Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Startups are Financial Suicide

medium.com

Post reply on HN
Print view View original

1–10 of 47 posts

Re: Startups are Financial Suicide

#4

Post by hartator »

> We raised over $25m and sold millions of dollars of product to real customers.

I don’t fully get this part, even if the startup wasn’t financialy viable, why didn’t he pay himseslf something around $10-35k per month as CEO? He won’t have his savings crushed now, and probably made money for himself. Maybe I am missing something obvious.

Re: Startups are Financial Suicide

#5

Post by BIackSwan »

The point here (which seemed to be muddled in the post) is that you can’t assume that your startup succeeds and not save with that expectation.

Its not that startups are financial suicide - the suicide is not saving and not keeping the personal burn rate low.

A clearer way of saying the same point - keep on saving like a regular employee would - you will protect yourself in case startup fails. Do not assume that the startup succeeds and have no safety net. That sets up for a disaster.

Re: Startups are Financial Suicide

#6

Post by teddyh »

m3kw9 wrote: post #3

Ain’t all companies used to be startups?

No. Very much no. All companies used to be small, which is a different thing to being a startup.

See here, where the difference between Ben and Jerry’s and Amazon (when both were small companies) is explained.

https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...

Re: Startups are Financial Suicide

#7

Post by analog31 »

m3kw9 wrote: post #3

Ain’t all companies used to be startups?

Something I learned from reading enough HN, is that "startup" specifically refers to companies that are started for the purpose of ultimately being sold. This is as opposed to a so called "lifestyle business," which you expect to operate and produce an income to support yourself and your family.

Of course these businesses can look similar from a distance, one can turn into the other, and it's possible to bet wrong on which category your business should align itself with.

Re: Startups are Financial Suicide

#9

Post by keeptrying »

uptownfunk wrote: post #2

Sound advice.. a sobering note for anyone looking to get into a startup like myself..

Yes! And if you're actually heeding this advice it means you're smarter than most. BUT this should not stop you either - just need to find a way to work around it. :)

Essentially you should calculate your opportunity cost. And then figure out a dollar number you are willing to lose. So lets say you save $10k per year. Also assume that you will reduce your lifestyle so as to spend only 2k/month (including medical insurance) on living expenses to start your company.

So for a year of unpaid work you will be down the hole of 24k + $10k + $6k (it will take 3 months to get a job after 1 year of being an entreprenur) + $10k in incidentals (server hosting costs to seeing the doc a few times). So thats a total of $50k. Now thats in fantasy land or Utah.

In NYC and SF you're looking at probably $120k or more per year if living in decent housing. The more you make the higher this number becomes, becuase of the opportunity costs.

So its should become very apparent to you that you need to raise money if you start a startup in SF or NYC. Else move somewhere else immediately.

It should also make apparent that you should work as much as possible in your free time before quitting.

After this you should put a number in your savings account after which you will quit entrepreneruship. So say on hitting $100k in your bank account (after starting with $200k) you'll quit.

People focus too much on just their monthly bill and I think thats the biggest mistake. The opprotunity cost is very very real. You don't get that time back.

Post reply on HN