Why Being Broke Is A Founder's Greatest Asset

Post by richardjordan » Thu, Oct 25, 2012, 2:24 AM UTC

ericabiz wrote: post #31

richardjordan wrote: post #20

Earlier quoted context omitted.

I've been there too (i.e. sold a company in the $1-2million range). Once taxes etc. are taken out it's more like half that and that's just two to four years of salary for most folks starting companies of the type we discuss on HN most of the time (given most founders of Silicon Valley style startups can make $100-200k elsewhere). No-one is saying that getting $1mm is a bad thing, just that for most start ups folks on…

I started my hosting company in 2001. If you were in the Valley at the time, you'd know it was a terrible time to be there. No one was hiring. I am a college dropout and had no degree. I sent literally hundreds of resumes out to every conceivable tech company. Never even got a call back. Newspapers (remember those?) were full of smug pundits telling us "The Internet is dead!" or "The Internet is a fad!" Huge companie…

Post by bravoyankee » Thu, Oct 25, 2012, 2:48 AM UTC

ericabiz wrote: post #34

jpdoctor wrote: post #33

Earlier quoted context omitted.

> I wanted to say: $1.1 million is life-changing first: congrats. I'm curious: How much of the $1.1 did you manage to keep (taxes etc.) BTW It might be a good entry in your blog on how to set up a biz for such events.

Hi JP: I lost about a third to taxes (I should have moved to Texas sooner! Ah, well, I'm here in Austin now and loving it.) Another $125,000 or so to debt (it was an asset sale and the business was holding some debt on its books.) And $74,000 to a stupid mistake in the contract--should probably write out the details on my blog so no one gets stuck in that particular quagmire. I owned 91.5% of the company, with the ot…

Post by bravoyankee » Thu, Oct 25, 2012, 2:54 AM UTC

richardjordan wrote: post #7

tweiss wrote: post #4

Earlier quoted context omitted.

This. I can't even imagine how founders with families and kids deal with the stress that goes hand in hand with being broke. Being scrapy and hungry is a good thing. But not knowing how to pay rent or having to freelance a couple of days a week is a huge distraction.

I can tell you from personal experience how: If you take literally the advice of investors and startup-ra-ra types and put everything on the line for your startup, your own money, your time... and then something like the financial crash of 2008 hits just as you're raising your round, your $500k Salesforce.com pipeline of business that depends on marketing spend from big corporates in q4/08 and q1/09 collapses and lit…