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Things learned while running your own self-funded startup

404 points by rinesh 9y ago

ganeshkrishnan 9y ago
You missed the most important part: Keep your sanity. Trying to get funding is described as "soul sucking" even by Paul Graham and in our experience this is a startup killing move. Very few people talk about mental health for entrepreneurs and for us the most challenging times was talking to investors. If a constant stream of people told you, your business was not worth spending time or money, after how many rejections will you start doubting your company and even yourself? Investors asking for a stream of documents, asking us to drive down for partner meetings, arriving late at meetings, un-responsive to emails: They all take a toll on the startup and more importantly on entrepreneurs. Getting funded is a rat race. You get the money and then clock starts ticking for sales, series A,B,C , 10x the returns etc. The startup newsletter are full of wins, and VC fundings and "we are killing it bro" mentality but how often do we stop to talk about those that failed?
- InternetUser 9y ago
  Exactly; you are referring to survivorship bias - https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
  - jasonkester 9y ago
    They need another catchy phrase to reply to this, along the lines of "if you never try, there's nothing to survive". Survivorship Bias is at the top of the list of "reasons not to try", and it's a shame to see it dragged out every time you see a success story. The thing I live on today was Job Quittin' Sideproject #5. The first four died without ever letting me quit any jobs. Is #5 "survivorship"? Or is it "persistance"? Let's say the chance of getting a business working, even for a smart guy, is only 10%. Does that mean you shouldn't try? Or does that mean it will take on average half a dozen attempts to make it work? I like to think it's the latter. Here's a bit that I wrote about all this a week or so ago: http://www.expatsoftware.com/Articles/what-if-your-bootstrapped-product-dies.html http://www.expatsoftware.com/Articles/what-if-your-bootstrap...
    - amorphid 9y ago
      > They need another catchy phrase to reply to this, along the lines of "if you never try, there's nothing to survive". I like "you gotta be in it to win it".
    - smt88 9y ago
      > Let's say the chance of getting a business working, even for a smart guy, is only 10%. It's much, much lower, according to any reasonable estimation. For all startups, I've seen "less than 1%" on many occasions. That obviously excludes tons of failures that are never reported anywhere -- sometimes that are never even incorporated, despite trying to build/sell a product. > Does that mean you shouldn't try? For the vast majority of people, yes! "Try" has costs -- time, money, life, and relationships. To really try will often cost tens of thousands of dollars. Most people can't afford to gamble so much with such a tiny chance of success.
      - jasonkester 9y ago
        "less than 1%" Are you thinking VC-backed startups, or maybe lumping them in to your calculation? Remember, we're talking bootstrapped businesses designed for profitability. I think you'd be hard pressed to make ten real efforts in a row, learning lessons as you go, without getting one of them to stick. For VC's, where "profitable and growing linearly" equates to failure, then sure, the odds are worse. But that's just another reason not to go that route. tens of thousands of dollars For what it's worth, the 4 big multi-year failures I reference above cost maybe a few thousand dollars total over the span of 10 years, and happened primarily in spare nights & weekends during the course of an otherwise active and non-ruined life. Most people who met me never knew it was happening at all, and no friday beers were missed as a result of the aforementioned bootstrapping.
      - marz0 9y ago
        I suppose it depends on how you differentiate between startups and small businesses, but the failure rate might not be as bad you would think depending on how you expect to run your business. Only 50% of small businesses will have failed after 5 years[0], which is a significantly lower rate of failure than you typically hear for startups. If you decide to start a lifestyle business as opposed to a high-growth startup you may be more successful in terms of wealth and health. [0] https://www.fundera.com/blog/what-percentage-of-small-businesses-fail https://www.fundera.com/blog/what-percentage-of-small-busine...
- dudul 9y ago
  This is a post about self funded startups. One bullet point explicitly calls out not getting involved with investors.
  - ak39 9y ago
    Even still, the point about sanity after being rejected "all over the show" is very much relevant. I couldn't agree more that keeping your head in the game when nay sayers and sometimes downright jealous or mischievous characters get you doubting yourself. It is soul crushing. The psychology of living in startup purgatory is where it's at.
- jasode 9y ago
  > but how often do we stop to talk about those that failed? The failures of VC-funded startups (e.g. recently Juicero, Rethinkdb, etc on HN) are discussed more often than the failures of self-funded startups. Also, as far as I can tell, a significant number (most?) of the startups listed at autopsy.io[1] are VC-funded. In contrast, the self-funded startups that fail usually die a quiet death without discussion because they were never big enough to be mentioned in Techcrunch/Wired/Engadget/etc. [1] http://autopsy.io/ http://autopsy.io/
