Super Angel Ron Conway To Would-Be Startups: Don't Quit Your Day Jobs(alleyinsider.com)
alleyinsider.com
Super Angel Ron Conway To Would-Be Startups: Don't Quit Your Day Jobs
http://www.alleyinsider.com/2008/10/super-angel-ron-conway-to-would-be-startups-don-t-quit-your-day-jobs
21 comments
Is a year really long enough to grow a business to the point where it can support you? I think a lot of startup types don't realize that sometimes the hockey stick is a little less vertical than you planned for, and there may be nothing you can do to speed it up.
It's disheartening to have a business that's growing, but not fast enough to stop you from hitting the brick wall one year out where you're out of money.
It's disheartening to have a business that's growing, but not fast enough to stop you from hitting the brick wall one year out where you're out of money.
I've not been there yet, but I'm pretty sure the answer is, "It depends."
I think you also have to have some real idea for how you're going to make money on the stuff. Even if you don't write a real business plan, sitting down and saying, "Our costs will be about this much. We'll make this much per user. So, we'll need to have this many users in a year of it's a no-go." -- doing that can give you an idea of if your ideas sound really nutty or not.
The brick wall is an important construct; it's an important idea to have there to keep you scared of what happens when the cash runs out ... but in reality, if you've got a stupidly low burn rate, you just do one week of consulting and then live for the next two months off of that.
I think you also have to have some real idea for how you're going to make money on the stuff. Even if you don't write a real business plan, sitting down and saying, "Our costs will be about this much. We'll make this much per user. So, we'll need to have this many users in a year of it's a no-go." -- doing that can give you an idea of if your ideas sound really nutty or not.
The brick wall is an important construct; it's an important idea to have there to keep you scared of what happens when the cash runs out ... but in reality, if you've got a stupidly low burn rate, you just do one week of consulting and then live for the next two months off of that.
1 year of total focus is plenty of time to find out of you should quit or go home. If you have positive cash flow and a solid company you can always borrow at below your growth rate and come out ahead. Take a part time job and keep living cheep. Or find some inverters.
I love how there are both "a recession is a great time to join a startup" and "it's a recession, don't quit your day job" stories on the front page at the same time.
I know the advice isn't mutually exclusive; but that was a confusing front page the first time I saw it.
I know the advice isn't mutually exclusive; but that was a confusing front page the first time I saw it.
But you don't understand. I don't like my dayjob.
The worst case scenario for a startup entrepreneur is failing out and having to get another day job. Skilled software engineers are still in high demand, and a recession will not change that. Therefore, the safety net (corporate America) is still there for anyone who quits.
However, if you like your current day job, it might not be a bad idea to hold on to it for a while.
However, if you like your current day job, it might not be a bad idea to hold on to it for a while.
I think the "cut cost" idea is correct. Startups who survived from series A fund should be really careful about its cash flow statement. Especially in the economic winter, who can last longer who will be able to see the spring sunrise.
Now would be a good time to apply to YC, or start startups in the FogCreek/37Signals way.
prakash, all due respect, but are those really the companies you want to quote? FogCreek and 37Signals are not the best or most profitable companies making money off these intranet, and they are not a 'way' of starting companies. They are just the loudest. Many, many companies started off like those two and are now pretty (Symantec, ZoneAlarm, Winzip). Those are the real success stories, not people who make their money by giving talks on how to make money.
I think you're missing one point that I get from 37Signals, which is the "be happy baking good bread" angle that DHH has espoused on at least one occasion I can remember. What he means by this is that not everyone feels like they have to crush Google to call themselves a success. Some people would be happy to be doing a (likely self determined) job they enjoy that provides what they need to maintain their chosen lifestyle. There's a lot of niches out there waiting to be found.
Granted, not everyone is happy just to "bake good bread" and that's cool, I'll be the first to cheer you on as you enter the area with Google/MS/Symantec/Digg/Facebook/whoever but on the flip side, don't assume that no one is.
This may be a hard concept for a lot of people to grok in a world addicted to "more" and possibly an unrealistic concept to entertain if you have a big VC expecting X return on their investment in Y amount of time.
But to write off companies that obviously have their own idea of how to proceed and seem to be doing just fine from their point of view is overly myopic on your part.
Granted, not everyone is happy just to "bake good bread" and that's cool, I'll be the first to cheer you on as you enter the area with Google/MS/Symantec/Digg/Facebook/whoever but on the flip side, don't assume that no one is.
