This is the point that has really started to become clear to me in recent years, and not just for startups but for artists, authors, athletes, and all the other dream jobs we idolize: so many of these people are either (1) not really making that much money or (2) already had a trust-fund or come from a wealthy background so they can spend all of their time writing, painting, or engineering. Most authors make below the poverty line [1], and Facebook's success was the outlier, not the norm.
I did the start-up thing in my 20s for about 3-4 years (in the 1990s). My income was about the same as my salary would later be when I went to work for another company, but my stress-levels dropped significantly when I started working for someone else. The constant uncertainty was gone, I was watching my savings grow instead of decline, and I do regret not going for that stability sooner.
I see a similarity between tech-kids in their 20s chasing start-up dreams and the poor kids from my old neighborhood chasing hoop-dreams. The tech-kids have better options to fall back on, but the chances of becoming that rockstar million/billionaire CEO/professional athlete are about the same.
They served together on the board of United Way; they weren't just random acquaintances. The social proof conditions necessary for Bill and Paul Allen to make their pitch to him had been satisfied both through their parents' credentials, social connections and the fact that they both went to Harvard. Not to take anything away from Gates' technical skills and business savvy. But this goes to the crux of a lot of startup stories. It could all have been very different if even one of those 'background variables' had been different and the meeting with IBM never happened.
I am always a bit sad when I see money equated with success. Money is an artifact of success, not a result of success.
There are many "trust fund" kids who have lots of money and zero success, and there are successful people who do not have a lot of money (generally "yet"). Success is defining a vision of how you want things to be and then working to make that happen. For some it will bring in additional money, for everyone it brings satisfaction.
The odds of a smart middle class entrepreneur making a successful business are actually way better than making it to the NBA or NFL. To say these are equal odds is misleading.
A successful middleclass business does not equal billions or necessarily even millions, so I fail to see how the gp's comparison is off? What he is saying is that you are as likely to be the next Bill Gates as you are to be the next Michael Jordan, not that you are just as likely to be the next Bob Smith who runs a 40-people tech consultancy shop.
Likewise to academia and professional science, by the way: 70% of all faculty are adjuncts, and most working scientists don't even become adjunct faculty. Thus, almost everyone working in science on a daily basis is either a grad-student or post-doc (paid low wages because they're theoretically a trainee for a position they'll never really get) or an adjunct faculty member (used to do the teaching labor the administration wants done but which would distract real professors from frantically applying for grants).
Oh, and advancement runs on a feudal hierarchy[1].
Whilst you have a valid point here, one thing that concerns me with this message is that it could easily make the problem of inequality in entrepreneurship worse, by giving across the strong message that the opinion is universally "if you're poor or a minority, entrepreneurship is not for you. Don't even bother."
I am reminded of the often repeated saying "It takes three generations to make a gentleman". The gradual compounding of wealth opens up a lot of opportunity to safely take risk.
I don’t think this is helpful. There is no medical test for it being in your blood. This ends up being a self-fulfilling prophecy. If you quit, it wasn’t in your blood, if you succeed it was in your blood. Most entrepreneurs I’ve come across so far in SV have taken very little risk and come from rich, prestigious backgrounds. The ‘entrepreneurship porn’ of the amazing struggle tends to primarily be used to justify the huge disparity between employee and founder/vc equity. The “they deserve it” crowd, when in reality it’s just the structure of the power dynamic and has little to do with deserving.
Also quitting doesn't necessarily mean it's not in your blood, it just means that particular project didn't work out and you cut your losses so you could do another one.
Probably when you have to try NOT to do something...? Like at this point, I would have to try not to play guitar. Or try not to program and experiment with designs for systems software. But I am trying TO start a business as well. It doesn't come as naturally.
I like the idea of making money independently... and I actually DO like satisfying customers. But so far not enough to give it a real concerted effort. (I have a good job otherwise).
EDIT: Although I will admit I had to reach a certain level of competency at guitar and programming before I stopped needing to force myself to continue... you do have to sweat it out first. I think what YC is doing is good because they're providing the equivalent of free online guitar lessons... definitely better than nothing (for the motivated).
Even that test has limits though. Competive gamers all start off playing hours of video games a day, but playing competitively means sacrificing fun for grueling practice, formulaic tactics and very little experimentation; basically all the fun is sucked out of it.
Theres a moment in the show "Silicon valley" when a programmer looks at an Agile deliverables chart and says "This just became a job".
I think that would be the test. Can you endure the drudgery of daily grind and constant challenges and still want to go through with it? You won't know unless you try.
I think that works some but for me it has been messier than that. I think self reflection and friendly peer feedback helps. Also some personality assessments help. I have found that "Strengths Finder" has helped me in my career find a place that is satisfying and where I can be extremely competent. As a ADHD with Dyslexia I had to slog through the boredom of the growing my skills till I was competent in programming.
I also try to see if I am in the flow with hobbies or work, But being competent enough to be in the flow takes a lot of skills before you get there.
I have two girls that seem to understand well what their are meant to do both for hobbies and work. We practiced a lot of self-reflection with them when they were growing up and both have strong feedback loops with people they trust.
But it is messy. Maybe that is what we are meant to do. That is find out what we are meant to do. Kind-of meta.
> You are looking outside, and that is what you should most avoid right now. No one can advise or help you - no one. There is only one thing you should do. Go into yourself. Find out the reason that commands you to write; see whether it has spread its roots into the very depths of your heart; confess to yourself whether you would have to die if you were forbidden to write. This most of all: ask yourself in the most silent hour of your night: must I write? Dig into yourself for a deep answer. And if this answer rings out in assent, if you meet this solemn question with a strong, simple "I must", then build your life in accordance with this necessity; your whole life, even into its humblest and most indifferent hour, must become a sign and witness to this impulse.
I have known a few entrepreneurs and invariably they showed they were such by their behaviour, attitude and approach. They did not need someone to tell them or need to stop and ask "Am I an entrepreneur?", they just got on with being one. The same applies to a cartoonist, or comedian etc. Often in fact these people do it despite advice from competent people and even their loved ones. Advice like: "What, why give up your place at an ivy league university to go open a car wash, that is just crazy!".
I disagree with this. I've been running my own company for a little over 5 years. Not having to worry about my rent and being able to live a comfortable lifestyle has made me really happy.
