17 ms·

How to Survive in SF as a Broke Startup

168 points by wlimdo 12y ago

hagope 12y ago
The thought of starting a company in San Fran makes me cringe a little with prices the way they are...but what you are doing seems very resourceful, kudos to you and good luck.
- wlimdo 12y ago
  True, prices are absurd. If you can make it here despite the ridiculous COL, props to you. There are also livable gems south of SF (San Bruno, Millbrae, etc.) that make living in the Bay Area more palatable.
rtpg 12y ago
Does anyone have an update on the utility of building a startup in SF? Except maybe for the (certainly large) class of "interacting with real world" or "local" startups (like Uber or Grubhub) I feel like you could gain so much more by even being outside of LA or something instead.
- davidedicillo 12y ago
  The access to people you have here (for advices, fundraising, selling your company, etc.) can't be found anywhere else. That doesn't mean you can't do it anywhere else, but here it's just much easier.
  - rtpg 12y ago
    So I guess everywhere around SF is also the same sort of price range? I mean I don't think Steve McClure cares too much if you had to drive 90 minutes to see him right? I'm just surprised at what people go to to be really in downtown SF. That money could arguably be better spent making sure that the founders/employees eat more than cup noodles for the first 6 months, if it means driving 90 minutes to go to meetings or events.
    - davidw 12y ago
      There's a whole budding movement of people doing the bootstrapped thing... patio11 of course, also people like Rob Walling, Amy Hoy and lots of others. They tend to be in lots of different places, most of which are not expensive places to live. Where I am in my life, I actually find that much more appealing than the typical bay area startup, although I don't feel the need to be 'against' VC fueled startups either - they're capable of doing some things that bootstrapped companies can't.
      - deleted 12y ago
        [deleted]
      - patio11 12y ago
        I think the inexpensiveness of our various locales may actually be causational. A quick survey of the people I'd consider bootstrapping peers is a wheres-where of "Places You Wouldn't Expect To See A Tech Company." Almost all of them are relatively low cost-of-living. In my own experience in Gifu, the fact that ~$3k a month not only supported me but paid roughly market wages was enormously helpful. Had I started in SF or NYC or Tokyo, the need to have $120k a year in profit to have the same standard of living would have probably kept me tied to a desk at AmaGooBookSoft forever. (I can afford to live here in Tokyo these days, but man, $3k in rent is an awful lot of bingo cards.)
    - GeneralMayhem 12y ago
      Oakland and East Bay are generally cheaper. The peninsula down to Palo Alto and Mountain View is just as expensive as the city.
- timr 12y ago
  It's a huge disadvantage unless you're doing something that depends on access to a large number of high-quality (but expensive) engineers and/or rich people. Building a tool for programmers? The valley might be your place. Building a fashion startup? Go where people are fashionable. Building a search engine? There are a lot of search people here. Building a service startup that requires warehouses, inventory and/or logistics expertise? Go to the places where logistics people are running warehouses. Building a streaming video site? Many of the best network engineers in the world live in the valley. Building a two-sided marketplace for used children's clothing? You might want to go somewhere that people can afford to have children. Building yet another on-demand, Uber-for-X service where the value proposition is weak/nonexistent for people who aren't workaholic techno-utopians? Yeah, OK. You could probably only do that sort of thing here. San Francisco is the world capital for people who have more disposable income than incredulity.
  - mahmud 12y ago
    This the premise of a good chunk of Reid Hoffman's Startup Class lecture. http://startupclass.samaltman.com/courses/lec13/ http://startupclass.samaltman.com/courses/lec13/
    - timr 12y ago
      Yep. He's (sadly) one of the few people here who is saying that stuff aloud, though.
  - smt88 12y ago
    > access to a large number of ... rich people That's kind of the heart of it for a lot of people. Say you're a young engineer with a great idea. Now what? You don't have the experience or connections to build your company, so you absolutely need to raise money. That kind of money may exist elsewhere, but only as a fraction of the SF money. "Silicon Alley" talks a big game, but their numbers aren't even close (especially when you talk about exits). I personally strongly support living in an affordable city that gives you great access to your customers. Bootstrap something that has the potential for early revenue. Fail fast or succeed, and then, when you're post-exit someday, do your Next Big Thing in SF.
BadassFractal 12y ago
Very impressive. I'd say that your age group and your relationship status have a very dramatic impact on your ability to pull something like this off. Imho if you've already "done your time" somewhere else, this option becomes a lot less palatable.
peter422 12y ago
You can start a failed company in a lot of cities. Congrats on living in sf on the cheap but it really isn't useful information to help aspiring startup founders.
- BadassFractal 12y ago
  You could pull something like this off in Vegas and live a lot more luxuriously. Yeah, you're stuck in the middle of the desert, but some folks in the startup community really seem to dig it out there.
