I'm interpreting it as "The first was in the 2000s out of college (~$500k annual); it eventually petered out. Then [the second was] in the 2010s (~$5m annual)."
If you had a daily lottery but only 1000 people were able to enter it, by year 5 nearly everyone would have won the lottery at least twice.
Most people cannot afford to recover from failing once.
So in the context of bootstrapping a company it’s helpful to have a legit fallback (way to suck it up and find an OK job) when things don’t pan out.
Edit: maybe this is obvious for CS/software folks but the extracurricular work I’m involved with is not exactly tech related, though my day job is coding
We work jobs and do our thing on the side like most traditional American entrepreneurs do until their business gets off the ground.
Who the hell is bootstrapping businesses without a job besides rich kids?
1. Get a cheap apartment in a slightly sketchy neighborhood
2. Work 7-8 hours at work and every other waking hour on your business. Take meetings during lunch.
3. Focus to the point of cutting out sports, video games, bars and other frivolous shit until you’ve made progress. Don’t date if you can.
Discipline wins the race.
And when you fail; which you will.
Do it all over again until you find success.
A man/woman has a nice life, a cheap apartment in an okay neighbourhood. Their 9-5 job isn't particularly exciting or well-paid; however, at the weekend, it allows them to enjoy sports, video games and other frivolous activities, such as dating and hanging out with their partner or children.
A stranger approaches them and says they make a much better life for themselves. He tells them they just need to get a cheap apartment in a sketchy neighbourhood, work all waking hours of the day, and give up any fun until they make it. They may fail five times until they succeed and may be declared bankrupt.
After listening, they ask what their life looks like after they make it. He answers it allows them to have an okay apartment in a more expensive neighbourhood, and they can enjoy sports, video games and other frivolous activities, such as dating and hanging out with their partner or children.
They smile at the stranger, and say "But I already have most of this right now". The stranger walks off wearily.
I was confusing it with a man sitting below an olive tree, maybe a variant of the fisher one.
This is life.
Life is inequality.
Not everyone is meant to be an entrepreneur or has the desire to do what it takes to become one.
Trying to convince someone to become an entrepreneur is like trying to convince someone to become a professional athlete or musician.
You must sacrifice frivolity for excellence.
But excellence can always dabble in frivolity.
The choice is ours to make.
For which you may have to be somewhat lucky
Maybe at least one of their parents had a sofa.
The trick is to have parents who aren't homeless.
Few paths go straight from a to b without a misstep.
This. “It's not what you know its who you know.” Though often the people who give that advice privately are the most invested in maintaining the illusion of meritocracy publicly.
[X] "The trick is to have parents",
[ ] who are alive,
[ ] "who aren't homeless",
[ ] who have housing that is safe and functional,
[ ] who have room for you not already occupied by other family members in greater need,
[ ] who "had a sofa",
[ ] or if they're dead, at least left you with enough money as an equivalent
(Also, you forgot people whose parents are able-but-unwilling. This also sometimes makes some things harder than they would be, compared to, say, being given fistfulls of cash each weekend by your rich parents who have a sofa AND a bed.)
To the original post, I generally agree. There are some fundamental lessons about business you can learn, and if you follow them, have a better chance of success. But the magnitude of that success largely comes down to luck. There's plenty of thought leaders out there that just happened to join the right company at the right time. Much of their success is "beta" rather than "alpha", but they are treated like they have unique insight to drive amazing outcomes.
Elon Musk cleaned out manure tanks for a while in Canada if I'm not mistaking. There are some interviews where he talks about this (and showering at the gym across the street and sleeping under a desk and having no money) in quite some detail.
I lived in relative poverty for a while when doing my first business, and while my parents were not particularly wealthy, knowing they provided an escape hatch took a lot of pressure off (living somewhere with a highly functional welfare system provided additional comfort). Things could have crashed and burned at any time, and I'd likely have been better off financially.
The story of how he even got to own the mine sounds pretty wild:
“According to the story, in the mid-1980s, Errol and a copilot landed their plane near Lake Tanganyika in Zambia, where "a group of Italians" offered them 80,000 pounds in British currency in order to buy the plane.
Standing with the cash in his hand, Errol was made another offer he couldn't refuse: Would he like to buy half an emerald mine for half of his new riches?
"I said, 'Oh, all right'. So I became a half owner of the mine, and we got emeralds for the next six years."”
It proceeds to say he made about $400000 from the mine in total - hardly a billionaire villain level money.
https://www.snopes.com/news/2022/11/17/elon-musk-emerald-min...