  - Xeoncross 9y ago
    > die a quiet death without discussion Perhaps the reason they died
- harel 9y ago
  I guess if we started talking about those who failed we'll never stop... For every one that makes it there are scores who didn't.
- segmondy 9y ago
  Are you speaking from experience or just repeating what you have read from other sources?
- hw 9y ago
  The funding race is soul sucking, but there are many people who like to play the startup+funding churn game. Lots of $ involved, and some people like the nature of it Not seeking funding can also be soul sucking especially when it comes to hiring and you don't have enough resources to hire. Of course, if you're self funding, the ideal scenario would be to build something that doesn't require a lot of human resources and maintenance and cost, and run it as a lifestyle instead of an actual job.
- contingencies 9y ago
  My tip would be that if you squint and view your own time as unsalaried (to a defined point within bizdev, eg. raising external financing) and your initial capital as equivalent expense versus another option (eg. doing an MBA) then you can psychologically hack yourself to justify a larger commitment than you would otherwise. This also works for skipping college, but with time as the key resource. In the end, so much is subjective!
ykler 9y ago
I'm unclear about what he means by "Don't blindly sign NDAs". What are the risks, and what items to watch out for would be on the checklist my lawyer would ideally provide?
- moxious 9y ago
  NDAs aren't standard at all. They range from simple back of the napkin agreements to "we get your first born child". Blindly signing subjects you to potentially nasty term, and obligated you not to talk about certain things. This in turn can be used as leverage by the other side if things go badly. Really, it's just don't blindly sign any agreement. Unfortunately agreements are so ponderous (clickwrap) that most people are used to doing that
  - bkovacev 9y ago
    As funny as it sounds the "we get your first born child" clauses in the NDAs are not a rare occurrence. One NDA I was required to sign explicitly stated that every idea or functionality I developed on other projects for up to twelve months after delivery of their project was subject to review by the issuer of the NDA (not even a 3rd party) and that if anything even remotely similar to functionality I will be creating within the new project they're rightful owners of it or that they are able to sue me.
    - dahart 9y ago
      > One NDA I was required to sign explicitly stated that every idea or functionality I developed on other projects for up to twelve months after delivery of their project was subject to review by the issuer of the NDA Saying 'required' makes it sound like you didn't have a choice -- out of curiosity, did they have other leverage over you above getting your help on their project, and did you attempt to negotiate on this clause? I don't doubt that non-compete clauses happen in NDAs; other people in this thread to mention seeing them. But I think they're not that common either. I've seen my share of NDAs and never seen a non-compete clause. I do get non-compete clauses in employment contracts that also include NDAs as well as invention assignments and more, but I haven't personally seen a non-compete clause in a pure non-disclosure contract, that seems abnormal. But I agree completely that one should always read their contracts carefully before signing.
lemmings19 9y ago
Does anyone know of similar articles to this that they like and wouldn't mind sharing? I always find these perspectives and retrospectives useful and interesting. Different people always point out different things, because everyone's business is at least slightly different in one respect or another. (be it funding, customer base, product scale, product type, employee count, number of concurrent projects, how successful they were, etc.) For example, the book "The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers" by Ben Horowitz provided good insight into managing larger tech companies and was enjoyable to read.
- sogen 9y ago
  I'd recommend checking marco.org, panic, nevenmrgan and this article: https://medium.com/@adrianhon/how-we-made-an-app-store-subscription-success-25f4ea75500f https://medium.com/@adrianhon/how-we-made-an-app-store-subsc...
- mi100hael 9y ago
  Some other good resources I've come across recently: https://www.groovehq.com/blog https://www.groovehq.com/blog https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-... http://www.startupsfortherestofus.com http://www.startupsfortherestofus.com
- ChanningAllen 9y ago
  In general I'd keep an eye on the articles and interviews on indiehackers.com. Specifically, I recommend checking out these articles: How Seth Godin Would Launch a Business With a $1,000 Budget[1], A Guide to Running a Minimalist Startup[2], How to Launch a Product With No Money and No Customers[3], How to Ship Side Projects[4]. For something a little more comprehensive, check out GrowthLab’s Ultimate Guide to Starting an Online Business[5]. [1] https://www.indiehackers.com/@Louis_Grenier/2cc8c6c79c https://www.indiehackers.com/@Louis_Grenier/2cc8c6c79c [2] https://www.indiehackers.com/@pjrvs/1187274e54 https://www.indiehackers.com/@pjrvs/1187274e54 [3] https://www.indiehackers.com/@cmason/how-to-launch-a-product-with-no-money-and-no-customers https://www.indiehackers.com/@cmason/how-to-launch-a-product... [4] https://www.indiehackers.com/@lambtron/b04914b36f https://www.indiehackers.com/@lambtron/b04914b36f [5] https://growthlab.com/guides/ultimate-guide-to-starting-an-online-business/?ref=banner https://growthlab.com/guides/ultimate-guide-to-starting-an-o...