- neodude 12y ago
  Running out of money is the most common way for a startup to die, so successfully living in SF on the cheap certainly mitigates that.
  - rtpg 12y ago
    i would say that running out of money is the only way for a startup to die. I haven't heard of a company earning loads of money closing down (except when being bought out or something).
    - k-mcgrady 12y ago
      There's a lot of room between running out of money and earning loads. Say I was earning $15,000 per year from my startup. Costs were low and I could take most of that home but revenue wasn't growing. The business hasn't run out of money but it's not making enough to support me and I have to shut it down. Unless there is significant growth opportunity that I'm missing it's also unlikely to get bought.
bsims 12y ago
Any other Sunset start-ups out there?
qwerta 12y ago
Move outside SF?
lifeformed 12y ago
Why not just move somewhere else? To me, the best part of an internet company is that you can work from anywhere. Also, the money you make is usually made online, meaning it doesn't scale to your cost of living. If you make $1000/mo in ad revenue from your website, it doesn't matter if you live in SF or Portland. It's not like a wage, which changes drastically on your location. Why not move to an awesome, affordable city, live the lifestyle you want, and still make the same product? With the money you save, you could fly monthly to SF to have whatever important meetings are critical to do in SF. Is living in SF that critical? Maybe it is, I honestly don't know.
- LogicX 12y ago
  Agreed. Whether it's Portland, or even somewhere like Myrtle Beach, SC - I'm working remotely for a Boston company, and my money goes so much further. We're building a startup community at Startup.SC trying to do just what you're proposing: leverage the Internet to make higher income in a lower cost of living location. Agree also on flights into cities: we just had a demo-day pitch last night, and now I'm headed to Boston for TechStars Demo Day, Angel Bootcamp, etc. To make connections with our entrepreneurs.
- wlimdo 12y ago
  I think the allure of SF is its network of entrepreneurs and the natural tech ecosystem. Entrepreneurs can certainly work anywhere in the US, but you've got to admit that SF's place as a tech hub (and its proximity to SV--think investors, mentors, tech-strong univ like Stanford and Berkeley) is hard to beat.
- retrogradeMT 12y ago
  > Why not move to an awesome, affordable city, live the lifestyle you want, and still make the same product? I agree completely... Now for my plug: For people that like small towns, good beer and outdoor lifestyle, I recommend Bozeman, MT. If you don't mind snow, it simply cannot be beat.
rpm33 12y ago
If you are a student, don't try to do this. Instead, stay at college as much as possible to leverage the network. If you've dropped out of college, try to crash on a friend's couch till he/she gets annoyed and kicks you out. For everyone else, unless your gut is wrenching from a feeling that the solar system will stop expanding without you, go find a job, save some money, get some advice and then try to stumble upon a startup idea along the way. This op-ed makes sense if your idea has been validated and you are struggling to bootstrap/raise angel investment. The time value of money is clearly neglected here, the amount of time you spend trying to live frugally can instead be spent in raising money.
abalone 12y ago
Tradeoff: Living with your cofounders in the dining room of your office might possibly, you know, increase stress and strain among the group. Also that's a lot of time spent making meals. I doubt he's including researching recipes, shopping & cleaning up for 3 meals a day in his 1 hr/day estimate.
- dusklight 12y ago
  If you're living with your cofounders one person can cook for everyone. Also note with this particular arrangement the commuting time is significantly reduced. If living together is sufficient to create enough stress that the group can no longer function, you were never going to make it anyway.
- wlimdo 12y ago
  Good points. I'd only suggest living with co-founders if you know them well enough and can jive on a regular schedule. I mean, if you get sick of your co-founder, maybe he/she wasn't a match in the first place? As for the time preparing the meal (from researching recipes to cleaning up), I'd say it can take less than 1.5 hrs per day total. Imagine buying in bulk, cooking a large, delicious stew that can last a couple days (just warm up the meals in a microwave), and voila. Time and money saved.
zingar 12y ago
Interesting. To live here in South Africa on those numbers you'd have to make similar sacrifices, in an economy which I normally regard as 10x cheaper than (what I've heard of) SF. Some questions: 1. When I hear people on this site talking about "low" startup engineer wages in SF, the numbers I see are 60k - 80k / year. But this article makes that number look like glorious riches by comparison. Living in the dining room sounds pretty extreme, what are the sacrifices made for living on 60k? Presumably nowhere near as onerous? 2. It's fascinating to me that an Asian-American neighbourhood is cheaper than elsewhere. As a foreigner with only stereotypes to work from, Asian-Americans sound like the perfect neighbours... quiet, industrious, and likely to have kids with similar values whom I'd be glad to have my own hypothetical kids meet. So why then would this neighbourhood be unpopular? Are my stereotypes wrong? Is there something else in particular about this neighbourhood that I'm missing? Or perhaps USAians like to interact with their neighbours more than I do?
