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Why Being Broke Is A Founder's Greatest Asset

mixergy.com

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Re: Why Being Broke Is A Founder's Greatest Asset

#11

Post by gjm11 »

If you take a sample of successful founders, then I dare say the ones who were broke are indeed particularly ambitious, determined, impressive, etc.

This doesn't mean that being broke is an advantage. Quite the reverse: it happens because being broke is a disadvantage, so people who succeed despite broke-ness have to have been better in some other respects. (In some cases they might just have been luckier.)

I bet you'll find that professional basketball players who are short are especially fast, that professional academics who score worse on standard intelligence tests are more creative, that expensive houses that are in nasty areas are particularly large or beautiful, that successful singers with unimpressive voices are especially gifted musically, etc., etc., etc. None of this means that those features are advantages.

Sorry, but this is just stupid.

Re: Why Being Broke Is A Founder's Greatest Asset

#12

Post by [deleted] »

MicahWedemeyer wrote: post #9

Survivor bias mixed with anecdotal folksy wisdom. "She scrounged what hardware she could get and succeeded" does not mean that everyone who does that will succeed. I'm sure most successful businesses buy or lease or subscribe to the hardware they need. Being a hustler and working hard is required for success. Money, or lack of it, doesn't change that. But, having access to money, even just enough to get by day-to-day…

[deleted]

Re: Why Being Broke Is A Founder's Greatest Asset

#13

Post by zupreme »

This article's title is a textbook example of "The Grass is Greener" mindset.

Believe me. I've been broke before. When you are broke it's not an asset and much of your time is spent thinking about how much easier everything would be if you had money.

Alternatively once you have money, from time to time you might think about how much simpler and less stressful your life was back when you had fewer responsibilities and fewer people depending on you both personally and professionally.

This article fails to take into account the dichotomy I have just described. Perhaps in a few years the author will look back at that particular post and wonder what he was thinking.

Interestingly enough, though, the body of the post doesn't really unpack that title in any meaningful way. Selling for 1.1 million dollars is meaningless compared to what well-funded companies are able to sell for (assuming they do well in the market).

Re: Why Being Broke Is A Founder's Greatest Asset

#14

Post by mibbitier »

MicahWedemeyer wrote: post #9

Survivor bias mixed with anecdotal folksy wisdom. "She scrounged what hardware she could get and succeeded" does not mean that everyone who does that will succeed. I'm sure most successful businesses buy or lease or subscribe to the hardware they need. Being a hustler and working hard is required for success. Money, or lack of it, doesn't change that. But, having access to money, even just enough to get by day-to-day…

FWIW, you can also find an absolute ton of examples of startups that had plenty of money, and failed spectacularly.

Having too much money is probably worse than not having enough.

I think the difference is that HN is primarily venture backed "silicon valley" startups. Mixergy is more about bootstrapped businesses.

Re: Why Being Broke Is A Founder's Greatest Asset

#15

Post by mibbitier »

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…

I think perhaps you're the wrong audience.

The advice is great for bootstrapped businesses who are looking to get profitable. It's probably not so great for "raising a round" venture backed "startups" who are playing the startup lottery.

If you're building a business, then being broke is a pretty great incentive to make things work.

Re: Why Being Broke Is A Founder's Greatest Asset

#16

Post by OldSchool »

richardjordan wrote: post #2

This is nonsense, or at least misleading for this audience. The example, selling a company for $1.1million isn't even getting to the start line for most folks. If you look at many made-it-from-nothing founders of the companies we know, they rarely start out broke, are often independently wealthy (it's a lot safer to drop out of an ivy-league school with a wealthy family as a backs-stop) or have made significant money…

Sorry, but unless you were born with a trust fund, a million bucks in real money is still enough to change the course of the rest of your life. You aren't going to be buying your own island, but you certainly won't have the worries that most people have, as long as you're smart with it, as in living like you don't have it.

Re: Why Being Broke Is A Founder's Greatest Asset

#18

Post by moocow01 »

If this was true there would be proof in the numbers but pretty much all indicators point to this as increasingly incorrect (unfortunately). In America there is increasingly less mobility from the "poor" to the rich and if monetary desperation was an attribute to business success in the current business climate the numbers would tell the story.

If the point of the article is to suggest that having to eat can make you work your ass off out of fear - sure Ill agree with that one but that doesn't mean your business is going to be taking off.

Its also not that hard to understand that the more your back is off the wall the more power and freedom you have to leverage to make smart decisions. I guess if you are just a lazy person desperation may help you get to work but otherwise I cant think of any successful business person who is looking to become poorer so they can get their spark back (and if that is the case, Ill be glad to help)

Re: Why Being Broke Is A Founder's Greatest Asset

#19

Post by richardjordan »

mibbitier wrote: post #15
richardjordan wrote: post #7

Earlier quoted context omitted.

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…

I think perhaps you're the wrong audience. The advice is great for bootstrapped businesses who are looking to get profitable. It's probably not so great for "raising a round" venture backed "startups" who are playing the startup lottery. If you're building a business, then being broke is a pretty great incentive to make things work.

I understand what you're saying, though i think the characterization of startups as a lottery is a mistake. There is some luck involved with startups but smarts and execution count far more. But for lifestyle businesses too I just don't buy the argument that being broke is a great asset. It just makes it more likely you'll fail. Ask anyone who's tried opening a store or a restaurant. It's better to take a job and save some $$ before starting and having some runway. If the writer is going for the narrower case of a consulting or contracting business then founder is misleading, or at least being used in a very different way than most HNers are using it.

Re: Why Being Broke Is A Founder's Greatest Asset

#20

Post by richardjordan »

OldSchool wrote: post #16
richardjordan wrote: post #2

This is nonsense, or at least misleading for this audience. The example, selling a company for $1.1million isn't even getting to the start line for most folks. If you look at many made-it-from-nothing founders of the companies we know, they rarely start out broke, are often independently wealthy (it's a lot safer to drop out of an ivy-league school with a wealthy family as a backs-stop) or have made significant money…

Sorry, but unless you were born with a trust fund, a million bucks in real money is still enough to change the course of the rest of your life. You aren't going to be buying your own island, but you certainly won't have the worries that most people have, as long as you're smart with it, as in living like you don't have it.

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 HN are starting or working on pre-money valuations for angel rounds are higher than that... hence the starting line comment. It's the usual semantic question of what people mean by startup and founder.

However my primary point is that it's nonsense to say being broke is better than not being broke when dealing with the stresses of starting a company.

EDIT: Hm... not sure how one can be downvoted for clarifying my point in response to a comment. Meh, I guess I still don't understand the way HN works.

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