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I really agree with this, though I suspect some young bright 20 year olds are desperate to work hard for the little cash VCs throw at them, especially if FAANG

I really agree with this, though I suspect some young bright 20 year olds are desperate to work hard for the little cash VCs throw at them, especially if FAANG says no to them for arbitrary reasons. The thing that has always stopped me from starting a business is the fear of being sued, the fear of failure, and the fear of just breaking even compared to working for a normal company. I also am not very good at sales despite years of trying-- my personality is hardwired towards laying all my cards down on the table immediately. My question to you is, if you have 2 million, why not continue to work for FAANG or retire semi-frugally to do hobbyist work, when considering that starting a startup involves immense downside risk (getting sued）

mgkimsal 6y ago
> is the fear of being sued... I can't discount it entirely, but... for many situations, that's probably a somewhat overblown fear. It's why you get insurance, pay professionals to do legal/paperwork stuff, and get on with your business. Almost anyone can sue for anything, but it probably doesn't happen anywhere near the number of times you might think it does. When you start, you're going to be too small to get sued in the first place. And being sued probably means you have paying customers, so you're already doing something right.
- ta1234567890 6y ago
  > too small to get sued in the first place. And being sued probably means you have paying customers Apparently I'm the exception, but my business was pretty small (under $1M ARR), and one of our investors (which was also our largest client), sued us to pay his convertible note back. The company went bankrupt and after bankruptcy he sued my cofounder and I personally for the note. Still dealing with the whole thing. Every step of the way our other investors and lawyers were caught off guard, because the situation is apparently very rare, however, it still happened. Having said that, knowing what I know now, I'd prefer to start a business, with all the issues and risks that it might entail, rather than let fear keep me from doing it. It's also been a hell of a learning experience and I'm sure it's all going to help me in the future.
  - gnicholas 6y ago
    Wow, sounds pretty crazy. Did the note have personal guarantees? My understanding is that kind of thing is very rare. If not, what grounds did he have for suing you personally? Fraudulent conveyance or breach of fiduciary duties? Something else?
    - sushshshsh 6y ago
      It is not crazy and not rare. I can sue you right now, personally, and you would need to pay someone to defend you in court. If you've never owned a business and have no relation to me, then probably you'll survive the suit just fine. But as you can see, OP had a business relationship with the person involved, and though OP probably won the suit in the end, he still had to pay oodles of money to protect himself. And if he lost, well, then there's my point.
    - ta1234567890 6y ago
      The note did not have personal guarantees. But that didn't stop him from trying to claim alter ego. Like the sibling comment says, even if we win, we still need to pay tons of money to lawyers just to deal with it, and put in a lot of our time as well. Our lawyers and other investors do think this situation is pretty rare, as the guy ended up killing the business that could have given him a better return on his money, and also screwed everyone else involved in the process.
  - mgkimsal 6y ago
    interesting (sorry you had to deal with that). "having investors" is perhaps a different sort of business than other small businesses that start up. many of the smaller businesses (esp software) don't have 'investors' as such, though some have taken out bank loans.
    - ta1234567890 6y ago
      You are totally right. And it will take me a very long time before I want to have investors again (if ever at all).
deleted 6y ago
[deleted]
vmception 6y ago
This is so interesting because you could watch a 5 minute video on "limited liability" and dissolve all of those fears. The company concept is a shield. Money is allowed to pass through to you, outside capital is not a tax event and everything you spend is deducted against the much smaller salary you paid yourself. You can have negative AGI, actually have a high compensation, and still get $1,200 checks signed by the President. Risk is allowed to stay with the company, whether it has anything left to pay to the aggrieved investor or not. This knowledge alone acts as a deterrent to many risks. You're really overthinking this.
- heipei 6y ago
  This. Add on to the fact that none of your customers has any incentive to sue you or screw you (i.e. it almost never happens) and that you can get insurance for all kinds of eventualities. And you still have a limited-liability corporation.
- sushshshsh 6y ago
  I'm actually not overthinking it, because judge's remove the protection an LLC gives your personal assets for arbitrary reasons. Additionally, you need a multi member non spousal LLC to even get the protection in the first place. I have a lot of assets to protect.
  - Aeolun 6y ago
    Arbitrary reasons being? Generally this happens if you’ve been grossly irresponsible with your companies’ funds.
    - sushshshsh 6y ago
      As mentioned the first one is not having a cofounder who isnt in your immediate family, which for some people is fine and for me is honestly a waste of time and equity. Just another vector for failure. Beinf grossly irresponsible with your companies' funds is an interesting way of saying "I tried to pay myself without the detailed advice of a skilled accountant and I made an oopsie and now the judge says I need to pay a lawyer ${sum_i_dont_have} to protect a random plantiff from becoming the new owner of my house" Again, how amazing is your idea and execution and business networking capabilities that you somehow think you are gonna make more than $2.2M in 10 years of work, like you would at Google?

