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The Fatal Pinch

paulgraham.com

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Re: The Fatal Pinch

#181

Post by JoeAltmaier »

outworlder wrote: post #99

I'd argue that the 'consultingish' part is as hard as the startup's main business itself, if you add the human factor. On one hand, you have your ideas, your product or whatever you're working on – which, by definition, isn't working all that great. On the other hand, you have a client (or more than one), who's willing to pay right now (usually you can negotiate something upfront) or at least just one invoice away. P…

My product company turned full-time consulting when our 1st products failed to find enough market. We consulted for two years until we got a contract making somebody else's product. Now we're all that company's employees with equity, and have revenue and traction. So it can work pretty well.

Re: The Fatal Pinch

#182

Post by philjr »

ChuckMcM wrote: post #35

That is so spot on. Put another way, the seed round is a peek to see if you can do what you say you can do, series A is a bet you can make it profitably, and series B is the gas to grow the market. As soon as you know your cash and your profitability cross below the 'zero' line you calk your investors that week and you ask them, call it or push forward. They say no, then you just roll it up. And I know, that is much…

Love this description!

Re: The Fatal Pinch

#184

Post by fit2rule »

I've never been one to lean on investors as a solution to problems. Its far better to build your company on the basis of the immense amounts of help and good you are doing your customers. If you're not doing that, and its not a principle focus for how you're going to produce revenues, then its not business but rather an academic experiment.

Investment is very important, though, for various big-growth reasons, but mostly to extend reach beyond what the business-as-organism is capable of attaining independently. Better to grow strong by remembering who really pays the bills: true customers.

Too many startups conflate investor/customer in strange ways before they realize there is actually a relevance to how much of the company is your company.

Re: The Fatal Pinch

#186

Post by arbuge »

tonydiv wrote: post #72

These days, the stakes are higher for everyone. Investors expect faster growth and want a "meaningful stake" (15%+) early on. Meanwhile, entrepreneurs generally try to raise more too. Who doesn't want more cash if they can get it? This is dangerous for those who don't understand these dynamics. The growth trajectory needs to align with the incoming cash. The second you raise a $3M seed round, you're on the roller coa…

>> The second you raise a $3M seed round, you're on the roller coaster. You will need to show "hockey stick" growth in 12 months, and raise your A in 18. If not, you're dead.

Depends how much control you have, and how resourceful you are in a pinch. If you can figure out how to stay alive until you see a different way to do things without raising more money, then you're not dead. They key is being able to bunker down without investors being able to pull the plug on you... $3m could buy a lot of bunkering time for a small team.

Re: The Fatal Pinch

#187

Post by michaelochurch »

tptacek wrote: post #105
michaelochurch wrote: post #98

Earlier quoted context omitted.

It does not compensate developers for working on mundane projects. It does. That's not the sole reason why consultants make more, but that's a factor. If you're a full-time employee, you expect your health insurance, HR, work supplies, 401k, office space, finding of work, and your career growth and promotion planning to be taken care of, and you're likely to leave if you're not getting it. If you're a consultant, you…

That's true of sole practitioners . Most consulting engineers aren't that. They're employees of firms that bill them out.

You'd probably know more about that world. In your opinion, are these consultants more like corporate employees (in terms of demanding managerial investment in their careers, and slacking or leaving if they don't get it) or are they more like independent consultants (who'll do a nasty project if the hourly rate is high)?

Re: The Fatal Pinch

#188

Post by ams6110 »

jameshart wrote: post #132
to3m wrote: post #83

Earlier quoted context omitted.

Wikipedia has a few pages about the various systems of this kind: http://en.wikipedia.org/wiki/Pre-decimal_currency . Difficult to fathom why the fashion for these passed, because such systems provide so many advantages. A good example is the Spanish system of division into 34, which permits straightforward further division into not only 2 but also 17 pieces - a case very difficult to handle with the modern restricti…

It saddens me in some ways that the UK currency decimalized before mass computerization of record-keeping took off. I think I would have liked to have lived in a world where database currency columns needed to support pounds, shillings and pence (keeping in mind that pence could be divided into quarters, of course).

It's only recently (2001?) that US stock prices moved to decimal from previous eighths of a dollar. The origin of this was spanish "pieces of eight" but not sure why it persisted so long. Maybe because it made the spread always at least $0.125 ?

Re: The Fatal Pinch

#189

Post by michaelochurch »

jisaacks wrote: post #111
michaelochurch wrote: post #38

Earlier quoted context omitted.

Actually, it's more like this. There are good programmers in the enterprise (meaning, say, investment banks or large corporations or governments) but they generally fall, ambition-wise, into one of three categories: (1) those who want to become managers or software architects (or, in finance, quants and traders) and will define and oversee work but delegate the dirty bits. This would be fixable (they could oversee a…

Can you please explain the numbers 2.0+, 1.4-1.5, etc. when referring to a programmer's skill. I have never seen this before.

Roughly speaking, it represents the transition from an adder to a multiplier. A 1.0 programmer is competent at "adder" tasks (scripts, bug fixes, features) but not yet ready for infrastructural work. A 2.0 programmer is highly competent as a multiplier. It goes from 0.0 (complete beginner) to 3.0 (global multiplier) but most (probably 99%) professional software engineers are between 0.8 and 2.2, with a median around 1.1-1.2.

This is more up to date than nostrademons's link:http://michaelochurch.wordpress.com/2013/04/22/gervais-macle...

Also, from Quora: http://www.quora.com/What-do-the-top-1-of-software-engineers...

Re: The Fatal Pinch

#190

Post by ghobbins »

S4M wrote: post #172
ghobbins wrote: post #149

First time founder. My company is in a "fatal pinch." Similar to a previous comment by @LukeFitzpatrick, we built something for our alma mater that we thought we could sell to colleges for 50k/year. We got investment, we built it, we sold it to a few more schools but the software is not feature-packed and mature enough to attract sales fast enough. Higher ed also moves super slow even when you're doing well. We're st…

Where are you based? I found out the French government has a program to help companies doing things for higher education - my own startup targets middle and high school, so unfortunately I don't think I can benefit it. The thing is detailed here [0], unfortunately it's in French. I'd be glad to help if I can, drop me an email if you're interested (address in my profile). [0] http://www.agence-nationale-recherche.fr/f…

We're based in Atlanta. Not sure there's anything of the sort in the states but good thought.
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