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Bootstrapping Calculator: Do you have enough savings to fund your business?

167 points by DVassallo 8y ago

sokoloff 8y ago
Nice work. Since you can't easily pull request an excel sheet, I'll propose a change here: After the text "If you include retirement funds, also subtract early withdrawal fees." I'd add something like "Most experts suggest not using retirement funds for anything other than retirement." or similar discouraging of that action. (Those people who really ought to use retirement funds to bootstrap something will find a way to blow through whatever caution you put there; most people shouldn't, and I'd rather they at least see/feel the small speed bump...)
lbacaj 8y ago
Love the calculator, it’s very useful. In my view it has never been easier to build a technology business than today. The public cloud makes it so you can start small or free and scale as needed and almost everything has been open sourced. All you need is the idea and the will power. My only beef with the calculator is that I’d like to recommend another approach, that is you don’t actually need to quit your job to make, that is the end goal shouldn’t just be to quit. The costs of starting tech business have never been so low to get a an idea off the ground you can benefit from both a job and the other thing your working on. Steph Smith has a great post on this https://blog.stephsmith.io/you-dont-need-to-quit-your-job-to-make/ https://blog.stephsmith.io/you-dont-need-to-quit-your-job-to...
- DVassallo 8y ago
  Yes, quitting your job is not the only way - or the best way for many people. However, it's not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.
  - lbacaj 8y ago
    Highly recommend Steph’s blog post, she puts it much better than I ever could. Totally agree that could kill the idea of doing both. At times employers have made folks sign very strict contracts, most though would not stand up in courts as long as you never use their equipment and never do it on work time.
- dahart 8y ago
  I quit my job to start a startup while having a family and kids and I consider it a mistake. I’m not sure it would have changed the outcome (successful exit) but it caused a lot of extra stress, and I can safely say that I didn’t quite know what I was doing and it would have been better to have a stronger plan (especially marketing), a longer runway, a more complete prototype, and more evidence of a market, before I took the leap and quit my job. All those things can be done on the side while holding down a job, even with a family. (As long as the job is closer to 40 hours a week than 60 or 70...) $1M is a nice runway, but most people don’t have that, and even with it, the more you have locked down before you quit your job, the better.
  - lbacaj 8y ago
    Amen. I think your story is important and why I think we should be pushing people more to this sort of arrangement. Even VCs will never give you a penny without first quitting your job, but honestly some of the seed stuff I don’t see why one couldn’t do both if there is promise.
    - dahart 8y ago
      Speaking of VCs, part of not knowing what I was doing before I quit my job was not understanding how VCs worked, and how much evidence they need before investing. They spend a lot more money on companies that have $1M/month income than on seeding unknown first timers, even seed funds. There are too many misleading stories of cash being thrown at startups with nothing more than an idea. Maybe it happens once or twice in a blue moon, but the reality is that they prefer a sure thing and don’t often fund companies with no traction. It took a lot longer to raise money than we expected, even after we had what we thought seemed like good traction. And when it takes longer to raise, it means you need a longer runway. It took longer to build than we thought too. I was very lucky to have a couple years’ runway, and it still wasn’t nearly enough, I should have planned on 3 or 4 times as long.
  - puranjay 8y ago
    I think more than just money, you have to account for your "mistakes runway". You WILL make mistakes - a lot of them if its your first business. When you are 25, you just have a lot longer runway to make those mistakes. At 35 with a wife and kid, you have limited time to make mistakes and learn from them
mockingbirdy 8y ago
I've read your blog post. A million is a nice nest egg for bootstrapping. Just a thought: You can generate $15k of monthly passive income directly with $300-350k investment. If the bootstrapped business fails to make money fast, there's always this option with your amount of money. Developers often miss those obvious ways to make money because these ways aren't technically intricate. Source: I do affiliate marketing. This are the usual ROIs. Good luck on your journey! edit: wrt. the downvotes - that's one of the reasons I don't want to talk about this in public. I agree that it sounds unbelievable, but most people also don't believe in $500k salaries. Many people dismiss those opportunities because they don't believe it's possible.
- rahimnathwani 8y ago
  "You can generate $15k of monthly passive income directly with $300-350k investment" $15k/month is $180k/year $180k/year passive return on $350k/year is over 50% Can you please share something about how you achieve that level of return? If 50% IRR is 'usual' for affiliate marketing, why isn't competition pulling those returns down? (genuinely curious, not doubting you!)
  - mockingbirdy 8y ago