- zingar 12y ago
  Maybe I'm misunderstanding how this site works (had this account for years but only commented a few times). It looks like my comment was downvoted, can someone explain why? Is thinking about stereotypes offensive? Or it was deemed irrelevant?
  - dijit 12y ago
    sometimes people downvote for no reason. the reason you're not getting replies is likely because the US are asleep though. I think it's a valid question- although it's probably more about causation; Asian-Americans are less snobbish when it comes to areas to live, my assumption is that they live in area's that Americans wouldn't want to live anyway.
    - robin_reala 12y ago
      Are ‘Asian-Americans’ not ‘Americans’ in the first place?
      - 12y ago
lordnacho 12y ago
If networking is the main benefit, why not live really far out and drive in for events? I have no idea what "far out" would mean, but I'm supposing you don't have to be networking every single day?
benzesandbetter 12y ago
Here's another idea: Do like 2 days a month of consulting and move to a more desirable zip code.
- jpatokal 12y ago
  ...and what exactly do you get out of a more "desirable zip code" if you're living the penniless startup life?
Handwash 12y ago
You might as well open a small restaurant. It looks like the presentation of your food is attracting enough. Not sure about the taste.
carlchenet 12y ago
hey that's cool tricks to spare money! I hope we'll see your product at the top of HN one of these days :)
- wlimdo 12y ago
  Glad to hear you found this somewhat useful. Keep me and HN in the loop if/when you're building something, too--looking forward.
k-mcgrady 12y ago
Living in one room with your founders and working in that same room (essentially staying in one place with no privacy 24/7) sounds horrible. I understand that there are benefits to being in SF but surely they can't be worth enough to make you want to live that way. It sounds like the artist who thinks he won't be good unless he starves first. There are other ways and for most people it's unnecessary. How about living 2-3 hours away so that you can still travel in for investor meetings - probably the biggest benefit of being in SF? Or doing some freelance work on the side?
- jonnathanson 12y ago
  Psychologically, I think it's a lot easier for the very young. If you're 21 or 22, fresh out of college, this living situation wouldn't be dramatically different from the setup you've dealt with for the last four years of your life. I imagine it would be much harder to tolerate if you were a bit older, and you'd had a taste or two of life in your own place.
  - k-mcgrady 12y ago
    Very true but should you tolerate it? If it's unnecessary it seems like 'suffering' just to say you did.
    - jonnathanson 12y ago
      Well, if we're getting into the realm of should and shouldn't, that's a different story. :) No, I don't think anyone should have to put up with that sort of living arrangement. At the same time, I don't begrudge people that choice if they want to make it. While I wouldn't make the same choice, I respect it. I would never advocate miserliness without necessity. There's no reason to torture oneself, just for the sake of living hard. But I respect the decision to live as frugally as possible, especially while bootstrapping a company. If that means living in one place with three buddies, then so long as all four people are cool with the living arrangement, so be it. It's far from ideal, but it's a legitimate choice. There are plenty of alternatives to crashing with a bunch of people in one tiny place in SF. But if you've done the cost/benefit analysis, and you truly believe you need to be in SF, then, well, SF is expensive. Deal with that as best you are able. If you are willing to make some significant sacrifices, that's great. You shouldn't have to, but there's a difference between the world of "shouldn't" and the world as it is. Case in point: I know of two co-founders who moved out to SF, couldn't afford an apartment, and instead, lived on a boat in the marina for half a year. Would I have the grit to do that? Not at my age, at any rate. But I respect it. We shouldn't glamorize it, but we shouldn't rush to cast aspersions on it.
downandout 12y ago
If you really want to be rational about your company (no personal or business income tax), live cheaply relative to San Francisco, and yet be close to it, start your company in Reno, NV. Rents are 1/2 to 1/3rd of what they are in SF. There is a relatively large and growing tech scene (Gigafactory is being built in Reno, there are several drone startups, SNC does space/military stuff, IGT and Bally Technologies are also headquartered there). San Francisco is a 3.5 hour drive or a 45 minute flight. Even if you flew to San Francisco every week for meetings and rented a 4 bedroom house, you would save money over a 2 bedroom apartment in SF. Las Vegas (where I primarily live) is another great option, although it's further from SF and puts it out of driving range (1.5 hour direct flight to SF). It seems irrational (and a disservice to investors) to start an Internet company that can be based anywhere in the Bay Area these days, especially if you plan on being successful. Say you personally net $10M on an exit. In Nevada you would only the 20% federal long-term capital gains tax, or $2M. In California, you pay the 20% federal tax plus 13.5% state income tax - your tax bill rises by 67.5%. That same $10M exit costs you $3.35M in taxes (not to mention the negative effects of CA's business income tax, higher payroll taxes, office rents, living expenses for employees, etc. on your valuation). Personally, I'd rather have the extra $1.35M in the bank or spend it on buying a bigger house or a few Ferraris than give it to Jerry Brown (plus I happen to like soda [1]). Mark Zuckerberg alone has paid a multi-billion dollar penalty for the mere privilege of living in California. [1] http://www.npr.org/blogs/thesalt/2014/11/05/361793296/how-did-berkeley-pass-a-soda-tax-bloombergs-cash-didnt-hurt http://www.npr.org/blogs/thesalt/2014/11/05/361793296/how-di...