ernsheong 9y ago
A link to the product page (Basis) would be helpful to give context. Sounds like a lot of advice veers toward enterprise sales.
- tshanmu 9y ago
  http://www.binomial.info http://www.binomial.info - Basis appears to be a GPU agnostic texture compression product
  - rasjani 9y ago
    Which is sort of interesting - while I have very little experience - I've dealt with this on QA side of things for automotive industry tooling a bit and getting the right texture format for what ever vendor and their product was always a problematic depending on variety of factors.
- nottorp 9y ago
  He does say "middleware" a couple hundred times in the article. Most of his sales advice doesn't apply to off the shelf consumer software. Doesn't mean the article doesn't look insightful though.
  - abraae 9y ago
    I imagine he was selling to techies. > 7. If you have a product that a very large company really wants, they'll still do everything they can to delay purchasing it for the market price. They'll try to hire you or your partner(s) away individually, or they'll wait as long as possible to see if you encounter hard financial times and go under. They won't come and just offer to license your product or buy you out until they've exhausted all other possibilities. This is the opposite of normal enterprise sales in my experience (we do HR software). If you are talking to the right person, and you have a solution to their business problem at a suitable price (not too high, not too low) then the very last thing they want to do is to kill the deal with these kinds of shenanigans. Selling to programmers though is the opposite, and frankly is to be avoided at all costs.
trevyn 9y ago
Since the article goes into this, a couple things about selling into large companies: - The amount that they will try to squeeze you and give you the runaround is highly dependent on the personalities and the resources of the team that you’re selling to; it’s not generally consistent across the entire company, unless you’re dealing with a central purchasing department (hopefully you’re not, except for processing your PO). Of course, it also depends on the amount of value that your product provides compared to their current or potential internal solutions, as well as your competitors. - Getting paid promptly is much easier if you write your contract with milestones and require receipt of payment for a previous milestone before work on the next milestone begins. Invoice in advance so the “net 30” expires on the day you want to be paid, or demand “due upon receipt” terms.
- twfarland 9y ago
  I also use that billing strategy happily. There's another detail that helps with 'training' new clients on good payment behaviour - give them a small % discount on the next milestone if they pay early on the first.
LoSboccacc 9y ago
there ya go div.post-body { color: black; font-size: 1.7em; font-family: serif; } now you too can read the article!
mixedbit 9y ago
Great read. They do direct sales with each contract individually negotiated and high prices. More common approach for small companies is to avoid such negotiations and sell packaged software at fixed and lower prices but aim for higher volume.
dmichulke 9y ago
Quite a few of the advices can be summarized to: Say "no" when something feels wrong. This implies that you can say "no" - emotionally (you don't feel bad about it and you don't fear missing out) - economically (you don't need that money) Source: I've committed all three types of errors
scardine 9y ago
> 22. If you're at a company with deep pockets and you want to really have influence, offer the potential of a very large license fee for key software middleware. It works. What is number #22 (sorry, English is not my native language)? Is he talking about clients that offered him a large licensing fee and gained huge influence over him for doing so?
- gbacon 9y ago
  The opposite. To a company with lots of money to spend (deep pockets) the author offered the client a large license fee for middleware that was important (to the client). This is a bit of a mind game. Confirmation bias[0] and the sunk-cost fallacy[1] being what they are, after a client makes what she sees as a large investment in you and your product, she has tied her success to your success. [0]: https://en.wikipedia.org/wiki/Confirmation_bias https://en.wikipedia.org/wiki/Confirmation_bias [1]: https://en.wikipedia.org/wiki/Sunk_cost#Loss_aversion_and_the_sunk_cost_fallacy https://en.wikipedia.org/wiki/Sunk_cost#Loss_aversion_and_th...
gumby 9y ago
Having bootstrapped a couple of successful businesses myself, I think this is chockablock with great advice/observations. I am surprised he seemed happy with his Valve experience but it is insightful of him to see that it taught him some good bootstrap lessons.
- Mouse47 9y ago
  >chockablock I had to google that :) Funny it's 'x is chockablock with' rather than 'x is chockablocked with'
  - HeyLaughingBoy 9y ago
    Chockablock is a nautical term (see:double blocked) meaning that two blocks (pulley systems used in ship rigging) are fast against each other and can't get closer. Basically it's a synonym for "full" or "can't move." Clearly, the term "block" has nothing to do with the word, "blocked."
bcarroll22 9y ago