    Because most people who make those returns don't sell their businesses openly. You need to know the right groups or people and you need to have specific knowledge to assess a web project properly. edit: To clarify - most people don't sell them because they're literally money makers. Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare.
    - im3w1l 8y ago
      > Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare. But when they do sell them, why for so little?
lettergram 8y ago
Nice work, I’m going to play with it a bit. One thing I would recommend to everyone is adding a multiple to your expenses. Essentially, < expenses > * < margin of error > I manage my personal expenses down to the dollar and have managed seven figure budgets. One thing that always occurs is unexpected expenses. My go-to rule is assuming my expenses are going to be 25% higher than expected, per year I go out. I personally track my error between expected and actual to develop a hard number for my margin of error. However, between 25% and 50% larger than expected expenses is a good estimate to give you breathing room. This method ensures you can be hospitalized for a week or so and it’ll kind of “be in the plan” so to speak.
- suls 8y ago
  What tooling do you use to track your expenses?
- agilebyte 8y ago
  As a side note https://www.getguesstimate.com https://www.getguesstimate.com is a good tool that calculates with margins rather than fixed numbers. Love the graphical output too.
lifeisstillgood 8y ago
Ok I have to ask- is 500k pa a rare dev salary for FAANG or is it fairly normal - I mean that's insane levels
- patio11 8y ago
  $450k is approximately the package (salary, bonus, 1 year of RSU vesting) for the “career level”, the point in the ladder that all devs are expected to make if they’re not fired. AppAmaGooBookSoft people can tell you the exact name of it at their firm. It’s not insane, it’s the market.
  - deleted 8y ago
    [deleted]
  - shove 8y ago
    was going to call BS until I saw your username. Would love to be hitting those numbers. Only been doing this 20+ years :/
  - badfrog 8y ago
    E5 (the terminal level) at FB is more like $325-350k. I think Google's terminal level is L4, which would be around $250k. $450k is totally within reach for people willing to put in the effort to hit E6/L6, but it's definitely not the norm for terminal level. Source: personal experience and https://www.levels.fyi https://www.levels.fyi
    - akavi 8y ago
      Google's terminal is L5, which would be around ~340 k$/yr. I do think patio's overstating things by saying 450 k$/yr.
  - lifeisstillgood 8y ago
    But ... I am having to readjust my understanding of "the market" Ok so is this just the global tech firms, who have a 1-2 billion user base so every good and bad software decision gets multiplied by a lot of zeros and it's worth the cost. Or is this a function of tech firms in the valley - a function of supply and demand (plus house prices) Or are the non global reach tech firms also having to join this bidding war - this is the part I have trouble believing I have worked for the past several years in a major US bank - and I do very well for a UK contractor - but no where near this well. And I am not noticing that there are people on a large multiple of me as a daily rate. I am sure there are but this seems ... common ... at FAANG In short, Do I move to silicon valley and get any job, do I apply to Google any location or do I just wait for the rest of the world to catch up?
puranjay 8y ago
Posts like these is where I realize that the average HN crowd is just way too rich. $500k in liquid savings? $1M nest egg before starting? That's an exit event for me. So many of the entrepreneurs I know just started with whatever money they had and just made things work somehow.
- dahart 8y ago
  What evidence is there that this 1 sample is average? I don’t think it is.
- DVassallo 8y ago
  Yet, many don't start anything, despite wanting to. Financial "success" brings with it a problem. Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit. It took me quite a bit of mental effort to break out of that myself. My approach was to mentally write off everything that wasn't super important to me. This helped me to stop worrying about losing my nest egg (and my career), and start taking speculative risks with it.
  - movedx 8y ago
    > Yet, many don't start anything, despite wanting to. That's a pretty tone deaf response. Many people don't start something, anything, because they don't have $1.5m in liquid assets sitting around, mate. I have my own business. I'm writing this from the office we hire. I have tens of thousands in business bank account, not $500k. I have tens of thousands in personal savings, not $500k. You don't need a lot to start, in my opinion, but when you have $500k it's really not a hard decision to start at all. With $500k you can start, then start, then start, and keep starting and failing over and over, easily, for 5-10 years with that kind of cash. > Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit. I believe this is a sign of a deeper problem, Daniel. If you can maintain a happy lifestyle on (for example) $50k per year, there's no reason you shouldn't be able to maintain the same lifestyle should you "win the lottery" and find your self with $1.5m in the bank... you simply keep living off of $50k. The lottery winnings are just a bonus you can grow on the side. Worrying about losing it is, essentially, worrying about being poor. And that's a valid concern for some, but it's not a valid concern for you, sorry.
keiferski 8y ago
