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We need a middle class for startups

neilthanedar.com

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Re: We need a middle class for startups

#181

Post by dv111 »

di4na wrote: post #48
user_7832 wrote: post #15

While some comments here are criticizing the author, I'd like to add that what the author says matches with my (extremely) limited experience. The most "glamorous" are YC-type funds, while others seem to be built with money more locally pooled from friends/family/banks. There are a few entrepreneurship centres and startups, but these unsurprisingly aren't as famous as funds with billions of dollars. I wonder if there…

Please yes. As a founder aiming for the kind of outcome described above, finding the original 500k of funding is the hardest part right now. No idea who to ask or what they expect.

republic.co

Re: We need a middle class for startups

#182

Post by di4na »

robocat wrote: post #160
munificent wrote: post #81

Earlier quoted context omitted.

> The current young people simply are too unstable and too close to poverty to take the risks. One piece of the solution that is very clear to me and contains many other upsides is better access to healthcare. The fact that Americans mostly get healthcare through large corporate jobs significantly ratchets up the risk of entrepreneurialism. A better healthcare safety net would make it safer to leave the safe confines…

> better access to healthcare If you are an entrepreneur under say 40, can’t you just roll a D10 and hope you don’t get a 1? Surely most people before middle-age won’t need expensive healthcare?

Break a leg. Catch covid.

In my case have a cognitive trouble. Allergy. All kind of disease you can catch. Breaking a tooth while tripping over something.

Being young does not isolate you. And the trip to poverty is far faster than getting out of it.

Re: We need a middle class for startups

#183

Post by webmaven »

sgift wrote: post #122
bradleybuda wrote: post #98

Earlier quoted context omitted.

> The key is that Mittelstand businesses are much less likely to fail I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? The failure rate for new business starts is famously high, whether that business is a tech startup chasing unicorn status or the corner deli. I think this will manifest itself in the due diligence…

> I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? By having a business plan. That's why banks (at least over here in Germany) ask for one when you ask for a loan. You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) yo…

> You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) your business with it.

In the US, unless you can put up property like a house or land as collateral, or plan to use the loan to purchase recoverable assets like industrial equipment (I suppose a data center would qualify, but actual computer hardware depreciates faster than banks like), you won't get the loan, even if it's a local bank you're approaching.

In theory a software business could use IP assets as collateral, but that usually doesn't apply to new software businesses.

Getting to the point where a software business could get a business loan from a bank more or less requires bootstrapping.

Re: We need a middle class for startups

#184

Post by pkaler »

coderholic wrote: post #103

Totally agree with this article. It's not just about funding methods, but also playbooks for these types of businesses, and best practices. I've bootstrapped IPinfo.io to millions in revenue and a team of over 20 - so we're squarely in the "Middle class", and there's a tension between the "bootsrapper advice" (which mostly applies to optimizing for lifestyle and eliminating any risk) and "VC backed advice" (which mos…

>> Totally agree with this article. It's not just about funding methods, but also playbooks for these types of businesses, and best practices.

I think the word you are looking for is called "business". There are tons of books for these types of businesses.

On the shelf behind me is E-Myth Mastery, 22 Immutable Laws of Branding, Traction by Gino Wickman. You just have to look outside of tech. All of these books and practices apply to software businesses.

Re: We need a middle class for startups

#185

Post by limedaring »

bradgessler wrote: post #139
limedaring wrote: post #125

Earlier quoted context omitted.

Tracy here from TinySeed, thanks for linking to our thesis! Point of clarification: we don't do profit-sharing. Instead, we are equity owners. So when a company gets to the point of success where they want to take money off the table, they can issue dividends (and TinySeed get's a pro-rata amount of those dividends). I find this is one of our most unique points and aligns the incentives of the founder with TinySeed.…

You should add that you cap founder salaries at $250-$300k/year (if I remember your terms correctly) If you’re a founder looking at TinySeed, what this means is that if your business reaches a level of success you can pay yourself over $250k-$300k through your W-2, you’ll either have to cap it there or pay the rest through dividends. That said, this isn’t really a terrible setup if you plan to go down this route. The…

That's correct. More info here on the full TinySeed terms can be found here: https://tinyseed.com/faq

Re: We need a middle class for startups

#186

Post by munificent »

robocat wrote: post #160
munificent wrote: post #81

Earlier quoted context omitted.

