Just finished reading "Ramen Profitable" of Paul Graham (http://paulgraham.com/ramenprofitable.html). Asking from you guys,
What keeps you away from starting startups?
If you overcome from this, what is your story of survival?
Here are some of my thoughts, obviously different things apply to different people:
1) The Ramen-way works only for people who are fresh out of college or at least are still with no liabilities. This doesn't work for people who have families, mortgage etc. In this case the YC-type funding just doesn't cut it. I would love to be proved wrong here with example(s) of YC company founders, since that might give me motivation.
2) Most poeple need some validation of their ideas, especially if they have more than one. Ideally it would be nice if YC, or someone else, can just help people validate their ideas and provide input, and might even take a small stake just for that service. Additional guidance along the way would be awesome.
3) How to form a team? OK, I'm committed in my idea and my idea is validated, where do I find at least 1-2 additional people I need. This is true especially since not everyone is an expert in all the technologies. Attending Meetups etc. is a way, hopefully there are others.
A lot of things around the cloud and hosting had really reduced the cost of an initial launch, but some of the above bottlenecks still stay, at least IMO.
"The Ramen-way works only for people who are fresh out of college or at least are still with no liabilities."
This is simply not true. My wife and I have medical debt and my partner has a family and a mortgage. You just work your 8 hour day job and come home and work another 4 to 6 hours in the evening. It's not a lot of fun -- it took us about a year to get to enough revenue to pay my salary.
I think #1 can be generalized (or re-phrased) to not having enough time/money. In other words, if you sacrifice a day job to take the time to start your startup, you do not have financial stability to support your family. If you keep the day job, however, then you don't have enough time for your startup.
YC-type funding in this case would probably help a little, assuming you have some cushioning elsewhere, e.g. savings, live with family, etc.
Then again, I bet there are probably founders out there that started their project on the side and slowly grew into a startup.
Users & customers validate #2 better than investor opinions. Whether or not it's viable to experimentally build depends on the domain, but if this is holding you back, you can choose an idea with a low startup cost.
Finding a team also helps validate the idea. Bouncing your thoughts off sharp colleagues is a key step in honing your idea. Once they're excited (about either you or your idea) you pop the question.
3) is the most difficult obstacle IMO. Finding people who share a vision, have elite skills across broad functional areas, and have the lifestyle flexibility to start something are hard to come by. I've been searching for a year and it is a real challenge. Finding potential partners in the Boston area has been tough. I imagine its even harder elsewhere (excluding SV/NYC).
I honestly think healthcare / health insurance is a major reason.
It's hard to be "ramen AND medical bills profitable" if you or one of your founders has an urgent medical issue when you're trying to bootstrap yourselves with no insurance.
The Obama administration should look at this issue and provide significantly reduced healthcare to bootstrapped startups.
I for one know I couldn't have done it if it weren't for socialized (yes I'll use that evil term) medicine here in Canada. Fortunately, I haven't been sick. But I have gone to the doctor a few times over the past few years for routine checkups/physicals. Actually, I did go once when I had a terrible bronchial infection that I just couldn't seem to kick even after a few weeks. My doctor gave me a bunch of free asthma inhalers when she heard I was self-employed. The next year I got a free flu shot and didn't get sick. This was important because had I gotten the flu it would have ended up in a huge amount of lost productivity on the project I was working on and possibly resulted in public failure for the stakeholders involved (we were constantly catching up the whole way). Although to be fair, not getting the flu may have been coincidence as the flu shot prevented a strain that was not prevalent this year. Flu vaccine manufacturers always have to guess which strain they think will be dominant and target it.
The routine physicals have led to me getting back into shape. My doctor also did some blood work and discussed some changes I needed to make in my diet to reduce the risk of developing some conditions that afflict other family members. This is a major benefit of having a family doctor that everyone goes to. When your other family members aren't insured and consequently don't see a doctor, your doctor doesn't have as complete perspective of potential risks to your health. Incidentally, I'm now earning more and contributing more to taxes, so I feel like the money spent on covering my healthcare was a worthwhile investment. And no, I didn't have to wait 6 months for a physical, I waited precisely 9 days for the next schedule window that was convenient for me. The flu shot was a walk-in procedure when I had an empty patch in my schedule.