- at-fates-hands 12y ago
  This. Great advice. I often wonder why people never associate "start-ups" with "small business". There are plenty of states who talk about having very favorable tax structures for small businesses, none of which include California. Reno is a great example of being able to leverage favorable tax structures and still being close to "the action" so to speak. This is such an obvious win-win on so many levels, I'm not sure why more people talk about utilizing states like Nevada for these advantages. If you look at this map, Nevada has one of the best business climates, which is right next to California, which has one of the worst: http://taxfoundation.org/article/2015-state-business-tax-climate-index http://taxfoundation.org/article/2015-state-business-tax-cli...
freshflowers 12y ago
It's interesting how some people react negatively to this. This is what young people who want to "make it big in the city" have done it for ages all over the planet. Just the city and the industry varies, but the story remains the same. Nothing about it is particular to SF or tech startups. Sure, you may be able to achieve the same goals from a more comfortable place, but for many people that's missing out on 50% of the adventure. When it all comes down to it, these are the experiences that last, regardless of whatever failure or success follows.
- DanBC 12y ago
  But those people are usually seen as deluded fools and we've tried to protect them from the exploitation that they may face when they get to whatever big city. I think you'd see the same negative reaction if this was a blog post telling would-be actors how to live cheap as waiters in Hollywood.
junto 12y ago
It often strikes me as ironic that the very people who build the connected applications that live in the virtual world of the internet are so obsessed about the physical location requirement of San Francisco (and Silicon Valley), in order to become successful in delivering that virtual offering. That being said I have never worked in or worked for a company in "the valley". I've also been a remote freelancer for 15 years so maybe I just don't get it. Do these talented people really need to be in an office in Silicon Valley, sitting opposite you, tapping away on their keybosrds with their headphones on to as productive or better than me or you? Obviously the data suggests that the most successful companies are there, but is that not just cause and effect?
- dpe82 12y ago
  When you're in the ideation stage of a startup it's hugely valuable to be in the same room arguing over the same whiteboard. There's no higher bandwidth way of communicating, learning and building consensus. Once you've decided what to do remote can totally work, but most startups are in that first phase for quite a while. There are lots of other reasons for being in the bay area in particular, but that's the primary reason for founders being in the same physical location.
  - dyeje 12y ago
    I agree that being in the same room helps move things along, but why not do it in a city with a sane cost of living?
- dheera 12y ago
  The virtual world is great but it doesn't replace the physical world. Location still makes a huge difference to tech startups in terms of getting talent, finding venues and events to pitch your idea, getting investor attention, and all that. No matter how good our video streaming technology these days, it still makes a big, big difference to be with the right people in person. If you were in middle-of-nowhere Nebraska you'd have a hard time finding co-founders, programmers, or investors within a 100-mile radius. Not to say it's a bad place, but it's really not the best place to be for a tech startup (unless you're completely set on a one-person startup, it's your parents' home and you just need a few months offline to churn out code on free rent and free food, or that place is your target market, in which case it might make some sense). That said, I don't think the bay area is the only place. I'm working on an idea and I'm planning to stay in Boston for a while since the environment here is just starting to become awesome.
NiftyFifty 12y ago
This is generally how I survived 4 years of college _and_ worked in tech myself in the Buffalo area. It's hell of a lot cheaper than even that. This is absolutely brilliant though, but beware ... pride might get in the way for that sushi role desire. :) ty for sharing!
tedchs 12y ago
No thanks. This is how the stereotypical "starving artist", but it also sounds like a great way to burn out quickly. I'd rather work at an actual job for ~2 years and stockpile 20-30k in cash, then live like a normal (but still frugal) person during the initial startup build.
billconan 12y ago
This is an interesting link. but what do you get living in SF? what does the startup get in SF?

