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Confessions of a Middle-Class Founder

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Re: Confessions of a Middle-Class Founder

#21

Post by paulsutter »

BoxFour wrote: post #10
ryandrake wrote: post #4

> I could have tried roughing it without venture funding, what the industry calls “bootstrapping.” The venture world has a condescending label for bootstrapped companies without scale potential: a “lifestyle” business, which roughly translates to: Good for you, now back to the sandbox until you’re ready to play with the big boys. Given my professed aim, this could have made sense. But there was so much funding for th…

While it does sound this particular author was just interested in a cash grab, the author and you are both recognizing the stark reality facing many aspiring founders: the choice often boils down to taking a high-stakes gamble with venture capital or settling for the security of a 9-5 job. The current financing landscape offers limited options for those aiming to establish lifestyle businesses in unpredictable market…

There are actually two ways to bootstrap a business: huge savings, or small personal burn rate. I bootstrapped in my 20s without any significant financial support. Yes that was painful, but worth the effort

> One can either secure a small business loan ... unless, of course, they have the personal wealth to shoulder the financial risk

Re: Confessions of a Middle-Class Founder

#22

Post by NickC25 »

marklar423 wrote: post #7

Honestly it sounds like this person was a success. Their company is growing and sounds profitable, their customers are happy, and they have a working product. They avoided the "megafunds" and the strings attached to them, and still managed to pay themselves a salary. It's not a smashing unicorn success but it's definitely a success.

Seriously - they built the company on their terms, have a happy customer base, and don't have a host of Vultures screeching "grow grow grow" in their ear all day.

Not every company needs to grow to a 10,000x investment ROI for investors. Let people build companies that serve their local niches, and if it grows organically past that, great. If it doesn't, but the business is healthy, great!

There's a local restaurant chain in South Florida where I live that serves an upscale demographic. They have no outside investors but they've grown from 1 location to roughly 23 in under a decade. Their locations are always full and according to a friend of mine who knows the owner, their cash flow is absurd and the business itself is incredibly profitable. I'm sure the owner has had offers to take the brand to other locales like LA or NYC, but is quite comfortable where he is. There's nothing wrong with that!

And we as a society need to celebrate large business that scale, but also be able to celebrate when someone builds a great healthy business that serves a niche, and is happy serving that niche without needing to constantly grow just to satisfy investors who by and large aren't part of the communities the business serves. It's OK to build a successful local business!!! Not everything needs to hit hyperscale to be considered a success!

Re: Confessions of a Middle-Class Founder

#23

Post by Solvency »

schnable wrote: post #2

The tech version of a successful small to medium business, like maybe a regional restaurant group or car dealership. Seems good to me, both for the owners and the broader culture. These owners are the group that keeps the country stable and common sense alive. We can't all have big exits but lots of people can generate enough value to satisfy customers and make a comfortable living with skin the game of society.

To me the picture perfect software company that meets this archetype is McNeel (who made and maintain Rhino3D). A comparatively niche market NURBs design tool for artists, engineers, and industrial designers. Been in business over 20 years. Constantly improving the software. Everyone treated fairly and making honest and competitive wages. I wish there were far more companies like this than there are.

Re: Confessions of a Middle-Class Founder

#24

Post by ryandrake »

encoderer wrote: post #15
BoxFour wrote: post #10

Earlier quoted context omitted.

While it does sound this particular author was just interested in a cash grab, the author and you are both recognizing the stark reality facing many aspiring founders: the choice often boils down to taking a high-stakes gamble with venture capital or settling for the security of a 9-5 job. The current financing landscape offers limited options for those aiming to establish lifestyle businesses in unpredictable market…

The third way is to add sweat equity and build a business slowly around your normal 9-5. There is just as much downside to this route, it’s also risky, you take time away from hobbies and relationships, and even if you’re successful there’s a period where you will basically just have two full time jobs. That said, I did it this way, and I know a lot of others that have, and I was able to see it through. Timeline: 201…

This path is also fraught with legal risk, depending on your "normal 9-5" employer. If it's a FAANG or other large tech company, most of them (at least the ones I've worked for) lay claim to every single IP you create while working there, on or off the clock, using your own equipment or theirs. It doesn't matter whether or not they legally can--you are unlikely to be able to afford a legal defense against them.

Re: Confessions of a Middle-Class Founder

#27

Post by davidw »

ryandrake wrote: post #4

> I could have tried roughing it without venture funding, what the industry calls “bootstrapping.” The venture world has a condescending label for bootstrapped companies without scale potential: a “lifestyle” business, which roughly translates to: Good for you, now back to the sandbox until you’re ready to play with the big boys. Given my professed aim, this could have made sense. But there was so much funding for th…

To be fair, I'm sure most of us have read Paul Graham's essays, including some of the early ones where he kind of breezily talks about "solving the money problem". That's what that guy wanted to do too. Maybe he was even inspired by PG.

Re: Confessions of a Middle-Class Founder

#28

Post by encoderer »

ryandrake wrote: post #24
encoderer wrote: post #15

Earlier quoted context omitted.

The third way is to add sweat equity and build a business slowly around your normal 9-5. There is just as much downside to this route, it’s also risky, you take time away from hobbies and relationships, and even if you’re successful there’s a period where you will basically just have two full time jobs. That said, I did it this way, and I know a lot of others that have, and I was able to see it through. Timeline: 201…

This path is also fraught with legal risk, depending on your "normal 9-5" employer. If it's a FAANG or other large tech company, most of them (at least the ones I've worked for) lay claim to every single IP you create while working there, on or off the clock, using your own equipment or theirs. It doesn't matter whether or not they legally can--you are unlikely to be able to afford a legal defense against them.

Yeah you need to be aware of what contracts you have signed. In my case, the day we launched on HN in 2014 I notified my VP (via email), highlighted how this work is not related to the company at all, and I only worked on it at home with my own equipment. I asked him to release any IP claims and he replied in minutes and said it looks great and that I’m free to pursue it.

And that was the end of it.

I would not let fear of legal reprisal stop me from starting.

Re: Confessions of a Middle-Class Founder

#29

Post by sowbug »

Solvency wrote: post #25

$6 million in personal wealth is middle class? Woof!

$6 million x 4% safe withdrawal rate = $240,000 a year. It's enough for comfort, but it's still considered a middle-class income in the more expensive parts of the country.

https://finance.yahoo.com/news/takes-middle-class-americas-l...

Re: Confessions of a Middle-Class Founder

#30

Post by OkayPhysicist »

ryandrake wrote: post #24
encoderer wrote: post #15

Earlier quoted context omitted.

The third way is to add sweat equity and build a business slowly around your normal 9-5. There is just as much downside to this route, it’s also risky, you take time away from hobbies and relationships, and even if you’re successful there’s a period where you will basically just have two full time jobs. That said, I did it this way, and I know a lot of others that have, and I was able to see it through. Timeline: 201…

This path is also fraught with legal risk, depending on your "normal 9-5" employer. If it's a FAANG or other large tech company, most of them (at least the ones I've worked for) lay claim to every single IP you create while working there, on or off the clock, using your own equipment or theirs. It doesn't matter whether or not they legally can--you are unlikely to be able to afford a legal defense against them.

California has pretty friendly laws on this. Unless your startup is directly competing with your employer, or you work on it at work, they have very little ground to stand on. As in "within the realm of someone representing themselves"-type deal.
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