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I lost $209k of my own money trying to start a business

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Re: I lost $209k of my own money trying to start a business

#71

Post by TuringNYC »

bluedino wrote: post #14

> I'll never depend on a 3rd party dev as the main means of production again. He spent over half of his money on it as well. I've had more than one person come to me with their business idea, and they have a terrible website (or app) that they have spent 100, 200, or even 300k on. And it doesn't even work. If you aren't staring out WITH customers, you either have to code it your damn self, or have a technical co-foun…

>> If you aren't staring out WITH customers, you either have to code it your damn self, or have a technical co-founder.

Agree. Also note that if you are starting out with customers and POs -- and fully outsource -- it isnt the end of the world (as hopefully you have enough money to re-build properly with a tech team that has aligned interests long term) but you'll find that your supplier (outsourced dev) will capture ever greater portions of your profit. This is especially true if they have access to transaction systems where they get to see your revenues, because they will be able to see your pressure point and charge you just enough to extract most of the profits, but without putting you in the red.

It becomes a classic Porter's Five Forces (https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysi...) where the supplier's force becomes ever more powerful.

Re: I lost $209k of my own money trying to start a business

#72

Post by xivzgrev »

This is sad. This was a large risk they decided to take with unfortunately not a lot of upside.

As they learned the hard way, there are far cheaper and quicker ways to figure out if a business is viable. Namely, talk to users. Build a landing page and show it to users, or spend a little money on paid ads. Try to get email addresses. Etc

I’ve made bad investments too so I know the feeling of seeing the upside while discounting the risk. But the risks are real, and need to mitigate them as quickly / cheaply as you can even if it means to pass on the idea / deal.

Re: I lost $209k of my own money trying to start a business

#73

Post by gwbas1c »

Similar situation: I lost money because I quit my job and lived off of investments.

I'd say that most "rules" about starting a business are hot air, because most businesses fail. But:

> Lesson #9: A founder's #1 job is sales.

This is really the critical lesson. Building a business in a vacuum never works. Even if you have to do hardcore R&D and won't have a working product for awhile, working without some kind of interaction and input from customers is just a dead-end.

Re: I lost $209k of my own money trying to start a business

#74

Post by yolo3000 »

TuringNYC wrote: post #28
blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

+10 on point 3. Even as a highly technical CTO, it is shocking what outsourced dev agencies will try to do. I've seen dev agencies try to conclude engagements with a "successfully working app" but havent delivered any source code, or when source code is delivered it cannot actually be compiled into the successfully working app. As a technical CTO I can smell this a mile away and work it into SoWs, but I wonder how ma…

I've consulted in this sort of role for a startup which hired a dev agency. A few months in, we were behind schedule. I've asked them access to their git repo and built some graphs with the commits and LOC changes of every dev we paid for. It became clear that these devs were working on multiple other assignments and were not really dedicated to us. Without these sort of insights, it's hard to judge if they are honest or not.

Re: I lost $209k of my own money trying to start a business

#75

Post by skizm »

> I'll never depend on a 3rd party dev as the main means of production again.

I wonder if being a developer will mitigate some of the issues that come with hiring a dev. You'll be able to see if things are not working or getting off the rails much sooner and pull the plug, change course, or take over.

Re: I lost $209k of my own money trying to start a business

#76

Post by luckylion »

Aromasin wrote: post #60
blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

I can't help but agree. Technology is hard to grasp without study. Study takes time, which founders don't have. People with technical expertise are expensive. If you don't have the expertise yourself, you have to hire it. He's got 200k and he's bled 125k of that just to make his MVP. That's utterly insane to me.

App studios are often quoting high prices though. I have no idea about app development, but I regularly hear about quotes for relatively simple apps (i.e. you could do it with Wordpress and a custom theme as a web app) that are 30-50k euros. I don't know if these agencies just make insane profits or if they really make everything super complicated and need three developers working for a month to produce a simple crud app.

Re: I lost $209k of my own money trying to start a business

#77

Post by wing-_-nuts »

jrochkind1 wrote: post #67
blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

So, if it's very hard to start a software company based on paying contractors for software development -- which seems true to me -- there's another warning here for software contractors/consultants . If someone is paying you, as contracting engineering talent for hire on a consulting/hourly/iteration basis, to develop an app or product they hope will be the foundation of a new business -- chances are high this won't…

OT, but I thought I'd ask, since you seem to have experience with this sort of work...

In your experience, is it possible to negotiate work at a rate where one would only be working 2d / wk? I'd imagine it's hard to negotiate such an agreement with a company because they want work done on a faster timeline?

Re: I lost $209k of my own money trying to start a business

#78

Post by vldg »

Some of the stories I hear over and over again: — When non technical founders don't have 'rich friends' that done it before, then they often tend to fail — If tech founders work part time as a dev, it tends to fund their venture and living situation with low stress compared to non tech founders with a full time job that pays the same amount — Moms who are non technical cofounders have a higher rate of success because they are tapped into their community — Any accelerator that isn't YC don't seam to promise the level of growth in order to be sustainable

Re: I lost $209k of my own money trying to start a business

#79

Post by webmobdev »

On a slight tangent, you know the old saying - "A lawyer / doctor has a fool for a client if he represents / treats himself"? Someone told me the businessman / entrepreneur equivalent of this is - "A man who does business with his own money is a fool. A man who does not know how to do business with other people's money is no business man." (It's not really a black and white thing, but it is wise advise - the ability to raise funds at the start, and to ensure your business survival, is a very necessary talent that anyone venturing into a business needs to have.)
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