It was about the advantages of running a startup cheaply, not of having no money. And if you're running a startup cheaply, you don't need to raise as much.

The one big disadvantage I see is that you can quit pretty easily. Being poor gets tiring pretty quickly, especially if someone waves a nice fat salary and benefits in front of you.

This is one of the reasons the young and the nerdy tend to have an advantage in starting startups. They have inexpensive tastes. So they feel prosperous on an income that would make someone older and more conventional feel poor.

We're talking about smart people and inevitably they're going to look at friends who've opted for the corporate world and do the math. Certainly as long as the promise of a big payoff is there, then the math might weigh in favor of doing a startup. But it also might not. That whole time value of money thing says that sacrificing income in your twenties is going to hurt you a lot more in the long run than sacrificing income later on.

edit: Of course, right now the "whole time value of money" is basically negative. ;-)

Coming from a "poor" entrepreneur who has previously held six-figure software engineer salaries, I can say there's more to entrepreneurship than salary. When I busted my ass working overtime to add cool new features, nobody cared. The company doesn't care, the boss doesn't care, your coworkers don't care either. If I have to spend 1/3 of my life at work, I might as well be doing something I love, even if it puts my retirement at risk.

I mostly agree. But there's something to be said for retirement.

You can retire well even if you only make $10 an hour for 40 years. It just requires you to be very frugal with your expenses and investing wisely. Let interest do the heavy lifting for your retirement :)

The interest rates here are pretty much zero ...

The expected value of doing a startup is high -- I think a little higher than being able to guarantee myself $80K/year. If I work on a startup with 1 cofounder for 5 years and it's got a 10% chance of exiting for $10M, my expectation is roughly $100K/year. So if I can afford to take the (rather high) risk of getting nothing, then I should do the startup.

If I value my time differently depending on what I'm working on -- if the startup is lots more fun -- then it's an easy choice.

But then again you have to "spend alot of time to raise money" especially when your company hasn't proven its viability yet.

PG, on that note, what would you say is the "sweet spot" in terms of time looking to raise money?

Admittedly my mistake; I thought you had said that. Updated the original post.

If you don't have any money, then it's a foregone conclusion that nobody has a salary and you're not going to hire anybody. That drops your operating expenses down to the cost of keeping the server alive, which paradoxically means that you don't need to bring in any outside money to keep going.

The main reason we haven't taken any VC for Twiddla is that we couldn't for the life of us think of anything to spend it on. What exactly are you supposed to do with $12M when you're only burning at $600/month?

I can only assume there was context involved. Something like:

With no money, you only have two viable choices:

1. Build something to get to Ramen Profitability

2. Raise Money.

If you don't focus exclusively on one or the other, you may be making a strategic mistake.

Meh. The only ones I really agree with are 2 and 6. The other ones from a glance either don't make sense or aren't necessarily a unique benefit of a startup.

i think #1 should be #6 to make sense.

after one is forced to build, do sales and being efficient, there's little time left to raise money