If I made $100 million and didn't ever have to worry about money again, I definitely would be happier. It's the peace of mind that I'm working toward.
But, the money isn't the main thing that makes me happy. The development challenges and systems that I build to run my company is what I really enjoy. The money is just a nice side-effect.
I agree with the rest of the article. I had an ex-business partner that got his idea of a startup from the stories he sees online. Everything we did had to 'change the world', regardless of the business model or practicality.
I had many hours of discussions about this and had to continually convince him we needed some sort of business model. His response was always: "We will get funding"...with no users, traffic, business model, or a decent MVP.
At some point I finally convinced him and as soon as it got down to the hard work, and he didn't see immediate results, he got discouraged. He thought that somehow if we just built something, we would have thousands of users in a couple of weeks.
I realized that even if whatever we worked on succeeded, he probably wouldn't be a good fit in the next stage of the company and I would be spending more and more of my time fighting these ideas. I had to end the partnership and he ended up getting a job.
I have always hated this saying because it's worthless without the context of who is getting the money.
I grew up poor - money definitely made us happy because we could afford to move out of my aunt or my grandmother's house.
Everyone loves to cite the study that "above $75,000/year money doesn't make you happier" - without realizing that it's simply saying that there are diminishing returns above that point (standard economic marginal utility concept), not that overall happiness goes down.
The reality is that more money gives you different problems, not more problems and in fact opens up a world of opportunities that can keep generations beyond you above that $75,000/year mark.
Money is about what it enables and that is where happiness comes from. As a wise man once said:
"Money can't buy happiness [but it can buy] a WaveRunner. Have you ever seen a sad person on a WaveRunner?"
The whole thing about the "happiness/money metric" is incredibly misleading, because it doesn't touch upon what money really gets you. Happiness as an emotion might (for some people) trail off after a certain point, but that should be considered irrelevant. Money buys you safety, freedom, and the ability to take risks; those things aren't going to show up in any kind of happiness study. If I had a serious amount of money, that would give me the freedom to work on things I want to work on without having to worry about paying the rent, getting downsized, getting my pay cut, and all the rest.
The idea that the artist that doesn't have to spend their life working in a coffee shop to fund their art or that the software dev that would rather write FLOSS all day rather than take on boring contract gigs isn't happier is absurd on its face.
> without realizing that it's simply saying that there are diminishing returns above that point
But I thought everyone got that point. It's not as if people thought every additional dollar brought them misery. People who quote this understand that you don't need this additional money, and that the effort/sacrifices to get it are not worth it.
>and that the effort/sacrifices to get it are not worth it.
Not quite. Marginal utility means the increase in benefit from an extra unit of some value, is some percentage less than 100% of the benefit gained from the previous unit.
Again, you're stating things people already know (maybe not in terms of marginal utility, but they do). You say you grew up poor, but the money you needed in order to be happy weren't millions or billions. It was a lot less. Beyond this, more money doesn't mean happiness, which is what people mean when they say it... but you already knew this, didn't you?
If the return in happiness/peace of mind you get beyond $75K (or whatever number) is close to nil, those all-nighters and cheap noodle lunches are simply not worth it by definition. Unless you enjoy living like that, of course, but the implication is that most startup founders don't, it's just stuff they do because they see the gold pot at the end.
I don't think that's true. I think a lot of people want to find a way to think that billionaires are worse off than someone making 75,000/year. They cite that study and incorrectly come to the conclusion that more money past 75,000 means increasing unhappiness under the "mo money mo problems" doctrine. People in this thread doing that in fact.
Your broader point though is uncontroversial that for the vast majority, working an extra hour per day for 100k more a year wouldn't be worth it.
I argue that's because the vast majority of people wouldn't know what to do with ungodly amounts of money, likely because they don't have ambitions that would require it, and thus see it as superfluous or as you state not worth the effort.
Most people, just want to play with their kids, take a vacation and zone out on netflix. That certainly doesn't take billions.
Sure, I take it that they don't need it. But they do not know if you, or me, or anyone else needs it, and whether the effort is worth it for others, and really shouldn't pretend that they do.
The point is precisely that nobody "needs" millions of dollars. That kind of money is well beyond the point of having the peace of mind you'll never go hungry or stop having a comfortable standard of living.
Your last quote captures the point of the age-old phrase.
The point of "Money can't buy happiness" is that happiness doesn't have a UPC. The connection between money and happiness has tangible intermediaries. You have to spend the money in order to be happy.
The wisdom of it is putting the ball in the hands of the listener.
A lot of times people can get excited just about making money. That's fine because there are so many wonderful things you can buy. On the other hand, I'm sure there is at least an inkling of a further goal behind the idea of making money. No one is trying to be the guy from the parable who dies with a ton of money in the bank (guy has no descendents/will either). Money can be a trap if it is used as a proxy for future desires that are never realized.
"Money can't buy happiness" leads to the question: What is it that you do want?
High scores in video games are effectively meaningless. People still chase them.
IMO, dying with a lot of money is no sadder than devoting your life to packman. It's hard to think of being a CEO as a Hobby, but internally the rewards are similar to a guild leader.
People tend to attach a lot more meaning to cash than it really deserves. It's not a virtue, just a token of exchange and nothing more.
How are video games meaningless? They are entertainment. If someone devotes their life to pacman, they hopefully enjoy it!
It seems to me that we do not disagree. From my point of view the CEO/guild leader discovered that he/she enjoys working and that they do not enjoy anything that is very expensive. That is great!
All I am saying is that making a lot of money should go hand in hand with asking 'What will I use this money for?'.
To your point, if you ask the question and decide that you get a lot of personal fulfillment from activity that makes money, you might not be able to spend it as fast as it comes in.
> Everyone loves to cite the study that "above $75,000/year money doesn't make you happier" - without realizing that it's simply saying that there are diminishing returns above that point (standard economic marginal utility concept), not that overall happiness goes down.
No, the studies I've seen (though it was at around $200K, not $75K, in, IIRC, early-2000s) that there was no marginal utility above the stated point. That declining marginal utility means only that each additional unit of income brings less additional satisfaction than the last, but there was a point in the study at which there was no additional satisfaction from additional income.
"Money won't make you happy" is someone's naive, illogical reversal of the underlying, relevant truth: Lack of money will make you fucking miserable.