Kudos for being extremely financially astute about the decision. But I can’t help but ask - why not just move to a cheaper location? With 1.4 million, you can more or less retire / have a runway of 20+ years if you didn’t live in one of the most expensive metro areas in the country.
- DVassallo 8y ago
  I did consider it. But I have a family and 2 small kids, and I promised my family that our lifestyle won't have to change while I do this experiment with my career. We did seriously consider moving about 30 miles out of Seattle, where houses cost $350/sqft instead fo $500, but my family wasn't enthusiastic about being far away from our community, and it actually wouldn't have made that much of a difference to my runway. If the circumstances were different, we could have made a different decision. But, in my situation I felt that I didn't have to.
  - alecco 8y ago
    > and I promised my family that our lifestyle won't have to change while I do this experiment with my career. That doesn't sound right at all.
    - deleted 8y ago
      [deleted]
    - whatislovecraft 8y ago
      Why not? I don't have evidence to support my following claim, but I think that having a stable home life with a supporting family, not subjected to unusual bankruptcies or bad financial surprises, is a key element to startup founder success. I could be mistaken. But I am a failed founder who disrupted their family and friends lives and lost a lot of goodwill while running the business because of it. So I think I'm at least right some of the time. Regardless, it's wise to think of your loved ones first, even if it's only a cold business decision to do so; your business will thank you later with smoother revenues and a happier, more capable decision-making process down the road.
zoba 8y ago
Great calculator. I have previously used the Startup Runway Calculator for similar purposes. It allows for greater itemization than I saw in your screenshots. Might be nice for folks who like this project to also check out: https://startuprunway.io https://startuprunway.io
e1g 8y ago
Excellent DIY solution! For more nuanced planning, I found web-based apps https://startuprunway.io https://startuprunway.io and https://hiringplan.io https://hiringplan.io to be very helpful for budget forecasts.
sascha_sl 8y ago
Nice, too bad I'll be too poor for the foreseeable future to do anything like that. (50k EUR/yr)
jv22222 8y ago
The answer should almost always be yes (you have enough funds) because in most cases it’s wiser to stay at your day job and bootstrap a side project. I don’t know why general advice is to leave the day job and go all in. IMHO that is terrible advice.
- DVassallo 8y ago
  I addressed this in another comment, but it is not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.
- MaybiusStrip 8y ago
  Let's say you manage to carve out 2-4 hours a day to work on your side project while remaining a decent person to your wife and kids. Leaving your job means you could spend 11-13 hours a day on it instead. That's an enormous difference and could easily mean the difference between failure and success. Not only that, but you are putting yourself in precarious legal territory by bootstrapping a side project. Your employer could easily claim ownership of all your IP. OP was a senior software engineer at AWS, how difficult do you think it would be for him to re-enter the workforce with a competing cloud provider nor even coming back to Amazon?
  - DVassallo 8y ago
    Exactly. And I think nearly everyone in tech is able to re-enter the workforce within < 6 months.
jackcosgrove 8y ago
Thanks, I appreciate this. My main motivation for starting my own business is to be independent. From what I've seen of management at companies that accept investor money, it's not at all an independent lifestyle. Whereas at a bootstrapped company the management can do much more of what they want (for better or for worse). If you can bootstrap with $2000 in the bank, that's awesome. But I'm more traditional with money and would heed the "three years' worth of expenses saved up" mantra before quitting my job to start a business.
csomar 8y ago
I tried the calculator and actually my savings would last well over 10 years (probably more like 20-25 years even if you account for inflation). I spend around $1.000/month and that includes a new car (paid off), rent for 2 bed-room with a garden, eating out regularly. It doesn't include extensive traveling (which I have been doing in the last couple years). I think the two key points here: 1. Having a family is expensive. If you are considering this track, you may want to postpone having a family/kids. 2. Living in cheaper cities can save you a whole lot of money. Obviously, I would not recommend doing that with a family or if you need extensive networking. But if you want to do 3-4 years of discovery without burning a whole in your savings, then there is countless countries to pick from.
- dbbk 8y ago
  It would be absolutely reckless to try this with a family to support. Just do it on the side of the day job.
  - DVassallo 8y ago
    OP here. I’m doing it with a family, and I don’t think I’m doing anything reckless. I’m not risking anything consequential. Worst case scenario I go get a job again, and my family’s lifestyle wouldn’t have changed one bit during the whole thing.
    - dbbk 8y ago
      What happens if you can't "go get a job again"? Is it assured you can just walk right into one?
      - DVassallo 8y ago
        Nothing is ever certain obviously, but I feel very confident I can find a $150K/yr job in 6 months. If I don't manage, I'd have to adjust my lifestyle (sell house, move somewhere cheaper, etc).
  - csomar 8y ago