I think the null hypothesis that Musk got lucky in the dotcom era is pretty reasonable, lots of people did. I don’t get all the conspiracy theories.
Just to clarify for anyone else wondering, that’s 400,000USD inflation adjusted for 2021. Converted to South African rand, it’s about 7.2 million.
To put that in context, the average home price in South Africa is about a million rand. So at most they would have been able to buy 7 properties. If they bought in an expensive area, they likely would have only been able to afford 4 or 5.
> To put that in context, the average home price in South Africa is about a million rand. So at most they would have been able to buy 7 properties
That’s... not how averages work.
(If the minimum price was a million rand, then 7 would be the maximum.)
It's easier to take risks when you have an out when it all goes really wrong. Doubt he'd still be cleaning manure today if he hadn't had a success...
"But still you'll never get it right/'Cause when you're laying in bed at night/Watching roaches climb the wall/If you called your dad he could stop it all."
> Standing with the cash in his hand, Errol was made another offer he couldn't refuse: Would he like to buy half an emerald mine for half of his new riches?
> "I said, 'Oh, all right'. So I became a half owner of the mine, and we got emeralds for the next six years."
https://www.news24.com/news24/bi-archive/how-elon-musks-fami...
> Chasing "Get Rich Quick" schemes is not typically a sign of wealth.
I've found it to be pretty common. The amount of dumb money seeking 'easy' ways to multiply flowing around silicon valley kind of defines the place.
Just take smaller risks. I built my first business over nights and weekends and didn’t quit my day job for 5 years.
If you want something bad enough you just have to take the chance.
I worked for a startup before my current job where the founders - two brothers - had connections with the governor of a state in the Midwest to get a grant to start a small health care company. Neither of them were technical. They hired a few people in the state as basically QA and then hired a full stack consulting company that did the design, the project management and the development by hiring cheaper labor from India.
Then when they started getting enough revenue, they started bringing the technical skills in house including hiring a very good CTO.
The CTO then hired me as his third technical hire to oversee the “cloud application modernization” initiatives because they wanted to sell access to their micro services to large health care providers.
They sold the company three years after I was hired for 10x revenue. It was only $30 million. But the founders and the CTO I assumed made out well.
I think the people who had been there the longest made in the low six figures. I left ten months earlier and didn’t exercise my options. I might have left about $60K on the table.
Please play the worlds smallest fiddle for me. My next job after leaving the 60 person company was a remote job working at $BigTech in the cloud consulting department where my two year prorated signing bonus was $nice.
So stop comparing yourself to other people. Nobody starts at the same place.
For every trust funder with a garage but in Atherton, there are 10 other trust funder with substance abuse problems doing nothing with their life
I can respect people that play their cards, I dont resent people that had a better hand
I think it is up to everyone else to recognize the barriers to entry. In feudal society everyone knew that.
If $45 per month is unachievable then what on Earth are you doing with your money?!
That’s not true in my experience. I’m a similar case, have started 8 businesses in 30 years. Most have had some level of success: enough pay my employees and provide good healthcare while also making a (often small) profit. I’ve also had 2 exits, one of which generatied a life-changing amount of money for my co-founder and myself. Of the 6 business that did not exit, 2 failed to start, 2 achieved multi-million dollar revenue levels then failed, 2 somewhere in the middle.
In between startups I worked for other companies. I tried to optimize $/hr while I did, rebuilding my reserves and even my credit (lost everything once)
Working for others after a failed startup has many benefits. You look at company leadership differently. You observe. You learn. You make more connections. You see more market opportunities. You get inspired. You try again.
Probably key in being able to do this cycle well is to not let the businesses get over leveraged. I’ve had both funded and non-funded businesses. I’ve gone nearly broke a couple of times but a big part of learning to be an entrepreneur is learning to manage money.
I assume your first venture was not the "life-changing money" venture, and the impact of when that did happen certainly can change the narrative of the rest of the businesses in regards to risk taking, particularly if it was not the last venture that was greatly successful.
How much money are people sinking into micro-SaaS in 2023?
If you live in a cheap place, get a decent job, then you can save money which you can use to start a business.
It costs literally $50 to get a LLC from your local Secretary of State or equivalent. You can do it yourself…like tomorrow.
Your chances of making it to Elon Musk status are slim, but there’s literally no excuse in America to not spin up an LLC by tomorrow, get a free EIN, open a bank account for FREE, throw up a landing page and start interacting with potential customers…
…in literally days.
That’s how you do it!
If I follow the "scratch your own itch" advice I ultimately fail because nobody wants to pay for e.g. a better register allocation algorithm for 6502 C compilers.
