5 ms·

> A big fact of the entrepreneur world is that it is hugely based on luck. And for anything with bigger ambitions than a lifestyle business, don’t forget conne

> A big fact of the entrepreneur world is that it is hugely based on luck. And for anything with bigger ambitions than a lifestyle business, don’t forget connections. Most founders are still men from Ivies or Stanford. Just look at the “PayPal mafia” to see how inbred tech investing can be. Not that most entrepreneurs need or should expect VC funding, but this is HN, run by a VC. You can totally run a business and be successful without it.

mensetmanusman 4y ago
Connections, where you were born, and where you go to school are also luck.
cies 4y ago
> Most founders are still men from Ivies or Stanford Is that also true for YC startups? I felt like YC (while still playing the capitalist's game) was providing a more equal opportunity to start-up "luck" by just looking at the numbers :)
- vineyardmike 4y ago
  No idea but I’d love to see data… Eg - academic breakdown of founders - % founders that already knew a YC grad personally - founders that knew YC investors - etc
- themoonisachees 4y ago
  Maybe, but to have good numbers to be in YC to begin with having the right connections helps a lot.
pirate787 4y ago
I wasted a decade of my life on the notion that you can bootstrap a startup. It is hard mode and the folks that are so dismissive of VC funding should have that disclaimer.
- onion2k 4y ago
  It's worth noting that investment makes building a business wildly different to bootstrapping. You stop trying to build whatever a successful business looks like to you and have to build something other people believe in. That comes with a lot of compromises, different decisions, and 'selling out'. Some founders find that change in direction very hard to accept. Bootstrapping and investment are different journeys. Neither is easier.
  - 082349872349872 4y ago
    As an example of a possible compromise, recall the risk/return efficient frontier. If you are the principal investor in your venture, you may be willing to leave some potential return on the table, in exchange for dialling down risk to a comfortable level. If funds are the principal investors, they have already dialled down their risk via diversification over the rest of their portfolios, and they will view any risk-adversity on your part as inefficient dead loss. Solid base hit or swing for the bleachers? You may have the option to pick either strategy in the former case, but will not in the latter.
- jacquesm 4y ago
  You can bootstrap a startup, but not every startup. And woe to you if you are bootstrapped and some VC funded club starts poaching your customers with a product subsidized by their financiers. I wrote about these options long ago: https://jacquesmattheij.com/three-roads-to-the-top-of-the-mountain/ https://jacquesmattheij.com/three-roads-to-the-top-of-the-mo...
  - 082349872349872 4y ago
    > if you get screwed, let it be, revenge is costly, you likely can't afford it "Living well is the best revenge". And if you're someone who has the skills to turn their time into significant value-add, seeking revenge is an opportunity cost that undoubtedly counts as "living poorly". [caveat: I have had to litigate on occasion, but (a) that is something where hours spent are indirect, via counsel, and (b) it's not exactly "living well", either]
hef19898 4y ago
Personally, I have a problem with the term lifestyle business. Without plenty of VC money, building and running a business is hard. VC backed up start-ups fit the "lifestyle" business definition a lot better, IMHO. One can play CxO, or chief engineer or whatever fancy title one wants to hold without putting the effort and years in, without actually worrying about those nasty things like profitability, cash flow or actual products. And, with the right connections, if one start-up fails one can still just start a new one.
- jacquesm 4y ago
  And there is absolutely nothing wrong with a life style business to begin with, the negative stigma is there only because certain VCs feel that you are a horrible person for not cutting them in on the action so they can diversify their portfolios.
  - jwr 4y ago
    This. I really dislike the term "lifestyle business". What's wrong with a stable long-term business that makes founders and customers happy? Why does every business need GROWTH GROWTH GROWTH at all costs, even if the result is a net negative for customers? I sometimes explain to customers that if my business were VC-funded, it would grow and be developed much faster, but in the end there would need to be an exit and there is no exit scenario that is good for the customers. Think about it: there could be an IPO, in which case the business would need to start addressing a huge audience and increase growth (which always hurts existing customers), there could be a strategic acquisition or an acquihire, very few of which go right (this usually results in shutting down the service within 2-3 years), or the VCs could decide to fold the company, stopping the service outright. There is simply no good scenario.
    - jacquesm 4y ago
      I've been more than happy to invest in a few of these 'lifestyle' businesses as angel investor. One of them is quite possibly going to be a breakout success anyway. We're all still amazed by it. Not a dollar of external capital beyond the friends-and-family round.
copx 4y ago
>Most founders are still men from Ivies or Stanford. That's the key part of the "entrepreneur" story the OP missed. From Gates over Zuckerberg to Musk, all these people were born rich, into well-connected families. If you do not belong to this ultra-privileged class of people, your chances of doing what they did is practically zero.
- MikeDelta 4y ago
  Indeed, this has been a topic of many discussions in the past and I do believe that connections and privilege form a more important factor in success than many would like to admit.
  - nprateem 4y ago
    Connections, privilege, but also it's about personal net capital invested. Entrepreneurs with ordinary net worth are underdiversified, with a concentration in their own business. If you have high net worth, you have less exposure so the stakes are lower and you require a lower rate of return to compensate you for the risk (CAPM). There's no way I wanted the pressure to run a business in my 20s. A decade or so later with a cushy job gives me the financial freedom to do this without the high risk of failure, since if it tanks I'll still have other investments. Most entrepreneurs are in their 40s apparently according to research.
  - czbond 4y ago
    If this were true, wouldn't the other side of that statement be true? Since all startups seem to be privileged white males - shouldn't they all succeed and have funding?
    - andrekandre 4y ago
      where did the previous poster say "white males"?
      - deleted 4y ago
        [deleted]

mensetmanusman 4y ago

Connections, where you were born, and where you go to school are also luck.

