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I think there's a failure to acurately calculate opportunity cost going on here. At startup school they talked about (presumably VC backed) startups being a %1

by BitGeek 19y ago

I think there's a failure to acurately calculate opportunity cost going on here. At startup school they talked about (presumably VC backed) startups being a %15 chance of success. IF you have a %15 chance of building a company worth $20M in 2 years, and you'll get $2M of that-- then the opportunty value is 0.15X2M or $300,000. On the other hand, if you bootstrap, and you build the same business, your chances of being a success go up to %60 (No flatline VC sitting on your board forcing bad decisions) but maybe you spend a bit less on marketing and grow more organically (really, I'm being generous here- I think the same business would grow just as fast bootstrapped.) so you end up being worth $10M in two years. Your share of that is $5M, for an opportunity value of $3,000,000. In other words, you're likely to return ten times the money by forgoing venture capital. While in both cases you could end up with nothing, weighting the payoff with the likihood of success lets you evaluate two very different opportunities. If you take the choice tht has a %15 chance of success, odds are you won't get that first million... where as in the alternative, odds are you will.

staunch 19y ago
The biggest problem most founders have in the beginning is just being able to devote undivided attention to it. If you have to work a full-time job and do your startup on the side for the first 1-2 years that's a huge disadvantage and it massively deceases your chances of success. If you have something good and don't need a lot of money there's no reason you have to put yourself at the mercy of VCs -- you can maintain control. You can't judge this kind of thing in a vacuum. What kind of scenario are you thinking of?
- BitGeek 19y ago
  YC is three months of funding. IF you make $25 an hour, you can work a three month contract and save up enough to fund yourself for three months to try and get a prototype done. You can totally focus on the project for those three months. If you can only get a 6 month contract, then do it, and you'll have 6 months to work on your idea. Also, you're assuming that doing your startup on the side "massively decreases your chance of success". I think this is in error-- success is goverened by determination more than anything else, and someone who builds something on the side is clearly determined. Personally, its more fun to focus on your project completely, and so, its probably psychologically better to work for 3 or 6 months, and then take a 3 or 6 month "break".

by BitGeek 19y ago

staunch 19y ago

The biggest problem most founders have in the beginning is just being able to devote undivided attention to it. If you have to work a full-time job and do your startup on the side for the first 1-2 years that's a huge disadvantage and it massively deceases your chances of success. If you have something good and don't need a lot of money there's no reason you have to put yourself at the mercy of VCs -- you can maintain control. You can't judge this kind of thing in a vacuum. What kind of scenario are you thinking of?

BitGeek 19y ago
YC is three months of funding. IF you make $25 an hour, you can work a three month contract and save up enough to fund yourself for three months to try and get a prototype done. You can totally focus on the project for those three months. If you can only get a 6 month contract, then do it, and you'll have 6 months to work on your idea. Also, you're assuming that doing your startup on the side "massively decreases your chance of success". I think this is in error-- success is goverened by determination more than anything else, and someone who builds something on the side is clearly determined. Personally, its more fun to focus on your project completely, and so, its probably psychologically better to work for 3 or 6 months, and then take a 3 or 6 month "break".