

Ask HN: Any desperate things you did just to keep your startup alive? - twidlit

I love the story of how the AirBnB guys sold cereal boxes just to survive. Does anyone know any more similar stories about successful startups.
======
zbruhnke
When I started my first software related company at 21 (almost 3 years ago) I
had already had some small successes in other businesses, and had a fairly
strong customer base to start because of contacts I had made. So I went out
hired employees bought copy machines, set up an office etc. But after the 6th
pay period (3 months in) I paid all my employees and I had $3.62 left in the
company bank account with several unpaid invoices from clients who I did not
know very well, since we were working mainly for law firms and they are famous
for not paying in a timely manner I did not know what to do.

I went and took an evening job at "geek squad" for $13 hour and started
selling cars at a friends car lot on the weekends in a city about 50 miles
away so none of my employees would know we were struggling. Often times over
those next few months I was paying my employees from money I had earned
working those two jobs which none of my employees even knew I had.

I eventually started researching effective ways to collect past due bills and
I was harsh and even lost a few customers in my collection tactics, but
ultimately learned a great deal about the types of customers I did and did not
want which allowed me to realize that having tons of business was not
necessarily as good as simply having a smaller, loyal customer base who pays
their bills and respects your work.

I can recall one conversation where I was speaking to an attorney's secretary
and she told me that after talking to "John" Aka the attorney in question, he
simply did not have the money to pay the bill, but he "would get it paid as
soon as possible" to which I quickly popped off "Well why don't you tell John
that if he doesn't have the money he needs to stop parking his Aston Martin in
front of my office."

luckily for me, my young hot headedness paid off and I received a hand
delivered check the very next day.

While I struggled for some time to come and eventually spent my entire savings
paying my employees salaries the business did eventually succeed and go on to
be very sustainable.

When selling the company to a large firm out of Charlotte, NC I was even able
to negotiate terms allowing all my employees to keep their same grade of pay
for at least 2 years after the sale (they were all on salary and paid above
market rate) While I worked harder in those 19 moths than I ever had in my
life it was the most fulfilling time that I have ever been through and it
shaped the me into the person I am today.

------
LoonyPandora
I went on the "super noodle diet" - Which consisted of eating 2 packets of
instant noodles per day, seasoned with lots of pepper to make it seem more
filling. As a treat on a Sunday I had a 99p pizza too! I paid for this with
the contents of my penny jar. When that had run out, I survived for another
week on cornflakes with golden syrup instead of milk, which were the only
things I had in my cupboard.

I lost ~30lbs in the 2 months I was doing this. In the end the startup failed,
I swallowed my pride and got my old job back, the one I'd left a year previous
to work full time on my startup.

------
jamiequint
We arbitraged Facebook application development when the platform was brand
new. I had developed some applications in the first few weeks platform was
out, and had done some early work on the predecessor to rFacebook. I used
these examples and some well placed adwords ads to drive customers to us. The
phone was ringing off the hook with people wanting apps, many calling just to
waste our time, but a fair number of solid leads. We hired competent
subcontractors to do the development and most of the product management (so we
could spend time coding for our startup). This turned out to be a mistake as
our subcontractors tried to steal a client from us behind our backs. This of
course was against both our contract with the client and our subcontractors.

However, our client was a hedge fund manager with an in house attorney who
kept trying to convince me that because of my age (I was 21 at the time) I had
no idea what I was doing and was being unethical for subcontracting work. He
refused to pay and threatened to have his in house attorney waste enough of
our lawyers time to make it unfeasible for us to pursue litigation (we didn't
have a lawyers fees clause in our contract in case of disputes). After a lot
of back and forth, he ended up settling for 50% of the contract amount ($12.5k
IIRC) and we didn't pay anything to our subcontractors as a result of their
breach of contract. The $12.5k plus some other purely advisory (non-
development) work we did paid for us to stop arbitraging consulting (which was
great since we didn't have any subcontractors anymore since we fired them) and
to live on for the rest of the summer and work on our startup.

We raised money from YC right before that money ran out.

------
bl4k
<http://en.wikipedia.org/wiki/John_DeLorean#Entrapment>

(If you are not familiar with the story, in a last-ditched effort to save his
car company, De Lorean attempted to traffic a large amount of cocaine. Turned
out the seller was a federal agent. That is dedication)

~~~
Andrew_Quentin
That is not dedication, that is criminal, that is, following the first easy
thing you can think of, regardless of the consequences. If he has the
dedication, a firm no to the above suggestion, and a further five minutes
thinking, would have probably brought up a much honourable means, even in
times of desperate need, to get what he wanted.

~~~
cheesey
He managed to avoid prosecution, as he was found not guilty due to entrapment.
Entrapment is when the alleged criminal was:

1\. given the idea for the crime by the government agents

2\. persuaded or talked into committing the crime by government agents

3\. not _ready and willing_ to commit the crime before the government agents
spoke with him.

So no, it wasn't "the first easy thing you[he] can [could] think of".