Healthcare shouldn't only be about tending to urgent matters. Not getting your yearly physical is potentially like having a memory leak. You won't know something is wrong until it's potentially too late and when you do find out, it will be a major dilemma. All too often, even when healthcare costs are covered, people just don't bother going. If you're a startup founder, don't neglect your health, and make sure you take care of your body as well as you would your car.
9oliYQjP: you're one very interesting person but with a bad user name. Do you mind putting a note in your profile with a more pronouncable name? Everytime I read a comment of yours I am distracted by the machine generated name, which I somehow pronounce in my head as "Nine Olly Qiyuu Jay Pee".
Heh, it is a machine generated name. I am by no means well-known or a public figure, but some of the people I deal with regularly are. I have had the unfortunate experience of having people digging up dirt on some of these people try to use comments I posted to the Internet against them (e.g., an extreme example of a similar situation is how difficult it was for Obama to shake the notion that Reverend Wright's opinion was also his own). Around the same time I had to undergo a security clearance. It got me thinking about the breadcrumb trail I'd been leaving online. If I could change my cryptic alias to something more readable I would. It just so happens the easiest way to randomly come up with a username was to use the script I use to randomly generate passwords with.
I've spent the past few years SEuO (search engine unoptimizing) my personal online presence including quitting Facebook and started signing up to new services with different aliases so that people can't so easily aggregate what I say. It's kind of embarrassing how paranoid that sounds, but there's the rationale. I don't mind defending my opinions, but I'm loathe to put my friends in a position, as one was, to try to explain my opinion when they might not share it. On the other hand, it's quite liberating being able to say what I want without having to worry about the political costs associated with those comments.
It sounds like you haven't actually tried to obtain affordable private medical insurance. I have. A few years ago, I spent almost two years working sans paycheck on a startup and found it easy to satisfy one of my prerequisites, which was an affordable high-deductible medical insurance policy.
The notion that medical insurance has to be expensive is a myth. The notion that medical insurance has to cover every bout of the sniffles is a myth. My policy had a $1000 deductible, which meant I was on the hook for routine medical visits (I didn't have any in two years), but that policy relieved me from worries about financial ruin due to any potential major medical problems. The high-deductible policy that I purchased was less than half the cost of my former employer's COBRA plan. It was well within the realm of ramen profitability. It doesn't take much effort to be an informed consumer in the medical insurance marketplace, but many people (it seems) can't be bothered to try.
Knowledge that such a thing is possible when I first got out of college. Everything about school directed me to look for a job afterwards. Then finding a job was very easy, decent pay, big company. It wasn't until all these web startups started making it big that it even became a thought that it was possible to do such a thing, and then there is a lack of education about how to start a company.
It's taken a lot of thinking and reading of YN essays to discover that it is possible to start up a web company and that, in fact, I had all of the tools at my disposal coming out of college to do it! I just didn't know it was possible.
Now, I'm working for a late stage startup that has excellent potential and the golden handcuffs are keeping me around until an IPO.
It sounds like you don't want to run a start-up. Weighing expected return against current income means you're only interested in results, not in playing the game.
What's interesting is, I see a lot of people saying, "I don't have a very good idea."
For the record, my first swing was an awful idea -- social networking mumbo-jumbo. Half-baked, totally impossible to monetize. Four of us worked on it for about four months before the whole thing melted down and everyone but me (including my wife!) quit one at a time.
When I finally gave up and let it die, I became deeply depressed. I didn't even want to get out of bed. I felt like a total failure. But the truth was, we discovered a bunch of really important things during the total-failure startup. Those things stewed in my mind, and when the opportunity showed itself, I tried again. Now all those important things that I learned are contributing to my new company.
