9 ms·

The side hustle from hell

349 points by jakey_bakey 1y ago

cortesoft 1y ago
This just makes me glad I don't work in the startup space anymore
- jakey_bakey 1y ago
  Eh, it gets better. I've gone from (this) to my own preseed, to a seed, now in a series A. It's always fun and there's always lots to learn.
firesteelrain 1y ago
Sounds like a nightmare. Red flags were visible early on but obviously everyone was blind
- jakey_bakey 1y ago
  The only person you have to convince is yourself!
xivzgrev 1y ago
I get it, why a young ambitious 20-something would be sucked into this. Sometimes you just need to make your own mistakes to learn, even if you read / hear from others that you shouldn't do that thing. C'est la vie.
- jakey_bakey 1y ago
  I would even say it was a worthwhile experience. I've built my career off the startup I landed in, I probably wouldn't have got there without being burned here.
  - its_down_again 1y ago
    Any advice for leveraging a startup role to boost your career? I’ve seen friends turn their positions at early stage companies (Pre-Seed/Seed/Series A) into things like raising funding for their own ventures, hosting galas at SF museums, putting on international fashion shows with their alma mater, or even speaking gigs. And honestly, I have no idea how they pulled it off.
    - dan-robertson 1y ago
      Feels like you might get better advice asking your friends who’ve done the thing you can’t understand?
juliansimioni 1y ago
Like many, I also had an experience like this in my younger days: obviously unfit product, early prototype made by bottom-of-the-barrel contractors, co-founders who can't code, no salary, no users. I got lucky, and spent only a few months while not working that hard. But at the same time, this quote hits home: >I was doing a startup. I was executing, and for the first time in my professional life I wasn’t insulated from the results. I didn’t achieve my destiny of great things, but I’d built something.
- jakey_bakey 1y ago
  Right? I literally can't even call it a proper warning because of how much I took out of it. My whole career was jumpstarted by my second startup (we only got to preseed but it was a great two years) and there's no way I'd have been as good a fit without this experience
  - bruce511 1y ago
    I think you nailed it here. >> I hope that by reading this story, I can protect some of you from 11 months of pain. That's not how experience works. What you really did was get an 11 month business education. And again, you can tell your story, but you can't pass on that education. I'm glad you moved on to better things. And I think you're saying that this experience prepared you for that, and you were a better overall entrepreneur because of it. Thats how experience works.
    - skeeter2020 1y ago
      But maybe he can compress someone else's terrible experience down to 6 or 3 months, or stop them from sinking their own money (or that of family/friends) into an obvious faliure. There's another failures to go around; we don't all need to life every one of them.
      - jakey_bakey 1y ago
        Yeah honestly I’m not sure what someone is meant to take out of this. The experience is really useful. But if me and Gus worked this out after 3 months, we could have cofounded our own thing!
Aurornis 1y ago
This is the classic dead-end startup story from beginning to end. It checks all the boxes: - 3 non-technical cofounders - Flurry of activity for everything other than acquiring customers - Attempt to outsource development followed by disappointment - Relentless scope creep - Zero go to market plan, just an incessant belief that more features in the app will solve all problems There is also one less obvious point that is buried in the article: > Simultaneously, my underpaid mid-level consultancy role passed me up for promotion again. I wanted out, double-time. I did volunteer mentoring for a while. Few people went all-in on unpaid startup jobs as their primary role, but many were tempted to do it as side projects. They always believe it’s less risky. The risk they don’t see is that it distracts them from their main job, either slowing career growth or risking a PIP or layoff. The common thread I kept coming back to was this: Ignore the side projects. Focus on career growth at your day job. Put your primary energy into growing your career or finding a job where you can. Something about the side hustle continues to lure people into thinking it’s a way out, until they burn themselves out and sabotage their day job while doing it.
- jakey_bakey 1y ago
  Amazing analysis. To be fair, I think there were a lot of reasons I was passed for promotion at Deloitte. I can grind like a mofo but am a terrible fit for client-facing roles (AuDHD).
  - joshdavham 1y ago
    TIL AuDHD = "Autistm + ADHD".
    - jakey_bakey 1y ago
      Same, I saw it on Twitter and just wanted to use it :D
- zelda420 1y ago
  Throughout my long career in the tech industry, from established giants like Oracle to a hyper-growth pre-IPO Airbnb, I've observed a consistent pattern: engineers rarely advance more than one level above their initial hiring position, regardless of their performance or tenure. The only exception were juniors who could rise to a senior. But senior to staff, or whatever you want to call it is almost unheard of unless you jump ship.
TrackerFF 1y ago
Yeah, sounds like the product was DOA. All that time not spent on acquiring customers - but chasing the "perfect product".
- jakey_bakey 1y ago
  So much time could be saved by listening to 10 hours of YC podcasts ...
photochemsyn 1y ago
Very surprising that well-designed contracts (with well-designed exit clauses among other issues) aren't at the top of the 'ten red flags' list. This isn't just a problem with tech startups - business partners down the ages have been burning each other with flimsy contractual agreements and 'trust me buddy' rationales when questioned about the contracts. This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts. Try pasting one of those long-winded click-through contracts from Apple etc. into any LLM and see if they can help you decipher the terms - then do this with your startup's hiring contract. Also, watch 'The Social Network' and pay attention to things like stock-split clauses and so on. Some claim the world is split between those who understand compound interest and those who don't but I think it's understanding contract law that matters more.
- codingwagie 1y ago
  any extremely long contract with obtuse terms is designed to screw you in some way. you just wont know until you get there, unless you are willing to spend 10-20k on lawyers to argue the terms
  - skrebbel 1y ago
    This is not true. There's plenty super friendly contracts that just happened to be written by lawyers who are into legalese maximizing. I can imagine that someone trying to screw you over might use obtuse terms to hide that, but the reverse isn't always true. Sometimes things are just obtuse for stupid reasons.
    - codingwagie 1y ago
      in my experience it is 100% true, every contract i have seen with over legalese is created by people who expect to be acting on those terms
- VWWHFSfQ 1y ago
  > watch 'The Social Network' and pay attention to things like stock-split clauses > but I think it's understanding contract law that matters more It's best to just pay a real attorney instead of trying to learn something from a TV show or fact-check the hallucinations of an LLM.
wibbily 1y ago
Currently at a startup that did the same thing wrt having their app built overseas. Protip: don't. Endless bullshit, excruciating trying to get anything out of them. We ended up with an app just like this guy's, locked aspect ratio and all. If I find another startup whose product is an app, and they can't find a local developer to write that app, I'm running. Why outsource your core product!?
