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Before the Startup

paulgraham.com

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Re: Before the Startup

#91

Post by johnward »

IsaacL wrote: post #47

So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working. Gaming the system may continue to work if you go to work for a big company. Depending on how broken the company is, you can succeed by sucking up to the right people, giving the impression of productivity, and so on. [2] But that doesn't work with startups. There is no boss to trick, on…

I don't really remember those two talking about startups being gameable in the way that PG is talking about megacorps. Most of the reasons they prefer bootstrapping vs startups are around the idea that bootstrapping has a predicable model for success. Where as your chances of a successful exit in a startup are like winning the powerball. Even PG notes that one good exit covers the losses of hundreds of other investments and that they still don't really know how to pick winners (they just happen). Startups that take VC are also kind of designed to fail early so as to not waste too much investor money. The other pro for bootstrapping seems to be around the idea of "freedom" from bosses. In a megacorp you work for like 14 bosses. In a startup your bosses are the VC's. As bootstrapper you work for yourself and the people that pay your for what you produce.

Re: Before the Startup

#92

Post by ingenieros »

IsaacL wrote: post #47

So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working. Gaming the system may continue to work if you go to work for a big company. Depending on how broken the company is, you can succeed by sucking up to the right people, giving the impression of productivity, and so on. [2] But that doesn't work with startups. There is no boss to trick, on…

Looking at the valuations of the likes of Snapchat I think it's pretty safe to assume that B.S has already taken over.

Re: Before the Startup

#94

Post by moron4hire »

3pt14159 wrote: post #86
strlen wrote: post #52

Earlier quoted context omitted.

How do you bootstrap a company that requires significant R&D before an MVP can be shipped? Or for that matter one that has initial infrastructure costs, or one would only be affordable if there's an economy of scale? This is armchair quarterbacking, of course, I'm not an entrepreneur and do not pretend to be one. Patio11 has a lot of interesting and relevant things to say, but I would hate to live in a world where en…

You can easily start a company that requires significant R&D: start with consulting; then one day sell the product you want to make with the right license and timeline, then make it and sell it to everyone. Look at Space X, they were making money wayyy before they were igniting rockets.

It's so simple, even a cave man could do it!

It's a plan that probably works for enterprise middleware, but for the majority of reality that is not covered by such a descriptor, it is significantly harder to find a path this way.

Unless you're an Oracle consultant on one end of the scale, or a WordPress theme designer on the other end, you're probably not going to be able to repeatably find lots of clients who want a little of your time and are willing to pay enough for you to work on the side.

A lot of clients want to hire consultants for full-time work, and they are frequently only looking for bodies to fill chairs. Finding a decent client that treats you with respect and understands they can't monopolize your time is hard, hard work.

So if your R&D effort is not related to your consulting--or your contract terms assign ownership of all work materials to the client--you'll just end up in the same situation as having a job.

I suspect the only reasonably repeatable path for early funding for big R&D efforts is through obtaining grants. Learn grant writing, or pay someone who does do grant writing (imagine the longest paper you wrote in college and quadruple it). There are a lot of research grants available, even for independent people not associated with accredited academic research environments. There are even grants for work in the arts.

I've spent the last two years doing freelance consulting. The money I've made was great, but I'm no closer now to starting a company than I was before. You should only do consulting if consulting is what you want to do.

Re: Before the Startup

#95

Post by 3pt14159 »

moron4hire wrote: post #94
3pt14159 wrote: post #86

Earlier quoted context omitted.

You can easily start a company that requires significant R&D: start with consulting; then one day sell the product you want to make with the right license and timeline, then make it and sell it to everyone. Look at Space X, they were making money wayyy before they were igniting rockets.

It's so simple, even a cave man could do it! It's a plan that probably works for enterprise middleware, but for the majority of reality that is not covered by such a descriptor, it is significantly harder to find a path this way. Unless you're an Oracle consultant on one end of the scale, or a WordPress theme designer on the other end, you're probably not going to be able to repeatably find lots of clients who want a…

I'm doing it right now, actually. It is possible; there are clients out there that will pay for problems to be solved or for deep expertise. Even in the cases where they want a warm body for 3 months to a year, if it brings in enough cash for your other two partners to keep working, then great!