So, "I have a bad idea" is not much of an excuse. Take your free time and start working on it. Put up a reality distortion field and make yourself believe in it. Failing is also progress.
A. I just can't shake the idea that the market for mainstream web apps is saturated.
B. I can't find any ideas for niche markets because I'm not involved in any niches except for programming and anything for programmers is definitely a saturated market.
C. Cofounders I've come across have always flaked out. Granted I may have too but I think if just one of us had been persistent it would have been enough.
I think the interesting thing is that even if your niche looks saturated, but you're solving a pain point that other people aren't there's a possibility of (atleast) being ramen profitable.
It is not a zero-sum game, you're essentially growing the market by providing a feature or value that other products don't.
I don't want to do marketing/sales. I hate people trying to sell to me. I don't want to do it to others. Hard to find a good, non slimy, trustworthy business oriented guy to round me out.
I'd rather code full time, and talk to customers (as in support etc , not sales). This attitude + the lack of a "business" partner stops me from attempting a startup.
"I don't want to do sales" really shouldn't stop you. I don't want to do sales either, and I haven't had to do much of it yet.
Not having a cofounder is a good reason not to start yet - but it's mostly a good reason to go and look for a cofounder, rather than a reason to cancel your start-up plans altogether.
"Not having a cofounder is a good reason not to start yet - but it's mostly a good reason to go and look for a cofounder, rather than a reason to cancel your start-up plans altogether"
I completely agree. But in the meantime I am doing some fun stuff, (working on AI algorithms and such when I am working and now doing a 6 month "technical immersion" type thing http://news.ycombinator.com/item?id=700891) and so that contributes to the "I'll do a startup sometime,but not just yet" feeling.
I guess I should change my reply to "Why aren't you doing a startup yet?" to "lack of a business focussed co founder and meanwhile I am doing other interesting things, which doesn't leave me enough time and energy to go look for one".
Thanks for that suggestion. It helped me clarify my thoughts.
That's fair. I don't like doing sales either. I have a technical call with a new prospective customer this afternoon, and I'm terrified.
You need to find a business partner who thrives on this stuff. My suggestion: don't worry too much about your idea. Find a salesman partner who has experience in a field unrelated to yours, a solid network and an interesting idea.
I think I'm too critical of ideas. I'm just not convinced that any old idea can make it - and so many have already been done. I've got the time and the flexibility to be able to do it, but I just haven't settled on an idea.
I often feel the same way because I shoot holes in 9 out of 10 of my own ideas. I also think that you should have some competitors as it demonstrates that what you are doing actually has a market. Keep working on ideas, and work on executing better than the other guys.
That's true, and it's a good point. Still, there's something to be said for an established user-base. Most of the time one product dominates the market, even though there are many other superior products out there.
I've done some reasonably interesting stuff - none of which was for-profit, but also none of which was hugely successful. Turns out marketing is hard!
1. I have very little clue what gets people to spend money. I keep wanting at least a plausible theory of how this could make money before I dive in. I am particularly discouraged by the idea of making a web site that requires high traffic in order to be ramen-profitable.
2. I am easily distracted. I find myself getting sidetracked at all time-scales: by administrative and sysadmin junk, by other project ideas, etc.
3. I find it particularly hard to implement a software idea that I've come up with myself. It's weird, but I find myself in a mode of "just wanting it done" instead of enjoying the coding. No joy, no work.
I want to become a professor so I'm paid to indulge my curiosity, teach, and write interesting books into my old age. I imagine that as a professor, as I age into my 50s and 60s and 70s, I would be an appreciated contributor in a loving community, and I imagine that as a start-up founder, I would be cast aside in my old age the way they do in Ik society.
I am now at the age when there's not much time left to go down the professor track and be successful.
If I wasn't trying to become a professor, I would do a start-up without hesitation. The above four reasons wouldn't stop me.
