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I agree with your first 2 paragraphs, but the third is being overly simplistic (or potentially just not understanding the trade-off at play). The scenario is t

I agree with your first 2 paragraphs, but the third is being overly simplistic (or potentially just not understanding the trade-off at play). The scenario is that (roughly) 90% of the hypergrowth-style startups which raise a first round will fail to achieve enough momentum to successfully raise a second. And due to the business model choices they've committed to, failing to raise at that point is equivalent to going out of business. A first raise is often too small to be able to do everything they'd like, so they suggest decide that it's in their best interest (long term) to forgo a salary where possible, in order to buy a few extra months of progress before you're forced to start shopping for investment again. Of course, folks give advice based on their own experience, but it doesn't always generalise to folks in different situations, which is potentially why that would seem like silly advice in (what I assume is) your scenario. (minor edits toward the end for clarification)

StanislavPetrov 8y ago
You are completely missing his third point. For people without wealth (or a social safety-net which provides you the resources you need to survive), it isn't optional to work for free. You have to eat and have a roof over your head, which means taking a salary if you are working full-time on your startup. Its not a strategic decision.
- robfitz 8y ago
  I must have poorly explained. The strategic decision happens earlier, when you decide which idea to commit to. Certain ideas are both a) incapable of generating early profits and b) dependent on reaching uncertain milestones to unlock the next stage of crucial funding. So if you don't have the personal finances to deal with that situation, then you make a different decision further upstream, in the past, by choosing to work on an idea which has either easier funding targets (allowing an early salary), or which can generate early profits (allowing an early salary), or which has lower development requirements (allowing you to work on it alongside another paying job). The decision is about idea selection, where I agree with you. "If you need the money, then pick an idea which allows you to pay yourself quickly." But if you've chosen to play a different game (typical hypergrowth VC stuff), and you want to maximise your odds of winning at that particular game, then it's generally ideal to buy yourself more months business runway instead of more months of personal runway. Perhaps still not clear, and I know it's an emotionally loaded topic, but hopefully that makes sense.
  - jjeaff 8y ago
    I think you make my point. Which is that unless you have some wealth already, family wealth or otherwise, your options for a startup are much more limited than those who do not have money.

StanislavPetrov 8y ago

You are completely missing his third point. For people without wealth (or a social safety-net which provides you the resources you need to survive), it isn't optional to work for free. You have to eat and have a roof over your head, which means taking a salary if you are working full-time on your startup. Its not a strategic decision.

robfitz 8y ago
I must have poorly explained. The strategic decision happens earlier, when you decide which idea to commit to. Certain ideas are both a) incapable of generating early profits and b) dependent on reaching uncertain milestones to unlock the next stage of crucial funding. So if you don't have the personal finances to deal with that situation, then you make a different decision further upstream, in the past, by choosing to work on an idea which has either easier funding targets (allowing an early salary), or which can generate early profits (allowing an early salary), or which has lower development requirements (allowing you to work on it alongside another paying job). The decision is about idea selection, where I agree with you. "If you need the money, then pick an idea which allows you to pay yourself quickly." But if you've chosen to play a different game (typical hypergrowth VC stuff), and you want to maximise your odds of winning at that particular game, then it's generally ideal to buy yourself more months business runway instead of more months of personal runway. Perhaps still not clear, and I know it's an emotionally loaded topic, but hopefully that makes sense.
- jjeaff 8y ago
  I think you make my point. Which is that unless you have some wealth already, family wealth or otherwise, your options for a startup are much more limited than those who do not have money.