Sure, just because luck of money will make you fucking miserable doesn't mean that the abundance of money will solve all your problems and make you happy. However, that is largely irrelevant because most people don't even have that "problem". Someone could hear that silly adage thousands of times throughout his life, and never find out first-hand whether it is true. Proverbs and adages should have broad applicability.
The saying "money won't buy you happiness" (and its various other versions) has a purpose: it expresses a kind of exasperated defeatism over not having money and trying to be content anyway. It's a version of the human behavior which is exposed in that true piece of wisdom known as the Sour Grapes Fable. The fox cannot reach the grapes, so they are declared sour (i..e If I did reach those grapes, it wouldn't make me happy, because they are sour! We just have to identify the struggle for grapes with money. Most of the time this "cannot buy happiness" adage is not only heard by those who will never experience first-hand whether it is true, but also uttered by those in the same boat.
There is a universal truth in it and it is that there exists a human predicament of not being satisified with what one has. It's not always possessions. Someone who has lots of possessions might be dissatisfied with something else in their life, and not necessarily the quantity of stuff. Perhaps he or she seeks to be more learned or skilled in something, or to have a different personality. Or to make some mark in the world other than being remembered as someone who had lots of stuff. I can tell you that if you have more money you will be happier in a sense, but you will still strive to achieve some other satisfactions.
$100M now? Some people are apparently harder to please than the sage and former governor of California:
"Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million." - Arnold Schwarzenegger
This is, of course, a joke, but there is clearly a couple thresholds that are decisive: the first around the point of "no longer need to work immediately" and the second at "no longer need to work at all if one is willing to have a modest retirement". I suspect that if one is sort of person who thinks that $20M or $100M is a important further threshold for some calculation ("all of my descendants will be able to go to college, for the next 12 generations" or "I need to be able to buy anything that I can current conceive of wanting") there's probably no real end to it.
The full quote is "money won't make you happy (within reason)". I agree with this. Once you cover basic needs and some luxuries (say, a car, a nice house, the possibility to travel and pay for the education of your kids; add or subtract whatever floats your particular boat), additional money won't buy you more happiness.
The kind of money that affords you these luxuries also gives you peace of mind. You can always scale back in difficult times, and it won't hurt you much.
Having huge amounts of money won't make you happier -- you'd be well past the "peace of mind" stage at that point -- unless your most desired goal in life is to be a billionaire philantropist like Bill Gates. Or a power player in the world's economy. Or swimming in a pool of gold coins like Scrooge McDuck, I guess.
Nothing external makes you happy. As cheesy as it may sound, happiness comes from within. That being said, having money can ease some of the stresses that weigh upon us and make us unhappy.
Moreover, it's the kind of thing that is said by people who either have a lot of money already or have no chance of ever having a lot of money. For those of us in the middle, it's a patronizing and frustrating platitude.
What you're saying is "Money won't make you happy, but a lack of it will" which is a more accurate statement that doesn't necessarily contradict the shorter version. And this is what most talk about when using similar lines anyway.
You admit development is where you find joy. You could be doing this broke if you didn't need money, but you do for rent etc. So the first step in happiness is to find how much money you need to be able to forget about it. If your goal is to be able to forget about something, it's certainly not something making you happy. It's what makes you miserable, but only when you lack it.
This makes money like water or electricity. Lack of it would make us miserable. But beyond what we need, we cease to think about it. We practically have infinite water coming from our taps, and more than enough electricity we need. But it's the quenching of thirst, the long baths, the phone charging, the computer that's always on... these are the only things that could possibly make us happy.
Resources don't necessarily make us happy or miserable. They're just enablers.
Yep. Grew up insecure & not rich. Now own my own house outright, work for myself, and can afford our exceptionally high medical insurance. Am much, much happier knowing the house is mine and that I can afford to repair it. Unlike my family as I grew up, we don't have to leave pots under holes in the sealing for years at a time because we can't afford roof repair. Am much happier knowing I can't be fired by a stupid boss. Money has made me much happier.
> If I made $100 million and didn't ever have to worry about money again, I definitely would be happier.
so actually you agree, money won't make you happy. its something you worry about now and the prospect of not worrying about it is what would make you happy.
you probably don't need anywhere even close to $100 million to have enough money so you won't have to worry about it anymore. unless your lifestyle is lavish and decadent even $10 million is quite a lot. collecting just 2% annual interest on that (a very modest figure, available from pretty safe investments) would yield $200,000 annual income, which is more than most people get paid in salary from a 9-5 job.
more to the point though is that everything you described is either 1) feeling relieved from not having to worry about the crushing effects of potentially falling into poverty or 2) feeling interested and engaged in the work itself.
I think you actually made a pretty convincing argument _against_ your own thesis here. Money can't make you happy, but lack of money (i.e. poverty) can make you very very unhappy. Things that can actually make you happy are generally not for sale.
I remember a Burt Reynolds interview (with Ruby Wax I think) when he said something like "I've been poor and miserable, and I've been rich and miserable - I'll take being rich and miserable any time". Nothing exactly earth shattering there, it just stuck in my mind for some reason.
Not everyone can run the business. I tried, and I can say I do not have enough guts to do do that hard things you should do sometimes. Like breaking promises, firing nice, but toxic to your business people, and many more unpleasant stunts.
It's a pretty simple principle between the happy curve and where it intersects with the financial stability curve. However, the opposite can be very true as well. Namely, poverty as it plays out on the social ills that we in the United States have - most notable, are minorities and the lack / motivation of the government to cure this problem. I believe there is some paradigm where happy can be achieved if the work/happy ratio is subsidized through social programs lowering the happy curve (or at least tolerance) because of the work requirements to achieve the financial base to maintain that curve. It's an interesting problem, but overwhelming it causes desperation and by a minor extension drug / alcohol abuse / crime syndication, and violence (domestic abuse and gun deaths in particular). The upward mobility is one thing, but an opposite paradigm is also a very interesting dynamic with respect to if money can or cannot by happiness. However, your example of "owning your own company" is also a self-confidence motivator that is a game changer. :) That's why we need a minority middle class to fix poverty, IMHO.
My temporal self is jumping at this - if money "makes" you happy, then you are acquiescing to the concept that the removal of said money will "make" you unhappy. That can be problematic. [I realize I'm removing this from the context of work/income, I'm just indulging my mood this morning..carry on!]
