Whoops. I think we're in violent agreement. I agree with keeping burn rate low, and not moving to a startup hub... especially if the business is an online one.
373 karma · joined March 25, 2007
If you want a startup, it sounds like you have 25 hours a week to invest in it. It doesn't sound like you need to save up a lot of money.
If you're a software engineer, even in alabama, you can easily make $60k a year.
And anyway, it doesn't matter-- if your income is that low, cost of living should be low as well.
Alabama is probably a great place to start a startup-- just you should start living on half your income.
Do that for a year and save the balance and you have a years living expenses to live off while you try and get your business going.
Zero reason to move to the bay area if you're in seattle... and a lot of reasons not to.
That's all well and good, but where's your cocaine habit? How are you blowing all your money if you're spending all your time at work or on the startup?
IF you're not blowing all your moeny, and you've spent a year looking for funding (like it sounds like) then why dont' you have a year's worth of living expenses saved up?
The problem here is hte pervasive idea that the first step to starting a company is getting someone else to fund it. Screw that-- nobody can ever know your business as well as you can. You can use advice, sure, but wasting months working on proposals-- getting seeking emotional validation from investment, this is all the wrong way to go about it.
Build your product, save your cash. When you have enough money saved up, and if you really believe in your predictions (That you'll be cash flow positive in 6 months) then you quit your jobs when you have $12,000 saved up, or less.
If you can't save $12,000 between now and the next YC funding round, and you're working full time, then you are spending your money on something-- cocaine, maybe?
IF your idea and team really are good, you shouldn't be desperate for money... and hinging your emotional well being, or self confidence, on validation from investors is a recipe for failure (and unhappiness.)
It was cool for transmeta, but immediately after it became cheesy.
On the other hand, when you have an idea, or a solution, and you're evaluating it, and trying to determine what the market is, what technological solutions are needed, or even if it is viable, you don't want to start talking about what you're doing too soon.
Not because your idea is super secret-- but because your idea is evolving every week. If you're doing a social network (And by the way, if your social network doesn't already have 1M members right now, please stop and find something interesting to work on-- you already missed the party)... but your niche is changing each week- one week it is cat owners, next week it is ferret owners-- you don't want to talk about it and sound like a goofball who is a member of the "get-rich-quick-scheme-of-the-week" club.
If you're really in stealth mode, you won't ever use the phrase "stealth mode". You would simply not talk about it.
However, when talking to friends who know I'm working on something, it would be nice if there was a phrase to use that says "it is too early to talk about right now, but I'm not trying to be pretentious."
Maybe just "early stage" is the phrase to use.
As for titles, I always hated the CxO titles-- they say to me "these are titles we give to MBA idiots cause they insist that their air of pomposity be respected, but secretly we know anyone with this title is an clueless and not worth spending time with at parties."
Personally, I'm going with founder. It is way too early to come up with a job title to specify exactly what my responsibilities are-- if it isn't done yet, it is my responsibility!
If you're going to do business in Japan to the point that you have above ground employees (taxes, social security, etc.) then you'll have to find out the Japanese laws. Even then it probably makes sense to incorporate outside of Japan for tax reasons. A foriegn corporation operating in a country is generaly treated differently (and better) than a domestic corporation.
But, if not, then you can incorporate in any jurisdiction which is friendly to corporations.
I would strongly recommend you do not incorporate in the US. The USA is not a friendly jurisdiction for corporations and all the trends are that it is getting worse. Ths US has enacted currency controls, limiting ones ability to move money in and out of the country-- this is the first step in the creation of an "iron curtain". (Requiring passports of people who travel, as the US started doing in January is the second step.)
It is only appropriate to incorporate in america if your business is completely located in america. (If you want to find out what your government does all day, just file business papers in many states- over the next 6 weeks you'll get contacted by many dozens of different agencies, all of whom want you to do paperwork and give them money. Texas is an exeption to this, Nevada may be as well.)
Ok, on to the real advice-- look at countries that are pro-business, or who are, or used to be tax havens. The caymen islands and bahamas are obvious choices, but also st kitts and nevis are worth checking out. You can legally incorporate there. Some of these islands have restrictions about the business you can operate there, but are happy to incorporate foriegn businesses (that is to say, its easier if you'll not be opening an office on their soil).