> Research the concept of "Death Prices". Google doesn't come up with anything on this one, is there a different term for the same thing?
- chmike 9y ago
  Is this the same as "hidden costs" ? That is a cost not showing up on the bill. For instance the time spent to get the thing working and keep it working. I've heard it used as argument against linux and free software.
  - cjsawyer 9y ago
    No, it’s about the initial price you list influencing the value perceived by potential customers. If you set it too low they won’t think your product is worth their time or money
- grinnick 9y ago
  I think it's the idea that if you price your software too low then it's value will be perceived as low. You then have customers paying a low price for a low (perceived) value product and you're into a death spiral.
acidburnNSA 9y ago
> Open source is great, because potential customers will get a chance to try out your work without spending a dime or ever talking to you. This boosts your credibility. On the flip side, if you give away too much, you are basically competing against yourself when you attempt to monetize your work as a product. > Your open source release should be a demo of the product, and no more. Give things away with the goal of eventually converting the users of the free software into paying customers. Eh, I get it, but I also kind of dislike when people use open source solely as an advertisement. Either open source something useful or don't bother open sourcing it at all. A lot of smaller open source work I've seen is done by people who put a lot of work into making a cool tool who then want to share it with other people that may find it useful and use it for new and interesting purposes.
- tmccrmck 9y ago
  Unfortunately, this is where we are in 2017. For many companies and people, contributing to open source has nothing to do with the Stallman concept of "freedom" - it has everything to do with PR.
- ike_yeah 9y ago
  Give me a non-utopian incentive where widespread open source (when you can hire professionals for security) is practical.
- ci5er 9y ago
  What about a license that says: "If you buy some X number of seats of our software, then you get a copy of the source-code to modify and do with as you will (today as well as when we, the vendor, die, as vendors are wont to do), but this does not grant a license to more seats (unless we, the vendor, are dead), nor the right to redistribute the source-code. N.B. We do not support your changes. Unless you pay us a goodly sum in advance. And even then, we really can't put SLAs behind outcomes." ??
matt2000 9y ago
Great list. The only thing that I might take issue with is #5: "5. Every decision must be made extremely carefully. Bad decisions cost money." Taking too much time on decisions is a good way to kill a new company. Many, if not most wrong decisions you can recover from, and it's very difficult to know what the right decision is beforehand. So a lot of the time the "right" decision is just to do _something_ to learn what the real right decision is and then do that.
- j45 9y ago
  Taking the right amount of time on the right decisions is key - gathering experience in turn ultimately provides it if you have it, or in hindsight. As much as making quick decisions is valuable, its painful/permanent impacts to the group are high if they aren't flexible decisions, or aren't revisited. Technical Research is critical. https://producthabits.com/everyone-forgets-technical-research/ https://producthabits.com/everyone-forgets-technical-researc...
- dannylandau 9y ago
  Generally don't comment that much, but have to agree with your point 200%. Trial and error is the backbone of building a successful stat-up, going from 0 to 1.
at-fates-hands 9y ago
Great checklist. I self funded two startups and the point about targeting small companies is a good idea. I would also add using a subscription based service (even for development) is the way to go. You can charge a monthly fee for a group of services to smaller clients while development is ongoing with a list of milestones and achievements to keep the project on track while ensuring you have recurring revenue coming in. If you get multiple clients, you can really set yourself up for success. Having 3-4K coming in every month on a regular basis can keep you afloat and reduce the anxiety of having to send out bill and then waiting to get paid.
alberth 9y ago
I find these articles always of interest. @Rich Geldreich, you might want to link from your blog to your company website http://www.binomial.info/ http://www.binomial.info/. I only say that because I didn't find a link and I had to google for it.
Cut_N_Paste 9y ago
low contrast is hard for me to read
bogomipz 9y ago
Are the references to contracts in the article "contract work" i.e contract employee work for someone else in order to help subsidize your startup? If so that's an interesting approach to getting your startup of the ground and maintaining some income. Have people had success with this? I have found lining up contract work to be almost as time consuming as doing a regular FT job. Or am I reading these references wrong and it's your startup doing various short term and tangentially related contracts?
Heraclite 9y ago
I think I'm going to stop reading any article about what it's like to run a company, until I actually create and run my next one. Does anyone feel like reading articles has reached a point of diminished returns?
rubin55 9y ago
Wow, this matches 101% my experiences self-funding my company and product. I made a lot of mistakes that I recognize in the advice given here. Kudos!