I don't think it unrealistic to say that the removal of money (at least at certain levels) is going to make you unhappy. In the worst case all your money is removed, you can't make rent, and get kicked out. Now you're homeless, and either sleeping on people's couches or the street, and I bet you wouldn't be smiling in that situation.
I had a similar experience with a company I'm currently working on. This particular individual liked to "think big thoughts", but when it came to doing the work he would always find an excuse of why he couldn't do it or he had "previous plans". We later decided to work on the project without him. We never looked back.
I was under HN influence when I started my solo product. I had designed it as bootstrapped: There is an opportunity, I fulfill it, then I don't go after the x1000 scaling. It worked at the end of year 1, and we're 2.5 years later, and I'm happy, not millionaire, but I have my own work schedule.
There are several kinds of startups. The article mentions huge ones. Or you can start a consultancy, very classic business, low risk. Or you can bootstrap[1]. Use the one that fits your profile.
Other than that, I approve the cautionary tale of the article.
I can't imagine a lot of businesses that come with lower risk attached than consulting:
You don't need equity.
Profit margins are high.
Depending on your particular expertise your services will be in demand for years to come (anything software-related).
If you do it right you can work for several clients at the same time. At least you can always have a full sales pipeline so losing a contract won't be an end-of-the-world event for you.
Growing a consulting business beyond yourself, not selling your time but results, those are more of a problem but risk? Not really. At least not when compared to other businesses.
I would love to see your consulting model. You speak as if keeping a full sales pipeline while making multiple clients happy is a simple thing.
I'll agree that a single person consultancy is 0 risk. I can accept a job offer tomorrow and stop accepting new clients.
But growing your consultancy is just as risky as any other business, if not more so. You don't have a wide range of low paying clients, like a SaaS model. You have a few high paying clients. Any one of them leaving (or not paying) directly affects you and your employees.
I live in Washington DC, so I see this constantly. A large government contractor loses a re-bid on a contract, and they fire the team that was working on it. Fire them!
Not speaking for anyone else, but having to fire people every time a contract goes away sounds risky to me.
Firing people is risky for the person potentially being fired, not for the owners of the firm. Growing and shrinking over time is part and parcel of running a consultancy. That's why you see it all the time, and I'll bet if you look closer at the ownership during layoffs you'll find that they very rarely miss a paycheck and usually escape unharmed.
The fact that it's an unpleasant reality doesn't make it any more risky than e.g. having to pay taxes.
I agree with what you're saying, and this is probably why I don't hold a management position anywhere.
This also mirrors my experience with startups. I've been lied to about money many times to get me to keep working. The only things the owners care about is how they look to investors.
Well, no it's not simple. It means a lot of work and persistent marketing and sales efforts but it isn't particularly risky.
I'm running a single person consultancy. If I need help with handling the work depending on the client I can hire other freelancers. The secret to reducing risk is to always be selling / marketing and to not accept full-time projects. This precludes many project offers but you can stay flexible and don't have to decline projects or stop accepting new clients. Offering products, coaching and productized services besides your main consulting business also helps.
I agree that consulting becomes risky once you've got other developers on your payroll. It can be done, too though but you'd have to grow slowly and carefully.
I've been running my "consultancy" for over 5 years. Roughly 15% of my annual revenue is lost to non-payment. Customers pay late all the time. Literally. I've never had an invoice paid on time. Customers cancel projects right before they start, or pause projects half way through to focus on other areas.
Due to these situations, I try to always have 3 months of salary in the bank. I never do, but I try. If you are paid net 30, and invoice at the end of the January, that check will clear your bank account early March at best. This results in Just In Time mortgage payments.
If I were to hire somebody to code, and focus on sales, I'd need even more money in the bank than I have. This leaves me in a bit of a pickle.
You need a lot of capital. If 3 months of buffer salary for two employees isn't a lot of capital..... it's time to admit you are in a strong financial position and not everyone can simply be an entrepreneur.
(To answer the inevitable "charge more" question, I'm available for hire and I'll charge as much as you'd like :)
Have them put money in an escrow account. I have done freelance work since I was a kid and one thing I've always done was ask for money upfront, maybe not in my hands, but held by a 3rd party. Losses of 15% seem a bit high too me.
Writing software for someone else is kind of like painting a scene from someone's dream. There is a good chance you wont hit 100% of what they were looking for, and your goal is to make them just happy enough to pay you. If they part with their money already, they are much more likely to accept what you give them, than if they haven't already bought it.
With a few exceptions, businesses of all types have to deal with non-receivables.
A better strategy is to make sure the company that owes you money knows you are serious about collections and will aggressively pursue. Something as simple as having your lawyer send a collections letter by certified mail will deliver a good portion of the time.
If everyone did this, it wouldn't work. Companies that consistently pay late or continuously try to get out of paying are doing so because they simply don't have the cash. If they think you are going to cause them to spend more cash by them not paying you on time, you will get moved up the list.
To me, the worst part of the fantasy is that we then consider the people that actually do make it to the "money shot" as if they were management geniuses, instead of lottery winners.
Mostly the success has more to do with luck, timing and personal connections than the individual technical merits of the management team, but that is never what you read afterwards. And so you end up with all sorts of ridiculous management, methodology or market segmentation advice that bears little to no chance of ever working again. The same lottery ticket may win again, but it is highly improbable.
> To me, the worst part of the fantasy is that we then consider the people that actually do make it to the "money shot" as if they were management geniuses, instead of lottery winners.
This extends to engineers and computer scientists as well.
Take Wozniak. Constantly given countless platitudes when he was most likely as qualified as many engineers at HP who never came in contact with Steve Jobs. [1] But the story is always played as "he was Einstein in the Patent office just waiting to be unleashed".
Or Marc Andressen. Was he that special when he came up with, as an undergraduate, the Netscape browser? [1] Einstein special or just "special"?. (And of course there was Jim Clark who was there to help him..). Or the google guys as phd students. The list is endless.
This is not to take away from anyone's hard work as opposed to others of equal ability that slacked off of course. Credit is due however the over the top hyperbole of the media and bloggers is quite distasteful at times.
[1] And of course nearly 100% of what most people know about these people is what is written about them by others..
In most cases, the reward for building a mid-sized business is not much greater than working your way up the food chain at a large business. It just becomes a question of whether you value independence or not.
It is still consistent with the luck & connections theory if you allow that you gain a lot of experience and connections from the first successful round.