Along those lines- ex UK protectorates, consider the Isle of Man (or is it the Isle of Wight?) and closer to home, New Zealand and Australia. These latter two are high tax states, but are closer and may prove to be good choices for you.
Also consider the united arab emerites, monaco and Mauritius. These are a different style, but they may prove to be good places.
Finally, probably the best place to incorporate is Panama. Their government is oriented around providing services to foriegn industry... starting with the canal, but also ships registry, bank registration, incorporation and trust services, etc. This is probably one of the easiest places to do it.
If you're planning to bank outside of Japan, you might consider incorporating in Switzerland, so that your corporation and your bank can have closer ties. But I haven't looked into that much.
Its hard to find good information on this subject, probably because US courts have thrown people in jail for giving "Advice on how to avoid US taxes"... so, while this isn't a tax dodge (you're not a US citizen) people are wary of talking about it.
Oh, reason 13 not to live in San Francisco: Only the bad guys carry guns.
and someone's getting evicted for "Running a business out of their apartment". Arent' they in the YScraper?
First time I've "tuned in" and gotten an actual feed thats vaguely interesting (Ratehr than darkness, or Justin asleep... which is only interesting for about 2 seconds.)
I know it sucks to be rejected (went thru it recently myself) but don't fall into the trap of sour grapes.
Find out what you can do better, or improve on.
And I think this is probably a good forum for doing that.
I assume they are american expats...
... or maybe they are developing a product for the 5/6th of the world that isn't America.
So, for your basic consumer oriented web startup, you don't need VC funding...
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".
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.
Spot on!
"The brand-building idea is all about casino thinking. The theory is, the minute you have a brand, you can cash out. This casino attitude is good for VCs but it's ruinous for programmers, and it's ruinous for normal investors as well. (And it isn't even really that good for VCs.)"
This guy knows what he's talking about.
Getting Real misses the mark in a few areas... the 37signals people are (I am guessing) from a design background and often end up implemting a solution that solves the problem the way they want to solve it, but not generally... and rails suffers because of this. Some other things in the book don't make sense... but it is an excellent book and well worth reading.
Venture Capital is dead. Its deader than microsoft.
Implicit in your comment is that a company without VC funding cannot grow as fast as a company with VC funding.
That was true ten years ago when a lot of costs were unavoidable: Server hardware ,server software, and you had to build a lot of software infrastructure from scratch.
Now all that is cheap, or free, and what isn't comes with lease terms.
Thus, lacking a big pile of money is not an inhibitor to growing big fast.
Good luck with getting YC funding. But there's a huge difference between YC and venture capital. When you start talking to venture capitalists, you'll see.
You contradict yourself.
Obviously you have a problem with capitalism because you beleive people should be forced at gunpoint to live the way you prefer.
This is because you value "paper and numbers" more than people.
Your idolizing of hunter gatherer societies is the kind of pseudo-science that has always been used to sell socialism.
Feel free to quit your job and go find food yourself. In alaska you are free to hunt to feed your family-- subsistence is prtected there (and its a good thing... nothing worse for the environment than environmentalists anyway.)
You talk about "Seeing things at a human level" but your idea of the "human level" is sticking a gun in someones face.
I never equated open source software wiht development at gunpoint-- so of course you had to say I did to try and make me out as crazy. People who voluntarily open source their software are Capitalists -- they are profiting (exploiting in your parlance) the works of thousands who decide to contribute to their open source software.
No, the violence ocmes in when you insist that companies must be restrained and people must be restrained from freely trading for each toher.
becauss of your pretend care for their spirit "So the customers save money, yes, but they lose out in so many other ways."
When you force walmart to stay out of your town-- you are using a gun to deny poor people the ability to feed themselves.
You, my freind, are a socialist. The spew of your post is pure socialist drivel. Its nonsense... and as long as socialists like you continue to spout hateful anti-human nonsense like that, I'll be asking the questiosn you can't answer.
Like:
Why not let people live in peace? Why do you insist on using violence to force people to live according to your (ignorant) ideas?
"When we started our startup in 1995, the first three were our biggest expenses. We had to pay $5000 for the Netscape Commerce Server, the only software that then supported secure http connections. We paid $3000 for a server with a 90 MHz processor and 32 meg of memory. And we paid a PR firm about $30,000 to promote our launch.
