Whilst I think the need for speed is often overestimated, it's definitely important in some industries. If you need to move quickly and get a decent product to market first, cash is essential.
Bootstrapping Your Startup: Do You Really Need Early Investment?
41–50 of 51 posts
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#42Earlier quoted context omitted.
Is it so hard to be away for 3 months? Doing a startup instead of taking a stable job involves tradeoffs, like all choices. How much of a tradeoff you take depends on you. You can move your entire family to the Bay Area, with the tradeoffs that entails (uprooting family, more expensive housing). You can move to the Bay for 3-4 months with the intention of permanently setting up the startup back home, with its own tra…
There is a false dichotomy. Not asking for a free lunch. I think these are real concerns for entrepreneurs with dependents. Is it possible to be away for 3 months? Sure, it's possible, but almost everyone in this group, entrepreneurs with dependents, will tell you it's not worth it for the kind of terms that are being offered, and that it shouldn't be necessary to leave the family behind in order to start a business.…
You're right that I haven't personally been in that predicament.
But you haven't seen, as I've seen (as an employee), the huge value of YC and the meetings I've had with YC founders who had families (including one with a young child).
You haven't explained why what you said is not asking for a free lunch. Why is it that there aren't/shouldn't be tradeoffs? Either you move to YC or you don't do YC. Tradeoffs ensue. You yourself are arguing that the tradeoffs aren't worth it. Okay, they aren't worth it for you. The tradeoffs just don't make sense for your personal tolerance level.
Having children involves tradeoffs at all levels of your life. Tradeoffs in working hours. Tradeoffs in social activity. Tradeoffs in mobility. You accept those tradeoffs, for a certain time period, when you decide to start a family. The fact is those tradeoffs exist. And we don't live in an idealized world with no tradeoffs.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#43We bootstrapped our app www.staffsquared.com. While there are limits on what we can do using profits from our main business and income from the app as it grows, I love the fact that we got the app off of the ground organically. I think spolsky said that when you bootstrap you can only grow the business in line with revenue - which is of course true and a difficult trick to pull off. I think more importantly, the proc…
I saw that staffsquared was built by Atlas, which looks to be a client services agency. I've been hearing of startups taking on client work as a means to fund products. Is that essentially what you guys did? I think It's a noble way to bootstrap but am curious of the implications that stem from splitting your time between client and product.
Atlas is my consultancy business and spawned Staff Squared as a way of scratching our own itch (I needed an app to help me better manage my team). We hunkered down for 6 weeks and got something horrible but workable out of the door 2 years ago...
As for implications:
- Splitting development time between the product and the clients has been hard but gets easier as our clients get used to it. We book in sprints of work on Staff Squared in our schedules way in advance. I line up two solid weeks for the entire team every quarter and this time is sacred. No amount of customer complaints get us to move this time. The amount of time I block out increases with the growth of the app. There's a constant backlog of minor tweaks, so if any of the team find themselves at a loose end they always revert to the Staff Squared backlog (We use a trello/harvest combo for managing this).
- Managing sales - our office manager has stepped in to help the onboarding and sales but ultimately as CEO of Atlas I've done the lion share of this work. This has meant a lot of overtime on my part but tbh I enjoy the work. Given that our aim is to transition in to a product company that does a bit of consultancy on the side (as opposed to a service company with a couple of products) this is short term pain I'm more than happy to experience.
- Staff development - One of our programmers wasn't performing incredibly well in her position as a programmer. She's always had an artistic flair that a lot of programmers aren't blessed with, and so I decided to take a punt and move her on to Staff Squared full time to help me with marketing and UX. She's transformed beyond recognition and now my right hand woman when it comes to making changes to the Staff Squared app UI.
- Using the products as a sales tool. I hoped this would happen...we're not usually able to show/tell potential customers what we've worked on before to any level of detail as it'll breach confidentiality. Not so with our products (we also have www.fundipedia.com). If a potential client wants to see what we're capable of we ask them to sign up to Staff Squared and kick the tyres as it were. This has actually resulted in more Staff Squared customers too. Double whammy!
- We've had to drop any customers not willing to pay our full day rate (some were offered discounts back in the day which we haven't been able to readdress). With those customers gone, and Staff Squared out there as an example of what we're capable of, newer, bigger and better customers have arrived for Atlas and we're now fully booked for pretty much all of 2014. I have no doubt this huge upturn in customer work is as a direct result of our pushing our own products forward.
