

Ask HN: living on savings while working on startup? - BadassFractal

I'm contemplating quitting my full-time job to dedicate myself completely to a project that I've been working on part-time for half a year. We have no seed money yet and no prospective customers, but I feel that having me on board 24/7 rather than 3-4 hours a day + weekends would speed up our progress immensely and help us have something working to show to potential investors and customers much sooner.<p>Who here has dropped out and made no income whatsoever for some time while working on their project? Have you regretted it? Anything one should know before going through with it?<p>Thanks!
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trussi
I'm about 3 months down this path. Here's my approach and advice...

\----My Approach----

I'm a technical founder with no co-founder. 12 years of back-end development
experience. I think I am pretty good on the sales and marketing side (although
it's still unproven).

I enrolled in a local business mentorship to keep me sane (and get me out of
my home office every once in a while), get feedback from other entrepreneurs
and get help with various parts of starting a business.

My general life philosophy is to jump in, then figure out how to swim.

I'm using a combination of savings and friends & family to fund the project. I
currently have 6 months of runway to get ramen profitable.

My product is B2B SaaS. I need about 20 customers to get ramen profitable.

I am outsourcing the design, which is my weakness. Everything else falls on
me.

It took 3 months of 8 hours a day, 6 days a week to get the beta version
built. Demos are actually going out tonight and public launch is next
week...yikes!!

I feel very confident that I can sell 20 subscriptions in a few months, with
only half my time dedicated to sales.

\----My Advice----

If you're not building a B2B SaaS product, don't quit the day job.

If you are building anything consumer-focused, definitely don't quit your day
job.

Do you work well under pressure? I have a wife and a son and a decent monthly
nut I have to cover. I work best under pressure. But I have never felt this
level of sustained pressure before. It's incredibly difficult to keep pushing
hard all night every night (I work at night when the house is quiet). If you
don't thrive under pressure, don't quit your day job. Be brutally honest about
this one because it will crush you if you think you are but aren't.

Outsource your weaknesses. It usually takes a while to find any technical
support that's worth a damn. Be prepared to pay top dollar for it. Post your
needs on all the outsourcing/freelance/crowdsourcing sites. Post it on
craigslist (both locally and elsewhere). I found that each site has a specific
pool of talent that's worth a damn. This will take longer than you think.
You'll have to cycle through several 'perfect matches' before you find
somebody that's the right fit. This piece really comes down to serendipity and
luck and there's not much you can do to hack it (other than being persistent
and patient).

Estimate how long it will take to build the MVP. Be conservative. Then double
it. Seriously, double it. Then you'll be in the ballpark.

Spend half your time on non-coding stuff. This is the hardest part for a
technical person, but vital. Even if you have a bizdev co-founder, it's your
idea, your vision and you're the only person that will ever understand it.

Again, assuming B2B, get out a talk with customers ASAP. Talk with 3 potential
customers. Pitch each one, refine the pitch, go to the next. This is
absolutely paramount. Everybody says to do this. DO NOT UNDERESTIMATE THIS!!!

I was unable to find a co-founder. I think this is a blessing in disguise. I
tried to recruit one at the start (spent 2 months on it). We couldn't agree on
terms. That 2 months was not very productive. We'd spend a lot of time
talking, not much time doing. It's incredibly easy to just spend hours
talking, theorizing, hypothesizing, thinking. None of that really matters. The
only thing that matters is shipping a product. Even if it's complete garbage,
ship the damn product ASAP! If you engage potential customers (see the
previous point), you'll have a significantly better chance of the product
gaining some initial traction.

Last piece of advice would be: you have to sell this product. You can't hire
anybody else (even if you have a biz dev co-founder who should also be
selling) to do this for you. If you don't have the nerve to get in front of a
customer, the skill to communicate with them effectively, the thick skin to
hear how much your product sucks and the balls to ask them for money anyway,
then don't quit your day job. If you are the idea person, then you HAVE TO
SELL IT!

\---End Brain Dump---

Hopefully there's at least one or two nuggets of truth in there that resonate
with you.