- jakey_bakey 1y ago
  It's the classic case of believing that ideas at 90% of the value and execution is something you can delegate. Think Kendall from Succession.
- constantcrying 1y ago
  Because there are legions of people out there who want to be "entrepreneurs", so they come up with "business ideas". They can't make these ideas into reality by themselves, as they lack all technical skill. This lack of skill also means that they can not manage a project, as they lack a basic understanding of how software project works.
- icedchai 1y ago
  This is very common. Lofty idea folks often see developers as a commodity, so why not just outsource to the cheapest bidder? You might luck out and get a smart person who doesn't know what they're worth yet... but, 9 out of 10 times, you get what you pay for.
  - absolutelastone 1y ago
    If you don't know the value of what you are buying you are most likely to get even less than what you payed for. In the story they basically got scammed by overseas shops who probably pocketed most of the money and farmed out the effort to minimally-skilled and minimally-paid developers who were in way over their heads.
    - icedchai 1y ago
VWWHFSfQ 1y ago
I've worked with many startups and many VCs. The best VCs are investing in the team, not the product idea. The idea itself is basically nothing. It can get blown up in an instant and require a pivot. But the investor wants to know that the money they're giving out is going to people actually recognizing that and capable of successfully switching gears. They're investing in people, not some singular half-baked idea that very likely goes nowhere. In this case it sounds like both the idea was bad, and the team was bad.
- jakey_bakey 1y ago
  Many such cases!
aorloff 1y ago
Everyone wants someone else to do the hard part, but wants to "own" something Bitches, owning something is doing the hard part !
- jakey_bakey 1y ago
  I'm an entrepreneur, bitch. Ideas + delegation!
- icedchai 1y ago
  This attitude is also very common. When I see a small company with lots of "leaders" and far fewer doers, it's a huge red flag.
vessenes 1y ago
Oof. Sorry. Missed in this story because Jacob is in Europe/UK is that this level of absolute incompetence in a launch team is, in my experience, extra common on that side of the pond. There are of course some fantastic startups launched out of the UK and Europe. Spotify, Deepmind and Raspberry Pi come to mind. But, as a rule on the investment side, I'm always super skeptical. Inevitably cap tables are worse, investors have a very different view of their roles than they do in US or Asia, and there's so much less startup infrastructure than in SV or say Singapore or Shanghai that it's a very different world. Ironically, it's self-feeding -- investors think startups are shitty business, they charge more, high quality founders head for greener pastures -- rinse and repeat.
- jakey_bakey 1y ago
  Haha to be fair I have been adjacent to lots of startups like this. I also spent a few months attending weekly zoom calls for a side hustle that was effectively some mid level bored corporate people blowing off steam. They were a few steps behind getting a bankloan.
ChuckMcM 1y ago
I love this story. Why? Because it is the story of so many startups. I was so perplexed in the mid-90's when the dot com "boom" had started by people who wanted to do a "startup" but had no idea what that meant. Like the author, people with a feeling of Destiny that they would be some leader of something that everyone talked about. I had the same beliefs when I left Sun where clearly I would never be "famous" but by starting a company that became big? Sure anyone could do that. And in fact, a peer at Sun for whom I felt was not particularly qualified at anything, had gone on to a startup which had then gone public and made millions! And if he could do it, well it was guaranteed for me, right? Yeah, no. At the other end of my career and looking back it becomes possible to see things that you missed on the journey, the role of luck, the difference between talking hard and working hard, and the critical importance of the people involved. A million monkeys with a million typewriters won't eventually create Shakespeare's works, they will waste a lot of resources and create a bunch trash. I also discovered that there are people who, when they speak, you really want to believe what they are saying. Being able to step back and say "what's the foundation here? Why should I believe this?" can be very difficult.
- jakey_bakey 1y ago
  Do you think a million monkeys with a million typewriters could come up with Oracle Database 11?
  - jimbokun 1y ago
    Is an existence proof allowed?
- _DeadFred_ 1y ago
  Pitch: It's a replacement for Blockbuster. But instead of going and getting instant gratification and getting to watch the movie you want to watch tonight, you create a wishlist and we send you 3 titles off that list (normally the 3 least popular), which may or may not be what you want to watch right now, and add the convenience of injecting the United States Post Office into the process.
  - 1y ago
joshdavham 1y ago
Really cathartic read! Thanks so much for writing this. I really related to parts of this and the red flags you point out are very much the red flags I've also noticed with other startups. I almost feel like this could be "required reading" for some.
- jakey_bakey 1y ago
  I hope @paulg asks me to give this talk at demo day I can make it funnier!
ugh123 1y ago
> In one Monster-and-Elvanse-fuelled night of passion, I was light years ahead of a build that had taken 3 years. They were sold. MY MAN!
- jakey_bakey 1y ago
  AuDHD represent :ok:
Havoc 1y ago
Well at least he took learnings from it
- jakey_bakey 1y ago
  Hahah it was probably just about worth it. Wouldn't if I had kids or it wasn't mostly in COVID time
OtherShrezzing 1y ago
An additional red flag - if your company lists "being SEIS registered" as a point of traction, run a mile. Literally every newly registered UK company can get this by spending 60 minutes filling out a form that says "my company is risky, I intend to raise money from VCs".
- jakey_bakey 1y ago
  “This will be a great differentiator when looking for funding!”
constantcrying 1y ago
Having non-technical founders who failed to even outsource their project is an enormous red flag. Nobody there knew how to make the product a reality and if it is you who is doing 100% of the work, then you obviously deserve 100% of the equity. "Having an idea" is not worth equity. If you thought the idea was great, there was an obvious golden opportunity for you, none of the people there are going to make this into a product, but you can. If the idea was bad, getting paid in equity means getting paid in something worthless. The only situation where it is reasonable to deal with such a totally defunct organization is if they pay you a lot of money. And if there is a single missed payment you stop any work until you are paid.
- jakey_bakey 1y ago
  I certainly should have spotted this as soon as they offered me a contract that was a clumsily-reworded version of the contract for the awful overseas contractors
  - selimthegrim 1y ago
    Oh hi! Are you me?
- hinkley 1y ago
  Too many fantasy tales of overnight successes out there. It takes an enormous amount of work to make things look easy - in a commercial setting. Some people just pick things up and are relatively good at them but they cannot productive it. To do so you have to be able explain it and they don’t understand it, they just do it. So they can’t make a business out of it and they cannot become top of their field because they lack the fundamentals and the work ethic. I could talk anybody to death with all of my ideas. I only get to work on very few of them. I can’t imagine how sad a life it would be to only have one. It’s great for mentoring though because there’s always something shiny on the shelf and I can let them window shop for one they like.