- The development team are happier than they've ever been. They get to work on an app they're incredibly passionate about (inbetween client work) and see the direct results of their actions in the form of more paying customers. It's a great tool to incentivise a team of people who are already very well looked after individually.
I hope that helps, if you have any specific questions I'd be happy to answer them.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#44Earlier quoted context omitted.
Because there is a commensurate higher return. The founder's family provides a mechanism to enforce a decent work-life balance and provide for the founder's emotional needs. There is also a high likelihood that founders with real dependents and obligations are more realistic, mature, and serious than founders without these things. Realism, maturity, and seriousness are all desirable traits in entrepreneurs.
Who's to say that a founder without a family will not posses realism, maturity, or seriousness. If anything, I would turn it around and say that being a founder and having a family is like trying to have your cake and eat it too, which is not realistic. Delayed gratification is one of the prevailing signs of maturity, and postponing settling down and starting a family until after establishing a business would be a cl…
On the delayed gratification note, there are a couple of points. First, not everyone knows that they are going to be starting a business in the short-term when they have children. Second, there is a very real biological countdown in place for child-bearing and child-rearing. Our bodies do much better when the parents of the children are in their 20s and 30s. Many who delay their families find that they're limited by age-related implications. There are no such biological countdowns on entrepreneurship, and founders' experience, and therefore value, only increases as they age (until the point where dementia or other debilitating mental conditions become a serious possibility, but for most people that's well past retirement age). From a lifelong perspective, if you intend to have children, it's more intelligent to prioritize reproduction and delay your gratification for entrepreneurship.
Furthermore, family life teaches much more about delayed gratification than single 20-something life. If your argument is that entrepreneurs should show maturity through delayed gratification, the college kid really does not want to go up against the family man.
As to your point that the availability of excessive numbers of working hours and lack of work-life balance is superior, I think there are many who'd disagree. I don't feel compelled to cite a bunch of literature at the moment, but suffice it to say that slave-driving is not considered effective management, and workaholics are not considered healthy people.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#45Earlier quoted context omitted.
There is a false dichotomy. Not asking for a free lunch. I think these are real concerns for entrepreneurs with dependents. Is it possible to be away for 3 months? Sure, it's possible, but almost everyone in this group, entrepreneurs with dependents, will tell you it's not worth it for the kind of terms that are being offered, and that it shouldn't be necessary to leave the family behind in order to start a business.…
You're right that I haven't personally been in that predicament. But you haven't seen, as I've seen (as an employee), the huge value of YC and the meetings I've had with YC founders who had families (including one with a young child). You haven't explained why what you said is not asking for a free lunch. Why is it that there aren't/shouldn't be tradeoffs? Either you move to YC or you don't do YC. Tradeoffs ensue. Yo…
I feel I've explained why it's not a free lunch throughout this thread. I didn't claim that YC had to change their program. I just suggested that it is not helpful for founders with family obligations, and that we're missing something in the startup community by neglecting this group of entrepreneurs. What does that have to do with a free lunch?
I understand there are tradeoffs, and I acknowledged this. I do not accept the popular brogrammer philosophy that rootless 20-somethings are the only people worth investing in because they are the most easy to exploit and/or manipulate. I don't think that makes them worth investing in, but I accept that most investors do. I stated my reasons throughout this thread -- I think founders with families are more likely to have true maturity, seriousness, and realism, and to have superior mental health overall. I think these attributes are beneficial to investors and that they'd have an interest in investing in familied founders for this reason, even if it costs more money to invest a company led by that type of person. You and I are free to disagree, and it still doesn't have anything to do with a free lunch, and it doesn't have anything to do with tradeoffs. It's just two people disagreeing.
I don't really get what you want here.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#46Earlier quoted context omitted.
Because there is a commensurate higher return. The founder's family provides a mechanism to enforce a decent work-life balance and provide for the founder's emotional needs. There is also a high likelihood that founders with real dependents and obligations are more realistic, mature, and serious than founders without these things. Realism, maturity, and seriousness are all desirable traits in entrepreneurs.
Who's to say that a founder without a family will not posses realism, maturity, or seriousness. If anything, I would turn it around and say that being a founder and having a family is like trying to have your cake and eat it too, which is not realistic. Delayed gratification is one of the prevailing signs of maturity, and postponing settling down and starting a family until after establishing a business would be a cl…
There are important, valuable problems that simply aren't visible to the inexperienced kids that the current model wants working on startups. My own idea for a startup was the result of two decades of experience in the software industry and many years of seeing specific pain for myself and across the industry. I wouldn't have thought of it back in '94 when I was starting my career. And by the time I could see the problem (much less see a solution), I pretty much had the kids and the mortgage.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#47Earlier quoted context omitted.