Keep us posted on your progress. Everybody on HN is here to help you. Just
ask.

~~~
BadassFractal
Thanks for the extensive response, much appreciated! A couple of questions:

\- tell us more about how your mentoring arrangement works. I've never heard
of business mentorship before (I've only done mentorship at work at my
organization), is it suitable for someone doing an agile lean startup like you
are? Also, how does compare to finding an actual mentor from the startup world
(unless that's exactly what it is) and how do I sign up? :)

\- best of luck with your demos, it's an exciting time!!!

\- tell us a bit more about your experience hiring a designer

\- I didn't quite get the tech support part. Are you talking about "tech
support" or someone to support you with the engineering work involved in
developing the product? If it's the former, are you looking for some small
company to help you or just for an individual person you can train to
understand your service?

\- How did you get in touch with your current potential customers? You talk
about the importance of being able to sell the product to a customer yourself,
as a backend monkey myself I've been as far as possible from that aspect of
the business in my career. Tips?

~~~
trussi
\---About Business Development Programs---

Most mid and small cities have some sort of business development program. The
goal of these programs is to generate jobs in the local community. I googled
'reno business development program' and came up with this link:
<http://www.nsbdc.org/>

The business development program I'm in provides hours with a life coach (for
time management), marketing consultant, SEO consultant, web designer (I don't
use this one), a CPA and a lawyer. They also provide introductions in the
community.

I think the stated output of the program is a polished business plan.
Everybody in the tech scene scoffs at business plans (and most of it is
justified). However, if you want any financing, you'll need one. And it's
actually a very powerful tool to help you focus and answer questions you
haven't thought about yet. A business plan is really for you, not anybody
else. At least that's the value I'm getting out of it.

The program is not internet startup specific, but you really don't need that
(I'm assuming you've never started a business before). You need help with the
basic nuts and bolts of operating a business.

The primary benefit I get out of it is accountability. You commit to certain
milestones. Then you're on the hook to deliver. Personally, I really need this
type of support.

\---Hiring a Designer---

This one is very tricky because design is so subjective.

I used oDesk to find my designer.

I'm very picky about design aesthetics, so I can be kind of demanding. I
looked at a bunch of portfolios and tried out a couple designers before I
found my guy.

I would give fairly specific instructions that still had some room for
artistic interpretation. I was partly evaluating their ability to read
directions (most people suck at this), turnaround time and the quality of the
work.

Again, being subjective, the quality was really just 'do I like it'.

I ended up working with a Romania designer that speaks perfect english, turns
out great work and is really fast. The only downside is that I pay $25/hr for
him, which I think is pretty high for outsourced design. He's worth every
penny because of his efficency and the fact we don't have to go back and forth
iterating a bunch of times. Usually his first pass only requires one round of
minor tweaks.

One note of caution would be to not get too picky with minor stuff. Perfection
is the enemy of good enough. You're just going for good enough.

\---Technical Support Clarificaiton---

I was referring to finding technical talent/resources/people, not the specific
operational task of 'tech support' or 'customer support'.

\---Engaging Potential Customers---

Coming from a similar background, it's pretty scary, isn't it?! :)

It's actually not that scary. The hardest part is just doing it. People are
nice and want to help you out.

Leverage your network for potential customers.

Make sure your first interactions are with lower-value potential customers;
preferably customers you have a personal/existing relationship with. You don't
want your first customer interaction to be with a high-value target because
you will fall flat on your face! Inevitably the customer will ask you some
really simple obvious question about your product/service and it will
completely blindside you because you never thought about it. Yea...get those
questions out of the way in the lowest risk environment.

The purpose of your first interactions is to feel out the space you are trying
to work in. Do they have an existing vendor providing the same/similar
services? How much is that service? Do they like it? What do they like best?
What do they like least? What's it missing? What pains are they having
(probably not within the space you are trying to be in, but very important
question to identify other synergistic opportunities)? How can you help?

Notice it's really going to be a lot of asking open-ended questions and
listening. Common sense stuff, but most people screw it up and talk too much.

Talk just enough to establish expertise and trust, then shut up and let them
tell you want to build.

\------

Wow, that was a long response. Good thing I get paid by the word. Haha.

------
brk
Concentrating on your idea full-time will certainly move it along faster than
if you are working on it as a side-project.

