Make a product that people want and are willing to pay for.
The product may be in what appears to be a crowded field. Identify niche opportunities or cases where an established leader is doing a poor job.
It's fine to do some consulting on the side to pay the bills. Of course it will take time away from the product you are building; just be able to recognize when it's too much and scale back consulting or turn off the spigot completely once product sales take off.
It's fine to work according to your own schedule and needs, not some idealized '100 hours/week' VC fantasy schedule.
Investors don't care about you, they care about their returns. As you don't fit the pattern of what they expect for a successful startup, they will either ignore you or make very unreasonable demands - find a co-founder, work twice as hard, follow this or that model. Ultimately, it's a waste of time at best, a loss of control and failure at worst.
Once you have cashflow, offload certain business tasks to pros who can do it better and cheaper than attempting it yourself. Hire when you have sufficient cashflow + cushion.
Take pride in what you are building, the customers you attract, and the skills you are learning.
> Make a product that people want and are willing to pay for.
Great point. The long-term survival of a business distills down to being able to bring in more money than it costs you to produce a product. It's such a simple concept, but it's easy to forget when you're swept up in the excitement of coding and engineering an idea you're excited about.
Ironically, it's the most ambitious engineers who tend to make the mistake of doing too much engineering work before trying to validate the product. I can't count how many times I've signed up to follow ambitious engineers' startup ventures that turn into years of highly-detailed marketing updates for products that never seem to get any closer to materializing. These are the startups that fizzle out 2-3 years later with blog posts blaming the industry, the timing, the economy, or other external factors for their failure.
In reality, most of them could have determined their market fit, or lack thereof, much faster by launching a smaller version early and iterating with customer feedback.
Of course the customer cares about fast, powerful and efficient things they can use.
What happens is that most of the time making something fast, powerful and efficient implies so much resources that the ambitious engineer can not complete the project in time.
Customers prefer something that works today, even with limited functionality that something perfect that only works inside the mind of the engineer.
That is the reason Steve Jobs said no so many times, because this way his company could ship products in time.
That in engineers mindset problem: It is painful to say No, like the song says, we "want it all".
Not only that -- a lot of people pursue "innovative" technologies and try to build something all new, when existing ideas have only reached 1% of the market that need them because it takes a lot of work to actually get people on board.
> These are the startups that fizzle out 2-3 years later
Is that really the most common problem? I would probably be one of those engineers (if I'd start a business) and I'm a lot more afraid to sell something that doesn't exist yet than the other way around. Because now in addition to your usual problems you have legal obligations to deliver a product. I think this is one of the reasons for the crazy crunch culture of many startups.
Instead of selling a fake MVP product it is probably more healthy to be upfront to customers and let them pay for your development time like a consultant... And then repeat the work faster for different customers until you can spin the process out into a actual product.
In the case of the startups you describe I always imagine they have great sales and marketing people but no actual product, and thus survive only until the VC money dries up...
Statistically, more startup ventures fail than succeed.
> Instead of selling a fake MVP product it is probably more healthy to be upfront to customers and let them pay for your development time like a consultant
Careful, no one is advocating selling "fake" products. The key is to develop a minimal product that can be sold. It has to work, though. Fraud will sink a startup very quickly.
From there, you can contract with additional customers to expand the product to meet their needs. This is more difficult than it sounds, though, as you'll quickly be torn between working on what's best for the product as a whole, and what's best for an individual customer's unique needs.
I've seen many startups go down this path with best intentions, but ultimately become contracting shops with a single customer. That's fine if that's your goal, but it's painful when the contracts dry up and you don't have a product that appeals to the mass market.
The most common problem, if you're a really talented engineer, is that you could work for a big company and be paid more in a single year than your business will bring in for its entire lifetime.
Conversely what you really find is, the people running 20+ person companies with tens of millions in investor money to bring in only $1m in revenue a year - they lacked the talent, actually, to just make the money at a big company. That you should start with the assumption that capitalism works, and that the person doing this thing is not stupid but just shut out from a better opportunity.
So maybe you're a really talented engineer but you are foreign so you'd need an H1-B to work for Google. Or maybe you're a former product manager from Microsoft who didn't quit, but was laid off, so you really can't just go and make the money.
A transplant surgeon brings in about $1m in revenue per day for heart transplants. There is no risk there, there is unlimited demand for heart transplants. It's just extremely hard to become a transplant surgeon, it is extremely competitive, much more competitive than making a website. While I'm not suggesting every startup CEO is just a washed-out up-and-coming surgeon, there is other stuff they may have washed out from broadly, like just medicine itself, that led them to chase the worse economics of where they are.
I think it's often more about personality than talent or money. Founders tend to be the kind of people that hate the idea of being a cog (even a very well paid cog) in a big machine. People often start companies not because they can't get a good job, but because they can't stand working on other people's ideas when they've got a head full of their own.
The first business I started out of college was enabled solely by the fact I couldn’t find a full-time job. Like, at all really, for any pay. Was the business I started modestly successful? Sure. But did I move on when far better opportunities came about? Yes, I did. Opportunity cost is very much a real thing that dictates who actually starts a business or goes to work for one for under market rates.