168 points by wlimdo 12y ago

The thought of starting a company in San Fran makes me cringe a little with prices the way they are...but what you are doing seems very resourceful, kudos to you and good luck.

wlimdo 12y ago
True, prices are absurd. If you can make it here despite the ridiculous COL, props to you. There are also livable gems south of SF (San Bruno, Millbrae, etc.) that make living in the Bay Area more palatable.

rtpg 12y ago

Does anyone have an update on the utility of building a startup in SF? Except maybe for the (certainly large) class of "interacting with real world" or "local" startups (like Uber or Grubhub) I feel like you could gain so much more by even being outside of LA or something instead.

davidedicillo 12y ago
The access to people you have here (for advices, fundraising, selling your company, etc.) can't be found anywhere else. That doesn't mean you can't do it anywhere else, but here it's just much easier.
- rtpg 12y ago
  So I guess everywhere around SF is also the same sort of price range? I mean I don't think Steve McClure cares too much if you had to drive 90 minutes to see him right? I'm just surprised at what people go to to be really in downtown SF. That money could arguably be better spent making sure that the founders/employees eat more than cup noodles for the first 6 months, if it means driving 90 minutes to go to meetings or events.
  - davidw 12y ago
    There's a whole budding movement of people doing the bootstrapped thing... patio11 of course, also people like Rob Walling, Amy Hoy and lots of others. They tend to be in lots of different places, most of which are not expensive places to live. Where I am in my life, I actually find that much more appealing than the typical bay area startup, although I don't feel the need to be 'against' VC fueled startups either - they're capable of doing some things that bootstrapped companies can't.
    - deleted 12y ago
      [deleted]
    - patio11 12y ago
      I think the inexpensiveness of our various locales may actually be causational. A quick survey of the people I'd consider bootstrapping peers is a wheres-where of "Places You Wouldn't Expect To See A Tech Company." Almost all of them are relatively low cost-of-living. In my own experience in Gifu, the fact that ~$3k a month not only supported me but paid roughly market wages was enormously helpful. Had I started in SF or NYC or Tokyo, the need to have $120k a year in profit to have the same standard of living would have probably kept me tied to a desk at AmaGooBookSoft forever. (I can afford to live here in Tokyo these days, but man, $3k in rent is an awful lot of bingo cards.)
  - GeneralMayhem 12y ago
    Oakland and East Bay are generally cheaper. The peninsula down to Palo Alto and Mountain View is just as expensive as the city.
timr 12y ago
It's a huge disadvantage unless you're doing something that depends on access to a large number of high-quality (but expensive) engineers and/or rich people. Building a tool for programmers? The valley might be your place. Building a fashion startup? Go where people are fashionable. Building a search engine? There are a lot of search people here. Building a service startup that requires warehouses, inventory and/or logistics expertise? Go to the places where logistics people are running warehouses. Building a streaming video site? Many of the best network engineers in the world live in the valley. Building a two-sided marketplace for used children's clothing? You might want to go somewhere that people can afford to have children. Building yet another on-demand, Uber-for-X service where the value proposition is weak/nonexistent for people who aren't workaholic techno-utopians? Yeah, OK. You could probably only do that sort of thing here. San Francisco is the world capital for people who have more disposable income than incredulity.
- mahmud 12y ago
  This the premise of a good chunk of Reid Hoffman's Startup Class lecture. http://startupclass.samaltman.com/courses/lec13/ http://startupclass.samaltman.com/courses/lec13/
  - timr 12y ago
    Yep. He's (sadly) one of the few people here who is saying that stuff aloud, though.
- smt88 12y ago
  > access to a large number of ... rich people That's kind of the heart of it for a lot of people. Say you're a young engineer with a great idea. Now what? You don't have the experience or connections to build your company, so you absolutely need to raise money. That kind of money may exist elsewhere, but only as a fraction of the SF money. "Silicon Alley" talks a big game, but their numbers aren't even close (especially when you talk about exits). I personally strongly support living in an affordable city that gives you great access to your customers. Bootstrap something that has the potential for early revenue. Fail fast or succeed, and then, when you're post-exit someday, do your Next Big Thing in SF.

BadassFractal 12y ago

Very impressive. I'd say that your age group and your relationship status have a very dramatic impact on your ability to pull something like this off. Imho if you've already "done your time" somewhere else, this option becomes a lot less palatable.

peter422 12y ago

You can start a failed company in a lot of cities. Congrats on living in sf on the cheap but it really isn't useful information to help aspiring startup founders.

