
How should a startup founder value her time? - pors
http://blog.asmartbear.com/value-time.html
======
jasonkester
It's never mentioned in the article, but this only applies to the "Get Big
Fast" flavor of Startup. Where you're hoping for a big payout in 4 years time
if you sacrifice every waking hour between now and then building as fast as
possible.

So when it concludes that you can't build something small and profitable, and
that you can't do anything other than work yourself into the ground, it's just
restating its assumptions as conclusions.

If, on the other hand you're looking for something to replace your $150/hr
consultant gig, you absolutely _can_ build something small that brings in a
little profit. And you absolutely can build that thing without working "harder
than is healthy".

I keep a spreadsheet that tracks the hours I've worked on my startup alongside
the profits it has made. It tells me exactly how much my time has been worth
for the hours I've spent working on the thing in the last 4 years. And it's
creeping up to look like a respectable consulting rate.

~~~
toumhi
Bootstrapping solo founder here. It's kind of overwhelming if all you do needs
to be valued at $1000/hour. It sounds more like it could be used as an excuse
not to do anything: "I can't figure something I can do that would be valued
$1000/hour" => better to keep going at the current job.

I've been doing the startup thing for 5 months now, but as it's my first
experiment, I don't think I've created $1000/hour stuff so far.

Still, I don't see it as a problem. The idea is to value your time, yes, but
you should also value intangible things like what you're learning doing this
startup for example (which give you an edge for this one or the next startup).

------
mcherm
This argument considers the downside risk (85% chance of not getting paid
anything) but does NOT consider the upside risk (small chance of getting
filthy rich but still much bigger than the chance if you work as a $150/hr
consultant). That makes the math wrong, even if the idea has merit.

~~~
WalterSear
Furthermore, even if the premise is right, the strategies suggested are wrong.
'Working more than is healthy' never makes sense (except in short, >healthy <
doses) and hiring support staff only makes sense if you have the cashflow or
the increased productivity is worth the increasd burn rate - you haven't made
that money yet.

------
lawnchair_larry
Why is 'her' used here, if the author is male?

~~~
teaspoon
Because the subject of the sentence is "a startup founder", not "Jason Cohen".

~~~
marknutter
It's always irritated me to see the use of the word "her" because of the
blatant political-correctness of it. If you want to be PC, use "their".

~~~
rfrey
You don't like implied political correctness. OP doesn't like implied gender
bias. I don't like grammatical convolutions like using "their". What's to be
done?

How about focusing on the message?

~~~
marknutter
> what's to be done?

use "their"

------
ComputerGuru
Interesting tidbit for those debating the correctness of he/she/they in the
title: at one (very brief) period of time, there was a school of English
writers that believed 'it' was the correct gender-neutral term for living
human beings of either gender.

The argument being that 'they' was plural, and therefore blatantly incorrect
as a he/she replacement, whereas it was singular and gender-less (though
gender-less != gender-neutral (at least, not necessarily)).

Anyone that's read E. Nesbit's _The Five Children and It_ (the 'It' in the
title is completely unrelated, as it refers to a mythical being and not any
human) would have experienced this oddity of the English language, and
<strike>they</strike> it would have probably paused and wondered about the
usage of 'it' as a gender-neutral pronoun.

According to Nesbit, saying something like 'A lover and its crush' or, more
confusingly, 'The life of a founder, and its priorities' with 'it' here
referring to the founder and not his/her's ( _its <smirk>_) life.

Sounds weird? How many times have you said a sentence along the lines of "Was
_it_ your _father_ or your _mother_ that was in the Army?" Nesbit's approach
was the same, taken a few orders of magnitude further :)

------
its_so_on
Actually, this reasoning is completely wrong.

"""

Your time is $1000/hour, and you need to act accordingly. Here’s why:

Let’s say as a consultant who normally charges $150/hour you stumble upon a
weird client who asks for the following terms:

    
    
        “We agree your time is worth $150/hour. However, we can’t pay you for four years, at which time we will pay you in one lump sum.”
    