167 points by DVassallo 8y ago

Nice work. Since you can't easily pull request an excel sheet, I'll propose a change here: After the text "If you include retirement funds, also subtract early withdrawal fees." I'd add something like "Most experts suggest not using retirement funds for anything other than retirement." or similar discouraging of that action. (Those people who really ought to use retirement funds to bootstrap something will find a way to blow through whatever caution you put there; most people shouldn't, and I'd rather they at least see/feel the small speed bump...)

lbacaj 8y ago

Love the calculator, it’s very useful. In my view it has never been easier to build a technology business than today. The public cloud makes it so you can start small or free and scale as needed and almost everything has been open sourced. All you need is the idea and the will power. My only beef with the calculator is that I’d like to recommend another approach, that is you don’t actually need to quit your job to make, that is the end goal shouldn’t just be to quit. The costs of starting tech business have never been so low to get a an idea off the ground you can benefit from both a job and the other thing your working on. Steph Smith has a great post on this https://blog.stephsmith.io/you-dont-need-to-quit-your-job-to-make/ https://blog.stephsmith.io/you-dont-need-to-quit-your-job-to...

DVassallo 8y ago
Yes, quitting your job is not the only way - or the best way for many people. However, it's not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.
- lbacaj 8y ago
  Highly recommend Steph’s blog post, she puts it much better than I ever could. Totally agree that could kill the idea of doing both. At times employers have made folks sign very strict contracts, most though would not stand up in courts as long as you never use their equipment and never do it on work time.
dahart 8y ago
I quit my job to start a startup while having a family and kids and I consider it a mistake. I’m not sure it would have changed the outcome (successful exit) but it caused a lot of extra stress, and I can safely say that I didn’t quite know what I was doing and it would have been better to have a stronger plan (especially marketing), a longer runway, a more complete prototype, and more evidence of a market, before I took the leap and quit my job. All those things can be done on the side while holding down a job, even with a family. (As long as the job is closer to 40 hours a week than 60 or 70...) $1M is a nice runway, but most people don’t have that, and even with it, the more you have locked down before you quit your job, the better.
- lbacaj 8y ago
  Amen. I think your story is important and why I think we should be pushing people more to this sort of arrangement. Even VCs will never give you a penny without first quitting your job, but honestly some of the seed stuff I don’t see why one couldn’t do both if there is promise.
  - dahart 8y ago
    Speaking of VCs, part of not knowing what I was doing before I quit my job was not understanding how VCs worked, and how much evidence they need before investing. They spend a lot more money on companies that have $1M/month income than on seeding unknown first timers, even seed funds. There are too many misleading stories of cash being thrown at startups with nothing more than an idea. Maybe it happens once or twice in a blue moon, but the reality is that they prefer a sure thing and don’t often fund companies with no traction. It took a lot longer to raise money than we expected, even after we had what we thought seemed like good traction. And when it takes longer to raise, it means you need a longer runway. It took longer to build than we thought too. I was very lucky to have a couple years’ runway, and it still wasn’t nearly enough, I should have planned on 3 or 4 times as long.
- puranjay 8y ago
  I think more than just money, you have to account for your "mistakes runway". You WILL make mistakes - a lot of them if its your first business. When you are 25, you just have a lot longer runway to make those mistakes. At 35 with a wife and kid, you have limited time to make mistakes and learn from them