BadassFractal 12y ago
You could pull something like this off in Vegas and live a lot more luxuriously. Yeah, you're stuck in the middle of the desert, but some folks in the startup community really seem to dig it out there.
neodude 12y ago
Running out of money is the most common way for a startup to die, so successfully living in SF on the cheap certainly mitigates that.
- rtpg 12y ago
  i would say that running out of money is the only way for a startup to die. I haven't heard of a company earning loads of money closing down (except when being bought out or something).
  - k-mcgrady 12y ago
    There's a lot of room between running out of money and earning loads. Say I was earning $15,000 per year from my startup. Costs were low and I could take most of that home but revenue wasn't growing. The business hasn't run out of money but it's not making enough to support me and I have to shut it down. Unless there is significant growth opportunity that I'm missing it's also unlikely to get bought.

bsims 12y ago

Any other Sunset start-ups out there?

qwerta 12y ago

Move outside SF?

lifeformed 12y ago

Why not just move somewhere else? To me, the best part of an internet company is that you can work from anywhere. Also, the money you make is usually made online, meaning it doesn't scale to your cost of living. If you make $1000/mo in ad revenue from your website, it doesn't matter if you live in SF or Portland. It's not like a wage, which changes drastically on your location. Why not move to an awesome, affordable city, live the lifestyle you want, and still make the same product? With the money you save, you could fly monthly to SF to have whatever important meetings are critical to do in SF. Is living in SF that critical? Maybe it is, I honestly don't know.

LogicX 12y ago
Agreed. Whether it's Portland, or even somewhere like Myrtle Beach, SC - I'm working remotely for a Boston company, and my money goes so much further. We're building a startup community at Startup.SC trying to do just what you're proposing: leverage the Internet to make higher income in a lower cost of living location. Agree also on flights into cities: we just had a demo-day pitch last night, and now I'm headed to Boston for TechStars Demo Day, Angel Bootcamp, etc. To make connections with our entrepreneurs.
wlimdo 12y ago
I think the allure of SF is its network of entrepreneurs and the natural tech ecosystem. Entrepreneurs can certainly work anywhere in the US, but you've got to admit that SF's place as a tech hub (and its proximity to SV--think investors, mentors, tech-strong univ like Stanford and Berkeley) is hard to beat.
retrogradeMT 12y ago
> Why not move to an awesome, affordable city, live the lifestyle you want, and still make the same product? I agree completely... Now for my plug: For people that like small towns, good beer and outdoor lifestyle, I recommend Bozeman, MT. If you don't mind snow, it simply cannot be beat.

rpm33 12y ago

If you are a student, don't try to do this. Instead, stay at college as much as possible to leverage the network. If you've dropped out of college, try to crash on a friend's couch till he/she gets annoyed and kicks you out. For everyone else, unless your gut is wrenching from a feeling that the solar system will stop expanding without you, go find a job, save some money, get some advice and then try to stumble upon a startup idea along the way. This op-ed makes sense if your idea has been validated and you are struggling to bootstrap/raise angel investment. The time value of money is clearly neglected here, the amount of time you spend trying to live frugally can instead be spent in raising money.

abalone 12y ago

Tradeoff: Living with your cofounders in the dining room of your office might possibly, you know, increase stress and strain among the group. Also that's a lot of time spent making meals. I doubt he's including researching recipes, shopping & cleaning up for 3 meals a day in his 1 hr/day estimate.

dusklight 12y ago
If you're living with your cofounders one person can cook for everyone. Also note with this particular arrangement the commuting time is significantly reduced. If living together is sufficient to create enough stress that the group can no longer function, you were never going to make it anyway.
wlimdo 12y ago
Good points. I'd only suggest living with co-founders if you know them well enough and can jive on a regular schedule. I mean, if you get sick of your co-founder, maybe he/she wasn't a match in the first place? As for the time preparing the meal (from researching recipes to cleaning up), I'd say it can take less than 1.5 hrs per day total. Imagine buying in bulk, cooking a large, delicious stew that can last a couple days (just warm up the meals in a microwave), and voila. Time and money saved.

zingar 12y ago

Interesting. To live here in South Africa on those numbers you'd have to make similar sacrifices, in an economy which I normally regard as 10x cheaper than (what I've heard of) SF. Some questions: 1. When I hear people on this site talking about "low" startup engineer wages in SF, the numbers I see are 60k - 80k / year. But this article makes that number look like glorious riches by comparison. Living in the dining room sounds pretty extreme, what are the sacrifices made for living on 60k? Presumably nowhere near as onerous? 2. It's fascinating to me that an Asian-American neighbourhood is cheaper than elsewhere. As a foreigner with only stereotypes to work from, Asian-Americans sound like the perfect neighbours... quiet, industrious, and likely to have kids with similar values whom I'd be glad to have my own hypothetical kids meet. So why then would this neighbourhood be unpopular? Are my stereotypes wrong? Is there something else in particular about this neighbourhood that I'm missing? Or perhaps USAians like to interact with their neighbours more than I do?

