Re:Everything I need to know about startups, I learned from ...
by rabbitonrails on Sunday January 08, 2012 @09:36AM
(#3439580)
The numbers are arbitrary, so it would have been better for me to say "business models that produce nonzero revenues even when things go wrong are superior to business models that return nothing unless everything goes right, especially for bootstrapped companies".
The counter argument is that the latter kind of business models (e.g. social) have much higher potential payouts due to scale. But I believe one doesn't have to look too hard in the first category (e.g. SAAS) to find billion dollar opportunities that collapse into million dollar ones if the winds change.
Re:Everything I need to know about startups, I learned from ...
by erichocean on Sunday January 08, 2012 @12:05AM
(#3438935)
> There's no such thing as a business venture that makes $2mil in a worst case scenario.
The opposite is true though: there are a lot of companies that will have trouble doing more than $2 million. I think the author is suggesting you don't pick one of those.
In the end, the real cost is time. Do you want to spend your time building something small, or something big? That depends on why you're working, I suppose, but if you really don't care what the business is, might as well build something big.
It's easy to point out how $2mil a year might be only 1% or even 0.001% of the total size of some particular market, but that's irrelevant. No amount of business is guaranteed. $2mil is still $2mil, it's still x number of people each ponying up y number of dollars, for pretty significant values of both. Without a compelling product and a solid brand you have no guarantee of that. There's no such thing as a business venture that makes $2mil in a worst case scenario. The worst case is always losing money.