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A startup doesn't need to be a unicorn

mattgiustwilliamson.substack.com

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Re: A startup doesn't need to be a unicorn

#221

Post by all2 »

ZeroTalent wrote: post #204
_fat_santa wrote: post #125

> even a relatively small deal would produce a life-changing outcome for the founding team. I run a SaaS with a business partner and this is basically our thesis for getting rich. My saying around this is "This amount of revenue/profit will cause a company of 500 or 1000 to go bankrupt, but it will make a company of 5-10 filthy rich"

This is exactly what I am doing. I started another startup in February 2024. After a year, I crossed $1M in annual profit with three employees. I am not planning to scale humans. Profits are growing, and we don't need to hire more people. LLMs and scripting automation are doing the work of approx. 20-30 people — this wasn't possible before.

I'd be curious to hear about how you are managing quality on LLM generated stuff.

Re: A startup doesn't need to be a unicorn

#223

Post by pyb »

xandrius wrote: post #207
Oras wrote: post #33

Someone investing $1M for 10% might better off buy gold or a property. It sounds good for me as a founder, but from investor point of view, this is pointless. Why taking a huge risk for 10%?

If for 1M I get 10%, the company is valued at 10M. Going from 10M to 20M is not a big stretch, and that would net me 1M already. More than gold appreciation I believe.

1M "on paper", no cash

Re: A startup doesn't need to be a unicorn

#224

Post by overfeed »

marcinzm wrote: post #212
9rx wrote: post #110

Earlier quoted context omitted.

> The characteristics in that paragraph don't apply to new mom & pop restaurants, dry cleaners, new law practices, etc I fully expect the founders of those businesses originally have dreams of their business becoming the next F500. But when validation fails... > and very often associated with funding from VC. If you keep reading we get to: "Unlike an entrepreneur, a start up founder doesn’t have a major financial mot…

> I fully expect the founders of those businesses originally have dreams of their business becoming the next F500. But when validation fails... I take it you've not met many such people or business owners. No one except the utterly delusional would think a mom & pop restaurants, dry cleaners, new law practices, etc. would become a F500 company. Amazingly people start companies for reasons other than becoming a F500 c…

> No one except the utterly delusional would think a mom & pop restaurants, dry cleaners, new law practices, etc. would become a F500 company.

Do they fail at achieving F500 status at a higher or lower rate than "startups"? Who then is delusional - those who have realizable visions, or the strivers who dream of unicorn-status and still fail.

Re: A startup doesn't need to be a unicorn

#225

Post by 9rx »

tptacek wrote: post #220
9rx wrote: post #174

Earlier quoted context omitted.

> I literally walked into offices in my town and asked what the most annoying part of their job is and I made a prototype. Consumers don't have offices. You are looking at a business-to-business transaction, which is where we said there is still opportunity, in large part thanks to those collecting angel money. If you are going to disagree, surely you can provide an example of where you have sold to the consumer? Aff…

Literally every freelancer can tell you a story that refutes what you're saying here.

The only real tech "freelancing", if we are to call it that, opportunities as it pertains to consumers is possibly in fixing someone's home computer/phone, and that is within the small set of things consumers are still willing to pay for. In fact, one's phone was explicitly mentioned. But it is unlikely that most "freelancers", within the tech sphere, are making a business out of that.

Maybe we all have a grandmother tossing a few bucks out here and there when she needs help. Is that what you mean?

But that's ignoring that freelancing itself is normally a business-to-business transaction by definition, so your assertion is a bit strange if we are to stick to general understandings. What is the pet definition you are trying to use here that should change our understanding?

Re: A startup doesn't need to be a unicorn

#226

Post by rambambram »

jimmydddd wrote: post #83
senko wrote: post #39

Earlier quoted context omitted.

Regular companies aren't given $1m they don't have to pay back. They have to get loans and founders are usually on the hook if the venture fails. This is different from what the article advocates.

