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I lost $209k of my own money trying to start a business

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Re: I lost $209k of my own money trying to start a business

#101

Post by idopmstuff »

ed25519FUUU wrote: post #91

> Partnering with store management systems made it easier to hack the supply side, but dictated our development efforts and unit economics. We had massive platform risk. If any of our partners cut us off, we were screwed. Data couldn’t be our competitive moat, because we didn’t own it. What’s the other option for these guys? They’re not generating any of their data. There’s no way to own it unless you own hotel or to…

I think in this case the other option would be to try a different business. Sometimes businesses come with unavoidable, existential risks, and since you can't get rid of them you just have to figure out if that particular business is worth those risks.

Re: I lost $209k of my own money trying to start a business

#102

Post by gnad_sucks »

With all these lessons learned, why did they stop trying? They didn't run out of money a they never left their day job.

Also... It's ok if you can't code and pay someone to do it, but why not learn the absolute minimum in order to be able to implement quick hacks when necessary? It's not like knowing how to code is a generic trait you're born with.

Re: I lost $209k of my own money trying to start a business

#103

Post by adunsulag »

luckylion wrote: post #76
Aromasin wrote: post #60

Earlier quoted context omitted.

I can't help but agree. Technology is hard to grasp without study. Study takes time, which founders don't have. People with technical expertise are expensive. If you don't have the expertise yourself, you have to hire it. He's got 200k and he's bled 125k of that just to make his MVP. That's utterly insane to me.

App studios are often quoting high prices though. I have no idea about app development, but I regularly hear about quotes for relatively simple apps (i.e. you could do it with Wordpress and a custom theme as a web app) that are 30-50k euros. I don't know if these agencies just make insane profits or if they really make everything super complicated and need three developers working for a month to produce a simple crud…

There's always a nuance, and I laugh when people tell me 'this is relatively simple'. It often seems like it can be done with wordpress but if the client is fixed that the app MUST function in a way that wordpress doesn't accommodate... well then the costs go up dramatically to rebuild some form of wordpress but not using wordpress...

I often like to present things in terms of costs alternatives to my clients. IF it MUST be done with that feature it will cost X dollars to build it that way. If we remove that feature or do this alternative approach we can bring the cost down to Y where Y is much cheaper. It takes a good technical person who is business minded to be able to see these win/win scenarios though. 99% of the time people choose the cheaper option when they find out it can be done for 10K instead of 50K.

Its one of the reasons why you need a good technical cofounder who is ALSO familiar with business strategy to be able to choose from alternatives instead of doing whatever the business guy insists has to be done.

Re: I lost $209k of my own money trying to start a business

#104

Post by TuringNYC »

lnsru wrote: post #32
blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

I do the dirty tasks for a non-technical founder. Everybody he hires for a task does heavy corner cutting. Technical debt is enormous. Details are not taken care of. I like the guy, so I help him ignoring cost of opportunity. I do all the plumbing and fixing the tiny details and changes at 2 am. But that’s not sustainable. That’s not the way to build a business with prosperous future.

Totally empathize with you and I've been there. At some point, it does make sense to exit amicably in these situations. My experience has been that the non-technical founder will see things as they truly are, eventually.

At that point, you can re-establish another engagement where things are budgeted for a balance of speed and longevity.

To be fair, there is a purpose for Technical Debt and for cutting corners, esp for MVPs or demos. But it has to be a balance and the cost of the debt carry has to be appreciated.

Re: I lost $209k of my own money trying to start a business

#105

Post by sbilstein »

jrochkind1 wrote: post #67
blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

So, if it's very hard to start a software company based on paying contractors for software development -- which seems true to me -- there's another warning here for software contractors/consultants . If someone is paying you, as contracting engineering talent for hire on a consulting/hourly/iteration basis, to develop an app or product they hope will be the foundation of a new business -- chances are high this won't…

Oh absolutely. Twice I made the mistake of coming onto a startup to fix the “mess” the previous dev shop had made.