1. OK, we can expand it to "recent college graduates". The point is, YC is predominantly young adult males, aged in their early 20s, unlikely to have major external responsibilities. 2. As someone who's not from SV, everything in that area gets lumped into "SF" for me. My apologies if this is considered obtuse. 3. Isn't this kind of part of the point of seeking investment? Aren't you saying, "I can't do this all on m…
1. Yes, that much is true. Though I will claim that is partly a result of the applicant pool. My guess is that most applicants are young adult males. 3. If you're an exec earning $300k at big corp, you are not going to get $300k at a startup, because the startup obviously does not have the revenue or cash of big corp. Ditto for an engineer earning $150k at a tech company. But who said anything about a pittance? It's…
I think you are missing cookiecapers main point by focusing on minutiae.
YC targets the young male college student demographic, partly because that demographic shares the different components that you two are arguing about. This isn't really relevant though.
If they were targeting suburban boomers that vote republican, it's silly to point out that some of their investments are actually women that voted democrat.
cookiecaper's point is that the effect of targeting a particular founder profile means that there are a lot of other high potential founders that are under served by the "Aquire Funding, Kill Yourself, Profit!" model. I would tend to agree with that, particularly when you see that across the spectrum, most businesses are started by people that are 40+ and have over 10 years of experience in an industry.
YC was started particularly because the "college dropout" demographic was under served. Now, at least when it comes to tech, they have become the norm and the "career switcher" has all but been ignored.
I don't think YC needs to address this in any way, but as a tech community I think we're missing an opportunity by not tapping in to what has traditionally been the strongest segment of new entrepreneurs.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#48One big reason early startups take on investors is to let the entrepreneurs spread the risks. When bright coders (or other high-salaried individuals) forego a high salary in favor of founding a startup they are raising their investment in the business month by month.
Smart investing means balancing your portfolio. Very soon, the kind of oportunity cost these founders invest in their venture dwarfs the rest of the portfolio. Any bank account is a safer investment than most if not all startups.
More capital raised initially means more salary and less risk to the founders. The founders can pass on the ketracel white ... uh... money to their troops. If some capital deal does not decrease your risk, then just don't do it.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#49Earlier quoted context omitted.
You're right that I haven't personally been in that predicament. But you haven't seen, as I've seen (as an employee), the huge value of YC and the meetings I've had with YC founders who had families (including one with a young child). You haven't explained why what you said is not asking for a free lunch. Why is it that there aren't/shouldn't be tradeoffs? Either you move to YC or you don't do YC. Tradeoffs ensue. Yo…
I feel I've explained why it's not a free lunch throughout this thread. I didn't claim that YC had to change their program. I just suggested that it is not helpful for founders with family obligations, and that we're missing something in the startup community by neglecting this group of entrepreneurs. What does that have to do with a free lunch? I understand there are tradeoffs, and I acknowledged this. I do not acce…
I don't think YC or the startup community is neglecting that group of entrepreneurs. That's my point. The fact is that when you have a family there are tradeoffs you accept. One of which is less flexibility to take on riskier and less stable career paths.
It also pains me when you keep repeating the "investors only invest in 20-somethings who are easy to manipulate" line which is an overly cynical line that is usually repeated by a vocal subset of HN/the media in context with YC, precisely because YC ensures that you aren't manipulated, and also because it is simply not true. Older entrepreneurs have advantages. Younger entrepreneurs also have advantages.
I don't get what you want here either. I think you're wrong. That's it.
Re: Bootstrapping Your Startup: Do You Really Need Early Investment?
#50Earlier quoted context omitted.
1. Yes, that much is true. Though I will claim that is partly a result of the applicant pool. My guess is that most applicants are young adult males. 3. If you're an exec earning $300k at big corp, you are not going to get $300k at a startup, because the startup obviously does not have the revenue or cash of big corp. Ditto for an engineer earning $150k at a tech company. But who said anything about a pittance? It's…
I think you are missing cookiecapers main point by focusing on minutiae. YC targets the young male college student demographic, partly because that demographic shares the different components that you two are arguing about. This isn't really relevant though. If they were targeting suburban boomers that vote republican, it's silly to point out that some of their investments are actually women that voted democrat. cook…
Do you have any evidence YC targets the young male demographic, today? AFAIK YC doesn't target any one demographic. They don't really do any outreach to demographics. I believe their cohort demographic is a result of their application demographic. Anecdotal evidence seems to agree with me.