cies 4y ago

> Most founders are still men from Ivies or Stanford Is that also true for YC startups? I felt like YC (while still playing the capitalist's game) was providing a more equal opportunity to start-up "luck" by just looking at the numbers :)

vineyardmike 4y ago
No idea but I’d love to see data… Eg - academic breakdown of founders - % founders that already knew a YC grad personally - founders that knew YC investors - etc
themoonisachees 4y ago
Maybe, but to have good numbers to be in YC to begin with having the right connections helps a lot.

pirate787 4y ago

I wasted a decade of my life on the notion that you can bootstrap a startup. It is hard mode and the folks that are so dismissive of VC funding should have that disclaimer.

onion2k 4y ago
It's worth noting that investment makes building a business wildly different to bootstrapping. You stop trying to build whatever a successful business looks like to you and have to build something other people believe in. That comes with a lot of compromises, different decisions, and 'selling out'. Some founders find that change in direction very hard to accept. Bootstrapping and investment are different journeys. Neither is easier.
- 082349872349872 4y ago
  As an example of a possible compromise, recall the risk/return efficient frontier. If you are the principal investor in your venture, you may be willing to leave some potential return on the table, in exchange for dialling down risk to a comfortable level. If funds are the principal investors, they have already dialled down their risk via diversification over the rest of their portfolios, and they will view any risk-adversity on your part as inefficient dead loss. Solid base hit or swing for the bleachers? You may have the option to pick either strategy in the former case, but will not in the latter.
jacquesm 4y ago
You can bootstrap a startup, but not every startup. And woe to you if you are bootstrapped and some VC funded club starts poaching your customers with a product subsidized by their financiers. I wrote about these options long ago: https://jacquesmattheij.com/three-roads-to-the-top-of-the-mountain/ https://jacquesmattheij.com/three-roads-to-the-top-of-the-mo...
- 082349872349872 4y ago
  > if you get screwed, let it be, revenge is costly, you likely can't afford it "Living well is the best revenge". And if you're someone who has the skills to turn their time into significant value-add, seeking revenge is an opportunity cost that undoubtedly counts as "living poorly". [caveat: I have had to litigate on occasion, but (a) that is something where hours spent are indirect, via counsel, and (b) it's not exactly "living well", either]

hef19898 4y ago

Personally, I have a problem with the term lifestyle business. Without plenty of VC money, building and running a business is hard. VC backed up start-ups fit the "lifestyle" business definition a lot better, IMHO. One can play CxO, or chief engineer or whatever fancy title one wants to hold without putting the effort and years in, without actually worrying about those nasty things like profitability, cash flow or actual products. And, with the right connections, if one start-up fails one can still just start a new one.

jacquesm 4y ago
And there is absolutely nothing wrong with a life style business to begin with, the negative stigma is there only because certain VCs feel that you are a horrible person for not cutting them in on the action so they can diversify their portfolios.
- jwr 4y ago
  This. I really dislike the term "lifestyle business". What's wrong with a stable long-term business that makes founders and customers happy? Why does every business need GROWTH GROWTH GROWTH at all costs, even if the result is a net negative for customers? I sometimes explain to customers that if my business were VC-funded, it would grow and be developed much faster, but in the end there would need to be an exit and there is no exit scenario that is good for the customers. Think about it: there could be an IPO, in which case the business would need to start addressing a huge audience and increase growth (which always hurts existing customers), there could be a strategic acquisition or an acquihire, very few of which go right (this usually results in shutting down the service within 2-3 years), or the VCs could decide to fold the company, stopping the service outright. There is simply no good scenario.
  - jacquesm 4y ago
    I've been more than happy to invest in a few of these 'lifestyle' businesses as angel investor. One of them is quite possibly going to be a breakout success anyway. We're all still amazed by it. Not a dollar of external capital beyond the friends-and-family round.

copx 4y ago

>Most founders are still men from Ivies or Stanford. That's the key part of the "entrepreneur" story the OP missed. From Gates over Zuckerberg to Musk, all these people were born rich, into well-connected families. If you do not belong to this ultra-privileged class of people, your chances of doing what they did is practically zero.

MikeDelta 4y ago
Indeed, this has been a topic of many discussions in the past and I do believe that connections and privilege form a more important factor in success than many would like to admit.
- nprateem 4y ago
  Connections, privilege, but also it's about personal net capital invested. Entrepreneurs with ordinary net worth are underdiversified, with a concentration in their own business. If you have high net worth, you have less exposure so the stakes are lower and you require a lower rate of return to compensate you for the risk (CAPM). There's no way I wanted the pressure to run a business in my 20s. A decade or so later with a cushy job gives me the financial freedom to do this without the high risk of failure, since if it tanks I'll still have other investments. Most entrepreneurs are in their 40s apparently according to research.
- czbond 4y ago
  If this were true, wouldn't the other side of that statement be true? Since all startups seem to be privileged white males - shouldn't they all succeed and have funding?
  - andrekandre 4y ago
    where did the previous poster say "white males"?
    - deleted 4y ago
      [deleted]