404 points by rinesh 9y ago

You missed the most important part: Keep your sanity. Trying to get funding is described as "soul sucking" even by Paul Graham and in our experience this is a startup killing move. Very few people talk about mental health for entrepreneurs and for us the most challenging times was talking to investors. If a constant stream of people told you, your business was not worth spending time or money, after how many rejections will you start doubting your company and even yourself? Investors asking for a stream of documents, asking us to drive down for partner meetings, arriving late at meetings, un-responsive to emails: They all take a toll on the startup and more importantly on entrepreneurs. Getting funded is a rat race. You get the money and then clock starts ticking for sales, series A,B,C , 10x the returns etc. The startup newsletter are full of wins, and VC fundings and "we are killing it bro" mentality but how often do we stop to talk about those that failed?

InternetUser 9y ago
Exactly; you are referring to survivorship bias - https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
- jasonkester 9y ago
  They need another catchy phrase to reply to this, along the lines of "if you never try, there's nothing to survive". Survivorship Bias is at the top of the list of "reasons not to try", and it's a shame to see it dragged out every time you see a success story. The thing I live on today was Job Quittin' Sideproject #5. The first four died without ever letting me quit any jobs. Is #5 "survivorship"? Or is it "persistance"? Let's say the chance of getting a business working, even for a smart guy, is only 10%. Does that mean you shouldn't try? Or does that mean it will take on average half a dozen attempts to make it work? I like to think it's the latter. Here's a bit that I wrote about all this a week or so ago: http://www.expatsoftware.com/Articles/what-if-your-bootstrapped-product-dies.html http://www.expatsoftware.com/Articles/what-if-your-bootstrap...
  - amorphid 9y ago
    > They need another catchy phrase to reply to this, along the lines of "if you never try, there's nothing to survive". I like "you gotta be in it to win it".
  - smt88 9y ago
    > Let's say the chance of getting a business working, even for a smart guy, is only 10%. It's much, much lower, according to any reasonable estimation. For all startups, I've seen "less than 1%" on many occasions. That obviously excludes tons of failures that are never reported anywhere -- sometimes that are never even incorporated, despite trying to build/sell a product. > Does that mean you shouldn't try? For the vast majority of people, yes! "Try" has costs -- time, money, life, and relationships. To really try will often cost tens of thousands of dollars. Most people can't afford to gamble so much with such a tiny chance of success.
    - jasonkester 9y ago
      "less than 1%" Are you thinking VC-backed startups, or maybe lumping them in to your calculation? Remember, we're talking bootstrapped businesses designed for profitability. I think you'd be hard pressed to make ten real efforts in a row, learning lessons as you go, without getting one of them to stick. For VC's, where "profitable and growing linearly" equates to failure, then sure, the odds are worse. But that's just another reason not to go that route. tens of thousands of dollars For what it's worth, the 4 big multi-year failures I reference above cost maybe a few thousand dollars total over the span of 10 years, and happened primarily in spare nights & weekends during the course of an otherwise active and non-ruined life. Most people who met me never knew it was happening at all, and no friday beers were missed as a result of the aforementioned bootstrapping.
    - marz0 9y ago
      I suppose it depends on how you differentiate between startups and small businesses, but the failure rate might not be as bad you would think depending on how you expect to run your business. Only 50% of small businesses will have failed after 5 years[0], which is a significantly lower rate of failure than you typically hear for startups. If you decide to start a lifestyle business as opposed to a high-growth startup you may be more successful in terms of wealth and health. [0] https://www.fundera.com/blog/what-percentage-of-small-businesses-fail https://www.fundera.com/blog/what-percentage-of-small-busine...
dudul 9y ago
This is a post about self funded startups. One bullet point explicitly calls out not getting involved with investors.
- ak39 9y ago
  Even still, the point about sanity after being rejected "all over the show" is very much relevant. I couldn't agree more that keeping your head in the game when nay sayers and sometimes downright jealous or mischievous characters get you doubting yourself. It is soul crushing. The psychology of living in startup purgatory is where it's at.
jasode 9y ago
> but how often do we stop to talk about those that failed? The failures of VC-funded startups (e.g. recently Juicero, Rethinkdb, etc on HN) are discussed more often than the failures of self-funded startups. Also, as far as I can tell, a significant number (most?) of the startups listed at autopsy.io[1] are VC-funded. In contrast, the self-funded startups that fail usually die a quiet death without discussion because they were never big enough to be mentioned in Techcrunch/Wired/Engadget/etc. [1] http://autopsy.io/ http://autopsy.io/
- Xeoncross 9y ago
  > die a quiet death without discussion Perhaps the reason they died
harel 9y ago
I guess if we started talking about those who failed we'll never stop... For every one that makes it there are scores who didn't.
segmondy 9y ago
Are you speaking from experience or just repeating what you have read from other sources?
hw 9y ago
The funding race is soul sucking, but there are many people who like to play the startup+funding churn game. Lots of $ involved, and some people like the nature of it Not seeking funding can also be soul sucking especially when it comes to hiring and you don't have enough resources to hire. Of course, if you're self funding, the ideal scenario would be to build something that doesn't require a lot of human resources and maintenance and cost, and run it as a lifestyle instead of an actual job.
contingencies 9y ago
My tip would be that if you squint and view your own time as unsalaried (to a defined point within bizdev, eg. raising external financing) and your initial capital as equivalent expense versus another option (eg. doing an MBA) then you can psychologically hack yourself to justify a larger commitment than you would otherwise. This also works for skipping college, but with time as the key resource. In the end, so much is subjective!