> The current young people simply are too unstable and too close to poverty to take the risks. One piece of the solution that is very clear to me and contains many other upsides is better access to healthcare. The fact that Americans mostly get healthcare through large corporate jobs significantly ratchets up the risk of entrepreneurialism. A better healthcare safety net would make it safer to leave the safe confines…

> better access to healthcare If you are an entrepreneur under say 40, can’t you just roll a D10 and hope you don’t get a 1? Surely most people before middle-age won’t need expensive healthcare?

A 10% chance of a million-dollar healthcare bill you can't pay and will spend the rest of your life dealing with is still shitty odds on top of all of the other risks involved in starting a business.

Also: parents. Childbirth is expensive and most parents want some reasonable level of certainty that they can afford good healthcare for their kids. Or, to put a finer point on it, when forced to choose between health stability for their children and starting a business, most will sacrifice the latter to get the former.

Re: We need a middle class for startups

#187

Post by englishrookie »

Quanttek wrote: post #163
englishrookie wrote: post #156

Earlier quoted context omitted.

The original article uses the plural too, Mittelstands, but it sounds really weird in German since it's more of mass noun (it's as if you referred to various pots of sugar as 'the sugars'). I believe the correct word would be Mittelständler, but if you're going to anglicize it, Mittelstanders would much better than Mittelstands in my opinion. Then again, I'm not a native speaker of either German or English...

the "-stand" comes from the German word for "estate" in the medieval sense [1]. It's typically translated with small- and medium-sized enterprises, which is also the lingo used at EU level. As you said, it's a mass noun, so if you want to refer to an individual enterprise belonging to the "Mittelstand," you'd effectively use it as an adjective and speak of e.g. a Mittlestand firm. [1]: https://en.wikipedia.org/wiki/E…

How would you call a person belonging to the Mittelstand in German? In another Germanic language, Dutch, you would say "middenstander" (or plural"middenstanders"), derived from "middenstand".

Re: We need a middle class for startups

#188

Post by cseleborg »

sgift wrote: post #122
bradleybuda wrote: post #98

Earlier quoted context omitted.

> The key is that Mittelstand businesses are much less likely to fail I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? The failure rate for new business starts is famously high, whether that business is a tech startup chasing unicorn status or the corner deli. I think this will manifest itself in the due diligence…

> I think you're getting at the crux of it here. The question is, how does one of these businesses "prove" to investors that they are less likely to fail? By having a business plan. That's why banks (at least over here in Germany) ask for one when you ask for a loan. You present a plan, someone reads it, you talk it through, clarify a few things and if everyone is happy they give you a loan and you start (or grow) yo…

> they give you a loan

Yes, they do, if you can provide a security for the loan. More often than not, the founder is the guarantor, which sucks for them if the business fails. This is moderately founder friendly, to say the least.

Re: We need a middle class for startups

#189

Post by philsnow »

coderholic wrote: post #103

Totally agree with this article. It's not just about funding methods, but also playbooks for these types of businesses, and best practices. I've bootstrapped IPinfo.io to millions in revenue and a team of over 20 - so we're squarely in the "Middle class", and there's a tension between the "bootsrapper advice" (which mostly applies to optimizing for lifestyle and eliminating any risk) and "VC backed advice" (which mos…

This size of company and mindset seems pretty well served by MicroConf [0], which tends somewhat to the bootstrapping crowd but is very much not the "4 hour work week" crowd.

... Is that what you mean by "optimize for lifetyle"? "lifestyle business" is used as kind of epithet in some circles, as an "othering" term to identify people who don't work as hard as they do, but the MicroConf audience has a lot of people who want to grow their companies as much as is reasonably possible, but with non-negotiable ideas about family time, taking actual vacations instead of working vacations, etc.

One of the creators of MicroConf also is one of the hosts of the podcast "Startups for the Rest of Us" [1], which I don't see talked about very much on HN but which is very much my jam.

[0] https://microconf.com/

[1] https://www.startupsfortherestofus.com/

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