Now you could get all three for nothing. You can get the software for free; people throw away computers more powerful than our first server; and if you make something good you can generate ten times as much traffic by word of mouth online than our first PR firm got through the print media."
The reality is, you make money when you bring happiness to people. You make people happy and they want to give you money they want to buy more of your products because they want to keep being made happy again, or made even more happy.
Thus, the happier you make your customers the more money you make.
Further, making people happy, and making money are intrinsically moral things. Trading with people is honest and moral.
Those who talk of altruism speak of violence. Altruism is the destruction of your self to benefit others. (Literally). Thus socialists throw around the word "altruism" (and "Sacrifice" and a lot of other code words) to try and make it seem moral-- but at the root of it, what they are doing or advocating is putting a gun to your head and taking your money (and your money is just a representation of the labor you put in to earn it.)
So, don't you talk to me about morals-- when its clear you are advocating an immoral ideology.
The bottom line is this: Free people trade with each other and profit by trades that make people happy. This trade is moral, it is honest, and it is right. It is intrinsically peaceful.
Socialists oppose free trade, they believe in forcing people at gun point to "trade" on terms that the socialist approve of. This is not peaceful, this is not moral, and obviously the people who are having their lives threatened are acting under duress--- duress is not compatible with happines.
So, the next time you hear "sacrifice" come out of the mouth of a politician -- realize its not him that will be sacrificing-- its you and he's putting a gun to your head to get richer.
That is the language of the thief and the looter, the socialist and the immoral.
This is so obvious that I shouldn't have to say it-- but its amazing how twisted people's minds get when they are subjected to socialist propaganda day in and day out.
To think you just said people doing things that make them happy, because they make them happy is immoral!
http://www.danga.com/mogilefs/
1 Will pay good money for software, their prices are ok, just don't like the feeling I get that they will have my company by the balls.
VCs are people with more moeny than brains who are certain the situation is reversed!
The stallman cult thinks this and they have gone so far as to have protests against Apple when they sued microsoft! That's how twisted their socialist thinking is-- they support the monopolist against the underdog!
If you're 50 years old, get a mac, you'll find that its a hell of a lot easier to use than Linux.
To claim that its "superficial" is to not understand the real advantages of the Mac... alas, I suspect too many people like you reject microsoft and then reject Apple (because of FUD spread by MS or linux fans) and then go back to microsoft when they discover that Linux is a damn hard to administer desktop (for most people.)
I have been using unix for 20 years and I only run Linux in particular situaitons because generally the admin load is just not worth it. Why deal with it when Mac OS X is so much better? So, I use it on servers, but only when I am not able to use apple hardwware (They make great servers too....)
The thing about Apple is, its far better than people think... and most people have never tried it, and yet many of these peopel have a negative impression of it based on propaganda from MS proponents.
The "shrinkwrapped" license agreements are not really enforcable... at least not in a legitimate (eg: competant) court.
In the evenings and weekends, build your idea.
If you've got funding to finish your university degree, then build your idea in your spare time and stay in school. Not as good, but a number of stratups have come out of college started projects (eg: napster, facebook.)
The really important thing is not so much your idea, but the skills that will come with trying to make your idea a success.
Trying to make it a success and totally failing is much more valuable than getting a job writing enterprise software or staying in school.
Assuming you're an engineer, and your idea is a web based one, you don't need money- you don't need investment-- what you need is living expenses. Get that covered and you're in a no lose situation. (Just make sure you have something to show for it if it fails- so that you can use the epxerience to get a job if you need one....)
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Further, I think that even on the desktop things are going to change and fast.
I don't think people realize just how well Apple is doing.
Their Mac sales are up something like %50, but they havent' really experienced network effects yet... as MS fails to come up with anything inspiring, PC owners are going to try switching in larger and larger numbers.
We aren't yet seeing the watershet that this is yet-- but the Mac has moved from the margins to a viable maisntream possibility.... and as PCs bought between 2004-2006 come up for replacement, a huge number of those machines will be replaced with Macs.
It was only in 2006 that people outside the software and web industry really started to see the Mac as a viable alternative.
Personally, I am starting to feel a bit odd, since suddenly there are all these new Mac users.
When the Mac becomes mainstream, I'll lose the comfortable non-conformity I've enjoyed since 1988.