Outside of America this is basically how you have to do it pre-traction.

Re: Before the Startup

#96

Post by mychaelangelo »

fsloth wrote: post #33

A very nice read as always. Footnote [4] is a bit off-putting though "[4] What should you do if your true calling is gaming the system? Management consulting." Management consulting probably has more opportunities for gaming the system than startups do, and I concur. However, my friends who work at management consultants, from what I can tell based on anecdotal evidence, mostly perform value adding work for their cli…

thanks for sharing the link to that book - i will be grabbing a copy and reading it this weekend!

Re: Before the Startup

#97

Post by moron4hire »

3pt14159 wrote: post #95
moron4hire wrote: post #94

Earlier quoted context omitted.

It's so simple, even a cave man could do it! It's a plan that probably works for enterprise middleware, but for the majority of reality that is not covered by such a descriptor, it is significantly harder to find a path this way. Unless you're an Oracle consultant on one end of the scale, or a WordPress theme designer on the other end, you're probably not going to be able to repeatably find lots of clients who want a…

I'm doing it right now, actually. It is possible; there are clients out there that will pay for problems to be solved or for deep expertise. Even in the cases where they want a warm body for 3 months to a year, if it brings in enough cash for your other two partners to keep working, then great! Outside of America this is basically how you have to do it pre-traction.

I'm not saying it's impossible, I just take issue with your description of it as "easy".

Re: Before the Startup

#98

Post by grayclhn »

jaoued wrote: post #59
IsaacL wrote: post #47

So this is the third counterintuitive thing to remember about startups: starting a startup is where gaming the system stops working. Gaming the system may continue to work if you go to work for a big company. Depending on how broken the company is, you can succeed by sucking up to the right people, giving the impression of productivity, and so on. [2] But that doesn't work with startups. There is no boss to trick, on…

I disagree with you on academia, as the checks & balances plus the peer review system for worldwide recognised published research kill and destroy bullshitters. I am not saying there aren't any but having been in both academia & corporate, the latter is infested with them. In startup world, they get also eliminated quite rapidly as they will just fail. Success of any startups is not to raise funds but to get customer…

Ah, you must have never had to deal with administration.

Or so I've heard. All of the administration at my university is of course irreproachable. (Hi boss!) But the stories my friends tell me... ;)

Re: Before the Startup

#99

Post by uniclaude »

3pt14159 wrote: post #86
strlen wrote: post #52

Earlier quoted context omitted.

How do you bootstrap a company that requires significant R&D before an MVP can be shipped? Or for that matter one that has initial infrastructure costs, or one would only be affordable if there's an economy of scale? This is armchair quarterbacking, of course, I'm not an entrepreneur and do not pretend to be one. Patio11 has a lot of interesting and relevant things to say, but I would hate to live in a world where en…

You can easily start a company that requires significant R&D: start with consulting; then one day sell the product you want to make with the right license and timeline, then make it and sell it to everyone. Look at Space X, they were making money wayyy before they were igniting rockets.

I don't think you could pick a worse example. Space X was founded by a billionaire, who injected 100M USD from his own pocket, and then took 20M from his buddies. That's as far as it can get from what people imagine when they read "bootstrapping".

Re: Before the Startup

#100

Post by bsbechtel »

uniclaude wrote: post #99
3pt14159 wrote: post #86

Earlier quoted context omitted.

You can easily start a company that requires significant R&D: start with consulting; then one day sell the product you want to make with the right license and timeline, then make it and sell it to everyone. Look at Space X, they were making money wayyy before they were igniting rockets.

I don't think you could pick a worse example. Space X was founded by a billionaire, who injected 100M USD from his own pocket, and then took 20M from his buddies. That's as far as it can get from what people imagine when they read "bootstrapping".

I'm not arguing against your point, but he wasn't a billionaire when founded SpaceX. He sold PayPal to Ebay for $1.5b, but owned only a fraction of that.
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