I may become an entrepreneur some day, but I will have to have climbed the social ladder to the upper class before I even attempt it.
Being middle class in the US in a second-tier city is just totally freaking awesome. The corporate job I have now is night-and-day better than the lifestyle I had in my twenties. Breaking through to the next level is so far down the list of my current priorities that it could never happen and I'd be totally fine with it.
What else do I do with my time? Learn to make music. Date. Cultivate good habits. Plan trips abroad. Have dinner with friends. Eat right and lose weight. Actually get better at programming instead of just scrambling to Get Shit Done. Read. Try out hobbies like Rubik's cube. Sit at the coffee shop on weekends and chat with random people. Go to the bar in the evenings and cultivate a social life. Work on myself and become a better person.
You want me to throw that all away for a vague promise of more money, sometime in the future? I already have, right now, vastly more options for improving my life right now.
> I may become an entrepreneur some day, but I will have to have climbed the social ladder to the upper class before I even attempt it.
it sounds like you've been blessed with the temperament to not actually want either of these things.
you probably don't want to buy expensive stuff or exhibit control over other people or be written about either. that's also a blessing.
none of this stuff 'just happens, someday, maybe'. people who are driven by these urges are totally different than you. they wake up with the uncontrollable urge to do these things. when they see/think about something they want they are consumed by some kind of positive or negative emotion. you obviously don't experience any of this stuff because you're a normal person, but don't let yourself believe that you 'might do it someday', because you probably won't.
I am interested in expensive stuff and in leadership. I have to moderate my ambitions to those I can realistically try out. Two years ago I bought 3 custom suits for $3000. These days I'm happy browsing clearance racks and got a nice three-piece for under $150, a pair of secondhand Italian leather shoes for $14. I'm better dressed now than I was then because I have more variety to choose from.
Instead of begging for more responsibility at my job, I cultivate community relationships and put together deals. I'm currently doing a website for a musician friend of mine. I took my side of the fee and gave it back to him in exchange for a guitar.
I scratch most of the personal development itches that an entrepreneur seems to be after, and have a lot more fun (to me) doing it.
> I spend my time working on my company on evenings, week-ends.
I could do that. It sounds interesting enough. I do read a lot about startups and business and tech. The friends I have dinner with seem amazed at how much I know about this stuff, despite putting far less time into it.
But when I get right down to it, spending all my time trying to squeeze blood from a stone doesn't really hold all that much appeal to me. Now, if I had capital at my disposal, then I could do all that instead of having a job. But a startup would be too much work, so I'd need my own capital. That's why I'd need to be upper class first.
I understand the reasoning but the need for capital depends on your situation. For example if you want to start a software business and are a good developer you need no capital. The only thing you need is time to work on your venture. It might look like it's the same because taking time to work on your venture requires to have money but there's a big difference.
The author could work on getting his/her point across. I mean if I need something and see something that addresses that need, why would I not then want it? Any help would be appreciated.
I see your point, but this can happen both if you created a want-based venture or a need-based venture - and marketed the product correctly in the later case.
Perhaps this is out of the scope of the article as it doesn't concern itself with presenting marketing techniques but focuses on contrasting Lean Startup with another model, and outlining the underlying need to differentiate need from want ventures
As a skilled developer I can trade time for capital, but time is the most valuable thing any of us have, so I have to be very careful about taking on commitments that will use up a lot of my time.
Also would add a compounding series of negative results including depression, being almost shadow-banned from the business due to lack of optimism (no joke), then alcohol problems etc
I'd take a bet there are many many others on HN that can attest to this outcome, but lurk due to shame or emotional pain. Losing everything because of misjudgment is not an easy thing to admit to publicly, especially in a community so warped with the cult of survivor bias
I've worked for two failed early startups. Gained a lot of knowledge in a short period of time, wore a lot of hats, did work I was passionate about, but also stressed out about making the right decisions or the company could shut down (the final decisions were made by the management, but I had influence over their decisions), extremely long hours, no social life, rapidly deteriorating health, screwed up my finances, etc.
But I'm a few years away from it now, and I don't mind admitting it. The startups failed for reasons outside of me for the most part (although it feels a little funny knowing you're at least partially responsible for a company losing two million dollars), and I don't regret having that experience.
If anything, working for a corporation again and working on stuff I'm not too passionate about makes me itch for going back to a small company again, but I still need the stability to get my finances back in order and start losing the weight I put on during that time, plus I have a social life now, which is hard to give all that up for someone else's 'grand vision'.
As for misjudgment, from my experience, a lot of the "bad decisions" made in those startups actually made sense at the time and with the information available at the time of the decision. It was only with the benefit of hindsight and perspective that you can see why ultimately they were bad decisions.
Yeah, the downward spiral towards being on the rocks was just as bad, if not worse, than being homeless. Watching your bank account dry up is not fun. Coming to the realization that your friends and family can't, or won't, be able to catch you when you hit bottom is pretty sobering. Not having the skills necessary to negotiate not having a place to live is terrifying. It's weird getting to the point where you might not even be able to pay for your cell phone bill. And being depressed is, well, depressing. I have no intention of ever reliving that experience.
Really sorry to hear that. I didn't wind up homeless (thankfully) when I did it, but I burned through a good portion of my life savings (20+ years worth.) I'm going to write about it at some point, but the short version is that if you don't have any family or anything similar to fall back on other than your savings, you'd better be very sure your idea is a winner in advance (not exactly trivial.) We all know about the magical exceptions, but most of us aren't in a position to take risks like that without losing most or all of what we have, and that fact sucks. People (especially younger ones) are more risk averse for good reason:
Made my startup worked hard. Got contracts. Customers forgot to pay. It sucked.
And in my country it was normal. It was not Africa. It was France.
Big corporations do whatever the fuck want even if it is illegal. Trades dispute are regulated by "peers" tribunal dating from middle age that are crooked.
And newspapers, teachers and politics that never had a job were pointing fingers randomly at problems.
This is why I don't like B2B much; a monolith company can randomly decide to pay 5-10 months late and no one bats an eye because that's the normal thing to do for a company of that size, small entrepreneurs that are barely making it be damned.
A common form of leverage is a contractual "switch" with SaaS. If your service if valuable, they pay on time, otherwise you turn off their service (after suitable warning procedures).