mockingbirdy 8y ago

I've read your blog post. A million is a nice nest egg for bootstrapping. Just a thought: You can generate $15k of monthly passive income directly with $300-350k investment. If the bootstrapped business fails to make money fast, there's always this option with your amount of money. Developers often miss those obvious ways to make money because these ways aren't technically intricate. Source: I do affiliate marketing. This are the usual ROIs. Good luck on your journey! edit: wrt. the downvotes - that's one of the reasons I don't want to talk about this in public. I agree that it sounds unbelievable, but most people also don't believe in $500k salaries. Many people dismiss those opportunities because they don't believe it's possible.

rahimnathwani 8y ago
"You can generate $15k of monthly passive income directly with $300-350k investment" $15k/month is $180k/year $180k/year passive return on $350k/year is over 50% Can you please share something about how you achieve that level of return? If 50% IRR is 'usual' for affiliate marketing, why isn't competition pulling those returns down? (genuinely curious, not doubting you!)
- mockingbirdy 8y ago
  Because most people who make those returns don't sell their businesses openly. You need to know the right groups or people and you need to have specific knowledge to assess a web project properly. edit: To clarify - most people don't sell them because they're literally money makers. Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare.
  - im3w1l 8y ago
    > Usually they need the money for investments or have unexpected expenses that force them to sell. Some are just tired of their projects, but this is rare. But when they do sell them, why for so little?

lettergram 8y ago

Nice work, I’m going to play with it a bit. One thing I would recommend to everyone is adding a multiple to your expenses. Essentially, < expenses > * < margin of error > I manage my personal expenses down to the dollar and have managed seven figure budgets. One thing that always occurs is unexpected expenses. My go-to rule is assuming my expenses are going to be 25% higher than expected, per year I go out. I personally track my error between expected and actual to develop a hard number for my margin of error. However, between 25% and 50% larger than expected expenses is a good estimate to give you breathing room. This method ensures you can be hospitalized for a week or so and it’ll kind of “be in the plan” so to speak.

suls 8y ago
What tooling do you use to track your expenses?
agilebyte 8y ago
As a side note https://www.getguesstimate.com https://www.getguesstimate.com is a good tool that calculates with margins rather than fixed numbers. Love the graphical output too.

lifeisstillgood 8y ago

Ok I have to ask- is 500k pa a rare dev salary for FAANG or is it fairly normal - I mean that's insane levels