- CPLX 1y ago
  In fairness I think "non-technical" needs to be clarified a little. I can easily envision (and have seen) founders who are not themselves actual software engineers but who have some background in project management or otherwise managing tech teams hiring an offshore team and moving very quickly to a viable product cost efficiently. In fact I'd bet it's at least a coin-flip that this profile would actually be more effective than a hardcore CS background engineer who hasn't ever managed teams or launched and sold a product. Of course that's a small caveat, since that's almost never what we're talking about, like in this example. But still, seems worth noting that the outsourcing of the build isn't necessarily the red flag, the red flag is the leader of the project having no experience in building and launching useful software.
superconduct123 1y ago
I'm thankful I got to experience working at very early startup as a summer intern rather than full time That gave me enough info to know I'd prefer working for a big company
eqmvii 1y ago
Lovely article. The payoff of "I loved every minute of it" after all the agony and missed red flags really hit home.
- jakey_bakey 1y ago
  Thank you for reading :)
generationP 1y ago
So an app that would probably serve a real need fails because the team is unable to bootstrap the two-sided market. The best dev moves to a bullshit "green habits" app that doesn't suffer from such problems because... it doesn't really do much in the first place. Not the greatest outcome for the world.
- jakey_bakey 1y ago
  Hey man, don't knock 2020/2021 ZIRP era projects Don't you remember before inflation when we were able to focus on climate change! But you totally got us there, the startup failed because we were a vitamin (and because our on-the-fence seed round was scuppered by Putin cooling some feet)
  - generationP 1y ago
    Yeah, not so much harping on you as on the whole ecosystem. You seem to have done your part well.
gavmor 1y ago
> The cofounders didn’t have access to the code repo Get the fuck outta here. I couldn't read past that. I'm done. Thanks for the writeup. Godspeed.
- jakey_bakey 1y ago
  "This is just object code for my idea why would I want to read it"
dabinat 1y ago
This article reminded me of the time a guy wanted to pitch his startup idea for me to develop. He wanted me to sign an NDA before telling me, as the idea was so great that I would obviously steal it, which I refused. So all he would tell me is that it was “the next Twitter”, and from what I could gather, he would retain the majority of the equity and I would do all of the work, while he lobbed ideas at me from on high. I passed on it, but only because the red flags were extremely obvious. I could certainly see a situation where I might have been sucked into something more subtly exploitative.
- kjs3 1y ago
  I can't even count the number of times I've heard this pitch, complete with NDA demand. The only answer is "Thanks, but no thanks". I have never had to regret it.
- bityard 1y ago
  This needs to be highlighted: Everyone who does anything at all in the realm of business or tech should basically never sign an NDA unless it is already positively guaranteed they are getting something out of it. You might be required to sign an NDA once you have been hired at a W-2 job if the company handles sensitive data. Or if you have already been offered a contract. Event then, make sure it is actually necessary, and run it by your lawyer. But if someone wants you to sign an NDA just to hear about their idea or business, or as a condition of being interviewed for a job, ALWAYS say no. VCs don't sign NDAs and neither should you. It's plain and simple uncompensated risk. https://blog.jpl-consulting.com/2012/04/why-i-wont-sign-your-nda/ https://blog.jpl-consulting.com/2012/04/why-i-wont-sign-your... https://www.markwelchblog.com/2009/08/26/why-i-dont-sign-ndas/ https://www.markwelchblog.com/2009/08/26/why-i-dont-sign-nda... https://blog.hartleybrody.com/wont-sign-nda/ https://blog.hartleybrody.com/wont-sign-nda/
  - ChrisMarshallNY 1y ago
    Reminds me of this classic bit: https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM
- 1y ago
pizzathyme 1y ago
Rather than being a cautionary tale, I actually think this is the kind of misadventure that everybody should have. You learn so much about the real world from a failed startup where nothing is done right (at least I did). Your early 20s are the perfect time to do it with little risk. Lots of painful memories I laugh at later. Highly recommended.
- jakey_bakey 1y ago
  Yep this is exactly my summary at the end! I'm glad I sat on this story a few years to let it develop and let the positive career consequences play out.
  - ghc 1y ago
    It's an entertaining and well-written story. After reading it I momentarily entertained writing up my own similar misadventure, but even 15 years on, I think I'd find it too difficult to write about. I'm glad you were able to pull it off though!
bitbasher 1y ago
The first red flag is a startup that is contingent on a two sided marketplace... damn that's a tough place to be!
- mandevil 1y ago
  The only times I've ever heard of this working are when you have a huge war-chest to subsidize both sides of the marketplace to come out and play on your app. If you can offer better prices than normal to both sides (with the gap made up from your raises) it can work. Otherwise? I'm not sure it can.
- jakey_bakey 1y ago
  Yeah it turns out those are hard to go to market with, who would have thought Only way it can work is if you can bootstrap something hyperlocal to start with (think Uber in San Fran)
paulorlando 1y ago
Liked this: "Startup pitch competitions are mostly a waste of time—validation comes from talking to users and iterating, not from impressing a judge."
- jerryseff 1y ago
  [flagged]
- jakey_bakey 1y ago
  Thank you :)
htrp 1y ago
Advisory roles only advise. Once you start doing work, you're basically an employee.
buzzerbetrayed 1y ago
That was such a great read. And way too relatable at parts. Loved it. Makes me want to write down my startup stories one day, even if it's just for friends and family.
- jakey_bakey 1y ago
  Thank you :D
andrewstuart 1y ago
I do all that by myself and play all those roles at the same time.
kikimora 1y ago
I’ve been running an outsourcing business for a while and can confirm - 99% of people paying for development have no idea what they are doing and how to sell it. They are destined for failure unless the outsourcing team builds a product that is 3x better than a competitor with 100x funding. Success stories I’ve seen always involved extremely active customer. They become part of the team, helping devs to build good product. Also it always took much more time and money. If you think you can build marketable product with fix-cost-scope contract - think twice.
jkaptur 1y ago
> If you aren’t sure what your cofounders are doing, trust your git instinct. That's good advice to not lose your HEAD.
readthenotes1 1y ago
“Look at the specification. It does not specify anywhere we were asked to support screen dimensions larger than iPhone 4s sized.” I wonder how many outsourcing firms are going to be replaced by vibe coding. This response is pretty on par with many of the horror stories responses I've seen over the decades...
harshaw 1y ago
