5 ms·

Don’t Plan to Get Rich from Your Startup

39 points by rwalling 16y ago

yosho 16y ago
Heh, yes, let me quit my job, forget about future earnings, and do a start-up so I can have modest returns in a niche industry. I'm sorry, but I don't think that mentality is good advice for entrepreneurs. I'd rather reach for the top of Everest and even if I only get halfway there, it would still be better than conquering an anthill.
- iamdave 16y ago
  Well yes, that's terrible advice for an entrepreneur who's very existence is inherent to the idea of starting a business, and making money. It's wonderful advice for developers who's existence is inherent to developing software for people who need it.
- dasil003 16y ago
  Do you climb Everest by waking your pasty ass up one day out of the blue and boarding the next jet to Nepal?
- jtheory 16y ago
  WRT the critique of his "aim for modest returns" comment -- it may help to read the paragraph below it (his point is primarily about your first startup, where you don't know what you're doing yet): -------- Start your startup. Learn the ropes. Then, whether you succeed or fail, you can swing for the fences. That second time you may just make it.
deleted 16y ago
[deleted]
caseyboardman 16y ago
Pretty much the plan (as I understand it) behind starting Fog Creek, right? Rather than starting a business to get rich, create yourself a place to pursue your own interests and get paid while doing it.
- scrod 16y ago
  If people pursued this philosophy on a large scale, the economy would be far more stable, and its participants more contented.
Scott_MacGregor 16y ago
Getting rich is our goal. We are certainly not aiming for a modest outcome. We are not an imitation of any other company out there, we are unique in many ways. We want to build the company up into a large solid company as quickly as possible. An employer people will want to work for, a place where people will be proud to work--and be paid well. We are going to build the #1 company in the market, and maintain that position over time no matter what.
- democracy 16y ago
  is it "Political Connector" you are talking about?
  - Scott_MacGregor 16y ago
    Yes, we are in stealth mode right now.
dasil003 16y ago
By silicon valley standards I think modest outcomes can make you rich. Consider bootstrapping and selling for $5m... I do agree with the article in the sense that you need to have a relatively concrete vision and execute on that, then iterate repeatedly to a more grandiose vision. There are so many kids out here with $ signs in their eyes imagining Facebook or Google success without realizing all the stepping stones along the path. There are of course more capital-intensive businesses where it's either worth a $100m or nothing at all, but even those have to start with a focused vision. Operationally a $100m biotech startup probably looks a lot like a $5m SaaS startup.
edw519 16y ago
Hmmm, let's see... If we really wanted to, we could make a very nice livelihood doing contract programming/consulting for let's say $100 per hour. That's roughly $200,000 per year. Not bad. Over 40 years, with compound interest, conservative investments, and a reasonable lifestyle, that adds up to, well a lot! So why would anyone in that position take so much time away from earning to work on a side project, prototype, or startup? There could be many reasons, but the two biggest I can think of are: - We work on something that pays nothing now because we have to. We don't ever want to wonder what would have been if we didn't. - We invest time we can never get back in the possibility of a big pay day. That may or may not ever happen, but unlike OP, this is one lottery we're willing to play because it's more than luck; we do have significant influence on the outcome.
- NathanKP 16y ago
  I understand your point but I also think that no startup will be truly successful unless you are working on the startup because you want to and love what you do, not just because you have to, or because you want to get rich.
  - tomjen3 16y ago
    I think you are right that people who hate the startup will not do well, but I have to seriously question your assumption that you have to enjoy yourselves _or_ want get rich. In fact, I believe you must want to get rich, and enjoy what you do. If you don't want to get rich you won't have any incentive to get over the point that isn't fun and you won't build a big business.
  - nitrogen 16y ago
    For me, when I say I "have to" work on my startup, I'm really saying that it's what I want and love to do, and if I didn't do it, I'd spend my whole life wondering and regretting choosing the "safe" approach. The safe path will always be available in the future, as long as I keep my skills current, so why not live a little dangerously until I know for sure whether I'm good at it?
- deleted 16y ago
  [deleted]
alex1 16y ago
If you don't plan on getting rich (or whatever outcome you dream of) from your startup, then why are you doing it? If you want a modest outcome and to be your own boss, then start a small business. It kind of sounds like this guy failed at a couple startups and has just lost all faith in major startup success. On another blog post on his site (http://www.softwarebyrob.com/2009/09/22/why-luck-is-a-terrible-marketing-plan-for-your-startup/ http://www.softwarebyrob.com/2009/09/22/why-luck-is-a-terrib...), I found this line: "I know a handful of people – including myself – who have reached for the startup life. Each of us did it for one, maybe two startups (you can only do so many before you burn out). Not surprisingly, none of us “made it.”" Are you kidding me? Most startups fail, but you have to keep trying. If you stop after 2 startup failures, then I don't think you have real entrepreneur spirit. You need to keep going until you get what you want, even if you have to start 50 startups. And if you keep going, you will eventually get what you want, including riches. Guaranteed. Luck isn't something that magically falls out of the sky and lands on you. Luck is a combination of opportunity and preparation. As an entrepreneur, you need to have lofty goals. When you tell your friends and family what your goals are, you better get a response along the lines of "You're crazy, you should aim for something lower." That's a good thing. Aim high. Very high. Even if you don't get to your lofty goals, you will probably get much further than you would aiming for modest goals.
- natemartin 16y ago
  How is "starting a small business" different from a "startup"? Isn't every startup a small business, by definition, until it gets big?
  - alex1 16y ago
    Not all small businesses dream of getting "big." In fact, very little do. Different people have different definitions of a "startup." To me and (I think) to many others on HN, a "startup" is a business designed to scale dramatically. It's an innovative company with high-growth potential. The new corner coffee shop would be a small business but not a startup. The owner just wants to make a decent living.
thunk 16y ago
Fuck that, I plan to! In fact, having modest ambitions seems like a Really Bad Idea -- you'd give up too easily.
Tichy 16y ago
Micropreneurship??? Is this all turning into a joke? I think I'll apply for a job with BP.
bigsassy 16y ago
This reminds me of a talk DHH made about making money online. One of the key take-aways for me was to stop aiming for the Fortune 500, and instead aim for the Fortune 5 million and work from there. http://www.omnisio.com/startupschool08/david-heinemeier-hansson-at-startup-school-08 http://www.omnisio.com/startupschool08/david-heinemeier-hans...
MicahWedemeyer 16y ago
I happen to agree quite a bit with the OP. As revenue from my startup grows, I see it as buying time back from consulting. This year it will buy about 3 months. Maybe next year it will be 6. Eventually I hope it to be 12+. I'll never get rich, but eventually I'll be free to work solely on my startup without anyone else telling me what to do. No one will envy my car, but many will envy my lifestyle.
alavrik 16y ago
The post doesn't say anything about innovation which is the key part of technology entrepreneurship. If one can't innovate and create something radically new and efficient, then yes, he should probably stick with traditional business models and limit his ambitions to small markets, slow growth and modest returns focusing on efficient execution. And there's more to it. Good engineers could do much better if they join an existing ambitious startup rather than if they convert to a small software workshop owners.
charlesju 16y ago
Sorry, I play to win.
chrisbuchino 16y ago
I appreciate the pragmatism from a "devil's advocate" point of view but think this is bad advice in general. What is an entrepreneur if not a visionary and eternal optimist.
samratjp 16y ago
Obligatory:http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html Although the author does makes some fine points like learning to run a startup by actually running your first one. This is so true for there are much more ways to fail such as co-founders!
gfodor 16y ago
A great way to not build the next big thing is to say to yourself "we're not gonna build the next big thing."