I have met some people who implicitly or even explicitly claimed they were above being an employee but I think they weren’t being honest about their actual employment prospects.
So, you've got a choice: $200K/year at bigco, or $120K/year + a one time payout of $2m when you sell your company in five year. Yes, slow and steady can win the race, but last I looked, $200K x5 is $1m. The solo founder will make $2.6m. Of course, there's no guarantee of any of this. The talented engineer could be caught up in layoffs at bigco, and the founder could go out of business or never sell. Usually, exits are done at a multiple of revenue, so it is not uncommon to sell a small company with $600-700K/year of revenue for 3-5x that amount.
BTW, raising tens of millions for one million in revenue doesn't happen that often.
Everyone I know who has worked at the top tech companies for 5 years has earned considerably more than the entire startup's revenue. I wasn't ever talking about the startup's equity value, but even if I was, they were earning more than the equity value they would receive too.
I've seen companies raise single digit millions and not even get close to $1M in revenue, over 5 years later. The result is founders have been diluted massively after a couple of down rounds. Meanwhile, preferred dividends are accruing year after year. The odds of a big payoff gets smaller and smaller the longer this goes on.
Odds are you'd make more money taking a job at BigCo, live like you only needed half what you're making, and invest that extra money into the public market. This isn't as fun though.
This is entirely correct, and it also true that there are more opportunities in the startup world to build something meaningful and exciting from scratch and to have an unforgettable experience doing it. Not quite everyone is in tech for the money..
> let them pay for your development time like a consultant...
Do they not then own at least a share of the IP? You'd be lucky to find a customer that takes you on as a consultant but lets you keep the IP you develop during that time.
--Ironically, it's the most ambitious engineers who tend to make the mistake of doing too much engineering work before trying to validate the product--
? Not trying to be argumentative but that doesn't seem ironic to me at all. I would expect the most ambitious engineers to think that simply building the thing would be enough.
The more simple your MVP can be, the more indicative it is that you have a market.
If you need to build for years to release something [1], it's less likely that you're addressing a real need. The best products can start dead simple, even ugly, but still solve the problem.
The problem with some deep tech is the tech doesn't solve a problem until the next generation. It's less appealing as a solo bootstrap founder business.
I remember when I was an undergraduate physics student, looking forward to grad school and idolizing all the famous physicists. My adviser, who was not the most soft and cuddly type of guy, always pushed this type of hyper-alpha stuff on me, even telling me that he himself only sleeps 2-3 hours per night just so that he can do more physics. It really does damage to you and your self image, and I don't think the advice he gave me was really meant to help me as much as it was meant to help him feel superior.
Anyway, a bit later in life now I look back and realize that there are so many times when I've idolized a certain way of living / doing things that are actually not productive at all but rather just feed that same type of alpha-image.
There's no reason why you can't be successful on your own terms, even if that means taking the weekend off, being a solo founder, or whatever. Sure, I get that startups are hard and draining, but (not to lean too heavily on cliches) there's a difference between working hard and working smart and more often than not I think these types of alpha-founders are glorifying busyness.
> even telling me that he himself only sleeps 2-3 hours per night just so that he can do more physics.
It's always fascinating to see people make claims like this, despite all evidence showing that it's impossible to maintain. Some extreme genetic outliers may be able to sustain performance with around 5 hours of sleep per night, but no one is going to last very long on 2-3 hours per sleep each night.
Extreme genetic outliers still need 5, maybe 4 hours of sleep to function.
Going all the way down to 2 hours of sleep is doable for short bursts, but it will catch up with even the genetic outliers before long.
Many of these people are just exaggerating for effect. If you have poor time management, poor accounting for where you spend your time, and an erratic sleep/wake schedule, it's easy to get confused about actual sleep durations. Some people also use stimulants excessively during the week and then crash on weekends, but they'll only tell you about the nights where they barely slept.
Some people learn to normalize sleep deprivation and coast on a diet of frequent naps. If you take 30-90 minute naps a couple times a day you can coast for a long time on 2-3 hours in bed at night, but you're still sleep deprived. Those weird polyphasic sleep schedules that claim to reduce your need for sleep are simply normalizing sleep deprivation and masking it with naps throughout the day.
Finally, there's a common phenomenon where people misperceive some of their sleep time as being awake: https://en.wikipedia.org/wiki/Sleep_state_misperception This is a common explanation when people claim they didn't sleep at all on a certain night. It's not uncommon for people to claim extreme insomnia, but then sleep 6+ hours as soon as their sleep is objectively monitored.
In short: You can't trust self-reported sleep times. Especially not when someone feels they have something to gain by claiming minimal sleep.
Has there ever been a documented medical case of someone surviving on less than 3 hours of sleep a night indefinitely?
I've read a lot of sleep studies, and besides some non-scientifically published variations on Buckminster Fuller's 30 minute nap every six hour sleep schedule I haven't read about someone getting such low amounts of sleep.
I had a bad reaction to a 10 day cipro prescription a few years ago and it felt like getting hit by lightening. So many things returned to normal but being able to sleep for more than 4 1/2 hours, was not one of them.
