Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Being Broke Is A Founder's Greatest Asset

mixergy.com

Post reply on HN
Print view View original

21–30 of 47 posts

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

#21

Post by richardjordan »

mibbitier wrote: post #14
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.

I doubt that overfunding causes more failures than insufficient access to capital. That defies experience and common sense. I suspect you're extrapolating from a handful of high profile data points.

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

#22

Post by jonmc12 »

There is a correlation between social status, density of D2 receptors, and creativity: http://www.sciencedaily.com/releases/2010/02/100203084254.ht..., http://psychcentral.com/news/2010/05/19/mental-health-creati...

As others have said, being broke, proper, is not an asset - broke people problems are not synergistic with successful company problems. So, its basically a time drain. Being perceived as less successful than you want to be.. this could be an asset if you believe the above studies.

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

#23

Post by seacond »

What the blog author implies is that _being scrappy_ is a founder's greatest asset. Assuming we agree with this, then does being broke always lead to being scrappy? If yes, then I guess we could say being broke is, indirectly, a founder's greatest asset. If no, then the argument falls well short of being taken seriously. No one who is broke wants to be broke. And no one who is wealthy wants to be broke.

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

#24

Post by 6ren »

Christensen (disruption guy) notes that one of several barriers to large companies leading with a disruptive technology is that they don't get excited by small wins. Disruptive technologies start small.

He suggests they spin out a little company to work on the disruption: one of the several reasons is that a little company can get excited by small wins.

As a tiny startup, with no money, you are already blessed with this. Ramen-profitability is a mythical dream; $1,000 incomprehensible riches; and a $5 sale - someone wants what you created! They'll actually pay, like, money, for it! - is a transcendental achievement.

Meanwhile, Google,Apple,Oracle,Microsoft notate their spreadsheets in millions. Less-than-a-million is a proverbial rounding-error, literally. They are incapable of growing something that starts that small. That's why they spend millions each year acquiring startups; until they eventually get eclipsed by one they didn't or couldn't buy.

Stay hungry.

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

#25

Post by richardjordan »

biznickman wrote: post #8
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…

Some people romanticize being broke ... others romanticize raising funding. It's unfortunate that you think selling a company for $1 million isn't the starting line. Outside of Silicon Valley, most people would not understand why you are thinking that way. Perhaps saying "Broke" is the incorrect term ... "almost broke" will light a fire under your ass.

To clarify that comment: you get into the semantics of "startup" and "founder" here a bit. But most folks starting companies or working in startups on Hacker News are in the kind of startups where even an early angel round has a starting valuation north of $1million. So, that's what I mean by the starting line.

Obviously, selling for a million dollars will work in some circumstances for some folks. But also it's worth remembering that it's not as much money as it once was. I once had a startup that for various reasons we chose to exit for right around GBP1million. It's not retiring money for someone who is (as I was) still young and has a lot of years to go. It's helpful, but not where most folks on here are aiming to be when they build a company.

I doubt most people driven to start companies need the perverse incentive of being broke to light a fire under their ass. Most founders I know are incredibly driven and motivation of that kind is seldom necessary or helpful.

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

#26

Post by richardjordan »

seacond wrote: post #23

What the blog author implies is that _being scrappy_ is a founder's greatest asset. Assuming we agree with this, then does being broke always lead to being scrappy? If yes, then I guess we could say being broke is, indirectly, a founder's greatest asset. If no, then the argument falls well short of being taken seriously. No one who is broke wants to be broke. And no one who is wealthy wants to be broke.

I like the way you've put that. I certainly don't see being broke as a necessary condition of being scrappy, or driven. I don't see that being broke necessarily leads to being scrappy in ways that help a startup either.

I've seen (and been in) startups where the founders were more focused on short term income to pay their bills than long term success in the company - and it IS definitely possible for those two things to be at odds. It wasn't a recipe for success.

I can appreciate (and believe) that being broke may add some level of motivation for some people. I don't believe that motivation is going to be distraction free in most cases, and therefore I feel the argument falls well short of being taken seriously.

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

#27

Post by richardjordan »

moocow01 wrote: post #18

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…

This is a great point.

To add to the anecdotal aspects of the article, I see VERY few successful founders whose starting point was being broke, at the point they were starting and establishing their company. I see a LOT of successful founders who have independent wealth - often through family. I see a LOT of successful founders who saved up enough money to give them the runway to start a company WITHOUT being broke.

If you need to be desperate and incapable of paying bills before you are motivated enough to make your startup a success, you MAY not be well suited to doing a startup.

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

#28

Post by OldSchool »

richardjordan wrote: post #20
OldSchool wrote: post #16

Earlier quoted context omitted.

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…

I hear ya, broke is only good because you have nothing to lose and need is a strong motivator.

It may be fun for a newly-funded startup guy to count up his illiquid shares and say "I have $X now (in monopoly money)" but as you said, it's not over until your shares are actually sold, taxes are paid and indemnifications have been released.

(saw your EDIT: I don't know how downvoting works either - it wasn't me!!!)

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

#29

Post by arbuge »

Might be an asset for founders who would otherwise be stuck in a comfort zone, but for most people I know the added stress would be a negative.

Besides founders generally get richer as companies get bigger, especially with the advent of secondary markets where privately held shares can be sold. If you're the kind of person that loses motivation as your comfort level increases, you're unlikely to ever build a big company.

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

#30

Post by ericabiz »

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…

Hi, I'm Erica, and I'm the person that is mentioned in the OP. (Imagine my surprise to click through a link on the front page of HN and find out it was about me! That was quite a jolt.)

Anyway, I wanted to say: $1.1 million is life-changing, especially when it's for a company you started at age 20 and never expected to make more than a couple hundred dollars a month on. I didn't take on any investors for that business, and I found the buyer and did the sale.

Running (and later, selling) that business solidified my expertise not only in the tech area, but also in learning how to acquire and keep customers. I wouldn't trade that experience for anything. The payday was a nice bonus.

And, I have to say, in an era where tech companies IPO and then tank, is it not refreshing to read about a bootstrapped company built by a sole founder who then sold it for 7 figures? I know I love those stories. And, even in the Valley, they're a lot rarer than you think.

Post reply on HN