ykler 9y ago

I'm unclear about what he means by "Don't blindly sign NDAs". What are the risks, and what items to watch out for would be on the checklist my lawyer would ideally provide?

moxious 9y ago
NDAs aren't standard at all. They range from simple back of the napkin agreements to "we get your first born child". Blindly signing subjects you to potentially nasty term, and obligated you not to talk about certain things. This in turn can be used as leverage by the other side if things go badly. Really, it's just don't blindly sign any agreement. Unfortunately agreements are so ponderous (clickwrap) that most people are used to doing that
- bkovacev 9y ago
  As funny as it sounds the "we get your first born child" clauses in the NDAs are not a rare occurrence. One NDA I was required to sign explicitly stated that every idea or functionality I developed on other projects for up to twelve months after delivery of their project was subject to review by the issuer of the NDA (not even a 3rd party) and that if anything even remotely similar to functionality I will be creating within the new project they're rightful owners of it or that they are able to sue me.
  - dahart 9y ago
    > One NDA I was required to sign explicitly stated that every idea or functionality I developed on other projects for up to twelve months after delivery of their project was subject to review by the issuer of the NDA Saying 'required' makes it sound like you didn't have a choice -- out of curiosity, did they have other leverage over you above getting your help on their project, and did you attempt to negotiate on this clause? I don't doubt that non-compete clauses happen in NDAs; other people in this thread to mention seeing them. But I think they're not that common either. I've seen my share of NDAs and never seen a non-compete clause. I do get non-compete clauses in employment contracts that also include NDAs as well as invention assignments and more, but I haven't personally seen a non-compete clause in a pure non-disclosure contract, that seems abnormal. But I agree completely that one should always read their contracts carefully before signing.

lemmings19 9y ago

Does anyone know of similar articles to this that they like and wouldn't mind sharing? I always find these perspectives and retrospectives useful and interesting. Different people always point out different things, because everyone's business is at least slightly different in one respect or another. (be it funding, customer base, product scale, product type, employee count, number of concurrent projects, how successful they were, etc.) For example, the book "The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers" by Ben Horowitz provided good insight into managing larger tech companies and was enjoyable to read.

sogen 9y ago
I'd recommend checking marco.org, panic, nevenmrgan and this article: https://medium.com/@adrianhon/how-we-made-an-app-store-subscription-success-25f4ea75500f https://medium.com/@adrianhon/how-we-made-an-app-store-subsc...
mi100hael 9y ago
Some other good resources I've come across recently: https://www.groovehq.com/blog https://www.groovehq.com/blog https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-... http://www.startupsfortherestofus.com http://www.startupsfortherestofus.com
ChanningAllen 9y ago
In general I'd keep an eye on the articles and interviews on indiehackers.com. Specifically, I recommend checking out these articles: How Seth Godin Would Launch a Business With a $1,000 Budget[1], A Guide to Running a Minimalist Startup[2], How to Launch a Product With No Money and No Customers[3], How to Ship Side Projects[4]. For something a little more comprehensive, check out GrowthLab’s Ultimate Guide to Starting an Online Business[5]. [1] https://www.indiehackers.com/@Louis_Grenier/2cc8c6c79c https://www.indiehackers.com/@Louis_Grenier/2cc8c6c79c [2] https://www.indiehackers.com/@pjrvs/1187274e54 https://www.indiehackers.com/@pjrvs/1187274e54 [3] https://www.indiehackers.com/@cmason/how-to-launch-a-product-with-no-money-and-no-customers https://www.indiehackers.com/@cmason/how-to-launch-a-product... [4] https://www.indiehackers.com/@lambtron/b04914b36f https://www.indiehackers.com/@lambtron/b04914b36f [5] https://growthlab.com/guides/ultimate-guide-to-starting-an-online-business/?ref=banner https://growthlab.com/guides/ultimate-guide-to-starting-an-o...