zingar 12y ago
Maybe I'm misunderstanding how this site works (had this account for years but only commented a few times). It looks like my comment was downvoted, can someone explain why? Is thinking about stereotypes offensive? Or it was deemed irrelevant?
- dijit 12y ago
  sometimes people downvote for no reason. the reason you're not getting replies is likely because the US are asleep though. I think it's a valid question- although it's probably more about causation; Asian-Americans are less snobbish when it comes to areas to live, my assumption is that they live in area's that Americans wouldn't want to live anyway.
  - robin_reala 12y ago
    Are ‘Asian-Americans’ not ‘Americans’ in the first place?
    - 12y ago

lordnacho 12y ago

If networking is the main benefit, why not live really far out and drive in for events? I have no idea what "far out" would mean, but I'm supposing you don't have to be networking every single day?

benzesandbetter 12y ago

Here's another idea: Do like 2 days a month of consulting and move to a more desirable zip code.

jpatokal 12y ago
...and what exactly do you get out of a more "desirable zip code" if you're living the penniless startup life?

Handwash 12y ago

You might as well open a small restaurant. It looks like the presentation of your food is attracting enough. Not sure about the taste.

carlchenet 12y ago

hey that's cool tricks to spare money! I hope we'll see your product at the top of HN one of these days :)

wlimdo 12y ago
Glad to hear you found this somewhat useful. Keep me and HN in the loop if/when you're building something, too--looking forward.

k-mcgrady 12y ago

Living in one room with your founders and working in that same room (essentially staying in one place with no privacy 24/7) sounds horrible. I understand that there are benefits to being in SF but surely they can't be worth enough to make you want to live that way. It sounds like the artist who thinks he won't be good unless he starves first. There are other ways and for most people it's unnecessary. How about living 2-3 hours away so that you can still travel in for investor meetings - probably the biggest benefit of being in SF? Or doing some freelance work on the side?

jonnathanson 12y ago
Psychologically, I think it's a lot easier for the very young. If you're 21 or 22, fresh out of college, this living situation wouldn't be dramatically different from the setup you've dealt with for the last four years of your life. I imagine it would be much harder to tolerate if you were a bit older, and you'd had a taste or two of life in your own place.
- k-mcgrady 12y ago
  Very true but should you tolerate it? If it's unnecessary it seems like 'suffering' just to say you did.
  - jonnathanson 12y ago
    Well, if we're getting into the realm of should and shouldn't, that's a different story. :) No, I don't think anyone should have to put up with that sort of living arrangement. At the same time, I don't begrudge people that choice if they want to make it. While I wouldn't make the same choice, I respect it. I would never advocate miserliness without necessity. There's no reason to torture oneself, just for the sake of living hard. But I respect the decision to live as frugally as possible, especially while bootstrapping a company. If that means living in one place with three buddies, then so long as all four people are cool with the living arrangement, so be it. It's far from ideal, but it's a legitimate choice. There are plenty of alternatives to crashing with a bunch of people in one tiny place in SF. But if you've done the cost/benefit analysis, and you truly believe you need to be in SF, then, well, SF is expensive. Deal with that as best you are able. If you are willing to make some significant sacrifices, that's great. You shouldn't have to, but there's a difference between the world of "shouldn't" and the world as it is. Case in point: I know of two co-founders who moved out to SF, couldn't afford an apartment, and instead, lived on a boat in the marina for half a year. Would I have the grit to do that? Not at my age, at any rate. But I respect it. We shouldn't glamorize it, but we shouldn't rush to cast aspersions on it.