Small startups can leverage a factoring company to handle A/R and do risk assessment for lines of credit with customers before doing work. Definitely a worthwhile service to leverage if you do B2B.
The short list/affacturation scam. Software can only support safely at most 10 providers ... for RA.. facturing ... limitations.
Thus I had between 1 and 4 mans in the middle for the purpose of "factoring, risks assessments" and shits.
I usually was paid 300€ to 400€ / days when customers were billed between 1000€ and more. Each companies adding delays and free to use and recycle my specs, my codes, my works to compete against me next time. Added value : negative.
Have you ever been 38 yo, back at your mum's place, honoring a contract and eating ramen while waiting 18 months for the magic of "affacturation" to work and discovering that the men in the middle are now making money from YOUR creation ?
Fuck rotten so called capitalism.
Only the kids born rich gets the money and they scam people like me to have the job done.
This business is very close to both scam and extortion.
There's been something related in the UK recently - Tesco not paying their suppliers.
"...dating from middle age..."
I've been noticing increasingly, while technology is buzzing ahead, just how many mechanisms and interactions in society are unbelievably outdated. Is this what sociologists are supposed to be advancing? What are they doing?
Basically it is the most influential traders from your vicinity that decides how to settle your dispute.
Being judge and stake holder, what a nice idea of the independence of the justice. Bankruptcy in our country is being fed to vultures stripping you down to the core and making money out of your misery. Business in France requires way more bigger balls than in USA.
This joke is around untouched since 500 years. 2 times older than USA constitution. And socialist and liberal alike don't want to touch that.
EDIT: France is traditionally built on big corporations. Consular justice favors the most influential companies, that are often "represented" at the national assembly or founding politics.
Not all "national" companies are equal. My great great grandfather was was shamed publicly in 1900 for having one of his employee presenting himself and him giving 5francs to the "société pour l'amitié franco allemande" and considered a dirty "fritz" working for the schleues.
Big corporations are dynasty built (like Gates fortune and other US big corporations) but the catholic french long lineage dynasties are a tad more equal than the others.
Irony part of my family was protestant and being sacked from france in 1750. They tried to come back after some persecutions, and they almost all fled to the USA after 1900. Basically my family is consistently emigrating since 350 years.
So I am too like my family before a refugee of some kind and we have a tradition to build back our fortune. But actual immigration laws are a pain in the ass in every countries for business men with nothing but "know how" and no capitals. Emigrants are more and more second rank citizens nowadays in every countries.
That's different though - Tesco needs those suppliers, and the suppliers can boycott Tesco for not paying up, which would cause them to go down very quickly.
I haven't written about it in detail, no. It's been long enough that it doesn't hurt when I think about it anymore. Maybe I'll jot some words down and share with them y'all.
The short version is that I got hit pretty hard in 2008 when the economy melted down. I was working as a tech recruiter for startups, and I was being referred around by a few venture capitalists. When the VCs stopped investing, their portfolio companies stopped hiring, and my income dried up pretty quickly.
Being a savvy and sensible business person, and thinking that I had a surefire idea that was guaranteed to work, I took the money I'd set aside for taxes and seed funded my startup. I learned along the way that building software is hard, expensive, and that my idea wasn't something I could easily execute on.
I did bounce back, and now I'm a full time developer with a healthy appreciation for what it actually takes to get a company off the ground :)
I'd add that the industry really does not celebrate nor embrace failure the way that we're told it does. For those of us without the cushion of prior success or financial runway, repeating attempts to "get back on the horse" is an embarrassing exercise in futility.
With a failed enterprise, you lower your value in the eyes of many gatekeepers and peers, especially those who never tried running their own business.
But after repeatedly attempting to jumpstart businesses without capital, and subsequent failures, eventually you are more or less cast as foolish.
And god forbid you start to become pragmatic or slightly cynical in the world of tech startups! Because the moment your idealistic optimism comes into question, your "cultural fit" is permanently deemed negative. And bonus catch-22, having led startups also puts "cultural fit" into question for big cos as well.
Basically the personality changes that result from repeated business failure can begin to taint and poison your business relationships, and that can follow you around forever like a little dark cloud you just can't shake.
Psychological stamina is something nobody tells you about needing as a prerequisite for being an entrepreneur, but most of us don't learn that lesson until it's far too late...
Glad to see this piece posted on HN. I realize now when I first came to HN I felt somewhat 'ashamed' that I was not working towards being the 'next unicorn'. It took some time for me to realize that there are many more avenues that suit me and ultimately will be more fulfilling.
this bias is something that has been creeping up more and more; if another unbiased forum for hackers-entrepreneurs does emerge I'd love to hear from it. I'm finding myself back on slashdot often these days, which has less of these ("unicorn x" for "<insert ill-defined market that will mushroom here>) story-press releases. Or polemic-y time wasting topics that have nothing to do with hacking.
Just wanted to say that you're not alone in this. I program and read about tech things because they interest me and have useful applications, but I've never truly felt the drive to make myself into the next Gates, Jobs, Zuckerberg, etc. It's very easy to get the impression around here that that's the only worthwhile goal.
I remember a slew of articles mid 2015 that raised the criticism that founders came from privileged backgrounds. The article also mentioned "the cult of the entrepreneur" and the idolization of these characters.
I am born and raised in SV and yet I frankly do not understand the fetishization of entrepreneurs and the idea that this line of work is somehow holier than any other. Isn't that the root of the problem, rather than the privilege of the founders? After all, Wall Street is littered with nepotism and privileged family backgrounds, yet that isn't seen as much of an issue but rather just business as usual.
(perhaps the industry attempts to gain good will for its own gain through this portrayal, and this is the price they pay for this deceit though)
There's a narrative we're told about entrepreneurs that we're not told about Wall St. One of the founding values of America is that anyone with innovative entrepreneurial drive can start their own business and build wealth from nothing. It's what brought so many immigrants to this country, and is even taught to us in school as being the backbone of capitalism.
Most people in America have never actually met a successful entrepreneur. The shop keep down the street is usually under water with loans, and the big successes are corporations headquartered far away, the founders living in expensive seclusion. Heck, in my case it wasn't until I arrived in the Bay Area in my early 20's before I actually met someone who ran a successful business in person.
The successful entrepreneur is this key person in our social mythology, and stays very much a myth to most people. Their success gets spun into compelling stories that give a lot of hope to those who want a way out of poor circumstances. And in an effort to spin stories that sell, journalists (and PR people) often omit key facts, to match the "Self-Made Man" narrative that the people want to hear.
