A Less Risky Path to Entrepreneurship in Software Development

Although not completely related to the article - the headline triggered a reaction in me:

Why do we need a less risky approach to entrepreneurship in software development? I believe that of all start-up opportunities, software development is already the least risky one. Why? Almost zero unvestment required. Absolutely flexible working ours. All value creation is through your mind work. No external milestones and so on and so on...

The fact that Software development has become synonymous with entrepreneurship is almost ridiculous. Just compare the risks you are taking with that of your mom-and-pop shop around the corner (or the one that was there 30 years ago)...

Quite the opposite, in my experience.

One of the things that people need to understand is that there are various kinds of failure. Some ruin your life; others are mild annoyances whose negative consequences are paid back by what is learned. It's really important to know the difference before forming an opinion on failure (i.e. "fail fast") that is supposed to apply to everyone in all circumstances. What are the effects of the failure?

Losing a job is not a big deal, usually. Layoffs and business failures happen. Closing your venture because it didn't work out doesn't always ruin your life. But if you took out $80,000 in credit card loans, or took on personal liability to get a bank loan, or had a vindictive investor who decided to ruin your reputation, welcome to Fuckedville.

There are a lot of young people out there right now who are far too willing to risk their careers, reputations, resumes, and savings opportunities on terrible prospects and in business with some really unethical people. The fact is that if you don't gain a certain credibility quickly, you're going to be screwed. If you don't look out for your career and really think through what happens in the case of failure, you could very easily end up at a bad end. I've lost close to $200,000 on bad startups, but at least I always made sure that I kept learning and building skills, no matter what. Now that I'm older, having kept my skills sharp is starting to pay major dividends.

We have these obscenely privileged people, who are so well-connected as to be tied in with what's essentially a private welfare system, who go out there and preach about how failure is no big deal and everyone should risk everything all the time, knowing that they're Stanford grads with partners at six different VC firms in their cell phones. That's not realistic; and people who don't have the social resources to take extreme risks (i.e. the 99%) shouldn't be decried as cowards because they do less risky things like, you know, take regular jobs.

I would like to see a more wholesome path to financing, especially for the mid-risk businesses that VCs decry as "lifestyle" businesses.

Software is inherently mid- to high-risk. "Low-risk" just doesn't exist in a world where half of all projects fail, and some fail for reasons not due to a lack of merit (but because they were built to a specialized purpose for which there was demand, but the situation changed). So bank loans, which require personal liability are completely out. On the other hand, VCs want to play in the high-risk space where the mean (expected) return is high but the median is failure. That appeals to some people, but it shouldn't be the only game in town.

Right now, there isn't a mainstream funding outlet for the mid-risk businesses oriented toward 10-40% per year growth, even though that's a great space for software engineers, since it approximately matches the acceleration curve of our capability, with hard work.