39 points by rwalling 16y ago

yosho 16y ago

Heh, yes, let me quit my job, forget about future earnings, and do a start-up so I can have modest returns in a niche industry. I'm sorry, but I don't think that mentality is good advice for entrepreneurs. I'd rather reach for the top of Everest and even if I only get halfway there, it would still be better than conquering an anthill.

iamdave 16y ago
Well yes, that's terrible advice for an entrepreneur who's very existence is inherent to the idea of starting a business, and making money. It's wonderful advice for developers who's existence is inherent to developing software for people who need it.
dasil003 16y ago
Do you climb Everest by waking your pasty ass up one day out of the blue and boarding the next jet to Nepal?
jtheory 16y ago
WRT the critique of his "aim for modest returns" comment -- it may help to read the paragraph below it (his point is primarily about your first startup, where you don't know what you're doing yet): -------- Start your startup. Learn the ropes. Then, whether you succeed or fail, you can swing for the fences. That second time you may just make it.

deleted 16y ago

[deleted]

caseyboardman 16y ago

Pretty much the plan (as I understand it) behind starting Fog Creek, right? Rather than starting a business to get rich, create yourself a place to pursue your own interests and get paid while doing it.

scrod 16y ago
If people pursued this philosophy on a large scale, the economy would be far more stable, and its participants more contented.

Scott_MacGregor 16y ago

Getting rich is our goal. We are certainly not aiming for a modest outcome. We are not an imitation of any other company out there, we are unique in many ways. We want to build the company up into a large solid company as quickly as possible. An employer people will want to work for, a place where people will be proud to work--and be paid well. We are going to build the #1 company in the market, and maintain that position over time no matter what.

democracy 16y ago
is it "Political Connector" you are talking about?
- Scott_MacGregor 16y ago
  Yes, we are in stealth mode right now.

dasil003 16y ago

By silicon valley standards I think modest outcomes can make you rich. Consider bootstrapping and selling for $5m... I do agree with the article in the sense that you need to have a relatively concrete vision and execute on that, then iterate repeatedly to a more grandiose vision. There are so many kids out here with $ signs in their eyes imagining Facebook or Google success without realizing all the stepping stones along the path. There are of course more capital-intensive businesses where it's either worth a $100m or nothing at all, but even those have to start with a focused vision. Operationally a $100m biotech startup probably looks a lot like a $5m SaaS startup.

edw519 16y ago

Hmmm, let's see... If we really wanted to, we could make a very nice livelihood doing contract programming/consulting for let's say $100 per hour. That's roughly $200,000 per year. Not bad. Over 40 years, with compound interest, conservative investments, and a reasonable lifestyle, that adds up to, well a lot! So why would anyone in that position take so much time away from earning to work on a side project, prototype, or startup? There could be many reasons, but the two biggest I can think of are: - We work on something that pays nothing now because we have to. We don't ever want to wonder what would have been if we didn't. - We invest time we can never get back in the possibility of a big pay day. That may or may not ever happen, but unlike OP, this is one lottery we're willing to play because it's more than luck; we do have significant influence on the outcome.

