4 ms·

Yikes, this is painfully misguided. The fact that on the 10% chance that a startup is successful the founder's time will need to ultimately have been worth $10

Yikes, this is painfully misguided. The fact that on the 10% chance that a startup is successful the founder's time will need to ultimately have been worth $1000/hour in order to make the gamble worthwhile does not by any stretch of the imagination justify your making decisions as if your time was actually worth that much. Because nine out of ten times, your time is actually worth nothing. [Not to mention that the market doesn't care one bit what your time would need to have been worth to make the gamble worth it for you, nor the fact that increasing your burn rate actually decreases the chance that you'll succeed at all] Your time is only worth whatever you can reasonably expect it to be worth, and that has to include the chance that it's worth $0. If you start only considering the upside, then you can start justifying all manner of stupid purchases: why walk when you can save six minutes ($100) per trip by keeping a limo service on-call? Why bother cooking for yourself when you can hire a private chef? Hell, why bother coding when you can "only" pay $500/hour and get a best-in-the-business programmer to do it for you? You're still "saving money". Please don't think like this. It's a recipe for failure.

jiggy2011 14y ago
Agreed , they seem to be considering the mean startup founder per-hour value (which may well be $1000 or whatever) rather than the modal per-hour value (which is probably shockingly close to $0)
- FrojoS 14y ago
  Yeah, better consider the median! Really, this essay sounded like the opposite of the 'lean startup' idea. Remember, cutting expenses is relatively easy. Whats hard, is bringing in real money.
idleworx 14y ago
I agree. I had written a post on my blog similar to your line of tought a while back. More along the lines of people are overestimating what their time is actually worth. http://news.ycombinator.com/item?id=3376081 http://news.ycombinator.com/item?id=3376081
- FrojoS 14y ago
  Great article! Why isn't THIS on the front page? Direct link: http://blog.idleworx.com/2011/12/your-time-is-not-worth-that-much.html http://blog.idleworx.com/2011/12/your-time-is-not-worth-that...
  - idleworx 14y ago
    Thanks. I submitted it a while back but it didn't make it too far :-(
jamesaguilar 14y ago
There's also the issue that, realistically, even in successful startups, only particular hours among all the hours worked created substantial value. Key insights, key moments of negotiation, key meetings. What are the odds that the hours you're driving would have been one of those hours? Probably not all that high, or else you wouldn't have chosen to drive them.
- mwd_ 14y ago
  The drive up to Eureka may not even hurt your chances at coming up with one of those key insights if you've been working a lot. Sometimes breaks are good, and as others have pointed out looking at opportunity cost in terms of billable contract hours is deeply flawed. It should also be pointed out that you probably shouldn't bother with the startup if all you care about is money and the expected value is exactly the same as predictable contract work. If it's worthwhile then either the payout should be significantly higher or there should be some reasons other than money at play that are again going to influence calculations.
econidiot 14y ago
One's time is highly unlikely to be worth nothing.
wpietri 14y ago
I'm not so sure about that. The logic certainly applies to time invested in product choices. If you're doing a VC-backed startup, you are playing a high-risk, high-reward game. Early on, unless you are building something crucial to delivering a lot of value to a lot of people, the time spent is waste. So if I spend $10k of developer time (as measured by, say, salaries) to build a feature that only makes $15k back in revenue or cost savings, then that's a bad move in a VC-funded business, even though most businesses would be happy with that. Our rule of thumb when making build/buy decisions is to use a number well above loaded developer costs. 3x, I think, for precisely these reasons of opportunity cost. I agree that startups should still strive to be frugal, but I do note that Google had a chef from early on, and it's pretty standard startup advice to pay up to hire the best people you can get, rather than getting somebody cheap but adequate-ish. Sometimes being frugal requires paying up.

jiggy2011 14y ago

Agreed , they seem to be considering the mean startup founder per-hour value (which may well be $1000 or whatever) rather than the modal per-hour value (which is probably shockingly close to $0)

FrojoS 14y ago
Yeah, better consider the median! Really, this essay sounded like the opposite of the 'lean startup' idea. Remember, cutting expenses is relatively easy. Whats hard, is bringing in real money.

idleworx 14y ago

I agree. I had written a post on my blog similar to your line of tought a while back. More along the lines of people are overestimating what their time is actually worth. http://news.ycombinator.com/item?id=3376081 http://news.ycombinator.com/item?id=3376081

FrojoS 14y ago
Great article! Why isn't THIS on the front page? Direct link: http://blog.idleworx.com/2011/12/your-time-is-not-worth-that-much.html http://blog.idleworx.com/2011/12/your-time-is-not-worth-that...
- idleworx 14y ago
  Thanks. I submitted it a while back but it didn't make it too far :-(

jamesaguilar 14y ago

There's also the issue that, realistically, even in successful startups, only particular hours among all the hours worked created substantial value. Key insights, key moments of negotiation, key meetings. What are the odds that the hours you're driving would have been one of those hours? Probably not all that high, or else you wouldn't have chosen to drive them.

mwd_ 14y ago
The drive up to Eureka may not even hurt your chances at coming up with one of those key insights if you've been working a lot. Sometimes breaks are good, and as others have pointed out looking at opportunity cost in terms of billable contract hours is deeply flawed. It should also be pointed out that you probably shouldn't bother with the startup if all you care about is money and the expected value is exactly the same as predictable contract work. If it's worthwhile then either the payout should be significantly higher or there should be some reasons other than money at play that are again going to influence calculations.

econidiot 14y ago

One's time is highly unlikely to be worth nothing.

wpietri 14y ago

I'm not so sure about that. The logic certainly applies to time invested in product choices. If you're doing a VC-backed startup, you are playing a high-risk, high-reward game. Early on, unless you are building something crucial to delivering a lot of value to a lot of people, the time spent is waste. So if I spend $10k of developer time (as measured by, say, salaries) to build a feature that only makes $15k back in revenue or cost savings, then that's a bad move in a VC-funded business, even though most businesses would be happy with that. Our rule of thumb when making build/buy decisions is to use a number well above loaded developer costs. 3x, I think, for precisely these reasons of opportunity cost. I agree that startups should still strive to be frugal, but I do note that Google had a chef from early on, and it's pretty standard startup advice to pay up to hire the best people you can get, rather than getting somebody cheap but adequate-ish. Sometimes being frugal requires paying up.