So, learning that yes it indeed is mostly myth and that no, not everyone can get a shot at being "Self-Made" - is pulling the curtains back on a long standing cultural deceit. The truth that success is mostly limited to a tiny subset of the population based on mixed factors like wealth, education, location, social values, generational cohort, parental upbringing etc, is a bitter pill to swallow.
Eager, but disadvantaged, entrepreneurs have been entering the tech market with this key information being withheld, aiming their sights on holding out for mega VC rounds when they should have been focused on earning a living. This leads to painful failures that could have been prevented. Had these founders been given the right narrative to begin with, they might have been better aligned to scale of business success that's reasonably within their grasp. That's the issue here
Yes, I mostly agree with your point. I have been reading a lot of biographies of successful entrepreneurs lately and have discovered that quite a lot of spinning and outright fabrication occurs in how their backgrounds are presented.
Like right now I am reading Elon Musk's biography. It's said he had a "tough" upbringing. Yet he had access to a "Commodore VIC-20" in apartheid-era South Africa and further was able to easily immigrate to Canada and later America in search of further opportunities because he was a Canadian citizen via his mother.
Elon Musk's dad was an engineer, and his mother was a model. Even if assuming he wasn't crazy wealthy, he was at least partially exposed to engineering, and brushed with educated people from an early age.
Not to mention, from Wikipedia "In 1995, Musk and his brother, Kimbal, started Zip2, a web software company, with US$28,000 of their father's (Errol Musk) money."
I adjusted for inflation, that was $44k in today's dollars - quite a substantial amount of money to be gifted from a parent. Plus in 1995 the very idea that the web not only existed but had investment potential was still limited to tech geeks.
So at a time when I literally spent 2 full years furiously arguing to my own dad about why he should simply allow me to hook up my modem using the household phone line, somewhere else in the world is Elon Musk - smart, exceedingly well educated, born in a year with a small generational cohort, along with his also ambitious brother - cashing a generous $28k check from his engineer dad to build, at the exact perfect time in history, a website business in a space that has been duplicated literally thousands of times since, and later sells it for $307 Million. How many people even have the opportunity to nail a combo like that?
Having access to a "Commodore VIC-29" or other accoutrements of wealth doesn't prevent one from having a rough upbringing. From the biography details, it seemed Elon Musk had to deal with with psychologically skewed family members in addition to making way in a backwards society bent on apartheid and violence. That can break a man. These resonate with me precisely because I've had to endure similar things. Not every part of the US is a safe haven. I'm blessed to have gotten where I am, but it's not without scares and I'm sure Musk has his as well. Some parts of myth making actually brings out more of the truth in a story.
Not just that, but he also attended Queens University, one of the best public universities in Canada at a total cost of almost zero due to his ctizenship. I believe he completed his undergrad studies at Amherst College, however.
The "Horatio Alger" myth is one of our most common to illustrate this one. Which is hilarious, because the myth is based on a heavily abridged version of the stories:
"We think we know what comes next: Through hard work and perseverance, Ragged Dick emerges from destitution into a well-deserved fortune. But our contemporary notion of a “Horatio Alger story” departs significantly from what actually transpires in a Horatio Alger story. His heroes do exhibit many of the traditional self-made virtues—industry, frugality, a penchant for self-improvement—which set him apart from the ne’er-do-wells and confidence men who populate his adventures in the streets of New York. But these attributes merely qualify the Alger hero for success; they don’t produce it.
Instead, in Ragged Dick and in the scores of imitations Alger would write in its wake, the hero’s rise is the result of good luck and the good offices of a wealthy benefactor. In novel after novel, Alger’s hero meets a kindly gentleman who takes an interest in the poor boy’s advancement. He then buys the boy a new suit—a rite of passage into respectability that occurs in every story (often there’s a new watch, too)—and finds him a job, typically a junior position in a mercantile firm. Ragged Dick retires his boot-blacking kit when he’s offered a position as a clerk in the counting room of a Mr. Rockwell. He earns that position by saving Rockwell’s son, who conveniently falls off the Brooklyn ferry just as Dick’s penmanship has really started to improve."
*Anyone with access to capital a financial cushion to land on when their business fails, I.e, is paid more than subsistence wage, and can play the social game with investors, and can actually get a meeting with investors.
> If their startup fails, they can go back to their corporate job
A major challenge of a start-up founder is managing their own psychology. This much easier to do when you are/were upper-middle class and gives those founders a significant advantage.
Took the risk, it's not actual porn. In all honesty a "safe for work" tag would have been appreciated.
The author's conclusion is salient. For years I used this "entrepreneur porn" as a placebo to the general discontent I had at my job. I didn't feel like I was fitting into my role, like I wasn't making the impact I had expected. At some point I found an essay from someone that took the plunge and "made it." That hit was just enough that I spent my free time reading a lot of ultimately hollow how-to's, top 10 lists, blogging adventures, what-have-you instead of actually getting out there and doing something.
I see a lot of folks doing the same in various forums and communities. Even HN can be just enough to escape reality.
Actually, moving to Thailand and sipping mojitos doesn't cost as much as living on your parents' couch in NYC.
As that joke goes, the businessman sees the native sitting under a banana tree and asks why he doesn't work, so he can make a lot of money, retire and sit under a banana tree.
The natural pleasures in life don't cost that much, with today's technology and productivity. And they will continue to become more affordable.
The goal of a startup is to organize people and resources to change the world for the better!
When I was at university (a few years ago but not that long ago), the majority of the other students only had one idea in mind, becoming a civil servant, doing 9 to 5, job for life, no pressure, lots of holidays and free time to do other things, and early retirement (I am not even kidding, 20yo students looking forward to retirement).
Working hard, creating jobs, professional success clearly wasn't on the list.
I'd rather be in a society that glorifies entrepreneurship.
The people I know that have fallen in to the "entrepreneurship porn" trap all focus on the "no pressure, free time to other things, early retirement" based on the millions they'll earn. No one who's really fallen hard ("we're gonna be the next Facebook") is heading in that direction because they're interested in "creating jobs". And... they may say "working hard" but often the real hard stuff comes up... they fold anyway.