If I follow the "put yourself in the future and build that" advice I fail because nobody wants to pay for e.g. a library capable of guaranteed constant-time computation.
If I follow the "build products for your niche hobby community" advice I fail because nobody wants to pay for e.g. a better than state-of-the-art comb filter designed for NTSC laserdiscs.
If I follow the "capitalize on new trends in tech" advice I fail because nobody wants to pay for e.g. an ML model trained to invert audio cassette dub generational fidelity loss.
How do you figure out what people want when you're very, very, very different from most people?
It's a scary leap to make, but if you can pay some bills following your passion, making things you need to build, then I'd call that a win.
You had 2 of 9 businesses succeed. You are demonstrating roughly 1:5 odds of rolling a successful business.
With 1:5 odds if we reroll you doing 10 businesses over and over, 10% of you never succeed. About 1/3 of you win once, 1/3 of you win twice, and 20% of you win 3 times.
The versions of you that won 3 times are not any different than the versions of you who won never. Any advice you give is neither more accurate because a version of you won 3 times nor less accurate because a version of you won never.
If you do everything badly (i.e. come up with bad business ides, cannot implement even those bad ideas, are bad at hiring, managing money, paying taxes etc.) then your success rate will be 0%, not 20%.
The issue here isn't about how hard starting a business is. It's obviously hard enough that many (most?) people who try will fail.
The issue is: can you do things better? Is doing things better lead to higher probability of success?
The "it's all luck" people say that you can't. There is no better or worse way. It's just luck. Therefore any advice is useless.
The opposite point of view is: yes. There are better and worse ways of doing things. And if you know what they are then you can tell other people. And that advice will help them to achieve success. But not guarantee.
Some people may be able to increase their chances, but maybe not everyone.
Does 2 out of 9 successful startups mean your tenets listed here will lead to your level of success 22% of the time? Or do they only lead to success 0.022% of the time and you're the 1 out of 5000? How do you know?
It's not just this topic, it's a problem with general advice humans give to other humans without applying any specific context.
Which is quite the statistic when you think about it.
[1] https://www.federalreserve.gov/publications/2022-economic-we...
Also agree that it depends on your goals! I've done venture capital deals, self funded deals ("lifestyle"), non-profit & political campaigns, etc - and different stages and goals.
Obviously YMMV: I know people who legit get lucky and then their luck runs out, and I know smart guys who do everything right and can't catch a break.
It's also fun to angel invest. Get to see dozens more companies from (a bit) of the inside.
Was your first successful business one of your first ones? What if it had taken you until your 6th try to get a winner? Would you have stuck it out?
It is clear that given the dimensions of skill and luck, the most success will come from having both. If you lack either skill or luck, you will automatically be at a disadvantage compared to those who have both. This implies that the most prominent success stories are the result of luck as much as of anything else, however that isn’t very often mentioned in those stories.
And yes I’m far away from a new college grad.
No I didn’t do it. But I have 25 years of experience in the industry and was able to get a remote role via a slight pivot.
> Any of us who have had at least two “successful” businesses will tell you that this quote is ridiculous.
> I’ve also failed miserably and had 5-7 business go under or never even really get off the ground.
This means that you incurred (2+) / ((2+) + (5-7)) chance of creating a successful business. This is in the spirit of the OP. Creating a business may involve some skill, but ultimately it's just a lottery. Sometimes you win only because you're lucky. Or something you lose only because you're unlucky. I apologize but I truly do think giving advise like this can be dangerous. Not everyone is as privileged and maybe a single failure can put them in life-long debt, or financial trouble, or homelessness.
As a ratio I’ve failed a lot more than I’ve won but it is not a lottery.
It’s more like a golf game, it’s hard to do well but you do learn and improve with each attempt.
It may not be precisely a lottery, but if most of the successful people are “I’ve failed a lot more thab I’ve won”, then, the ability to afford to fail a lot more than you win.
Especially with the narratives where the failures involve periods of homelessness, etc., possibly mitigate by couch-surfing or other network support—having a network that mitigates in that way is fortune. Surviving homelessness without it in a way that lets you to buy another totally-not-a-lottery-ticket at business? Even more a matter of fortune.
Most people will never even have the opportunity to afford one lottery ticket.
The lottery idea works in the sense that I was born in the U.S. rather than a developing country AND my parents, who were far from rich or even stable at times still were able to afford a family computer (thank you Atari 520ST) which was very fortunate since my formal education ended the 3rd time I was expelled from high school.