However, this self-funded model can also be a slippery slope to self-
bankruptcy if you're not careful. I would suggest laying out a careful plan
beforehand. Figure out what your base living expenses will be, and determine
how long you can go on 75% of your current savings. Set some realistic goals
and expectations while you have a clear head (now), and as you start to
approach a critical low-cash point stop and evaluate where you are vs. what
you expected.

Keep in mind that this might make it harder for you to find a job if you take
this personal sort of time and it doesn't work out. I would only suggest doing
this if you can live for 8 or 9 solid months on savings, and STILL have
another 3-4 months of savings to live on after that. 6 months seems like a
good checkpoint time, you should have made some serious measurable progress by
then. If you haven't, you'll need to start looking for alternate income, which
may be time consuming and take a couple of months.

I would also suggest around the 5-6 month checkpoint trying to speak with some
angel investors. Partly for the obvious point of raising money, and partly to
get some unbiased outside feedback as to the viability and potential market of
what you are working on.

~~~
BadassFractal
How uncommon is it for entrepreneurs to take the plunge and have absolutely no
income for those 6-12 months? Is this something that's theoretically possible,
but most people choose not to go through with it because they would much
rather not bankrupt themselves, or do folks actually do it?

It's just that most success stories you read about these days involve some
sort of seed money / angel investment that at least guarantees you don't need
to immediately start depleting your reserves.

In any case, when you say 5-6 month checkpoint, is that from the moment one
would hypothetically start working on startup full time, or while still doing
it part-time?

~~~
brk
5-6 month checkpoint is from the time you go full time.

I hear of people doing it from time to time, but I generally think the self-
funded folks fly under the radar. When people raise money you see more press
coverage, so in terms of what you read about online I think the visible data
may be slightly skewed. I know many many people that worked for some amount of
time (usually less than 1 year) self funded and then either raised money or
pulled the ripcord and went back to work.

I do not personally know many who were able to get to something near break
even or viable in less than 1 year. But that is just me.

~~~
BadassFractal
What I read on other sites was that people would be ok with making
considerably less than what they were at their full time jobs, for a long
while, as the business is ramping up. So if you were making 6 figures before
quitting, now you'd be making possibly under minimum wage :|

On the other hand if there's a strategy behind that and you can clearly see
how you'll get to the light at the end of the tunnel, sucking it up for a
yearish shouldn't be too awful.

------
Zakuzaa
\- How easy do you think it is to get a job back should something go wrong
with your startup endeavors?

\- Are you married? Kids? - If not, taking a plunge obviously becomes much
more easy.

\- Would you be able to remain motivated for a fairly long time while living
frugally?

~~~
BadassFractal
\- I'm a technical guy with great credentials and some very high end industry
experience, I'd be able to find a job with one of the big boys (where I'm at
right now) in a blink of an eye, even though I generally hate interview
processes and would much rather never have to do one again :)

\- Will be married very soon if everything goes well, but my partner is very
supportive of me and I see it as a plus as far as starting a company is
concerned

\- This one is tough, and definitely a good question. I've been making quite a
bit as a corporate drone for several years now and so I don't remember last
time I had to question a purchase. On the other hand, I'd give up almost
everything to never have to see management's face again, go through
performance reviews, fill out HR questionnaires and have to play office
politics for that measly bonus, all while not learning anything new as an
engineer in a long time. To me, not hating myself every day is worth more than
probably 75% of my salary :) From a motivation standpoint, I feel that the
fear of running out of money and the terror of having to go back to writing
emails 80% of my day in corpspeak will be sufficient to keep me crunching all
day every day.

Cynicism apart, it's all about being able to work on something that I'm
ultimately responsible for, something that someone cares about and have a
purpose in mind, those three are a huge motivation to me, and have been for
the past half a year I've been doing 80 hour weeks.

~~~
truthseeker
You said it... _responsible for something that someone cares about_. Find that
out first if it is something someone cares about. If not you could be spinning
your wheels for a long time.

~~~
BadassFractal
Agreed, I myself feel that an idea is worth nothing if there's no real life
demand for it. It has to be tested.

Reminds me of the basic programming rule of thumb where if you haven't tested
a piece of code, it is to be considered broken.