This isn't so much about the Author's story but the space. He is correct that marketplaces are hell, and especially auto repair market places. I was one of the several devs that went through trying to make Openbay work (a US based market place for auto repair). We actually did have service providers signed up and we did have a way to acquire customers who wanted auto repair. So you had the illusion of product market fit - but the problem is that it's really really hard to get people to actually click "buy this brake job" and then, more importantly, they have no reason to come back to your app because 1) you don't need brake jobs all that often and 2) they can just go back to the service provider. And many shops are happy to still take phone calls as their default way of booking work. The reason the company existed is the rich founder was upset that a shop wanted to charge him a fortune to get his BMW M5 repaired. He wanted better quotes. So we built a marketplace to get better quotes. But that's not what real customers want (because most people have Toyotas not M5s). And also we didn't do the customer development / research to understand how repair shops work. You want to know how my repair shop manages their repair schedule? They have a paper calendar and write down your phone number and the job. sure there are better ways to manage the work - but this paper mechanism has worked for them for years and why change it? And you know what - I go back to the shop all the time because I trust them. Ultimately people tend to have a fairly personal relationship with their local mechanic. You can build a leadgen product but the ultimate relationship is between the customer and the repair provider. TLDR - everyone should understand the lean startup. /working backwards model and relentlessly focus on the customer.
- bityard 1y ago
  > Ultimately people tend to have a fairly personal relationship with their local mechanic. This is the money line. And it goes for all skilled trade work. Mechanics, plumbers, building contractors, roofers. Most of the people doing this work are just surprisingly bad at it, especially for how much they charge for it. It takes a LOT of time and effort to find someone good. I'd even lump doctors and dentists into this. I don't want a marketplace to tell me who's the cheapest, I want a marketplace to tell me who's the best. And unfortunately there's no way to build that. (Why is a long story, but the short version is: because there's no way to build the correct incentives into it.)
nyarlathotep_ 1y ago
I've always been surprised at the sheer amount of work that's outsourced in software/IT. Even companies that had staff of developers would often outsource work that should be part of their core competency. Without fail, every time, they ended up with a bill ~an order of magnitude higher than they'd pay if they were just hiring competent staff to deliver the project. In many of these cases, these same firms would then hire another (lower quality) company to maintain it for them. This typically went as expected. I could never understand the rationale for a lot of these cases. "The existing staff is busy"--but they could have two hours of meetings with us daily? "They don't have competence in those areas"--they're already using $CLOUD and $THAT_STUFF? It often was working with existing systems? "Costs"--again, see above. I really could not understand the motivation. I get it for clients that had no experience in what we were sent to do or got sold on something they didn't need, but a majority surely had or could get the resources to do the projects that were done, but opted not to, for whatever reason. I've seen this kind of thing fail on many occasions. If it's critical for your business, (ya know, not some LLM demo or something), you need ownership, otherwise you end up with a far larger cost of ownership and piles of logistical and quality problems. I genuinely can't imagine a start-up doing this. Everything I've seen is private sector companies, most ~competent companies. I'll say this, the cases where I have seen success in consulting (from the perspective of the 'buyer' is those that were intimately involved with the process from the start, providing feedback and pushing back when needed and taking initiative deliberately to "on board" so they could maintain and use whatever it was they got, and typically working alongside consultants) You also have to basically avoid most consulting companies. I won't name them, but it's not hard to guess.
indoorcat 1y ago
Extremely relatable. I was the first technical hire for a startup that ultimately failed last year. I did at least have a (below market) salary, and there were no outsourcing headaches, but I really did spend an inordinate amount of my time trying to perfect a product that the founders had no idea how to market. I certainly learned a lot, though it made me a little cynical about startups and the tech industry in general. Maybe in a couple more years I’ll feel more positively about the whole experience.
- jakey_bakey 1y ago
  I find it's all about hitching your wagon to the right horses
  - indoorcat 1y ago
    That’s the trick, isn’t it. It’s just so hard to figure out which horses are the right ones and which ones are going to bolt off track. In my case, the founders seemed to have good bonafides - former execs from big name tech companies - but had very limited startup experience. Turns out it takes a different skill set to build a company from zero versus running an already successful one.
pavel_lishin 1y ago
An incredibly good write-up. Had I been the author, I don't know if I could put ink to paper like this without bitterness and resentment burning through every page.
WaitWaitWha 1y ago
Another red flag: [phantom stocks](https://en.wikipedia.org/wiki/Phantom_stock https://en.wikipedia.org/wiki/Phantom_stock). Invented a few things, implemented in product, CEO & CFO sold company from under us. Ended up with nothing.
scarface_74 1y ago
In the later part of my career, I’ve had all sorts of “opportunities” to be a “technical cofounder” or a “CTO” (which was barely a glorified overworked tech lead). My motto is “FYPM”: https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1 https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1 Cash not illiquid equity at my market rate: “You’re getting in on the ground floor of something huge.” “We can’t offer big salaries yet, but the upside potential is enormous.” “You’ll have massive impact here — way more than at a big company.” “We’re looking for people who are mission-driven, not just here for the money.” “Everyone is making sacrifices right now.” “Once we close the next funding round, we’ll revisit compensation.” “The real reward is in the equity, not the salary.”
bgschulman31 1y ago
Loved this article! And I appreciated the BCS references - especially the subtler ones like the use of the word 'chicanery'
- jakey_bakey 1y ago
  I like to think we are the only 2 people who noticed :D
PeterStuer 1y ago
"Marketplace startups are often considered the hardest software startups to build, because you have to create two markets at once. They work best with frequent and inexpensive transactions (from which you can reasonably take a 20% cut)" 2 sided markets get started by buying one side of the market. This is why this model is very expensive to bootstrap. You typically start by offering free or very discounted services to the consumers and pay the difference to the producers until you have captured the consumers and the producers pay you for transactions. All the while you have to mitigate disintermediation, so that producers can't bypass you to access the consumers outside of your market platform.
koonsolo 1y ago
Can someone knowledgeable explain this part? "The guy whipped out a rudimentary financial model in a few hours. Turns out it’s not that important—it’s for illustrating your runway and spending plan, not to justify an imaginary revenue number."
leflambeur 1y ago
OMG I laughed so hard with this post. You're a very funny writer!