Yes, from the life perspective, as opposed to a worst-case (even in the U.S) I most certainly am privileged and lucky, and did certainly win a lottery of sorts. You’re absolutely correct.
Having said that, most of us that work in tech have won that same or a similar lottery.
Life, location, family, stability, yes those things are a bit of a lottery.
But not so for startups. Your odds of winning the lottery never increase. Your odds of winning in business do, as long as you learn from your failures.
9. If when you pitch your original idea to potential customers, if they're not over the moon about it your destined for failure.
You have to make absolute certain that you remember to do this step and to do it correctly, as well as at the right time, or it won't work.
I think there are three keys to the problem: 1) readers want feel-good success stories, 2) successful people strongly benefit from positive PR, and 3) people often can't usefully talk about why they succeeded.
The first, I think, is pretty obvious. The Hero's Journey long predates modern capitalism, but it very much gets applied. On top of that, add that readers want to feel positive, powerful, smart, enabled. So you can't just tell them, "Sure, you'd like to be rich like this guy, but take it from me, you're fucked from the get-go." There's a good critique of the corporate bio that relates: https://davidgerard.co.uk/blockchain/2023/02/11/jeff-john-ro...
The second bit means that business heroes are not going to tell you, here's my secret: be born at least moderately wealthy and well connected. They aren't going to tell you that past a certain levehttps://www.newyorker.com/magazine/2016/07/25/donald-trumps-... of wealth, it's basically impossible to go broke. They're instead going to make themselves seem both extraordinary and extra ordinary. See, e.g.: https://www.newyorker.com/magazine/2016/07/25/donald-trumps-...
And the third is something I'm sure many here have experienced. I started coding as a child, the son of a software developer. When people ask me how to get started as a developer, the honest answer is: I have no fucking idea. I have little recollection of how I learned, and I have no idea whether the parts that were easy for me would be easy for anybody else. I'll be positive and encouraging and give vague general advice. But if I talked about what worked for me, it would be very much in the vein of "here's the lottery ticket number I used", because my path was so personal.
Apropos the article, it’s easy to imagine there’s a similar lottery for most paths in life, including entrepreneurship. “Be born rich enough that you have the innate confidence that the universe will bend to your will” is a lottery I didn’t win.
Surely, a kernel of the current political polarization is the left’s insistence that these lottery tickets matter, and the right’s insistence that the wealth they’re holding is the result of their own hard work. (To be clear, it’s a spectrum — tickets come in different sizes, and hard work plays a role — but such nuance has no place in public discourse)
…
I’ve also failed miserably and had 5-7 business go under or never even really get off the ground.
All other things being equal, I’d expect someone who started 8 businesses and had one mild and one moderate success to have more useful insights to offer than someone who started one business and had it become wildly successful. Yet our culture valorizes the latter to extreme extents.
Perhaps that was what “awinkinson” was trying to get at with his pithy comment on that terrible platform.
I think it could still be true that the advice isn’t very good but not for the reason the tweet gives (I agree the tweet is stupid). In particular, I think there could be a lot of tacit things that aren’t really expressed in advice, especially the ‘startup influencer’ types who give out advice on twitter. For example, it might be that being really good at hiring and having people work on the right thing is a key skill and a successful founder might think they just walked around the office and asked obvious questions without being able to write down what exactly it was they did to steer the company in the right direction.
I wander how many of those “successful” startups will be successful when they can’t spend years living off of VC funding?
Any of us who have had at least two “successful” businesses will tell you that this quote is ridiculous.
What’s your ideal of being successful? If it’s exiting at a billion, then sorry. But you can use a lot of this entrepreneur advice to find some level of success.
The problem is that non-entrepreneur or first timers always try to skip the small stuff.
1. have a good team and hire right. you need just three roles: sales, operation and product.
2. TAM is real and will determine the size you can grow your business.
3. focus on sales first literally. as a founder you should do your own selling. take care of your customers!!!
4. don’t be a crook
5. manage your money right; be cheap.
6. grow where you’re planted. dig deep in areas you know or that your personal networks know.
7. be lucky - this is about timing and also putting yourself in a place to have information first or at least know the value of certain information first.
8. know you’re going to get it wrong sometime and fail; when that happens take a small break and then spin up another
I’ve bootstrapped two companies to success in my eyes which has changed me and my families life.
The first was in the 2000s out of college (~$500k annual) it eventually petered out then in the 2010s (~$5m annual). Now I’m going to do another and I hope to create a $5-10m company all off the advice of other entrepreneurs.
I’ve also failed miserably and had 5-7 business go under or never even really get off the ground.