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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

#111

Post by idopmstuff »

matrix wrote: post #26

Not mentioned in the article: the market which this person was trying to enter is saturated with competition. These tour operators are bombarded with pitches for these things every day, and of course every one of them wants a cut of their hard earned revenue. It's a bad deal for a small business owner. They take all the risk, invest all the capital, while some SV firm comes along and kindly offers to scoop all the cr…

I think this really is the most important point. They could've figured this out in a much lower-budget way by having conversations before investing hundreds of thousands of dollars. Pitching these business owners before making the app (or with a much lighter-weight version like a Shopify store) was clearly the right move, but you've got a founder who didn't want to sell (which is maybe as big of a hurdle as the saturated market).

And now that I think about it, I would bet they could've gotten 95+% of the functionality they needed with a Shopify store that cost a few hundred bucks per month and maybe some overseas VAs.

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

#113

Post by jcadam »

ekidd wrote: post #84
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 have a very high level of scepticism towards non-technical founders without deep pockets: I've seen two types of non-technical founders that stood a chance: - The industry insider who knows exactly what problem to solve, and who can sell the solution effectively. For example, I saw a woman who had closed $500k of revenue by month 3. She knew everyone in her niche. That kind of product/market fit will gloss over a…

I'd gladly be a technical co-founder for the first type, but they aren't exactly common, and hard to distinguish from the BS artists.

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

#114

Post by cccybernetic »

twawaaay wrote: post #35
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 don't think they necessarily need to be technical. But there is a huge advantage to being a person that can just roll up their sleeves and do pretty much anything that needs to be done, whatever it is. It does not have to be technical. It is a mindset of being open to researching stuff, trying to figure things out, accepting and learning from failures and doing 20% to get 80% of benefit. A person with this kind of…

As a technical founder, I agree with you to a degree, but not completely. I've come to appreciate sharp, non-technical founders with business acumen and who can see the "forest for the trees". There are times where being "technical" is actually a crutch, because you're more likely to:

1. Waste time / obsess over small technical details that in the grand scheme of things don't really matter, or at the very least, don't matter until you have validated product market fit. These details can be anything, from the design or shape of a button, or the perfect fully-normalized schema for your database or whatever.

2. You over-engineer technical solutions, like building a homegrown SaaS app or fleshing out a database for something that should have been validated inside of Google Sheets or email.

3. Idea generation - because they are non-technical, they often see potential products where technical people won’t because the technical person overestimates the amount that a non-technical person will commit to solving a problem. If you asked a technical person how to do XYZ, they might say something like, "oh that's easy, just set up a ABC server and VPN into it and run this bash script and blah blah blah". A sharp non-technical founder would immediately sense that to the average person this is absurd, and thus a potential product opportunity. I see this particular bias all the time on Hacker News.

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

#115

Post by TuringNYC »

300bps wrote: post #99
TuringNYC wrote: post #89

Earlier quoted context omitted.

I'll make suggestions to anyone doing this: - For slightly more legal protection, the code should be in YOUR OWN git repo, not the dev agency's repo - If you are giving some upfront $ or milestone payment, you should also contractually now own the code up to that point in time - You should not declare a milestone success (and should not pay) until you can independently compile the app straight from git (front end and…

Excellent but dangerous advice. I really hope non-technical people don't read the tips here and think they're now prepared to navigate this process.

100% agree. I've yet to see a startup succeed w/o a technical co-founder. I do angel investments and have never cut a check to a founding team w/o checking for the above checklist. For teams with good founding CTOs, they get it for free if the person is sharp about process.

But the whole discussion was what non-technical founders would do, and this is probably the second-best advice I could give. Moreso, to recognize the myriad risks and understand things arent quite as easy as posting a project on Upwork.

The first-best advice I could give is to get a technical co-founder.

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

#117

Post by Topgamer7 »

swyx wrote: post #68

> And finally, I ended up landing my first CFO role at a venture-backed tech marketplace. uh, what? without knowing more, and without insulting the author... this is a surprising outcome given the surface facts

Well its common to spin any work or venture done into a success story. No one is going to hire you if you say, I burned X dollars, built nothing, learned nothing, etc.

Most C level folks I've know are kings of spin.

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

#118

Post by flashgordon »

sbilstein wrote: post #105
jrochkind1 wrote: post #67

Earlier quoted context omitted.

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…

Oh absolutely. Twice I made the mistake of coming onto a startup to fix the “mess” the previous dev shop had made. Both times the founders had developed an incredibly negative relationship with their dev shop. Hell, the company with the Series A was withholding payments, the preseed company at least paid their bills. I naively thought “of course they hate working with a dev shop, the incentives are wrong. I’m FTE wit…

Great advice. Any guidance on asking the right questions as a way if filtering out these traits/behaviors in CEOs?

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

#119

Post by TuringNYC »

tripdout wrote: post #96
TuringNYC wrote: post #89

Earlier quoted context omitted.

I'll make suggestions to anyone doing this: - For slightly more legal protection, the code should be in YOUR OWN git repo, not the dev agency's repo - If you are giving some upfront $ or milestone payment, you should also contractually now own the code up to that point in time - You should not declare a milestone success (and should not pay) until you can independently compile the app straight from git (front end and…

If you can do all this, you're either already a developer and don't need to outsource it, or you have the ability to learn how.

In general, I agree. There is enormous hidden equity in being a technical co-founder that is unappreciated until non-technical founders are burnt several times.

That said, I did present two ideas for those who want to venture into this:

- You recognize that the "success" you have in the working app isnt actually a success and plan accordingly

- You hire someone independent who keeps the third parties honest

Another one:

- You cut corners, get a working demo, raise good VC funds and hire a well-compensated technical co-founder or founding engineer who is compensated sufficiently to be happy short term and has sufficient equity to want long term success

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

#120

Post by idopmstuff »

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…

I would wager heavily that this could've been a Shopify store. A few hundred bucks for a premium theme, a few hundred a month to run it, and maybe some overseas VAs at a few bucks an hour to help fill in the vendor/event details.

OP's LinkedIn shows he's never worked at a very early stage startup. I really can't recommend that enough before starting a company - being immersed in a culture where things are scrappy helps to instill a reflexive reaction of "how can we do that faster/cheaper" when someone tells you something is going to cost tens of thousands of dollars.

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