downandout 12y ago

If you really want to be rational about your company (no personal or business income tax), live cheaply relative to San Francisco, and yet be close to it, start your company in Reno, NV. Rents are 1/2 to 1/3rd of what they are in SF. There is a relatively large and growing tech scene (Gigafactory is being built in Reno, there are several drone startups, SNC does space/military stuff, IGT and Bally Technologies are also headquartered there). San Francisco is a 3.5 hour drive or a 45 minute flight. Even if you flew to San Francisco every week for meetings and rented a 4 bedroom house, you would save money over a 2 bedroom apartment in SF. Las Vegas (where I primarily live) is another great option, although it's further from SF and puts it out of driving range (1.5 hour direct flight to SF). It seems irrational (and a disservice to investors) to start an Internet company that can be based anywhere in the Bay Area these days, especially if you plan on being successful. Say you personally net $10M on an exit. In Nevada you would only the 20% federal long-term capital gains tax, or $2M. In California, you pay the 20% federal tax plus 13.5% state income tax - your tax bill rises by 67.5%. That same $10M exit costs you $3.35M in taxes (not to mention the negative effects of CA's business income tax, higher payroll taxes, office rents, living expenses for employees, etc. on your valuation). Personally, I'd rather have the extra $1.35M in the bank or spend it on buying a bigger house or a few Ferraris than give it to Jerry Brown (plus I happen to like soda [1]). Mark Zuckerberg alone has paid a multi-billion dollar penalty for the mere privilege of living in California. [1] http://www.npr.org/blogs/thesalt/2014/11/05/361793296/how-did-berkeley-pass-a-soda-tax-bloombergs-cash-didnt-hurt http://www.npr.org/blogs/thesalt/2014/11/05/361793296/how-di...

at-fates-hands 12y ago
This. Great advice. I often wonder why people never associate "start-ups" with "small business". There are plenty of states who talk about having very favorable tax structures for small businesses, none of which include California. Reno is a great example of being able to leverage favorable tax structures and still being close to "the action" so to speak. This is such an obvious win-win on so many levels, I'm not sure why more people talk about utilizing states like Nevada for these advantages. If you look at this map, Nevada has one of the best business climates, which is right next to California, which has one of the worst: http://taxfoundation.org/article/2015-state-business-tax-climate-index http://taxfoundation.org/article/2015-state-business-tax-cli...

freshflowers 12y ago

It's interesting how some people react negatively to this. This is what young people who want to "make it big in the city" have done it for ages all over the planet. Just the city and the industry varies, but the story remains the same. Nothing about it is particular to SF or tech startups. Sure, you may be able to achieve the same goals from a more comfortable place, but for many people that's missing out on 50% of the adventure. When it all comes down to it, these are the experiences that last, regardless of whatever failure or success follows.

DanBC 12y ago
But those people are usually seen as deluded fools and we've tried to protect them from the exploitation that they may face when they get to whatever big city. I think you'd see the same negative reaction if this was a blog post telling would-be actors how to live cheap as waiters in Hollywood.

junto 12y ago

It often strikes me as ironic that the very people who build the connected applications that live in the virtual world of the internet are so obsessed about the physical location requirement of San Francisco (and Silicon Valley), in order to become successful in delivering that virtual offering. That being said I have never worked in or worked for a company in "the valley". I've also been a remote freelancer for 15 years so maybe I just don't get it. Do these talented people really need to be in an office in Silicon Valley, sitting opposite you, tapping away on their keybosrds with their headphones on to as productive or better than me or you? Obviously the data suggests that the most successful companies are there, but is that not just cause and effect?

dpe82 12y ago
When you're in the ideation stage of a startup it's hugely valuable to be in the same room arguing over the same whiteboard. There's no higher bandwidth way of communicating, learning and building consensus. Once you've decided what to do remote can totally work, but most startups are in that first phase for quite a while. There are lots of other reasons for being in the bay area in particular, but that's the primary reason for founders being in the same physical location.
- dyeje 12y ago
  I agree that being in the same room helps move things along, but why not do it in a city with a sane cost of living?
dheera 12y ago
The virtual world is great but it doesn't replace the physical world. Location still makes a huge difference to tech startups in terms of getting talent, finding venues and events to pitch your idea, getting investor attention, and all that. No matter how good our video streaming technology these days, it still makes a big, big difference to be with the right people in person. If you were in middle-of-nowhere Nebraska you'd have a hard time finding co-founders, programmers, or investors within a 100-mile radius. Not to say it's a bad place, but it's really not the best place to be for a tech startup (unless you're completely set on a one-person startup, it's your parents' home and you just need a few months offline to churn out code on free rent and free food, or that place is your target market, in which case it might make some sense). That said, I don't think the bay area is the only place. I'm working on an idea and I'm planning to stay in Boston for a while since the environment here is just starting to become awesome.

NiftyFifty 12y ago

This is generally how I survived 4 years of college _and_ worked in tech myself in the Buffalo area. It's hell of a lot cheaper than even that. This is absolutely brilliant though, but beware ... pride might get in the way for that sushi role desire. :) ty for sharing!

tedchs 12y ago

No thanks. This is how the stereotypical "starving artist", but it also sounds like a great way to burn out quickly. I'd rather work at an actual job for ~2 years and stockpile 20-30k in cash, then live like a normal (but still frugal) person during the initial startup build.

billconan 12y ago

This is an interesting link. but what do you get living in SF? what does the startup get in SF?