I run a small 20 year old service business in the US. Just getting a $300K line of credit from a bank required a lot of paperwork and both the company and me personally being on the hook. It took about a month to secure. In contrast, on a different occasion a secured a personal home equity line of credit for $100K in a bout 5 minutes.

Was there a mortgage right in the mix in your second occasion?

Re: A startup doesn't need to be a unicorn

#227

Post by thuanao »

tptacek wrote: post #214
jpfr wrote: post #138

Earlier quoted context omitted.

I just founded in Germany. The paperwork is … okay. Not much more crazy than tax returns or internal accounting you need to do in any jurisdiction. But yes, running any organization is a lot of work.

Creating a company in the US doesn't require tax returns or internal accounting. (But perhaps you meant European jurisdictions).

It does if you're actually incorporating (C or S corp). You'll need to at least file both federal and state returns. And in many cases you'll need to pay money even if your business earned $0.

An LLC setup as a passthrough can get away with filing personal returns, but that only works for small freelance operations. Once you've got payroll or investors it's constant paperwork hassle.

Re: A startup doesn't need to be a unicorn

#228

Post by LikeAnElephant »

9rx wrote: post #174
LikeAnElephant wrote: post #171

Earlier quoted context omitted.

I respectfully disagree that there’s no business opportunity that people are willing to pay for. If your only target are developers or the tech industry, maybe, but there’s a whole world of non technical business people with problems that have extremely easy (and boring) technical solutions. I’ve recently signed up my third customer paying $49/mo with a simple CRUD app. No targeted ads or landing pages. I literally w…

> I literally walked into offices in my town and asked what the most annoying part of their job is and I made a prototype. Consumers don't have offices. You are looking at a business-to-business transaction, which is where we said there is still opportunity, in large part thanks to those collecting angel money. If you are going to disagree, surely you can provide an example of where you have sold to the consumer? Aff…

My broader point is that if you want to build a business there's a ton of opportunity if you're not overly picky on what that opportunity looks like. B2B, B2C, mobile, web, node, Python, PHP. None of it really matters.

> You are looking at a business-to-business.. which is where we said there is still opportunity, in large part thanks to those collecting angel money.

You might be mixing up opportunities within the tech industry with using tech to build a business within other industries. Angel money isn't really a "thing" for the latter, and that's where I'm pointing to opportunity.

But by all means keep on pushing B2C if that's your passion

Re: A startup doesn't need to be a unicorn

#229

Post by pembrook »

Bewelge wrote: post #132
zwnow wrote: post #77

Earlier quoted context omitted.

It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.

I agree that the process is unnecessarily complex, but I also think hiring someone for that would be the wise choice in most places anyway. And even in Germany hiring someone for that would probably amount to paying 500-1000€ for the whole registration of the company instead of doing everything yourself and only paying the 100-200€ notary fees. It's not as bad as you might think. > I will never try it in my home coun…

> but I also think hiring someone for [government paperwork] would be the wise choice in most places anyway.

I’m not sure if you’ve ever tried founding a business or fundraising in any other non-Germany country, but this is an insane thing to say imo.

Is this why Germany has no globally relevant software (or hardware tbh) companies founded in the last 40 years?

Are we sure we want to be holding up this model as an example of “a good one”?

Re: A startup doesn't need to be a unicorn

#230

Post by thelock85 »

summarity wrote: post #9

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

This is somewhat akin to the U.S. government's SBIR grant program. Phase I (generally $250-500K for a year)to develop and pilot novel tech. Phase II ($1M) to develop scalable tech. And Phase III to go-to-market. (I'm being intentionally brief here as there is a lot of variability between participating agencies).

Because each award solicitation is closely aligned to the industry needs associated with a given agency (DoD, DHS, HHS, NSF, DoEd, DoEnergy, DoCommerce, USDA, EPA, DoT, NASA), you are on a fast-track if you can get into Phase I.

It's a ton of paperwork and bureaucracy --probably even more so under current administration-- but still a great alternative/addition to VC that doesn't take equity and forces you into technical clarity.

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