My first year as a grad student was so miserable, I am now reassessing.
and, why do you think that as an entrepreneur you won't still be building businesses well into your 50s 60s and 70s with teams of ambitious and motivated people?
1. Grad school was miserable because of time-fragmentation. Four simultaneous projects (classes) => couldn't focus on any of them.
2. I think that by nature, I am not really an entrepreneur. I'm a curious person, a tinkerer, someone who mostly enjoys coming up with a really good theory to explain some facts and open up new lines of thought and research.
I've met people with a genuinely entrepreneurial mentality: they can't help but see how to negotiate a better deal, broker solutions to practical problems, pounce on opportunities before the crowd values them correctly, surprise their competitors with something unexpected. I admire those qualities, but that sort of thing wears me out fast. Theorizing and seeding other people with cool ideas, though—I never tire of those.
I think you would be surprised. If all you have is spare time and part time availability - do it anyway - many have (I'm one of them) and some are successful (I'm just starting). What was the old saying about doing something as a hobby, out of interest, and if it turns into a business - great! The thing is to be as committed to it as a full time startup.
The challenge of working on a project part-time is not a limit on time; it is follow through. For example if you can give 15 hours a week to a project at 100% you will be able to build something significant within a few months. If you don't have strong drive the 100% and 15 hours will both drop, and in the end you'll just have an idea that never happened.
Im a 31 yr old start-upper. I actually started my startup at 27/28ish; it was my first start-up. I was about to buy my first home with money I saved for such, but took the money and started up; stayed living with the parent I moved in with to save money for a house two years prior.
So, it's a huge sacrifice and gamble you take to either lead the quote/unquote normal life or start-up. If you start-up it becomes your life and entire focus. I pretty much dropped off the radar of my friends and devoted all my time and focus on my start-up. The journey it led me on was an awesome one re: attention, publicity and getting funding. Though all that awesome stuff was a great life journey it did not lead me to a healthy business that pays the bills and now I'm back to looking to get into the real world.
My start-up is still active and ppl do use it (just not that many). Though the things I learned from my first attempt and the journey it took me on has taught me a ton. I have the fever to start-up all over again, yet doing so on the side. The gamble was worth it just for the awesome experiences it led me on, but now it's time to get on with life and dream/enjoy the experiences on the side!
1.) I entered the developers and startup world late. It's only been about a year since I've discovered PG and only a few since I took up programming as more than just the occasional scripter.
2.) The market for web applications feels saturated, what happens when it collapses?
3.) As a single father I'm even more worried about being able to provide for my family. Not to mention the amount of chores around the house, and general repairs and preventative maintenance.
4.) I know ideas are supposed to be a natural progressive thing, but as someone else said, when you see your own flaws in every idea, or you have an idea that seems like such a niche market it would be hard to gain any share, it's discouraging.
As a counter point to all of these, my nature and spirit is in being an entrepreneur, my grandfather bootstrapped a food service company in the 50s that we sold in 2000, I convinced my parents to let me start an internet cafe/print shop when I was 17, which would have done well if I had more insight at the time, it still lasted over 5 years before I took a job for general IT support (which led me into programming, the missing 'creative' void I had been looking for).
If I was 21 instead of 27, and wasn't in the situation I was in, I'd be living at home working on starting my own business...I long everyday to work from home and be able to take a few months off every year to travel with the kids the way I never got to when I was younger (we were extremely tied down to the food service business).
There are a lot of variables to consider though, skillset being very important as well. I work the extra 4-6 hours a nigh already doing freelance web design/development, if I could find a good idea, I would put 100% towards it.
Being broke from the last one? Usually spend a year or more catching up financially. Its getting harder to do this.
Regarding insurance - If I didn't have a cheap policy I kept since I was 18, a startup wouldn't even be an option - I'm uninsurable on an individual plan.
I'm fairly confident that I not in the top 50%-30% that actually makes it work (for varying definitions of "work"). I've seen too many people who make me feel like a lackadaisical moron fail at start-upping.
