As someone who has spent a significant part of his career (and income) in startups, I strongly agree with this succinct advice. Particularly the bit about the 401K.
Startups are Financial Suicide
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Re: Startups are Financial Suicide
#42Everyone over-extrapolates based on personal circumstances. On one end you have guys like Paul Graham and Peter Thiel that truly believe in the startup way of life. On the other end, you have people that quit their job at Google, posted a "Why I left Google to do a startup" article on medium, and then ended up regretting the decision years later. Most people that start companies are either people that are unemployabl…
Personally I view it as self expression. Like someone who has to go out and paint not because he has to.. he longs it
Re: Startups are Financial Suicide
#43Ain’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-...
Depends if you are using the dictionary definition of startup (both) or the Paul Graham definition (Amazon).
Re: Startups are Financial Suicide
#44Ain’t all companies used to be startups?
Not all new companies are start-ups. http://www.paulgraham.com/growth.html
Mirriam Webster doesn't make that distinction.
Re: Startups are Financial Suicide
#45Earlier quoted context omitted.
To put a finer point on that, it’s important to remember not all startups succeed. We never hear the TechCrunch stories about the startup that quietly shuts down, or was sold to make the investors whole, leaving founders and employees holding the bag. Reality is starting your own startup is a very risky proposition. Huge upside potential (serious generational wealth), but tons of downside scenarios. If financial secu…
Interestingly the startup I joined had work very similar to the big established company I work for now - cleaning up someone else mess and trying to keep it running.
Ha! No doubt. No shortage of schleps and ‘tech debt’ at startups too. But if the company is doubling every year it will hard to not be swept up by that rising tide in terms of seniority and responsibility.
Re: Startups are Financial Suicide
#46Earlier quoted context omitted.
>Why didn’t he pay himseslf something around $10-35k per month as CEO? I take you've never planned a startup budget before ;). Try running the numbers on how much it costs to run a startup with 5 employees for 3 years given $2m. You can't afford to pay the CEO $35k/month because you will run out of money far to quickly.
You are right, but paying a founder $120k/y is totally fine when you raised $25m. It's more than that, money shouldn't be a problem for founders, so that they can focus 100% on their company. This subject has been discussed over and over again by top tier VCs !
Why would a founder of a start-up need 120k$/y though? Are they saving to buy a property? Renting in an extremely expensive place? Perhaps hiring servants?
If none of this happens (and I bet some of this could be set add cost of business) yore just filling your bank account with VC money and reducing the chances of success.
Re: Startups are Financial Suicide
#47The mistake many founders make is not analyzing the financial impact of doing a startup in the context of their entire life, both before and after a startup. You can mitigate much of the financial risk by choosing the right times in your life/finances to do a startup and having a plan for executing the startup that minimizes the downside if you fail. It is a long-term financial modeling exercise that let's you optimi…
could you expand on this - sounds interesting