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A talented young programmer from a good university can easily be making $100k within 5 years after graduation. So building small profitable companies that pay y

by ojbyrne 16y ago

A talented young programmer from a good university can easily be making $100k within 5 years after graduation. So building small profitable companies that pay your bills have a fairly large opportunity cost. You need somewhat of a blowout to overcome that opportunity cost.

kranner 16y ago
Not everyone is Homo Economicus. There is also a psychological cost for some. I for one tried that fat paycheck and cubicle thing for a few years, but I just can't do it now.
madair 16y ago
- most likely in a cubicle - reporting to middle managers - on a hardware and software stack selected for them - frequently in the kinds of unsustainable scorched earth industries and overly large multinationals - frequently in industries which centralize wealth and destroy small and local enterprises All that and I'm not even a liberal saying it ;)
- ojbyrne 16y ago
  Still an opportunity cost. And facebook, google and twitter are among the biggest hirers of the kind of people I'm talking about. 3 or 4 years at facebook or google makes for an even bigger opportunity cost.
  - jpeterson 16y ago
    3 or 4 years at facebook or google makes for an even bigger opportunity cost. Can you elaborate on that?
    - deltapoint 16y ago
      Working at a company at facebook or google increases your human capital, increasing one's opportunity cost. This can make it harder to leave the stable and growing pay check and try to create your own thing. This is not to even mention the growing amount of responsibilities that come with age (mortgage, family, etc.).
- cubicle67 16y ago
  yep. and each cubicle has a number on it. Guess where my username comes from?
- strlen 16y ago
  > reporting to middle managers - on a hardware and software stack selected for them - frequently in the kinds of unsustainable scorched earth industries and overly large multinationals > frequently in the kinds of unsustainable scorched earth industries and overly large multinationals That's not where hackers who could realistically pull-off a tech start-up usually end up going to.
- rstocker99 16y ago
  Or worse you become the middle manager.
tptacek 16y ago
You are clearly not a dumb person, having been commenting smartly here for many moons now, so I'm wondering how you've managed to disregard the fact that most moon-shot "blowout" companies fail. There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing.
- strlen 16y ago
  > There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing. Sometimes a binary outcome (death or success) is better than going nowhere and being unable to walk away from it. Most hackers (for better or for worse) aren't really interested in managing a business, but just want to write code. I'm pretty sure all would agree that running a small business is incompatible with "just write code". Failing in two years and going back to work for The Man (to write code) doesn't sound too bad. Then again, that dynamic may be exactly why startups fail or "sell out" for sums that are leaving VCs (but not angels!) very angry e.g., "don't pull a Patzer, dipshit companies".
  - tptacek 16y ago
    This may or may not be true, but it has nothing to do with my point.
- andreyf 16y ago
  There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing. It's certainly possible to make the kind of startup that lets you walk away with significant value regardless of how the business does.
- ojbyrne 16y ago
  Certainly, but just trying to point out there are costs to every decision and the unbridled optimism of the OP is annoying. Trying to bootstrap right out of college will lead to more bad outcomes, in my opinion, than just about any other choice.
metamemetics 16y ago
If you have a 33% chance of success, then the expected payout from a startup only needs to be 3 times greater. Doing a startup is a fairly logical decision in terms of expected value. Jobs are in the business of selling income insurance. It's really just a question of the minimum amount of insurance you can stand to live with (consumer preference).
- eru 16y ago
  This holds if you are risk neutral.
rstocker99 16y ago
Would folks rather make 70k per year working in their own small profitable software product company (either alone or with a partner) or 100k working for a large software company as a Sr. Software Engineer? What about 60k? I'd happily trade the 30k for complete control of my time and decision making. In your own business 70k could turn into 200k (or more) in profit. That's a pretty unlikely pay jump for a Sr. Dev. Switching to a middle management job e.g. dev manager, dev lead etc. doesn't guarantee a huge pay increase either. There are people that make a big salary in tech. It's not impossible but it's tough. It also goes away the second you stop working. Of course your own company could flop. That's a real risk. If it does you've suffered some opportunity cost but hopefully you've learned a lot and had some fun. Another plus to starting your own gig is that if you figure out how to do it once you're more likely to be able to do it again. Known how to create value people will pay for is an empowering feeling. I'm not against shooting for the stars and raising money. I think it's worth it if you have an idea that you are die on the hill passionate about and that has the right scale factors. What do you do in the mean time if you don't have that idea? If you don't then shooting for a single that gives you more control of your life and the potential for more upside seems like it's worth the risk. Who know maybe it will turn into a double. This is the path I've taken. I'm often surprised there isn't more talk about this topic and the trade offs between home run swing vs lifestyle business vs. job. I don't think lifestyle businesses and the strategies to make them happen get enough play. I think the current environment is ripe for more software devs to follow this path vs. a job.
- ojbyrne 16y ago
  Starting a business often means zero k for some period of time. Trading 30k sounds reasonable (in some parts of the world), but what about 10k? 5k? And "complete control of my time and decision making" reminds me of that old saying about business owners - "I get to choose my own hours, as long as its all of them."
nandemo 16y ago
I don't think Max is proposing that programmers build companies just to pay the bills. Paying the bills is not the final goal, it's just a requirement for bootstrapping. There's a big difference between the the kind of expected return necessary to compensate for the risk of failure and the blowout he's talking about.
russell 16y ago
I disagree, but it may depend on where you live. In Silicon Valley, working on your own for 5 years on cutting edge technology, even if you fail, gives you a distinct edge in the job market over someone who spent 5 years working on an obsolete stack and probably a significantly higher salary. The salaryman probably has a far higher burn rate and no significant savings.