ernsheong 9y ago

A link to the product page (Basis) would be helpful to give context. Sounds like a lot of advice veers toward enterprise sales.

tshanmu 9y ago
http://www.binomial.info http://www.binomial.info - Basis appears to be a GPU agnostic texture compression product
- rasjani 9y ago
  Which is sort of interesting - while I have very little experience - I've dealt with this on QA side of things for automotive industry tooling a bit and getting the right texture format for what ever vendor and their product was always a problematic depending on variety of factors.
nottorp 9y ago
He does say "middleware" a couple hundred times in the article. Most of his sales advice doesn't apply to off the shelf consumer software. Doesn't mean the article doesn't look insightful though.
- abraae 9y ago
  I imagine he was selling to techies. > 7. If you have a product that a very large company really wants, they'll still do everything they can to delay purchasing it for the market price. They'll try to hire you or your partner(s) away individually, or they'll wait as long as possible to see if you encounter hard financial times and go under. They won't come and just offer to license your product or buy you out until they've exhausted all other possibilities. This is the opposite of normal enterprise sales in my experience (we do HR software). If you are talking to the right person, and you have a solution to their business problem at a suitable price (not too high, not too low) then the very last thing they want to do is to kill the deal with these kinds of shenanigans. Selling to programmers though is the opposite, and frankly is to be avoided at all costs.

trevyn 9y ago

Since the article goes into this, a couple things about selling into large companies: - The amount that they will try to squeeze you and give you the runaround is highly dependent on the personalities and the resources of the team that you’re selling to; it’s not generally consistent across the entire company, unless you’re dealing with a central purchasing department (hopefully you’re not, except for processing your PO). Of course, it also depends on the amount of value that your product provides compared to their current or potential internal solutions, as well as your competitors. - Getting paid promptly is much easier if you write your contract with milestones and require receipt of payment for a previous milestone before work on the next milestone begins. Invoice in advance so the “net 30” expires on the day you want to be paid, or demand “due upon receipt” terms.

twfarland 9y ago
I also use that billing strategy happily. There's another detail that helps with 'training' new clients on good payment behaviour - give them a small % discount on the next milestone if they pay early on the first.

LoSboccacc 9y ago

there ya go div.post-body { color: black; font-size: 1.7em; font-family: serif; } now you too can read the article!

mixedbit 9y ago

Great read. They do direct sales with each contract individually negotiated and high prices. More common approach for small companies is to avoid such negotiations and sell packaged software at fixed and lower prices but aim for higher volume.

dmichulke 9y ago

Quite a few of the advices can be summarized to: Say "no" when something feels wrong. This implies that you can say "no" - emotionally (you don't feel bad about it and you don't fear missing out) - economically (you don't need that money) Source: I've committed all three types of errors

scardine 9y ago

> 22. If you're at a company with deep pockets and you want to really have influence, offer the potential of a very large license fee for key software middleware. It works. What is number #22 (sorry, English is not my native language)? Is he talking about clients that offered him a large licensing fee and gained huge influence over him for doing so?

gbacon 9y ago
The opposite. To a company with lots of money to spend (deep pockets) the author offered the client a large license fee for middleware that was important (to the client). This is a bit of a mind game. Confirmation bias[0] and the sunk-cost fallacy[1] being what they are, after a client makes what she sees as a large investment in you and your product, she has tied her success to your success. [0]: https://en.wikipedia.org/wiki/Confirmation_bias https://en.wikipedia.org/wiki/Confirmation_bias [1]: https://en.wikipedia.org/wiki/Sunk_cost#Loss_aversion_and_the_sunk_cost_fallacy https://en.wikipedia.org/wiki/Sunk_cost#Loss_aversion_and_th...

gumby 9y ago

Having bootstrapped a couple of successful businesses myself, I think this is chockablock with great advice/observations. I am surprised he seemed happy with his Valve experience but it is insightful of him to see that it taught him some good bootstrap lessons.