NathanKP 16y ago
I understand your point but I also think that no startup will be truly successful unless you are working on the startup because you want to and love what you do, not just because you have to, or because you want to get rich.
- tomjen3 16y ago
  I think you are right that people who hate the startup will not do well, but I have to seriously question your assumption that you have to enjoy yourselves _or_ want get rich. In fact, I believe you must want to get rich, and enjoy what you do. If you don't want to get rich you won't have any incentive to get over the point that isn't fun and you won't build a big business.
- nitrogen 16y ago
  For me, when I say I "have to" work on my startup, I'm really saying that it's what I want and love to do, and if I didn't do it, I'd spend my whole life wondering and regretting choosing the "safe" approach. The safe path will always be available in the future, as long as I keep my skills current, so why not live a little dangerously until I know for sure whether I'm good at it?
deleted 16y ago
[deleted]

alex1 16y ago

If you don't plan on getting rich (or whatever outcome you dream of) from your startup, then why are you doing it? If you want a modest outcome and to be your own boss, then start a small business. It kind of sounds like this guy failed at a couple startups and has just lost all faith in major startup success. On another blog post on his site (http://www.softwarebyrob.com/2009/09/22/why-luck-is-a-terrible-marketing-plan-for-your-startup/ http://www.softwarebyrob.com/2009/09/22/why-luck-is-a-terrib...), I found this line: "I know a handful of people – including myself – who have reached for the startup life. Each of us did it for one, maybe two startups (you can only do so many before you burn out). Not surprisingly, none of us “made it.”" Are you kidding me? Most startups fail, but you have to keep trying. If you stop after 2 startup failures, then I don't think you have real entrepreneur spirit. You need to keep going until you get what you want, even if you have to start 50 startups. And if you keep going, you will eventually get what you want, including riches. Guaranteed. Luck isn't something that magically falls out of the sky and lands on you. Luck is a combination of opportunity and preparation. As an entrepreneur, you need to have lofty goals. When you tell your friends and family what your goals are, you better get a response along the lines of "You're crazy, you should aim for something lower." That's a good thing. Aim high. Very high. Even if you don't get to your lofty goals, you will probably get much further than you would aiming for modest goals.

natemartin 16y ago
How is "starting a small business" different from a "startup"? Isn't every startup a small business, by definition, until it gets big?
- alex1 16y ago
  Not all small businesses dream of getting "big." In fact, very little do. Different people have different definitions of a "startup." To me and (I think) to many others on HN, a "startup" is a business designed to scale dramatically. It's an innovative company with high-growth potential. The new corner coffee shop would be a small business but not a startup. The owner just wants to make a decent living.

thunk 16y ago

Fuck that, I plan to! In fact, having modest ambitions seems like a Really Bad Idea -- you'd give up too easily.

Tichy 16y ago

Micropreneurship??? Is this all turning into a joke? I think I'll apply for a job with BP.

bigsassy 16y ago

This reminds me of a talk DHH made about making money online. One of the key take-aways for me was to stop aiming for the Fortune 500, and instead aim for the Fortune 5 million and work from there. http://www.omnisio.com/startupschool08/david-heinemeier-hansson-at-startup-school-08 http://www.omnisio.com/startupschool08/david-heinemeier-hans...

MicahWedemeyer 16y ago

I happen to agree quite a bit with the OP. As revenue from my startup grows, I see it as buying time back from consulting. This year it will buy about 3 months. Maybe next year it will be 6. Eventually I hope it to be 12+. I'll never get rich, but eventually I'll be free to work solely on my startup without anyone else telling me what to do. No one will envy my car, but many will envy my lifestyle.

alavrik 16y ago

The post doesn't say anything about innovation which is the key part of technology entrepreneurship. If one can't innovate and create something radically new and efficient, then yes, he should probably stick with traditional business models and limit his ambitions to small markets, slow growth and modest returns focusing on efficient execution. And there's more to it. Good engineers could do much better if they join an existing ambitious startup rather than if they convert to a small software workshop owners.

charlesju 16y ago

Sorry, I play to win.

chrisbuchino 16y ago

I appreciate the pragmatism from a "devil's advocate" point of view but think this is bad advice in general. What is an entrepreneur if not a visionary and eternal optimist.

samratjp 16y ago

Obligatory:http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html Although the author does makes some fine points like learning to run a startup by actually running your first one. This is so true for there are much more ways to fail such as co-founders!

gfodor 16y ago

A great way to not build the next big thing is to say to yourself "we're not gonna build the next big thing."