Both times the founders had developed an incredibly negative relationship with their dev shop. Hell, the company with the Series A was withholding payments, the preseed company at least paid their bills.

I naively thought “of course they hate working with a dev shop, the incentives are wrong. I’m FTE with percentage points equity. I’ll fix it.”

Of course, things got better, but growth stalled or never happened, blame gets shifted, suddenly that founder who was excited to hire top tier talent is very disappointed in the very equity and salary expensive engineer you are. You end up being the new target of their animosity. You start to empathize with the folks in India, China, Ukraine or Argentina whose history lingers in the git blame. They’re not stupid, the incentives were just wrong!

The thing is…the CEO who failed to find a technical co-founder, retain them, or replace them with the same equity agreement has already demonstrated their inability to work with technical people. If they are coming from tech, the fact that they couldn’t convince a former colleague to work with them means they’ll be a terrible manager. If they come from finance, as many founders do, you are a line item.

At the end of this, hopefully sooner than later, you’ll quit, you’ll get fired, or you’ll collect paychecks while looking for the next better thing.

As an engineer, stay away from mediocre CEOs.

Re: I lost $209k of my own money trying to start a business

#106

Post by EarthLaunch »

mstade wrote: post #48
danielvaughn wrote: post #21

Earlier quoted context omitted.

Seriously, sign me up for that contract. Give me 100k-300k for a single website? That website is gonna be a thing of beauty.

You say that now, but in my experience most people able to shell out this kind of money very often doesn't really have a clue about what it is they actually need and have no reasonable go to market strategy beyond "let's just build it and they will come", and then it fails spectacularly. I've been on the receiving money end of this kind of project several times in the past and as much as you try to help and guide, th…

Same experience. I have turned $100k-300k contracting projects into multimillion dollar successes in a short time. But those ones had a good business plan, and were hands-off on technical matters because they were semi-technical themselves. These successful projects are the ones you feel good about, and the ones to put on the resume.

The other type, where they give you a lot of money to "do what we say", but don't have good ideas...they're unsatisfying. The work feels pointless because it's not going anywhere. It's weak on the resume, the client isn't ongoing after it fails, you usually don't get references out of it.

If you're short on money then the second type is fine, but you try to build toward only taking the first type of work. (I believe this applies to employment, too.)

Re: I lost $209k of my own money trying to start a business

#108

Post by intrasight »

blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

It really depends. And there are some huge advantages to being a non-technical founder. Two are that a) you are a domain expert, and that expertise is more valuable than technical expertise, and b) you are less susceptible to analysis-paralysis (generalizing I know as that's more a personality trait)

My friend and colleague is non-technical and launched a very successful app. I acted as a virtual CTO and recruiter contract developers. My total hours on the project is <100. While non-technical, my colleague is a professional designer and has domain expertise.

Re: I lost $209k of my own money trying to start a business

#109

Post by sjm-lbm »

blagie wrote: post #9

I have a very high level of scepticism towards non-technical founders without deep pockets: 1. There's an agility to being able to change things yourself, at 2am if necessary. That's very important to startups. 2. There's a discipline to not accruing unreasonable technical debt of the type that will sink you two years in that you can't expect from someone who doesn't deeply care. 3. Managing devs generally requires u…

All of those are true, but there's another important reason I think is worth adding: the only way go get truly better at something is to do it over and over again, and most technically adapt people have a long string of side projects, experiments, etc. A lot of them are not great, but the act of attempting to create them and seeing them in real life gradually helps one to have a practiced feeling about what ideas are worth pursuing and what ideas are not worth pursuing.

If someone has never gone though that idea->attempted implementation->post mortem loop, it's very likely that they haven't developed a good muscle for coming up with good ideas. They just sit around babying whatever idea is currently in their head, never really challenging it.

(for what it's worth, this idea is something I first encountered in one of interviews in Founders at Work - I just really like the idea)

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