by ojbyrne 16y ago

kranner 16y ago

Not everyone is Homo Economicus. There is also a psychological cost for some. I for one tried that fat paycheck and cubicle thing for a few years, but I just can't do it now.

madair 16y ago

- most likely in a cubicle - reporting to middle managers - on a hardware and software stack selected for them - frequently in the kinds of unsustainable scorched earth industries and overly large multinationals - frequently in industries which centralize wealth and destroy small and local enterprises All that and I'm not even a liberal saying it ;)

ojbyrne 16y ago
Still an opportunity cost. And facebook, google and twitter are among the biggest hirers of the kind of people I'm talking about. 3 or 4 years at facebook or google makes for an even bigger opportunity cost.
- jpeterson 16y ago
  3 or 4 years at facebook or google makes for an even bigger opportunity cost. Can you elaborate on that?
  - deltapoint 16y ago
    Working at a company at facebook or google increases your human capital, increasing one's opportunity cost. This can make it harder to leave the stable and growing pay check and try to create your own thing. This is not to even mention the growing amount of responsibilities that come with age (mortgage, family, etc.).
cubicle67 16y ago
yep. and each cubicle has a number on it. Guess where my username comes from?
strlen 16y ago
> reporting to middle managers - on a hardware and software stack selected for them - frequently in the kinds of unsustainable scorched earth industries and overly large multinationals > frequently in the kinds of unsustainable scorched earth industries and overly large multinationals That's not where hackers who could realistically pull-off a tech start-up usually end up going to.
rstocker99 16y ago
Or worse you become the middle manager.

tptacek 16y ago

You are clearly not a dumb person, having been commenting smartly here for many moons now, so I'm wondering how you've managed to disregard the fact that most moon-shot "blowout" companies fail. There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing.

strlen 16y ago
> There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing. Sometimes a binary outcome (death or success) is better than going nowhere and being unable to walk away from it. Most hackers (for better or for worse) aren't really interested in managing a business, but just want to write code. I'm pretty sure all would agree that running a small business is incompatible with "just write code". Failing in two years and going back to work for The Man (to write code) doesn't sound too bad. Then again, that dynamic may be exactly why startups fail or "sell out" for sums that are leaving VCs (but not angels!) very angry e.g., "don't pull a Patzer, dipshit companies".
- tptacek 16y ago
  This may or may not be true, but it has nothing to do with my point.
andreyf 16y ago
There's an even bigger opportunity cost to spending 3-4 years of your life on something and have it come to nothing. It's certainly possible to make the kind of startup that lets you walk away with significant value regardless of how the business does.
ojbyrne 16y ago
Certainly, but just trying to point out there are costs to every decision and the unbridled optimism of the OP is annoying. Trying to bootstrap right out of college will lead to more bad outcomes, in my opinion, than just about any other choice.

metamemetics 16y ago

If you have a 33% chance of success, then the expected payout from a startup only needs to be 3 times greater. Doing a startup is a fairly logical decision in terms of expected value. Jobs are in the business of selling income insurance. It's really just a question of the minimum amount of insurance you can stand to live with (consumer preference).

eru 16y ago
This holds if you are risk neutral.

rstocker99 16y ago

Would folks rather make 70k per year working in their own small profitable software product company (either alone or with a partner) or 100k working for a large software company as a Sr. Software Engineer? What about 60k? I'd happily trade the 30k for complete control of my time and decision making. In your own business 70k could turn into 200k (or more) in profit. That's a pretty unlikely pay jump for a Sr. Dev. Switching to a middle management job e.g. dev manager, dev lead etc. doesn't guarantee a huge pay increase either. There are people that make a big salary in tech. It's not impossible but it's tough. It also goes away the second you stop working. Of course your own company could flop. That's a real risk. If it does you've suffered some opportunity cost but hopefully you've learned a lot and had some fun. Another plus to starting your own gig is that if you figure out how to do it once you're more likely to be able to do it again. Known how to create value people will pay for is an empowering feeling. I'm not against shooting for the stars and raising money. I think it's worth it if you have an idea that you are die on the hill passionate about and that has the right scale factors. What do you do in the mean time if you don't have that idea? If you don't then shooting for a single that gives you more control of your life and the potential for more upside seems like it's worth the risk. Who know maybe it will turn into a double. This is the path I've taken. I'm often surprised there isn't more talk about this topic and the trade offs between home run swing vs lifestyle business vs. job. I don't think lifestyle businesses and the strategies to make them happen get enough play. I think the current environment is ripe for more software devs to follow this path vs. a job.

ojbyrne 16y ago
Starting a business often means zero k for some period of time. Trading 30k sounds reasonable (in some parts of the world), but what about 10k? 5k? And "complete control of my time and decision making" reminds me of that old saying about business owners - "I get to choose my own hours, as long as its all of them."

nandemo 16y ago

I don't think Max is proposing that programmers build companies just to pay the bills. Paying the bills is not the final goal, it's just a requirement for bootstrapping. There's a big difference between the the kind of expected return necessary to compensate for the risk of failure and the blowout he's talking about.

russell 16y ago

I disagree, but it may depend on where you live. In Silicon Valley, working on your own for 5 years on cutting edge technology, even if you fail, gives you a distinct edge in the job market over someone who spent 5 years working on an obsolete stack and probably a significantly higher salary. The salaryman probably has a far higher burn rate and no significant savings.