EDIT: Formatting.

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cal5k
Fred Smith, the founder of FedEx, took the last $5000 in the company's bank
account to Vegas so they could afford to make the ~$30k fuel payment they
needed to stay in business. Turned out pretty well for him ;-)

------
ceredona
I went on a few 24 hour online poker binges to pay the rent. I won a lot, but
had to borrow money from my parents because it took over a week to cash-out.

Also drove to Foxwoods to play poker once with my co-founder when we were
particularly desperate. We only had enough money for one buy-in ($300).
Figured that if I was asking my parents for money again, asking for an extra
$300 was worth the risk, if I had a chance to win and not ask for anything.

Bill also took random jobs on Craigslist (helping people set up pod-casts,
writing papers for wealthy foreign students, etc.)

I taught the LSAT and did "law school admission consulting" which basically
translated to helping people write personal statements.

~~~
ceredona
shit, just posted this from my girlfriend's HN account :(

(I'm "aberman", one of the co-founders of WePay)

~~~
twidlit
You're GF's HN about line is awesome.

------
Udo
That was about ten years ago. For a while there, we did pretty good: hovering
stable at around 10 employees, mostly custom web projects for advertising
agencies. One day we took on a very nice-sounding project for a local
manufacturing company. One company-year flowed into the project, we did almost
nothing else. At the end, the project was canceled and they wanted their money
back because they were on the brink of bankruptcy (a move that despite our
contract was OK'ed by German courts).

It all went downhill from there, but I still hung on for a few months. Didn't
want to fire anyone. I took out crazy loans to keep this lead balloon afloat,
but there was really no turning around. And it pretty much ruined my life.

It's a cautionary tale, really. I should have allowed this company to fail at
a time when I still could have walked away without some serious damage. The
company was done. It had no product, burned-out employees and no prospects. I
wouldn't make that mistake again today. The lesson here being that desperation
is never a good sign. When you're doing a startup, what you want is hunger and
euphoria. Not desperation.

------
benologist
I live in a little house in one of the poorest countries in the Americas,
making Flash games every now and then to fund me and my startup.

If I was back home (AU) then I couldn't have come anywhere near as far as I
have - my cost of living here is like $500/month. I'm able to devote a
tremendous amount of time to my startup.

~~~
volare
Which country?

~~~
benologist
Nicaragua, but all of Central America's a great place to live ridiculously
cheap and hack away. Plus they're beautiful countries and latinas are so hot.

The internet's not fantastic (a crappy 1 megabit, and outages happen at least
once a week), half of the TV is in Spanish, and you have to be careful
sometimes since white guys are usually cashed up tourists and ripe for a
mugging.

But when push comes to shove it beats trying to make $1000 rent + living
expenses and trying to balance a startup around that.

~~~
volare
Thanks for the details. This is getting a bit off-topic, but can you describe
how a foreigner should go about finding a place to live in Central America?
Did you just fly there and look for "For Rent" signs or did you line something
up beforehand?

~~~
andreshb
I constantly travel to Latin America, speaking at conferences and recruiting
talent. I've lived/worked in Chile, Argentina, Mexico, Peru Colombia and
traveled to Honduras and Guatemala.

If you want to go to central america let me know. I can introduce you to the
tech/startup community there. They can hook you up with the best/safest
placest to live, work areas, and the whole thing.

My personal experience is with Guatemala and Honduras, though I know top notch
developers and entrepreneurs (all bilingual) throughout the whole region.

If I were you, I'd pick costa rica to live in if you want to live in Central
America. Bigger expat community, great nearshoring tech talent. Though Chile
will give you $40k to startup in Chile.

When I go live/work at a LATAM country my process is usually:

1\. Stay in a hostal for two days, those two days I check out places to rent
2\. In south america, you can find great stuff on craigslist, furnished rooms
or studios from $200-$500/mo 3\. Meet local entrepreneurs, and find coworking
spaces/become an office guest.

If you need more tips/intros for living in LATAM, my email is in my profile,
or @andresbarreto

~~~
joshbert
If you ever decide to come to Mexico and need a safe place to stay give me a
buzz as well. I'll hook you up.