349 points by jakey_bakey 1y ago

cortesoft 1y ago

This just makes me glad I don't work in the startup space anymore

jakey_bakey 1y ago
Eh, it gets better. I've gone from (this) to my own preseed, to a seed, now in a series A. It's always fun and there's always lots to learn.

firesteelrain 1y ago

Sounds like a nightmare. Red flags were visible early on but obviously everyone was blind

jakey_bakey 1y ago
The only person you have to convince is yourself!

xivzgrev 1y ago

I get it, why a young ambitious 20-something would be sucked into this. Sometimes you just need to make your own mistakes to learn, even if you read / hear from others that you shouldn't do that thing. C'est la vie.

jakey_bakey 1y ago
I would even say it was a worthwhile experience. I've built my career off the startup I landed in, I probably wouldn't have got there without being burned here.
- its_down_again 1y ago
  Any advice for leveraging a startup role to boost your career? I’ve seen friends turn their positions at early stage companies (Pre-Seed/Seed/Series A) into things like raising funding for their own ventures, hosting galas at SF museums, putting on international fashion shows with their alma mater, or even speaking gigs. And honestly, I have no idea how they pulled it off.
  - dan-robertson 1y ago
    Feels like you might get better advice asking your friends who’ve done the thing you can’t understand?

juliansimioni 1y ago

Like many, I also had an experience like this in my younger days: obviously unfit product, early prototype made by bottom-of-the-barrel contractors, co-founders who can't code, no salary, no users. I got lucky, and spent only a few months while not working that hard. But at the same time, this quote hits home: >I was doing a startup. I was executing, and for the first time in my professional life I wasn’t insulated from the results. I didn’t achieve my destiny of great things, but I’d built something.

jakey_bakey 1y ago
Right? I literally can't even call it a proper warning because of how much I took out of it. My whole career was jumpstarted by my second startup (we only got to preseed but it was a great two years) and there's no way I'd have been as good a fit without this experience
- bruce511 1y ago
  I think you nailed it here. >> I hope that by reading this story, I can protect some of you from 11 months of pain. That's not how experience works. What you really did was get an 11 month business education. And again, you can tell your story, but you can't pass on that education. I'm glad you moved on to better things. And I think you're saying that this experience prepared you for that, and you were a better overall entrepreneur because of it. Thats how experience works.
  - skeeter2020 1y ago
    But maybe he can compress someone else's terrible experience down to 6 or 3 months, or stop them from sinking their own money (or that of family/friends) into an obvious faliure. There's another failures to go around; we don't all need to life every one of them.
    - jakey_bakey 1y ago
      Yeah honestly I’m not sure what someone is meant to take out of this. The experience is really useful. But if me and Gus worked this out after 3 months, we could have cofounded our own thing!

Aurornis 1y ago

This is the classic dead-end startup story from beginning to end. It checks all the boxes: - 3 non-technical cofounders - Flurry of activity for everything other than acquiring customers - Attempt to outsource development followed by disappointment - Relentless scope creep - Zero go to market plan, just an incessant belief that more features in the app will solve all problems There is also one less obvious point that is buried in the article: > Simultaneously, my underpaid mid-level consultancy role passed me up for promotion again. I wanted out, double-time. I did volunteer mentoring for a while. Few people went all-in on unpaid startup jobs as their primary role, but many were tempted to do it as side projects. They always believe it’s less risky. The risk they don’t see is that it distracts them from their main job, either slowing career growth or risking a PIP or layoff. The common thread I kept coming back to was this: Ignore the side projects. Focus on career growth at your day job. Put your primary energy into growing your career or finding a job where you can. Something about the side hustle continues to lure people into thinking it’s a way out, until they burn themselves out and sabotage their day job while doing it.

jakey_bakey 1y ago
Amazing analysis. To be fair, I think there were a lot of reasons I was passed for promotion at Deloitte. I can grind like a mofo but am a terrible fit for client-facing roles (AuDHD).
- joshdavham 1y ago
  TIL AuDHD = "Autistm + ADHD".
  - jakey_bakey 1y ago
    Same, I saw it on Twitter and just wanted to use it :D
zelda420 1y ago
Throughout my long career in the tech industry, from established giants like Oracle to a hyper-growth pre-IPO Airbnb, I've observed a consistent pattern: engineers rarely advance more than one level above their initial hiring position, regardless of their performance or tenure. The only exception were juniors who could rise to a senior. But senior to staff, or whatever you want to call it is almost unheard of unless you jump ship.

TrackerFF 1y ago

Yeah, sounds like the product was DOA. All that time not spent on acquiring customers - but chasing the "perfect product".

jakey_bakey 1y ago
So much time could be saved by listening to 10 hours of YC podcasts ...

photochemsyn 1y ago

Very surprising that well-designed contracts (with well-designed exit clauses among other issues) aren't at the top of the 'ten red flags' list. This isn't just a problem with tech startups - business partners down the ages have been burning each other with flimsy contractual agreements and 'trust me buddy' rationales when questioned about the contracts. This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts. Try pasting one of those long-winded click-through contracts from Apple etc. into any LLM and see if they can help you decipher the terms - then do this with your startup's hiring contract. Also, watch 'The Social Network' and pay attention to things like stock-split clauses and so on. Some claim the world is split between those who understand compound interest and those who don't but I think it's understanding contract law that matters more.

codingwagie 1y ago
any extremely long contract with obtuse terms is designed to screw you in some way. you just wont know until you get there, unless you are willing to spend 10-20k on lawyers to argue the terms
- skrebbel 1y ago
  This is not true. There's plenty super friendly contracts that just happened to be written by lawyers who are into legalese maximizing. I can imagine that someone trying to screw you over might use obtuse terms to hide that, but the reverse isn't always true. Sometimes things are just obtuse for stupid reasons.
  - codingwagie 1y ago
    in my experience it is 100% true, every contract i have seen with over legalese is created by people who expect to be acting on those terms
VWWHFSfQ 1y ago
> watch 'The Social Network' and pay attention to things like stock-split clauses > but I think it's understanding contract law that matters more It's best to just pay a real attorney instead of trying to learn something from a TV show or fact-check the hallucinations of an LLM.