mgkimsal 6y ago

> is the fear of being sued... I can't discount it entirely, but... for many situations, that's probably a somewhat overblown fear. It's why you get insurance, pay professionals to do legal/paperwork stuff, and get on with your business. Almost anyone can sue for anything, but it probably doesn't happen anywhere near the number of times you might think it does. When you start, you're going to be too small to get sued in the first place. And being sued probably means you have paying customers, so you're already doing something right.

ta1234567890 6y ago
> too small to get sued in the first place. And being sued probably means you have paying customers Apparently I'm the exception, but my business was pretty small (under $1M ARR), and one of our investors (which was also our largest client), sued us to pay his convertible note back. The company went bankrupt and after bankruptcy he sued my cofounder and I personally for the note. Still dealing with the whole thing. Every step of the way our other investors and lawyers were caught off guard, because the situation is apparently very rare, however, it still happened. Having said that, knowing what I know now, I'd prefer to start a business, with all the issues and risks that it might entail, rather than let fear keep me from doing it. It's also been a hell of a learning experience and I'm sure it's all going to help me in the future.
- gnicholas 6y ago
  Wow, sounds pretty crazy. Did the note have personal guarantees? My understanding is that kind of thing is very rare. If not, what grounds did he have for suing you personally? Fraudulent conveyance or breach of fiduciary duties? Something else?
  - sushshshsh 6y ago
    It is not crazy and not rare. I can sue you right now, personally, and you would need to pay someone to defend you in court. If you've never owned a business and have no relation to me, then probably you'll survive the suit just fine. But as you can see, OP had a business relationship with the person involved, and though OP probably won the suit in the end, he still had to pay oodles of money to protect himself. And if he lost, well, then there's my point.
  - ta1234567890 6y ago
    The note did not have personal guarantees. But that didn't stop him from trying to claim alter ego. Like the sibling comment says, even if we win, we still need to pay tons of money to lawyers just to deal with it, and put in a lot of our time as well. Our lawyers and other investors do think this situation is pretty rare, as the guy ended up killing the business that could have given him a better return on his money, and also screwed everyone else involved in the process.
- mgkimsal 6y ago
  interesting (sorry you had to deal with that). "having investors" is perhaps a different sort of business than other small businesses that start up. many of the smaller businesses (esp software) don't have 'investors' as such, though some have taken out bank loans.
  - ta1234567890 6y ago
    You are totally right. And it will take me a very long time before I want to have investors again (if ever at all).

deleted 6y ago

[deleted]

vmception 6y ago

This is so interesting because you could watch a 5 minute video on "limited liability" and dissolve all of those fears. The company concept is a shield. Money is allowed to pass through to you, outside capital is not a tax event and everything you spend is deducted against the much smaller salary you paid yourself. You can have negative AGI, actually have a high compensation, and still get $1,200 checks signed by the President. Risk is allowed to stay with the company, whether it has anything left to pay to the aggrieved investor or not. This knowledge alone acts as a deterrent to many risks. You're really overthinking this.

heipei 6y ago
This. Add on to the fact that none of your customers has any incentive to sue you or screw you (i.e. it almost never happens) and that you can get insurance for all kinds of eventualities. And you still have a limited-liability corporation.
sushshshsh 6y ago
I'm actually not overthinking it, because judge's remove the protection an LLC gives your personal assets for arbitrary reasons. Additionally, you need a multi member non spousal LLC to even get the protection in the first place. I have a lot of assets to protect.
- Aeolun 6y ago
  Arbitrary reasons being? Generally this happens if you’ve been grossly irresponsible with your companies’ funds.
  - sushshshsh 6y ago
    As mentioned the first one is not having a cofounder who isnt in your immediate family, which for some people is fine and for me is honestly a waste of time and equity. Just another vector for failure. Beinf grossly irresponsible with your companies' funds is an interesting way of saying "I tried to pay myself without the detailed advice of a skilled accountant and I made an oopsie and now the judge says I need to pay a lawyer ${sum_i_dont_have} to protect a random plantiff from becoming the new owner of my house" Again, how amazing is your idea and execution and business networking capabilities that you somehow think you are gonna make more than $2.2M in 10 years of work, like you would at Google?