~~~
jscore
Where in Mexico?

~~~
joshbert
Mexico City. Forgot to be a little more specific, my bad :)

------
lrm242
In the early days of my first company my co-founder ran into visa issues. He
was a British national and post-September 11 his H1B was coming due. At the
time the company couldn't sponsor him due to prevailing wage issues so he had
to leave the country. Within the span of 2 months I moved from Austin, TX to
Sydney, Australia with my co-founder and his family. When I arrived I had no
where to live, nothing (living w/ my co-founder was not really possible,
mostly because he had four kids and adding a fifth would have driven everyone
insane). I initially setup in a hotel and eventually found an apartment. We
did it so we could continue to press forward knowing that such a large
separation of distance would effectively kill the company. My girlfriend (now
wife) stayed behind in Texas. I lived in Sydney on a tourist visa, leaving
every 3 months and re-entering. I lived off my credit card and whatever
hardware I could sell on eBay. This lasted for about 9 months. After we had
made enough progress I came back and about 6 months later we had our first
round of venture financing. When we got the check I had about $500 in my bank
account.

Only now can I really look back at that time and appreciate what a huge
opportunity it was. Most people only have one shot in life to take infinite
risk. Eventually life kicks in and you have to start making more measured
decisions. However, even with the huge amount of risk I took back then it
almost certainly would not have been possible had it not been for my very
supportive family and girlfriend. I knew that no matter what happened I could
always go home and tell them I gave it my best shot and life would go on.

------
old-gregg
Ha, we didn't consider selling cereal since we're not good at it. :-) So, when
we needed money we decided to stick to what we knew best and started another
service-oriented, and therefore instantly profitable, startup:
<http://buildasandcastle.com>

~~~
daystar
did it work?? how long before you got your first check from buildansandcastle?

------
uurayan
The AirBnB cereal boxes is more genius than desperate. I consider desperate
things like the Zappos story where Tony literally sold everything he owned to
keep the business afloat.

~~~
twidlit
I think it was more desperate than genius since it was nothing to do with
their product and the goal there was to earn money to sustain them further.
The expo>shortage>CNN coverage is an example of a genius move by the same
guys.

------
nailer
Someone who is a member of a lesser known six person startup (the other five
of which Im sure are lovely people) took some front end development work from
me, then dissappeared off the face of the earth - no Skype, no email, no phone
calls - before the product could be completed, without warning. The guy is
otherwise a nice person, but I get the feeling he was desperate for the cash
and did a bad thing.

~~~
jacquesm
You paid ahead of delivery or just a (small) downpayment ?

~~~
nailer
I paid per milestone, which were set by the developer according to his own
estimation of delivery, with a thousand dollar plus bonus to meeting his own
schedule. there was never any dispute, just the occasional 'I'm sorry this has
taken so long, something came up' until after getting paid for near completing
the first three milestones, he disappeared.

I was in another continent, so after all communication failed, decided not to
peruse the matter. However I ran into him at PyCon this year, about 2 years
afterwards. I didn't say anything, as to not cause a commotion. I'm over it,
and a lot has changed in my life since, including that I can now do all the
work I once needed him for.

~~~
jacquesm
Wow, what a bad experience. Good to see you get over it without holding a
grudge. That said I hope the person has learned their lesson and did not see
your decision to walk away from it as an encouragement for a repeat
performance.

~~~
nailer
Thanks man :^).

------
techbio
Built a MFA (made-for-adsense) site: <http://www.snapspans.com/>

:)

~~~
csomar
Care to share little more? Where traffic come from, how you built it,
estimated revenue...

~~~
techbio
I was thinking about advertising arbitrage at the time. Arbitrage, simplified,
works like this:

1) Buy something for a price.

2) Sell for a very tiny bit more.

3) Repeat as much as possible, for as long as the market sustains the price
difference.

Early on in AdWords/AdSense, some sites were able to buy traffic from a cheap
keyword and put up basically a thesaurus page with the higher value pay-per-
click (PPC) ads more than covering expenses (eg. pay $0.05 per visit for a N
visitors, then by optimizing conversions encourage click-throughs for > $2.00
each).

Later, before the online ad-market shook out upstarts, it was often possible
to buy traffic from one source and sell it on another, most often to or from
AdSense. Hence a proliferation of MFA sites (with almost no content but
relevant AdSense links).

But not thinking too hard suggests that paying nothing for traffic, not paying
less, is even better. So with an entrepreneur's ethics, I figured:

a) Business names and addresses are long tail search terms and not under
copyright

b) Dense Pages of Long Tail Search Terms => Targeted, Specifically Motivated
Traffic

c) (+ AdSense) => User Gets A Solution (finds a service) + PROFIT

I designed a logo, scraped some yellow pages, and it made some money.
Continual earnings trumped the dreams to conquer the internet.

Incidentally, the name is a palindrome, and rotating the logo through 360
degrees both spells out "snapspans" and looks like a yin-yan:

<http://www.snapspans.com/>

EDIT: Somewhat erratically, as search engine rankings update every so often,
it's at ~30K visitors and ~$450/month. It got spidered because of a link
exchange with another more established site.

EDIT2: Probably a good opportunity to write a blog post and submit, but only
if people care.

------
edanm
Haven't done it myself, but I'm guessing most startups can and do take on
consulting/outsourcing gigs for side money.

~~~
jasonkester
That's not particularly desperate though. Often the startup ends up boosting
the consulting side of a business to the point that it's making you more money
in business development than in actual on-site revenue.

------
japherwocky
Hot dogs and peanut butter burritos.

------
edge17
if anyone's curious what the post is referring to,

<http://en.justin.tv/startupschool/b/272007200>

starts @23:00 or so

------
kirpekar
I coached tennis for some extra money on the side.