I've also known some successful entrepreneurs who aren't afraid of working hard, but even then, professional curiosity, a bug to 'build' and other factors were at play. No one's stated goals were ever "I want to create jobs". The goal is the business. Couple friends of mine run small businesses pulling in a few million/year. Each would be just as happy if they could do it with 5 employees vs 40 employees - "creating jobs" was not their goal - "solving a need in the market" was.
You make it sound like having different life objectives than you is a shameful thing. What is wrong with some people preferring to invest in time rather than this (very personal) notion of professional success because it makes them happier?
First, I have to admire the audacity of you using a lifelong academic, who is an employee of the Ministry of Education, to further a point about entrepreneurship.
Second, show me a proof that there is a societal benefit of having a majority of high risk taking entrepreneurs within a country, or even that any country can sustain an artificially high number of entrepreneurs.
Third, if you actually bothered to look up the observatoire de la création d'entreprise you would have seen that the number of created businesses has steadily increased, and is being supported more and more by our lagging, yet trying to evolve, government.
Computers, the Internet, and the Web were all created by government agencies. The glorification of entrepreneurship seems to be mostly propaganda. It's a bit self-contradictory too, creating jobs while disrupting industries doesn't add up.
In European countries it's common that civil servants achieve a distinct status from an employee. As an employee, your rights are relatively typical (you have a 1 month notification period if you are to be fired or laid off, certain procedures have to be followed in order to fire you). However, once you achieve civil servant status after a few years of being a regular employee, you cannot be fired without serious cause, and therefore your job and your retirement are almost completely secured for the rest of your life.
Or in other words, civil servants have actual job security and don't have to constantly worry about finding themselves in sudden poverty because of an economic pendulum swing.
I believe he meant that in France, being a civil servant is kind of a common "dream job" - high pay, little work, near 100% job security, plenty of benefits. Brazil has a similar culture with the "concurseiros" too.
Oh, I didn't know that! Here in Brazil, top 50th percentile or so civil servants are likely to be paid about the same as top 10th percentile in the industry (approximating the numbers based on personal knowledge).
The most dangerous part of Entrepreneur Porn, especially of the TechCrunch flavor, is the idea funding equates to success. Funding won't fix an unsustainable business model, it will just enable you to waste more time.
I knew I was an entrepreneur when I realized I would starve to death, suffer great pain and be a social outcast rather than simply work for someone else.
For some reason, even when I hear "there are plenty of good businesses that aren't startups and it's ok," those businesses still seem like second class citizens.
It's easy to forget that "taking money to grow fast" often means "Try this really risky strategy in a winner take all market where you will most likely die."
This should be number one - or even just the whole article.
Any startup, or a career in general, should not be an end unto itself, but a vehicle to A) fulfill your basic needs and B) get you what you want. While I believe entrepreneurship is often the best way to get both of these, shooting to be the next Facebook is unnecessary. You could keep that corporate job, build your credit, and then buy a McDonald's or a gas station or an apartment building. There's no reason to make a dent in the universe if all you want to do is put your kids through college and travel abroad once a year.
9 out of 10 startups fail. While these odds are better than many other paths to wealth (being born rich, winning the lottery, becoming a rockstar/movie star/pro athlete), you're still likely to fail. If wealth is what you want, you need to ask yourself why you want to be wealthy. If it's because you want nice things or want to travel or even because you want to feed starving people, there's a path to get there that has much better odds than building extreme wealth.
>You could keep that corporate job, build your credit, and then buy a McDonald's or a gas station or an apartment building. There's no reason to make a dent in the universe if all you want to do is put your kids through college and travel abroad once a year.
This phrasing I think minimizes the positive impact you can have with those endeavors. Displacing temperamental landlords with professional landlords makes the world a better place, and I've found having property be their only source of income ratchets up the stakes so much that many landlords explode over nothing (I've had a landlord threaten to evict an entire house of unrelated tenants because someone -- unbeknownst to her, her son in the middle of normal maintenance -- had made a very slight mess in the kitchen).
More important than "you don't have to be Facebook" (as if everyone who tried could be even if they "had to") is: with proper diligence and care, running a business well DOES make a dent in the universe, with very few exceptions. It makes the lives of yours customers (and vendors, hopefully) better in ways that are tangible and appreciated.
This phrasing I think minimizes the positive impact you can have with those endeavors.
This is well put. It's almost as if I'm saying you don't need to make a dent in the universe if you want to make a dent in the universe.
Ultimately I'm saying there's no need to build a massive company for the side effects - material wealth, political influence, financial independence. Don't spend all of your time and energy working on something for its side effects.
9 out of 10 startups fail. While these odds are better than many other paths to wealth ...
That presupposes that a successful startup results in (the founders at least) becoming wealthy. That's a real stretch - unless you define it as "success". In that case, 10% is way, way too high.
If wealth is what you primarily want, you're probably in the wrong game anyway - and much more likely to fail than someone who wants to solve a problem.
I don't expect accuracy on this statistic, but everytime I hear it I wonder how many of those were prepared to run any sort of business. Execution matters, but aside from that, perhaps the hypothesis many of them were validating was not sound at all.
I realise most of these concepts, especially what constitutes an insane hypothesis is in the eye of the beholder, but it's definitely relevant if one seeks to use the "9/10 startups fail" as a measure of risk.
People need to work in industries they enjoy, but, yes, everyone should have a good understanding of the labor market (salaries, demand). Re-location should be an option too. Lower salaries in a low-cost region might work out.
This is the point that has really started to become clear to me in recent years, and not just for startups but for artists, authors, athletes, and all the other dream jobs we idolize: so many of these people are either (1) not really making that much money or (2) already had a trust-fund or come from a wealthy background so they can spend all of their time writing, painting, or engineering. Most authors make below the poverty line [1], and Facebook's success was the outlier, not the norm.
I did the start-up thing in my 20s for about 3-4 years (in the 1990s). My income was about the same as my salary would later be when I went to work for another company, but my stress-levels dropped significantly when I started working for someone else. The constant uncertainty was gone, I was watching my savings grow instead of decline, and I do regret not going for that stability sooner.
I see a similarity between tech-kids in their 20s chasing start-up dreams and the poor kids from my old neighborhood chasing hoop-dreams. The tech-kids have better options to fall back on, but the chances of becoming that rockstar million/billionaire CEO/professional athlete are about the same.
[1] http://www.theguardian.com/books/2015/sep/15/income-for-us-a...