from day one, get yourself to a place where you can live comfortably with your startup, and not bank your time on a tiny chance of getting acquired. Time is precious, and 20-year-olds suck at accounting for it.

Re: You Have to Be A Fool to Start a Company

#29

Post by codexon »

tptacek wrote: post #20
codexon wrote: post #19

Earlier quoted context omitted.

If shares of your company were undersold and you lose controlling interest in the process, that is your own fault. Founders usually have a different class of stock which has more voting rights per value. This is like an employee accepting a $10/hour contract, and then complaining later that it was too low.

Founders don't usually get preferred stock.

You are correct. I meant to say that founders usually have a different class of stock that has more voting rights, rather than higher liquidation preference in case of bankruptcy.

Re: You Have to Be A Fool to Start a Company

#30

Post by tptacek »

codexon wrote: post #29
tptacek wrote: post #20

Earlier quoted context omitted.

Founders don't usually get preferred stock.

You are correct. I meant to say that founders usually have a different class of stock that has more voting rights, rather than higher liquidation preference in case of bankruptcy.

Liquidation preferences aren't about bankruptcy.
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