
You Have to Be A Fool to Start a Company - tbgvi
http://babblingvc.typepad.com/pjozefak/2010/04/you-have-to-be-a-fool-to-start-a-company.html
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tptacek
I dislike posts like this because they foster a mindset that you have to "go
all in" to start a business, when in fact that's just how financiers _want_
you to do it.

You don't. Plenty of businesses start cautiously and grow organically.

What you have to be a fool to do is to bank 3-5 years of your life on a 1/20
shot at a 7 figure acquisition. Fortunately, only a tiny fraction of the
people who try to do this get funded and shot out of that particular cannon,
and they only lose ~1 year of their life to the idea.

~~~
gizmo
Who are you to say that a year spent working on a startup is a lost year? Why
is it foolish spend 3 to 5 years on something that might just change the
world, especially if you enjoy the ride?

I bet that 20 teams shooting for a 7 figure exit will be on average much more
successful than 20 teams building a cautious/lifestyle business.

You could even argue that shooting for a 7 figure exit is the selfless thing
to do, because you're less likely to make a good living that way compared to a
lifestyle business, but you are more likely to make a significant contribution
to the economy (+ job creation).

~~~
tptacek
First, stop kidding yourself. The year everyone loses trying to get funded
doesn't teach them anything other than "getting funded is harder than all the
blog posts make it sound". The 3-5 years the "lucky" few lose on ultimately
unsuccessful shoot-the-moon startups don't teach them anything other than "it
is possible to waste a spectacular amount of money without much revenue in
return for it, and that's a great way to spend 60% of your work day in
meetings".

Let me save 5 years of your life for you:

* Getting funded is harder than everything on Hacker News makes it sound.

* You can waste truly spectacular amounts of money without earning anything from customers in return from it, and when you do that, you wind up in meetings with salespeople, meetings with marketing people, meetings with PR people, meetings with engineers about the marketing people, meetings with the CEO, and, oops! Now it's time to go home.

Second: No. Shooting for a 7 figure exit is not a "selfless" thing to do. We
didn't do that and we've created more jobs than a lot of funded YC companies
have. The difference between companies that exit and companies that don't
isn't headcount.

~~~
gizmo
You're arguing against a straw-man version of my argument and you're making
absurd claims in the process ("you don't learn anything from a startup" / "you
spend 60% of your day in meetings"). When you write nonsense like this you
can't possibly expect a constructive responsive.

~~~
tptacek
See, you think I'm exaggerating or being hyperbolic, and I'm not. I might be
wrong. But I'm not just making things up.

I am telling you that you probably don't learn more from failing in a startup
than you could have in 3-5 years doing something else, and that yes, in fact,
if you have the misfortune of getting funded, you can wind up in a job that
you're handcuffed to that involves you spending most of your time in meetings.

It worries me a little that people think this claim is so outlandish that
anyone making it must be trolling. I'm really not.

~~~
gizmo
When you do a startup you have to learn about building a product, finding
customers, managing a team efficiently, hiring the right people, building a
brand for your company, determine a revenue model, basic bookkeeping, and so
on. I'm just listing a couple of the many things you have to learn when doing
a startup. None of these things you have to do when you're a software engineer
in an established company. You can only spend a few hours a day on software,
if you're lucky. The rest of the time you're building different skills. So
that's why I can't take the claim "you don't learn anything" seriously.

If you're in meetings all day you're either not delegating enough or you like
being in meetings all day. Either way nobody is forcing you to have meetings
all day every day.

------
dpcan
This is an article about how it's risky to start a business and all those
percentages and chances at success. again.

Personally, when I had a J.O.B. 8 years ago, I felt it was far more risky. At
any point, of any day, with or without notice, my boss could walk in and lay
me off.

Done. No more money. No more job.

Being at the mercy of someone else has never felt safe or less risky to me. I
was constantly stressed.

Working for myself means that if I need to get paid, I go out and get paid. I
make it happen. I don't see how being in control of your OWN destiny is MORE
risky. I rely on MYSELF, the person I trust and believe in most.

Sometimes I have to rely on others for contracts, but I'm in control of that
relationship too.

I think the problem is that there are entrepreneurs and employees. I don't
understand the employee mind-set, but it takes all kinds to make the world go
around.

Maybe I'll write the article, "Entrepreneurship is for control freaks. Because
I said so."

~~~
Dellort
You replaced your boss with a customer. No real change there; You're still at
the mercy of someone. I'd say you're a dumbass for not realizing this, but
I'll decline to as we're supposed to keep a higher standard here on HN.

~~~
codexon
A boss can fire you even if you are bringing in a profit. All it takes is 1
bad day, or a mistaken belief that someone from India can do the same job for
half the price.

If you are the owner, it doesn't matter if one or two customers are hard to
deal with. All you do is stop selling to them, and you will most likely still
be in business.

~~~
tptacek
A board can fire you and your whole team even if you're profitable. All it
takes is 1 bad day, or a mistaken belief that outsourcing to a team in India
can solve the same problem for half the price.

~~~
codexon
If your company is happens to have a board that doesn't include you, you
either

1\. Already sold your company.

2\. Didn't really contribute to its founding.

~~~
tptacek
"Not worth more than being laid-off" would be hyperbolic, but I'd guess that
your private company non-preferred shares are worth a lot less than you think
they are. I have stories from real, "successful" companies that screwed over
everyone not currently on staff on exit. It's not hard to do.

~~~
codexon
If shares of your company were undersold and you lose controlling interest in
the process, that is your own fault. Founders usually have a different class
of stock which has more voting rights per value.

This is like an employee accepting a $10/hour contract, and then complaining
later that it was too low.

~~~
tptacek
Founders don't usually get preferred stock.

~~~
codexon
You are correct. I meant to say that founders usually have a different class
of stock that has more voting rights, rather than higher liquidation
preference in case of bankruptcy.

~~~
tptacek
Liquidation preferences aren't about bankruptcy.

------
abstractbill
I disagree on many counts.

If you asked my wife and me on our wedding day what our chances of success
were, we would have probably said something like "Well, about half of all
marriages end in divorce, but we're a little older and hopefully more mature
than the average couple of newly-weds, and we talk pretty openly about
difficult things. There are no guarantees, but we think we have a decent
chance and we're going to do our best".

I have a similar approach to business - as Richard Branson is fond of saying,
"Take big risks, but _always_ think about the potential downside".

------
johnrob
It's really not that risky if you're willing to fight to the death, so to
speak. Many 'failures' are really just cases where people gave up.

------
pw0ncakes
Failure rate at 5 years is about 50%. How many jobs are there where it's worth
coming in to work after 5 years? A lot of people get pigeonholed or stagnate,
if not laid off, before then.

On the divorce rate, that's across _all_ marriages, and it's closer to 40%. If
you marry after 20, both are college-educated, and have known each other for
18 months before getting engaged, your odds are a _lot_ better.

------
Dellort
That must make this Paul Graham guy an idiot and this whole YCombinator thing
must be idiocy in action.

~~~
run4yourlives
While I don't agree with the Article's points, I invite you to read:

<http://en.wikipedia.org/wiki/Argument_from_authority>