patio11 8y ago
$450k is approximately the package (salary, bonus, 1 year of RSU vesting) for the “career level”, the point in the ladder that all devs are expected to make if they’re not fired. AppAmaGooBookSoft people can tell you the exact name of it at their firm. It’s not insane, it’s the market.
- deleted 8y ago
  [deleted]
- shove 8y ago
  was going to call BS until I saw your username. Would love to be hitting those numbers. Only been doing this 20+ years :/
- badfrog 8y ago
  E5 (the terminal level) at FB is more like $325-350k. I think Google's terminal level is L4, which would be around $250k. $450k is totally within reach for people willing to put in the effort to hit E6/L6, but it's definitely not the norm for terminal level. Source: personal experience and https://www.levels.fyi https://www.levels.fyi
  - akavi 8y ago
    Google's terminal is L5, which would be around ~340 k$/yr. I do think patio's overstating things by saying 450 k$/yr.
- lifeisstillgood 8y ago
  But ... I am having to readjust my understanding of "the market" Ok so is this just the global tech firms, who have a 1-2 billion user base so every good and bad software decision gets multiplied by a lot of zeros and it's worth the cost. Or is this a function of tech firms in the valley - a function of supply and demand (plus house prices) Or are the non global reach tech firms also having to join this bidding war - this is the part I have trouble believing I have worked for the past several years in a major US bank - and I do very well for a UK contractor - but no where near this well. And I am not noticing that there are people on a large multiple of me as a daily rate. I am sure there are but this seems ... common ... at FAANG In short, Do I move to silicon valley and get any job, do I apply to Google any location or do I just wait for the rest of the world to catch up?

puranjay 8y ago

Posts like these is where I realize that the average HN crowd is just way too rich. $500k in liquid savings? $1M nest egg before starting? That's an exit event for me. So many of the entrepreneurs I know just started with whatever money they had and just made things work somehow.

dahart 8y ago
What evidence is there that this 1 sample is average? I don’t think it is.
DVassallo 8y ago
Yet, many don't start anything, despite wanting to. Financial "success" brings with it a problem. Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit. It took me quite a bit of mental effort to break out of that myself. My approach was to mentally write off everything that wasn't super important to me. This helped me to stop worrying about losing my nest egg (and my career), and start taking speculative risks with it.
- movedx 8y ago
  > Yet, many don't start anything, despite wanting to. That's a pretty tone deaf response. Many people don't start something, anything, because they don't have $1.5m in liquid assets sitting around, mate. I have my own business. I'm writing this from the office we hire. I have tens of thousands in business bank account, not $500k. I have tens of thousands in personal savings, not $500k. You don't need a lot to start, in my opinion, but when you have $500k it's really not a hard decision to start at all. With $500k you can start, then start, then start, and keep starting and failing over and over, easily, for 5-10 years with that kind of cash. > Suddenly there's more to lose than to gain. Once you realize you've "won the lottery" and you find yourself with a nice nest egg, you start worrying more about losing it, than about using it to gain some benefit. I believe this is a sign of a deeper problem, Daniel. If you can maintain a happy lifestyle on (for example) $50k per year, there's no reason you shouldn't be able to maintain the same lifestyle should you "win the lottery" and find your self with $1.5m in the bank... you simply keep living off of $50k. The lottery winnings are just a bonus you can grow on the side. Worrying about losing it is, essentially, worrying about being poor. And that's a valid concern for some, but it's not a valid concern for you, sorry.

keiferski 8y ago

Kudos for being extremely financially astute about the decision. But I can’t help but ask - why not just move to a cheaper location? With 1.4 million, you can more or less retire / have a runway of 20+ years if you didn’t live in one of the most expensive metro areas in the country.

DVassallo 8y ago
I did consider it. But I have a family and 2 small kids, and I promised my family that our lifestyle won't have to change while I do this experiment with my career. We did seriously consider moving about 30 miles out of Seattle, where houses cost $350/sqft instead fo $500, but my family wasn't enthusiastic about being far away from our community, and it actually wouldn't have made that much of a difference to my runway. If the circumstances were different, we could have made a different decision. But, in my situation I felt that I didn't have to.
- alecco 8y ago
  > and I promised my family that our lifestyle won't have to change while I do this experiment with my career. That doesn't sound right at all.
  - deleted 8y ago
    [deleted]
  - whatislovecraft 8y ago
    Why not? I don't have evidence to support my following claim, but I think that having a stable home life with a supporting family, not subjected to unusual bankruptcies or bad financial surprises, is a key element to startup founder success. I could be mistaken. But I am a failed founder who disrupted their family and friends lives and lost a lot of goodwill while running the business because of it. So I think I'm at least right some of the time. Regardless, it's wise to think of your loved ones first, even if it's only a cold business decision to do so; your business will thank you later with smoother revenues and a happier, more capable decision-making process down the road.