Either he is an extreme genetic outlier (by definition the rarest of the rare) or he exaggerated to enhance his reputation (a trait baked in to everyone and so pervasive we all do it without realizing it). I know which one is more likely.
In this case, there's the additional irony of ignoring science in the name of doing science.
On another note, I can't be the only person who finds this kind of bragging to just fail to register, or even to backfire. Am I meant to be impressed by how poorly they've arranged their weekly routine in terms of work/life balance?
It reminds me of a line from a Jack Reacher novel - a guy with a scarred face (who obviously thinks he looks scary and tough) asks Reacher what his face tells him, and Reacher just replies "it tells me you've lost a lot of fights."
Maybe going on a cocaine/stim bender can sustain this for a little while then crash through the weekends when everyone is less productive. Obviously a terrible idea long-term to avoid chemical dependence/brain damage, but it's common enough that I've met quite a few of these "barely sleep yet hyper-productive" types that are abusing stimulants beyond coffee to keep it going during the work week.
The toughest part of this is finding a product that people are willing to pay for. The sunk cost fallacy kicks in, and everyone doubles down on pushing the product and iterating until they finally have no choice but to admit failure. I think YC does a great job of getting people to ask what is the absolute least amount of work I can do to validate an idea. Can you send texts instead of build an app? Can you do it all manually for the first 5 customers? Be quick to throw away things that aren't working, you don't have the bandwidth as a solo founder to make a perfect product, you NEED to see market acceptance to make it worth your time.
>getting people to ask what is the absolute least amount of work I can do to validate an idea
This is even a problem in the sciences! Everyone wants to kick the can (getting feedback on their pet hypothesis from reality) down the road & play with their shiny, awesome tech/math in the meantime.
"The great tragedy of science - the slaying of a beautiful hypothesis by an ugly fact." Thomas Huxley
100% disagree.
People good at this “know it when they see it” on the “finding a product that people are willing to pay for”. They don’t find this part hard.
What is hard is keeping mistakes/ignorance marginally less fatal than the ground you gain in your successes... forever.
Yeah, it is a twofold task really: 1) devise & ship something that makes sense and actually adds some value somewhere for a good number of people; 2) put it in front of the target niche through the cheapest feasible means of any type, aka do not get into the social media marketing rat trap.
In my very limited recent case, I produced a Kindle booklets series earlier this year (20 academic literature reviews) and started selling some through targeted ads on Amazon.com, at $0.03 per click, on top of a very few thousand visualizations per day.
Ramen profitable, but a platform to start from for small incremental updates in the mid- to long- term, hopefully.
> Make a product that people want and are willing to pay for.
Exactly. In fact, it's not even about the product. You need to solve somebody's problem in a way that they are willing to pay for. The product is just how you choose to do that. The designs and code and engineering decisions and artwork etc. etc. aren't for the customer, they're for you. What the customer is paying you for is solving their problem.
The trap I fall into is thinking about whether a solution 'ought to exist', disregarding the reasons why it doesn't already.
There are lots of tools people on appreciate when they are gone, and getting people to pay for them takes a much better salesman than I'm used to having available.
I’m a full time software engineer for a small company. No amount of googling answers my question: what exactly is part time consulting? At least, in your context
Here's my understanding. YMMV.
Moonlighting: working side job/s for other entities while you are employed full time by one entity.
The full-time employment entity is your own company (if you are the founder) or your full-time employer and there could be other companies or individuals to whom you work for part-time (1 day a week, adhoc days/hours, weekends etc) and you are paid for that work.
You have two things to consider:
1. Make sure it is legal (for example if you are on certain types of work-permit visa in some countries it might be illegal to work for anyone other than the work visa sponsor).
2. Make sure you don't have conflict in your employment contract clauses (many full-time employment contracts have clauses that prevent you from working for others even for part-time without explicit permission from the full-time employer).
Usually if you ask your full-time employer, they may permit you to do one-off consultations to other companies (and get paid for it) if they think it would not take your focus away from your FTE work and if there is no conflict of interest or potential to reveal trade-secrets (example: if that other company is a competitor etc).
Make a product that people want and are willing to pay for.
The product may be in what appears to be a crowded field. Identify niche opportunities or cases where an established leader is doing a poor job.
It's fine to do some consulting on the side to pay the bills. Of course it will take time away from the product you are building; just be able to recognize when it's too much and scale back consulting or turn off the spigot completely once product sales take off.
It's fine to work according to your own schedule and needs, not some idealized '100 hours/week' VC fantasy schedule.
Investors don't care about you, they care about their returns. As you don't fit the pattern of what they expect for a successful startup, they will either ignore you or make very unreasonable demands - find a co-founder, work twice as hard, follow this or that model. Ultimately, it's a waste of time at best, a loss of control and failure at worst.
Once you have cashflow, offload certain business tasks to pros who can do it better and cheaper than attempting it yourself. Hire when you have sufficient cashflow + cushion.
Take pride in what you are building, the customers you attract, and the skills you are learning.