I think most people are unsure how to make the transition from having a good idea to forming a company around it. Many people here build stuff all the time but often times don't seem to believe in the idea enough to put money into it, yet also are unsure how to get money from others. My guess is that people just aren't sure how, in spite of PG's best efforts.
My other guess would be that many ideas are largely just modifications of things that already exist that a large company like facebook could easily replicate. Coming up with brand new ideas is not easy.
Being a large company doesn't mean you can "easily replicate" things. The major reason startups can wiggle their way into a market and become a player is because large companies can't react in time to what an agile startup is doing in their space.
That's fair. Context is important here. I had facebook basically consuming twitter's functionality in mind. I was also attempting to point out how little innovation many ideas actually contribute.
Digression :: Has anyone noticed that myspace has recently ripped off a lot of facebooks features too?
I guess I'm a control freak. Having other people invest in my idea means I have certain obligations to them, I would feel less free to go about things the way I want to. Most of all it would create a sense of urgency which I don't have now.
I also happen to have a decent job where I am the lead developer on a product -- which in itself means I get to make the choices I want to make and I don't have to worry about all the stuff I don't care about (sales/marketing, finances, etc...).
One frustrating reason: I haven't found an idea with a sufficient chance of success to justify my investment.
It's frustrating because I have execution skills (I've launched 'startups' for larger companies), I could fund a small startup without external help and I have access to good design & technical talent. Am I being unreasonably risk averse? Lacking vision? Words of wisdom will be much appreciated!
Where do you look for ideas? I don't know any VCs or Angels personally, so what is it like to be you? Do you belong to an Angel's group, scan Craigslist, or rely on your network for introductions to people with ideas in need of funding?
That's very interesting - I have seen myself as a self-funding founder than an angel but given my lack of compelling ideas, perhaps that's where I'm going wrong. Perhaps I should do more networking to find other people with ideas where I can add execution skills and perhaps some funding.
I was simply oblivious to the idea that I could start a startup. My university focused on getting their students primed and ready to work at Big Widget Corporation and talk about startups was usually limited to references to Apple or Microsoft in their heyday in the 80s.
When I finally did hear about Y-Combinator all this other amazing stuff, the steady income from Big Widget Corporation still kept me from really going ahead with a startup. Why walk off the beaten path?
But after 2 years in the corporate world, I'll be starting my startup soon. What finally convinced me to go ahead? After witnessing the bureaucracy, red tape and inefficiency of large corporations, I decided that I was too young for this crap.
I'm edging towards 23-years old with no mortgages or debt/loans to pay and plenty of money in bank. Guess now wouldn't be such a bad time...
My father (who did start a company) gave me the sage advice that you don't want to start a company unless that company will be the absolute top priority in your life.
I'm currently a graduate student. I could drop out after I get my master's degree, or finish my Ph.D. I realized that doing a startup sounds great, but if it failed, as is very likely, I would regret walking away from grad school.
Time, I need more time. (granted it doesn't stop me from starting startups, it stops me from starting MORE startups). I need closer to 60 hours in a day.
1) The Ramen-way works only for people who are fresh out of college or at least are still with no liabilities. This doesn't work for people who have families, mortgage etc. In this case the YC-type funding just doesn't cut it. I would love to be proved wrong here with example(s) of YC company founders, since that might give me motivation.
2) Most poeple need some validation of their ideas, especially if they have more than one. Ideally it would be nice if YC, or someone else, can just help people validate their ideas and provide input, and might even take a small stake just for that service. Additional guidance along the way would be awesome.
3) How to form a team? OK, I'm committed in my idea and my idea is validated, where do I find at least 1-2 additional people I need. This is true especially since not everyone is an expert in all the technologies. Attending Meetups etc. is a way, hopefully there are others.
A lot of things around the cloud and hosting had really reduced the cost of an initial launch, but some of the above bottlenecks still stay, at least IMO.