wibbily 1y ago

Currently at a startup that did the same thing wrt having their app built overseas. Protip: don't. Endless bullshit, excruciating trying to get anything out of them. We ended up with an app just like this guy's, locked aspect ratio and all. If I find another startup whose product is an app, and they can't find a local developer to write that app, I'm running. Why outsource your core product!?

jakey_bakey 1y ago
It's the classic case of believing that ideas at 90% of the value and execution is something you can delegate. Think Kendall from Succession.
constantcrying 1y ago
Because there are legions of people out there who want to be "entrepreneurs", so they come up with "business ideas". They can't make these ideas into reality by themselves, as they lack all technical skill. This lack of skill also means that they can not manage a project, as they lack a basic understanding of how software project works.
icedchai 1y ago
This is very common. Lofty idea folks often see developers as a commodity, so why not just outsource to the cheapest bidder? You might luck out and get a smart person who doesn't know what they're worth yet... but, 9 out of 10 times, you get what you pay for.
- absolutelastone 1y ago
  If you don't know the value of what you are buying you are most likely to get even less than what you payed for. In the story they basically got scammed by overseas shops who probably pocketed most of the money and farmed out the effort to minimally-skilled and minimally-paid developers who were in way over their heads.
  - icedchai 1y ago

VWWHFSfQ 1y ago

I've worked with many startups and many VCs. The best VCs are investing in the team, not the product idea. The idea itself is basically nothing. It can get blown up in an instant and require a pivot. But the investor wants to know that the money they're giving out is going to people actually recognizing that and capable of successfully switching gears. They're investing in people, not some singular half-baked idea that very likely goes nowhere. In this case it sounds like both the idea was bad, and the team was bad.

jakey_bakey 1y ago
Many such cases!

aorloff 1y ago

Everyone wants someone else to do the hard part, but wants to "own" something Bitches, owning something is doing the hard part !

jakey_bakey 1y ago
I'm an entrepreneur, bitch. Ideas + delegation!
icedchai 1y ago
This attitude is also very common. When I see a small company with lots of "leaders" and far fewer doers, it's a huge red flag.

vessenes 1y ago

Oof. Sorry. Missed in this story because Jacob is in Europe/UK is that this level of absolute incompetence in a launch team is, in my experience, extra common on that side of the pond. There are of course some fantastic startups launched out of the UK and Europe. Spotify, Deepmind and Raspberry Pi come to mind. But, as a rule on the investment side, I'm always super skeptical. Inevitably cap tables are worse, investors have a very different view of their roles than they do in US or Asia, and there's so much less startup infrastructure than in SV or say Singapore or Shanghai that it's a very different world. Ironically, it's self-feeding -- investors think startups are shitty business, they charge more, high quality founders head for greener pastures -- rinse and repeat.

jakey_bakey 1y ago
Haha to be fair I have been adjacent to lots of startups like this. I also spent a few months attending weekly zoom calls for a side hustle that was effectively some mid level bored corporate people blowing off steam. They were a few steps behind getting a bankloan.

ChuckMcM 1y ago

I love this story. Why? Because it is the story of so many startups. I was so perplexed in the mid-90's when the dot com "boom" had started by people who wanted to do a "startup" but had no idea what that meant. Like the author, people with a feeling of Destiny that they would be some leader of something that everyone talked about. I had the same beliefs when I left Sun where clearly I would never be "famous" but by starting a company that became big? Sure anyone could do that. And in fact, a peer at Sun for whom I felt was not particularly qualified at anything, had gone on to a startup which had then gone public and made millions! And if he could do it, well it was guaranteed for me, right? Yeah, no. At the other end of my career and looking back it becomes possible to see things that you missed on the journey, the role of luck, the difference between talking hard and working hard, and the critical importance of the people involved. A million monkeys with a million typewriters won't eventually create Shakespeare's works, they will waste a lot of resources and create a bunch trash. I also discovered that there are people who, when they speak, you really want to believe what they are saying. Being able to step back and say "what's the foundation here? Why should I believe this?" can be very difficult.

jakey_bakey 1y ago
Do you think a million monkeys with a million typewriters could come up with Oracle Database 11?
- jimbokun 1y ago
  Is an existence proof allowed?
_DeadFred_ 1y ago
Pitch: It's a replacement for Blockbuster. But instead of going and getting instant gratification and getting to watch the movie you want to watch tonight, you create a wishlist and we send you 3 titles off that list (normally the 3 least popular), which may or may not be what you want to watch right now, and add the convenience of injecting the United States Post Office into the process.
- 1y ago

joshdavham 1y ago

Really cathartic read! Thanks so much for writing this. I really related to parts of this and the red flags you point out are very much the red flags I've also noticed with other startups. I almost feel like this could be "required reading" for some.

jakey_bakey 1y ago
I hope @paulg asks me to give this talk at demo day I can make it funnier!

ugh123 1y ago

> In one Monster-and-Elvanse-fuelled night of passion, I was light years ahead of a build that had taken 3 years. They were sold. MY MAN!

jakey_bakey 1y ago
AuDHD represent :ok:

Havoc 1y ago

Well at least he took learnings from it

jakey_bakey 1y ago
Hahah it was probably just about worth it. Wouldn't if I had kids or it wasn't mostly in COVID time

OtherShrezzing 1y ago

An additional red flag - if your company lists "being SEIS registered" as a point of traction, run a mile. Literally every newly registered UK company can get this by spending 60 minutes filling out a form that says "my company is risky, I intend to raise money from VCs".

jakey_bakey 1y ago
“This will be a great differentiator when looking for funding!”

constantcrying 1y ago

Having non-technical founders who failed to even outsource their project is an enormous red flag. Nobody there knew how to make the product a reality and if it is you who is doing 100% of the work, then you obviously deserve 100% of the equity. "Having an idea" is not worth equity. If you thought the idea was great, there was an obvious golden opportunity for you, none of the people there are going to make this into a product, but you can. If the idea was bad, getting paid in equity means getting paid in something worthless. The only situation where it is reasonable to deal with such a totally defunct organization is if they pay you a lot of money. And if there is a single missed payment you stop any work until you are paid.