Mouse47 9y ago
>chockablock I had to google that :) Funny it's 'x is chockablock with' rather than 'x is chockablocked with'
- HeyLaughingBoy 9y ago
  Chockablock is a nautical term (see:double blocked) meaning that two blocks (pulley systems used in ship rigging) are fast against each other and can't get closer. Basically it's a synonym for "full" or "can't move." Clearly, the term "block" has nothing to do with the word, "blocked."

bcarroll22 9y ago

> Research the concept of "Death Prices". Google doesn't come up with anything on this one, is there a different term for the same thing?

chmike 9y ago
Is this the same as "hidden costs" ? That is a cost not showing up on the bill. For instance the time spent to get the thing working and keep it working. I've heard it used as argument against linux and free software.
- cjsawyer 9y ago
  No, it’s about the initial price you list influencing the value perceived by potential customers. If you set it too low they won’t think your product is worth their time or money
grinnick 9y ago
I think it's the idea that if you price your software too low then it's value will be perceived as low. You then have customers paying a low price for a low (perceived) value product and you're into a death spiral.

acidburnNSA 9y ago

> Open source is great, because potential customers will get a chance to try out your work without spending a dime or ever talking to you. This boosts your credibility. On the flip side, if you give away too much, you are basically competing against yourself when you attempt to monetize your work as a product. > Your open source release should be a demo of the product, and no more. Give things away with the goal of eventually converting the users of the free software into paying customers. Eh, I get it, but I also kind of dislike when people use open source solely as an advertisement. Either open source something useful or don't bother open sourcing it at all. A lot of smaller open source work I've seen is done by people who put a lot of work into making a cool tool who then want to share it with other people that may find it useful and use it for new and interesting purposes.

tmccrmck 9y ago
Unfortunately, this is where we are in 2017. For many companies and people, contributing to open source has nothing to do with the Stallman concept of "freedom" - it has everything to do with PR.
ike_yeah 9y ago
Give me a non-utopian incentive where widespread open source (when you can hire professionals for security) is practical.
ci5er 9y ago
What about a license that says: "If you buy some X number of seats of our software, then you get a copy of the source-code to modify and do with as you will (today as well as when we, the vendor, die, as vendors are wont to do), but this does not grant a license to more seats (unless we, the vendor, are dead), nor the right to redistribute the source-code. N.B. We do not support your changes. Unless you pay us a goodly sum in advance. And even then, we really can't put SLAs behind outcomes." ??

matt2000 9y ago

Great list. The only thing that I might take issue with is #5: "5. Every decision must be made extremely carefully. Bad decisions cost money." Taking too much time on decisions is a good way to kill a new company. Many, if not most wrong decisions you can recover from, and it's very difficult to know what the right decision is beforehand. So a lot of the time the "right" decision is just to do _something_ to learn what the real right decision is and then do that.

j45 9y ago
Taking the right amount of time on the right decisions is key - gathering experience in turn ultimately provides it if you have it, or in hindsight. As much as making quick decisions is valuable, its painful/permanent impacts to the group are high if they aren't flexible decisions, or aren't revisited. Technical Research is critical. https://producthabits.com/everyone-forgets-technical-research/ https://producthabits.com/everyone-forgets-technical-researc...
dannylandau 9y ago
Generally don't comment that much, but have to agree with your point 200%. Trial and error is the backbone of building a successful stat-up, going from 0 to 1.

at-fates-hands 9y ago

Great checklist. I self funded two startups and the point about targeting small companies is a good idea. I would also add using a subscription based service (even for development) is the way to go. You can charge a monthly fee for a group of services to smaller clients while development is ongoing with a list of milestones and achievements to keep the project on track while ensuring you have recurring revenue coming in. If you get multiple clients, you can really set yourself up for success. Having 3-4K coming in every month on a regular basis can keep you afloat and reduce the anxiety of having to send out bill and then waiting to get paid.

alberth 9y ago

I find these articles always of interest. @Rich Geldreich, you might want to link from your blog to your company website http://www.binomial.info/ http://www.binomial.info/. I only say that because I didn't find a link and I had to google for it.

Cut_N_Paste 9y ago

low contrast is hard for me to read

bogomipz 9y ago

Are the references to contracts in the article "contract work" i.e contract employee work for someone else in order to help subsidize your startup? If so that's an interesting approach to getting your startup of the ground and maintaining some income. Have people had success with this? I have found lining up contract work to be almost as time consuming as doing a regular FT job. Or am I reading these references wrong and it's your startup doing various short term and tangentially related contracts?

Heraclite 9y ago

I think I'm going to stop reading any article about what it's like to run a company, until I actually create and run my next one. Does anyone feel like reading articles has reached a point of diminished returns?

rubin55 9y ago

Wow, this matches 101% my experiences self-funding my company and product. I made a lot of mistakes that I recognize in the advice given here. Kudos!