How much should you increase your hourly rate to make these terms worthwhile?

But “lost interest” and a premium doesn’t solve the biggest problem with these
terms. The problem is: What if this company goes out of business in four years
and doesn’t pay you at all?

Supposing this client is an early-stage startup — even if funded — the most
likely event is that they stiff you! Because they’re dead. Let’s suppose for
the sake of rhetoric there’s a 15% chance the company will exist in four years
and pay their bill.

"""

The article then goes on to reason that, therefore, you should value your time
at $1000 per hour with this company.

But there's a problem.

 _IF_ the company goes bankrupt, then _EVERY_ hour of time you spend with them
is worthless, and you should reduce to to 0.

 _IF_ the company doesn't go bankrupt, then any number of hours at, say,
$300/hour, is worth it for you.

In the first case, if you bill at $1000, the company is just as willing to use
lots of your time. If it makes it, it takes off; if it doesn't make it, it's
not stuck with the bill.

Absent all other market conditions, if you are a monopolist in what they want
to do with you, and they NEED 40 hours of your time to survive, that is how
much they will take at $40, $80, $120, and $150 or $1000 per hour. If they
believe they can use those forty hours to raise $15million in the next 4
years, they might even "agree" to $150,000 per hour. It doesn't matter. No
matter what your price, in this scenario you are out the same 40 hours if you
play ball with them.

It's like winning the lottery. It doesn't matter if the expected value is over
$1 per $1 ticket, if the chance of winning is the same. Your utility is
massive if you win, you're out $1 if you lose.

False reasoning.

~~~
chimeracoder
(I avoid reposting/relinking, but it seems that this theme has been coming up
a lot on HN recently.)

What you're getting at is the concept of risk-benefit analysis, which is a bit
more subtle than just the expected (dollar) value of the result. I describe it
in more (academic) detail here:

<http://news.ycombinator.com/item?id=3432356>

~~~
its_so_on
it's not just that. when there's a big jackpot at a casino at the slot
machines (i.e. the jackpot hasn't been paid for a long, long time) and it is
so large that the expected value of each drop of a quarter actually has
positive expected value, by enough of a margin, someone with a huge bankroll
comes along and hires teams of people to monopolize the slot machines until
one wins, paying them by the hour.

you can't do that.

so, when you're faced with depositing a quarter, does it really matter if the
expected value is positive or negative? No, due to the variance - not due to
how risk-averse you are, simply due to the variance.

Likewise at a startup: you only have one life, in which you can only do so
many. The more you can do, the less the variance and the more the expected
value comes into play.

Of course Microsoft or Warren Buffett would never 'invest' in lottery tickets
when these have a negative expected value; they can buy hundreds of thousands
or millions of them. When I buy one lottery ticket, I can buy one, or ten, but
basically I have just one. Only the variance matters.

it's not about risk-averse or -tolerant. it's about utility.

people who say "math is a tax on people who are bad at math" simply don't know
what they're talking about. People who are stuck in a hopeless life that would
be changed by $1 million have just as rational a reason to play the lottery
given a negative or positive expected return.

one wonders if the lottery had to be subsidized by corporations, and everyone
could only buy one to five tickets (if they wanted) each with an expected
value slightly above one, then would mathematicians start buying 5 lottery
tickets each?

It has nothing to do with risk-benefit ratio. Even if God could somehow
guarantee you access to googolplex googolplex googolplex dollars, but there
was only a one in googolplex googolplex chance of your winning it, it would
not even be worth the breath to say 'ok' -- try saying that googolplex times
-- let alone a penny. Yet the expected value of that proposition is googolplex
dollars! So, it's a false 'rationally' to claim that it is worth far more than
a penny (given God's guarantee). it's worth nothing.

it's not about risk-averse or whatever. it's simple rationality as an agent
who experiences utility here on Earth.

God's proposition is worthless.

