3 ms·

Here's what I consider the 'sweet spot': A small company, say 20-50 people or thereabouts, that has a profitable niche and does not require much in the way of

by davidw 8y ago

Here's what I consider the 'sweet spot': A small company, say 20-50 people or thereabouts, that has a profitable niche and does not require much in the way of investments. Here's why: * Small is more fun for me - I like knowing everyone I work with, and the chance to see what other people are working on, and maybe move around some in what I'm doing, rather than 'the same thing day in and day out at BigCo'. Your work also feels more valuable and meaningful. Startups are a lot of fun that way, however... * Investments and not living off what you sell are inherently unstable and stressful. That's ok to take a chance on when you're younger, but as someone with 20 years of experience in the industry, a family, hobbies, an interest in local politics and so on, it's not so much fun any more. * I have a bias for cash, not equity. It's fine to roll the dice a bit on that when you're younger, and even now for the right thing... you never know, but ceteris paribus, I'd rather just have the money. Of course actually finding a place like that is easier said than done. You need to avoid things like winner take all markets.

lgregg 8y ago
> I have a bias for cash, not equity. I'm like you. I'd rather take cash and dump it into my 401k or an index fund for retirement.
- seattle_spring 8y ago
  Any startup worth its salt will pay you a high enough base salary to max your 401k and still have a ton leftover for after tax investments.
HillaryBriss 8y ago
> You need to avoid things like winner take all markets. i love this idea. yet, it seems like the whole point of startups nowadays is to become the winner in the winner-take-all market. and VCs seem to be looking for that kind of play mainly. and markets become winner-take-all with alarming frequency. so, it's like, how do we get to the kind of market with room for multiple long-term, profitable players?
- creaghpatr 8y ago
  Markets that have a high barrier of entry and products that require a certain degree of in-house customization. The trade-off is scalability but the gain is that your space won't get slammed (or is less likely to get slammed) with VC-flash funded 'start up' versions of your start up in the medium run.
- seem_2211 8y ago
  That's basically the thesis of Zero To One, and yet it's responsible for burning how much Venture Capital? One of the interesting things is how companies like CB Insights seem to have built quite successful mid-sized startups with very little funding (CB Insights are at $11.7m in funding), or Atlassian who didn't raise until they were pretty close to IPO. Compared to Uber at the opposite end - how much capital has been squandered on making very marginal gains in the name of growing market share? It'd be an interesting research project to compare outcomes against funding raised, over say a 10-15 year period.
biztos 8y ago
> You need to avoid things like winner take all markets. Another thing that might work is looking at industries with a lot of software needs that are not traditionally considered "tech companies." A long time ago I worked in Biotech. There's tons of money there, and an awful lot of software made both in-house and by consultancies. (And I bet it's a hotbed of machine learning right now.) I'm sure there are lots of other industries where their core business makes a lot of money but there's no way for startups to just "disrupt" them out of existence; however if you can move the needle 0.01% that's more than enough to support a very profitable smallish company.

by davidw 8y ago

lgregg 8y ago

> I have a bias for cash, not equity. I'm like you. I'd rather take cash and dump it into my 401k or an index fund for retirement.

seattle_spring 8y ago
Any startup worth its salt will pay you a high enough base salary to max your 401k and still have a ton leftover for after tax investments.

HillaryBriss 8y ago

> You need to avoid things like winner take all markets. i love this idea. yet, it seems like the whole point of startups nowadays is to become the winner in the winner-take-all market. and VCs seem to be looking for that kind of play mainly. and markets become winner-take-all with alarming frequency. so, it's like, how do we get to the kind of market with room for multiple long-term, profitable players?

creaghpatr 8y ago
Markets that have a high barrier of entry and products that require a certain degree of in-house customization. The trade-off is scalability but the gain is that your space won't get slammed (or is less likely to get slammed) with VC-flash funded 'start up' versions of your start up in the medium run.
seem_2211 8y ago
That's basically the thesis of Zero To One, and yet it's responsible for burning how much Venture Capital? One of the interesting things is how companies like CB Insights seem to have built quite successful mid-sized startups with very little funding (CB Insights are at $11.7m in funding), or Atlassian who didn't raise until they were pretty close to IPO. Compared to Uber at the opposite end - how much capital has been squandered on making very marginal gains in the name of growing market share? It'd be an interesting research project to compare outcomes against funding raised, over say a 10-15 year period.

biztos 8y ago

> You need to avoid things like winner take all markets. Another thing that might work is looking at industries with a lot of software needs that are not traditionally considered "tech companies." A long time ago I worked in Biotech. There's tons of money there, and an awful lot of software made both in-house and by consultancies. (And I bet it's a hotbed of machine learning right now.) I'm sure there are lots of other industries where their core business makes a lot of money but there's no way for startups to just "disrupt" them out of existence; however if you can move the needle 0.01% that's more than enough to support a very profitable smallish company.