This may be a hard concept for a lot of people to grok in a world addicted to "more" and possibly an unrealistic concept to entertain if you have a big VC expecting X return on their investment in Y amount of time.
But to write off companies that obviously have their own idea of how to proceed and seem to be doing just fine from their point of view is overly myopic on your part.
You don't get my point. There are many many successful software companies that start off as small shareware companies and grow to make lots of money and have 20 employees. I respect those companies. 37signals used to be that way, but right now they make their money from telling people how to make money. They are no longer a product company, they are a talking company.
I am against VC and against big growth, but I am also against continuously boasting about how good you are, as 37signals seems to constantly be doing.
I believe in product companies - they let the quality of their product speak. 37signals product is stagnant and really not that great.
I am against VC and against big growth, but I am also against continuously boasting about how good you are, as 37signals seems to constantly be doing.
I believe in product companies - they let the quality of their product speak. 37signals product is stagnant and really not that great.
Actually I did get your point (although you have made it a bit clearer re: you view on big growth, which I didn't get before), I just don't agree with you re: these companies in particular. I have to say I've gotten some good information from 37Signals' ideas. I don't follow their advice like an unquestioning lemming, I just take what works for me and leave it at that.
I can see how 37Signals' marketing might rub some people the wrong way, there's a fine line between productive self promotion and "boasting", a line that I think many people who are good at the former may cross from time to time (hasn't everyone felt like smashing DHH square in that pretty boy face of his at one time or another? :P). But however you feel about their approach, you can't deny that they have created a pretty good lifestyle supporting business for themselves and this should be commended IMO.
I use Backpack almost every day and it serves my particular needs very well. So I also don't agree with you that their products are not that great. I think Backpack is awesome, it does what I need it to do and doesn't get in my way. Their products are simple and straight forward for sure, but that's what I like.
I just think it just sounds like you're throwing the baby out with the bathwater a bit here. But each to their own I guess.
I can see how 37Signals' marketing might rub some people the wrong way, there's a fine line between productive self promotion and "boasting", a line that I think many people who are good at the former may cross from time to time (hasn't everyone felt like smashing DHH square in that pretty boy face of his at one time or another? :P). But however you feel about their approach, you can't deny that they have created a pretty good lifestyle supporting business for themselves and this should be commended IMO.
I use Backpack almost every day and it serves my particular needs very well. So I also don't agree with you that their products are not that great. I think Backpack is awesome, it does what I need it to do and doesn't get in my way. Their products are simple and straight forward for sure, but that's what I like.
I just think it just sounds like you're throwing the baby out with the bathwater a bit here. But each to their own I guess.
His point was that there're many other companies that started out as simple shareware product companies and got much more successful than 37signals. He listed Symantec, ZoneAlarm, and Winzip, to which I'd add Winamp, Microsoft, and Aladdin. These were not huge bet-the-farm VC successes like Google or Netscape. They grew slowly & organically by building (or buying, in Microsoft's case) good products for large markets. And there results have been much more impressive than FogCreek or 37signals.
All I'm saying is don't assume that all people/businesses have the same goals, and don't assume that everyone has the same definition of success.
Isn't their "way" simply: "brilliant" product plus price = profit? Seems sensible to me.
I was using FogCreek/37 as an example in not taking money, start small, consult, grow organically type of example. Hard to raise money in this environment, and hence I used YC.
Those are the real success stories, not people who make their money by giving talks on how to make money.
I think there is a little more to both those companies :-), in any case if there is value in what they are saying that is akin to building something users want.
Those are the real success stories, not people who make their money by giving talks on how to make money.
I think there is a little more to both those companies :-), in any case if there is value in what they are saying that is akin to building something users want.
He was using those companies as the same example. Just because they're big now doesn't mean they were always big.
A lot of the biggest names in computing today started small, didn't take money, and grew organically. The best example is probably Microsoft.
A lot of the biggest names in computing today started small, didn't take money, and grew organically. The best example is probably Microsoft.
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Keep working until you've saved enough money to live for a year. If you've got a decent IT salary and really learn to tighten your belt, you can do that in 6 months.
Once you've got that down, it's amazing how far you can go on a little bit of cash and how fast you can save it up if you need to. Learning to keep an eye on your cash also pays dividends on managing the burn-rate in your company.