jakey_bakey 1y ago
I certainly should have spotted this as soon as they offered me a contract that was a clumsily-reworded version of the contract for the awful overseas contractors
- selimthegrim 1y ago
  Oh hi! Are you me?
hinkley 1y ago
Too many fantasy tales of overnight successes out there. It takes an enormous amount of work to make things look easy - in a commercial setting. Some people just pick things up and are relatively good at them but they cannot productive it. To do so you have to be able explain it and they don’t understand it, they just do it. So they can’t make a business out of it and they cannot become top of their field because they lack the fundamentals and the work ethic. I could talk anybody to death with all of my ideas. I only get to work on very few of them. I can’t imagine how sad a life it would be to only have one. It’s great for mentoring though because there’s always something shiny on the shelf and I can let them window shop for one they like.
CPLX 1y ago
In fairness I think "non-technical" needs to be clarified a little. I can easily envision (and have seen) founders who are not themselves actual software engineers but who have some background in project management or otherwise managing tech teams hiring an offshore team and moving very quickly to a viable product cost efficiently. In fact I'd bet it's at least a coin-flip that this profile would actually be more effective than a hardcore CS background engineer who hasn't ever managed teams or launched and sold a product. Of course that's a small caveat, since that's almost never what we're talking about, like in this example. But still, seems worth noting that the outsourcing of the build isn't necessarily the red flag, the red flag is the leader of the project having no experience in building and launching useful software.

superconduct123 1y ago

I'm thankful I got to experience working at very early startup as a summer intern rather than full time That gave me enough info to know I'd prefer working for a big company

eqmvii 1y ago

Lovely article. The payoff of "I loved every minute of it" after all the agony and missed red flags really hit home.

jakey_bakey 1y ago
Thank you for reading :)

generationP 1y ago

So an app that would probably serve a real need fails because the team is unable to bootstrap the two-sided market. The best dev moves to a bullshit "green habits" app that doesn't suffer from such problems because... it doesn't really do much in the first place. Not the greatest outcome for the world.

jakey_bakey 1y ago
Hey man, don't knock 2020/2021 ZIRP era projects Don't you remember before inflation when we were able to focus on climate change! But you totally got us there, the startup failed because we were a vitamin (and because our on-the-fence seed round was scuppered by Putin cooling some feet)
- generationP 1y ago
  Yeah, not so much harping on you as on the whole ecosystem. You seem to have done your part well.

gavmor 1y ago

> The cofounders didn’t have access to the code repo Get the fuck outta here. I couldn't read past that. I'm done. Thanks for the writeup. Godspeed.

jakey_bakey 1y ago
"This is just object code for my idea why would I want to read it"

dabinat 1y ago

This article reminded me of the time a guy wanted to pitch his startup idea for me to develop. He wanted me to sign an NDA before telling me, as the idea was so great that I would obviously steal it, which I refused. So all he would tell me is that it was “the next Twitter”, and from what I could gather, he would retain the majority of the equity and I would do all of the work, while he lobbed ideas at me from on high. I passed on it, but only because the red flags were extremely obvious. I could certainly see a situation where I might have been sucked into something more subtly exploitative.

kjs3 1y ago
I can't even count the number of times I've heard this pitch, complete with NDA demand. The only answer is "Thanks, but no thanks". I have never had to regret it.
bityard 1y ago
This needs to be highlighted: Everyone who does anything at all in the realm of business or tech should basically never sign an NDA unless it is already positively guaranteed they are getting something out of it. You might be required to sign an NDA once you have been hired at a W-2 job if the company handles sensitive data. Or if you have already been offered a contract. Event then, make sure it is actually necessary, and run it by your lawyer. But if someone wants you to sign an NDA just to hear about their idea or business, or as a condition of being interviewed for a job, ALWAYS say no. VCs don't sign NDAs and neither should you. It's plain and simple uncompensated risk. https://blog.jpl-consulting.com/2012/04/why-i-wont-sign-your-nda/ https://blog.jpl-consulting.com/2012/04/why-i-wont-sign-your... https://www.markwelchblog.com/2009/08/26/why-i-dont-sign-ndas/ https://www.markwelchblog.com/2009/08/26/why-i-dont-sign-nda... https://blog.hartleybrody.com/wont-sign-nda/ https://blog.hartleybrody.com/wont-sign-nda/
- ChrisMarshallNY 1y ago
  Reminds me of this classic bit: https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM
1y ago

pizzathyme 1y ago

Rather than being a cautionary tale, I actually think this is the kind of misadventure that everybody should have. You learn so much about the real world from a failed startup where nothing is done right (at least I did). Your early 20s are the perfect time to do it with little risk. Lots of painful memories I laugh at later. Highly recommended.

jakey_bakey 1y ago
Yep this is exactly my summary at the end! I'm glad I sat on this story a few years to let it develop and let the positive career consequences play out.
- ghc 1y ago
  It's an entertaining and well-written story. After reading it I momentarily entertained writing up my own similar misadventure, but even 15 years on, I think I'd find it too difficult to write about. I'm glad you were able to pull it off though!

bitbasher 1y ago

The first red flag is a startup that is contingent on a two sided marketplace... damn that's a tough place to be!

mandevil 1y ago
The only times I've ever heard of this working are when you have a huge war-chest to subsidize both sides of the marketplace to come out and play on your app. If you can offer better prices than normal to both sides (with the gap made up from your raises) it can work. Otherwise? I'm not sure it can.
jakey_bakey 1y ago
Yeah it turns out those are hard to go to market with, who would have thought Only way it can work is if you can bootstrap something hyperlocal to start with (think Uber in San Fran)

paulorlando 1y ago

Liked this: "Startup pitch competitions are mostly a waste of time—validation comes from talking to users and iterating, not from impressing a judge."

jerryseff 1y ago
[flagged]
jakey_bakey 1y ago
Thank you :)

htrp 1y ago

Advisory roles only advise. Once you start doing work, you're basically an employee.

buzzerbetrayed 1y ago

That was such a great read. And way too relatable at parts. Loved it. Makes me want to write down my startup stories one day, even if it's just for friends and family.

jakey_bakey 1y ago
Thank you :D

andrewstuart 1y ago

I do all that by myself and play all those roles at the same time.

kikimora 1y ago

I’ve been running an outsourcing business for a while and can confirm - 99% of people paying for development have no idea what they are doing and how to sell it. They are destined for failure unless the outsourcing team builds a product that is 3x better than a competitor with 100x funding. Success stories I’ve seen always involved extremely active customer. They become part of the team, helping devs to build good product. Also it always took much more time and money. If you think you can build marketable product with fix-cost-scope contract - think twice.

jkaptur 1y ago

> If you aren’t sure what your cofounders are doing, trust your git instinct. That's good advice to not lose your HEAD.