zoba 8y ago

Great calculator. I have previously used the Startup Runway Calculator for similar purposes. It allows for greater itemization than I saw in your screenshots. Might be nice for folks who like this project to also check out: https://startuprunway.io https://startuprunway.io

e1g 8y ago

Excellent DIY solution! For more nuanced planning, I found web-based apps https://startuprunway.io https://startuprunway.io and https://hiringplan.io https://hiringplan.io to be very helpful for budget forecasts.

sascha_sl 8y ago

Nice, too bad I'll be too poor for the foreseeable future to do anything like that. (50k EUR/yr)

jv22222 8y ago

The answer should almost always be yes (you have enough funds) because in most cases it’s wiser to stay at your day job and bootstrap a side project. I don’t know why general advice is to leave the day job and go all in. IMHO that is terrible advice.

DVassallo 8y ago
I addressed this in another comment, but it is not always possible to start something on the side with a full-time job. In my case, my employment contract prevented me from doing that. And even if it didn't, it would have been hard to find the time between work and family. If I didn't have enough savings, I might have taken a different approach - maybe start consulting or freelancing while boostrapping. But in my situation, I preferred to just focus on my business. I still have the option of doing freelancing/consulting if the circumstances require it. And obviously, I also have to option of going back on the job market if I don't manage to pull this off.
MaybiusStrip 8y ago
Let's say you manage to carve out 2-4 hours a day to work on your side project while remaining a decent person to your wife and kids. Leaving your job means you could spend 11-13 hours a day on it instead. That's an enormous difference and could easily mean the difference between failure and success. Not only that, but you are putting yourself in precarious legal territory by bootstrapping a side project. Your employer could easily claim ownership of all your IP. OP was a senior software engineer at AWS, how difficult do you think it would be for him to re-enter the workforce with a competing cloud provider nor even coming back to Amazon?
- DVassallo 8y ago
  Exactly. And I think nearly everyone in tech is able to re-enter the workforce within < 6 months.

jackcosgrove 8y ago

Thanks, I appreciate this. My main motivation for starting my own business is to be independent. From what I've seen of management at companies that accept investor money, it's not at all an independent lifestyle. Whereas at a bootstrapped company the management can do much more of what they want (for better or for worse). If you can bootstrap with $2000 in the bank, that's awesome. But I'm more traditional with money and would heed the "three years' worth of expenses saved up" mantra before quitting my job to start a business.

csomar 8y ago

I tried the calculator and actually my savings would last well over 10 years (probably more like 20-25 years even if you account for inflation). I spend around $1.000/month and that includes a new car (paid off), rent for 2 bed-room with a garden, eating out regularly. It doesn't include extensive traveling (which I have been doing in the last couple years). I think the two key points here: 1. Having a family is expensive. If you are considering this track, you may want to postpone having a family/kids. 2. Living in cheaper cities can save you a whole lot of money. Obviously, I would not recommend doing that with a family or if you need extensive networking. But if you want to do 3-4 years of discovery without burning a whole in your savings, then there is countless countries to pick from.

dbbk 8y ago
It would be absolutely reckless to try this with a family to support. Just do it on the side of the day job.
- DVassallo 8y ago
  OP here. I’m doing it with a family, and I don’t think I’m doing anything reckless. I’m not risking anything consequential. Worst case scenario I go get a job again, and my family’s lifestyle wouldn’t have changed one bit during the whole thing.
  - dbbk 8y ago
    What happens if you can't "go get a job again"? Is it assured you can just walk right into one?
    - DVassallo 8y ago
      Nothing is ever certain obviously, but I feel very confident I can find a $150K/yr job in 6 months. If I don't manage, I'd have to adjust my lifestyle (sell house, move somewhere cheaper, etc).
- csomar 8y ago