As I've detailed in a previous post, I'm planning on quitting my job in a few months and moving to SF to join the start-up scene with my friend / prospective co-founder. However, I've only got about $18k saved up. How does this compare to other people who have taken the leap?
Ask HN: How much savings did you have when you started?
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Re: Ask HN: How much savings did you have when you started?
#2I did it with exactly 0, but I did have a lot of luck and plenty of people that wanted to see me succeed so they threw me jobs, contacts and so on. That helped tremendously.
Conservatively, I'd say you need about 6 to 9 months living expenses in the bank and if that ever goes below 2 months remaining it might be time to see if you can land a job somewhere again.
The safe way to do this is to try out your consulting next to your regular employment.
That might take longer but the chances of failure are dramatically less.
Re: Ask HN: How much savings did you have when you started?
#3Depends on your expenses. How long do you anticipate that amount would last? And, would you be totally doomed if after X months, your startup isn't making any money and you run out of savings?
I think $18k is plenty fine, (but that's just me). I'm planning to do a similar thing and my savings are less than that.
Re: Ask HN: How much savings did you have when you started?
#4How much money you need depends on how much time you need. I had more savings than you when I started working on Tarsnap, but a secure backup system isn't something you can throw out in a few months, so I needed a longer runway.
Re: Ask HN: How much savings did you have when you started?
#5From friends in SF, the rent is similar to that of NYC where I live so I'm happy to share my experiences to see if it's similar to yours.
When both my co-founder (formerly in Investment Banking) and me (previously in Public Relations) left our jobs, we split our savings of $70k where the majority went to rent, food and other necessities living in a big city like New York. We also began to set up the necessities of the business, i.e. legal entity, website development, etc. and then went into product mode. We managed to start the company and live off our savings for thirteen months before we took outside funding.
The biggest thing to think through regarding savings, like cpercviva mentioned, is figuring out where the largest amount of your money needs to go. For us, and any other person thinking about taking the leap in New York, is usually rent.
I'd map every single expense you've had in the last year in a Google Spreadsheet so you can trim any "financial fat".
Re: Ask HN: How much savings did you have when you started?
#6I had 20k, but I also had no rent (very advantageous). SF is going to be really expensive — what about moving to cheaper Mountain View which still right in the middle of the startup scene (location of YC), and a train ride to SF?
Re: Ask HN: How much savings did you have when you started?
#7About 100k when I started Shopify, that meant I didn't have to take a salary until we had enough revenue 2 1/2 years later. Urg, don't do it like that.
Re: Ask HN: How much savings did you have when you started?
#8Technically I started before I quit ... something that I highly recommend any other entrepreneur to do. However you could definitely pull it off with 6 months money although 12 months would be better :) A few months after going on my own I also landed a contract dev job that helped me make it an additional 6 - 8 months and attend some events I wanted to. I did the dev work at night and then just worked on my project during the day.
If you are all-in on your new project though, you should be able to make it though. Just make sure you already have that new computer or whatever tools you'll need to get started. I've found a nice computer always boosted my productivity and made me feel better :)
Re: Ask HN: How much savings did you have when you started?
#9$18k - is not that much at all, and it will disappear fast. If you don't have any family to back you up with some reserve/emergency cash when you ran out, i would be really careful.
You will use it within 5 - 7 months. Keep in mind, that just even for renting, you will have to give a first, deposit, (and sometimes last month). Assuming you are going to have roommates, if your rent is 1k (can be more, can be a bit less in crappy area), + moving costs, you could see easy 4k gone, just when you land there.
The chances to get funding, or any revenue within that time are pretty much 0, unless you have a solid prototype already build, do you?
My advice, is move to SF, find a job (hopefully one that will pay relocating costs), or maybe even a contracting one, and then develop your product on the side. When it is at least 60% done, and you have a bit more savings, go full swing into it.
The rule of thumb, you should have at least 1.5 years of savings. If you have parents that lend 20k extra when things go sour, then 9-1yr would be good enough.
In SF that would be at least 30k. add about 10k you will need for the business (servers and such, depends on what you are doing, then 40k is minimum.
If you are working as an engineer, and are smart with money, you should be able to save at least 20k-30k a year.
Re: Ask HN: How much savings did you have when you started?
#10It's completely feasible if you move to SF with a job in hand.
Spend a year working, networking and getting the lay of the land, and then jump off and do your own thing. There's tons of companies that are hiring right now.
Aside from that, $18k really isn't much at all in SF or SV. Spend part of the $18k in coming out here for a visit for a month or so, do some networking land a job and then move out. Think of doing startups as a more long term plan rather than a short term leap to SF to see how far you can get by living on ramen noodles.