readthenotes1 1y ago

“Look at the specification. It does not specify anywhere we were asked to support screen dimensions larger than iPhone 4s sized.” I wonder how many outsourcing firms are going to be replaced by vibe coding. This response is pretty on par with many of the horror stories responses I've seen over the decades...

harshaw 1y ago

This isn't so much about the Author's story but the space. He is correct that marketplaces are hell, and especially auto repair market places. I was one of the several devs that went through trying to make Openbay work (a US based market place for auto repair). We actually did have service providers signed up and we did have a way to acquire customers who wanted auto repair. So you had the illusion of product market fit - but the problem is that it's really really hard to get people to actually click "buy this brake job" and then, more importantly, they have no reason to come back to your app because 1) you don't need brake jobs all that often and 2) they can just go back to the service provider. And many shops are happy to still take phone calls as their default way of booking work. The reason the company existed is the rich founder was upset that a shop wanted to charge him a fortune to get his BMW M5 repaired. He wanted better quotes. So we built a marketplace to get better quotes. But that's not what real customers want (because most people have Toyotas not M5s). And also we didn't do the customer development / research to understand how repair shops work. You want to know how my repair shop manages their repair schedule? They have a paper calendar and write down your phone number and the job. sure there are better ways to manage the work - but this paper mechanism has worked for them for years and why change it? And you know what - I go back to the shop all the time because I trust them. Ultimately people tend to have a fairly personal relationship with their local mechanic. You can build a leadgen product but the ultimate relationship is between the customer and the repair provider. TLDR - everyone should understand the lean startup. /working backwards model and relentlessly focus on the customer.

bityard 1y ago
> Ultimately people tend to have a fairly personal relationship with their local mechanic. This is the money line. And it goes for all skilled trade work. Mechanics, plumbers, building contractors, roofers. Most of the people doing this work are just surprisingly bad at it, especially for how much they charge for it. It takes a LOT of time and effort to find someone good. I'd even lump doctors and dentists into this. I don't want a marketplace to tell me who's the cheapest, I want a marketplace to tell me who's the best. And unfortunately there's no way to build that. (Why is a long story, but the short version is: because there's no way to build the correct incentives into it.)

nyarlathotep_ 1y ago

I've always been surprised at the sheer amount of work that's outsourced in software/IT. Even companies that had staff of developers would often outsource work that should be part of their core competency. Without fail, every time, they ended up with a bill ~an order of magnitude higher than they'd pay if they were just hiring competent staff to deliver the project. In many of these cases, these same firms would then hire another (lower quality) company to maintain it for them. This typically went as expected. I could never understand the rationale for a lot of these cases. "The existing staff is busy"--but they could have two hours of meetings with us daily? "They don't have competence in those areas"--they're already using $CLOUD and $THAT_STUFF? It often was working with existing systems? "Costs"--again, see above. I really could not understand the motivation. I get it for clients that had no experience in what we were sent to do or got sold on something they didn't need, but a majority surely had or could get the resources to do the projects that were done, but opted not to, for whatever reason. I've seen this kind of thing fail on many occasions. If it's critical for your business, (ya know, not some LLM demo or something), you need ownership, otherwise you end up with a far larger cost of ownership and piles of logistical and quality problems. I genuinely can't imagine a start-up doing this. Everything I've seen is private sector companies, most ~competent companies. I'll say this, the cases where I have seen success in consulting (from the perspective of the 'buyer' is those that were intimately involved with the process from the start, providing feedback and pushing back when needed and taking initiative deliberately to "on board" so they could maintain and use whatever it was they got, and typically working alongside consultants) You also have to basically avoid most consulting companies. I won't name them, but it's not hard to guess.

indoorcat 1y ago

Extremely relatable. I was the first technical hire for a startup that ultimately failed last year. I did at least have a (below market) salary, and there were no outsourcing headaches, but I really did spend an inordinate amount of my time trying to perfect a product that the founders had no idea how to market. I certainly learned a lot, though it made me a little cynical about startups and the tech industry in general. Maybe in a couple more years I’ll feel more positively about the whole experience.

jakey_bakey 1y ago
I find it's all about hitching your wagon to the right horses
- indoorcat 1y ago
  That’s the trick, isn’t it. It’s just so hard to figure out which horses are the right ones and which ones are going to bolt off track. In my case, the founders seemed to have good bonafides - former execs from big name tech companies - but had very limited startup experience. Turns out it takes a different skill set to build a company from zero versus running an already successful one.

pavel_lishin 1y ago

An incredibly good write-up. Had I been the author, I don't know if I could put ink to paper like this without bitterness and resentment burning through every page.

WaitWaitWha 1y ago

Another red flag: [phantom stocks](https://en.wikipedia.org/wiki/Phantom_stock https://en.wikipedia.org/wiki/Phantom_stock). Invented a few things, implemented in product, CEO & CFO sold company from under us. Ended up with nothing.

scarface_74 1y ago

In the later part of my career, I’ve had all sorts of “opportunities” to be a “technical cofounder” or a “CTO” (which was barely a glorified overworked tech lead). My motto is “FYPM”: https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1 https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1 Cash not illiquid equity at my market rate: “You’re getting in on the ground floor of something huge.” “We can’t offer big salaries yet, but the upside potential is enormous.” “You’ll have massive impact here — way more than at a big company.” “We’re looking for people who are mission-driven, not just here for the money.” “Everyone is making sacrifices right now.” “Once we close the next funding round, we’ll revisit compensation.” “The real reward is in the equity, not the salary.”

bgschulman31 1y ago

Loved this article! And I appreciated the BCS references - especially the subtler ones like the use of the word 'chicanery'

jakey_bakey 1y ago
I like to think we are the only 2 people who noticed :D

PeterStuer 1y ago

"Marketplace startups are often considered the hardest software startups to build, because you have to create two markets at once. They work best with frequent and inexpensive transactions (from which you can reasonably take a 20% cut)" 2 sided markets get started by buying one side of the market. This is why this model is very expensive to bootstrap. You typically start by offering free or very discounted services to the consumers and pay the difference to the producers until you have captured the consumers and the producers pay you for transactions. All the while you have to mitigate disintermediation, so that producers can't bypass you to access the consumers outside of your market platform.

koonsolo 1y ago

Can someone knowledgeable explain this part? "The guy whipped out a rudimentary financial model in a few hours. Turns out it’s not that important—it’s for illustrating your runway and spending plan, not to justify an imaginary revenue number."

leflambeur 1y ago

OMG I laughed so hard with this post. You're a very funny writer!