[dmor]

It seems like each week or so we have an existential crisis on HN by an author who has realized the "go big or go home" mindset/lifestyle might not work for them. There is a HUGE fallacy in all this expected value rationalization for building a lifestyle business. You are going to DIE someday. You don't have unlimited time, and I'd rather take crazy bets toward building something risky and radical than be comfortable and safe with "a profitable, small web-based business in just a few years, take a great salary and work 30 hours week".

Yes I know I could do that, I was able to do that at 19. I'm doing a startup because that isn't enough for me. That would be like retiring at 19.

Blog posts like this feel like "why I settled at 20-something". Come on, really?! Ugh

[oinksoft]

It's fine to say that you feel differently from the author and that you have a thirst for glory, a taste for risk.

Suggesting that running your own business without ambitions of limitless growth ... that putting in a good work week, maintaining your own serious enterprise, and having a balanced life is akin to "retiring at 19"? I find that offensive and out of touch.

I'm not sure what death has to do with all of this. Those of us not at VC-funded startups aren't sitting around twiddling our thumbs. A "don't you know your time is running out?" stance usually implies "you're wasting your time."

Now, of course this is a startup website, so the most worthwhile thing you could be doing is building your startup, right? Shouldn't you spend all your time there? Well, it's also a "hacker" website, and there are ways to make your mark outside of the high-energy startup world. Look at that wonderful interview with the creator of Nginx yesterday -- there's a guy who was just working as a sysadmin, saw his own itch to scratch after a lot of work on Apache httpd, and his software has made a major impact. It probably provides much more value on the whole than do most startups.

[dmor]

The expected value of the authors approach is $0 (Why? because the whole expected value argument for a startup is about additional wealth beyond your salary + dent in universe potential), and it is settling to boot. It's offensive and waste of human potential.

People striving to be average shouldn't be offended when they're told the course they've chosen will never make them extraordinary. It is reality.

[oinksoft]

Indeed, if you view humans as resources (HR!), it's a terrible waste of potential. One less cow in the meat grinder, if you will. I don't measure my value by the thickness of my wallet or the growth of my assets.

And what of the open source technology example? Are those people striving to be average, settling, or wasting their potential? Are they not extraordinary? That's only one of countless world-changing pursuits not focused on growing a business like a tumor, which I've selected because it is quite relevant to this website's users.

[melanie_io]

So, under this reasoning, you are saying all bootstrapped entrepreneurs are average and a waste of life, simply because they choose to go it alone, and not take funding. Hmm, what was that? Something about man, made of out straw...

[dmor]

I'm saying the value will begin to go up as soon as the mindset isn't "30 hours and a good salary". "Expected value" of startups is all about how much money an exit gets you, not the salary you get along the way.

I think its awesome you are self-employed, but as far I am concerned it isn't a startup in the sense I think of them, geared for massive growth.

[sliverstorm]

This exemplifies what bothers me about pieces of the startup community. The focus on building something that can grow as fast as possible and be sold for as much money as possible- with lasting value and long-term prospects of the business not even on the radar. Sometimes it almost tastes like your garden variety scam.

I don't have a problem with growth, or with exits, but I'm not a fan of what I'll call the house-of-cards startup model.

[melanie_io]

Do you think that is a marker for success in life? A photo sharing app 'geared for massive growth'?

[pg]

That's essentially what Facebook is. I'm not sure what you mean by "a marker for success in life," but most people consider Mark Zuckerberg to be successful.

[melanie_io]

I think you either did not read the article, or did not understand it. I am certainly not advocating 'giving up' in any sense. I doubt you would say that DHH or Tim Ferris have 'given up' and 'settled in their twenties.' I even say outright, that my point is to follow your own path, and make your own rules, rather than listen to the hype and tech press.

I am advocating for a worldview where getting VC funding is not an accomplishment in and of itself, and does not necessarily mean you are successful. By taking funding, you are giving up the opportunity to work for yourself. You are 'hiring a boss,' so to speak. And for me, after working for others for years in finance, and then as a CEO of a funded start-up, I decided I would rather forge my own path in life, prestige and press be damned.

[dmor]

With all respect (and I loved your previous company) I read it and quite frankly it read like this: "I raised $75K and flamed out and this is my rationalization for taking it easy right now". That's fine for you, but I don't think it is good for other entrepreneurs. I also think the expected value argument is poorly reasoned.

[melanie_io]

So, profitable business, totally bootstrapped, growing at 20% a month. I guess you could call that "taking it easy." If you think my argument is not well-reasoned, then you should refute it, not just insult me. Lastly, and I don't think the crowd on HN really gets this, I was using the absolute most conservative assumptions possible to prove my argument. Which is, 'even just working 30 hours a week, you still have a better chance at making millions of dollars by NOT raising VC.'

[dmor]

The problem with your argument it that it rests on a false premise, that you should start the calculation of a $100M exit with the 1% chance you will raise funding. You should actually be multiplying this by the chance that you'll have a 100M exit. And I think far fewer bootstrapped companies have that outcome than VC funded companies. FWIW I don't think being VC funding is success, but adding fuel can certainly help it grow. Just because it didn't work out for you doesn't mean it isn't a powerful tool to a startup founder.

[aaronbrethorst]

> And I think far fewer bootstrapped companies have that outcome than VC funded companies.

This is almost certainly true. But you're also likely to hold a fraction of the equity you'd hold in the case where you bootstrapped.

I find the 'raise nothing, hold all the equity, exit for >$1mm' (or don't exit and live a happy, very comfortable life) far more enticing than 'raise money, hold a fraction of the equity, exit for $100mm', especially when you factor in the lifestyle differences between the two scenarios.

That said, I recognize that other people hold different opinions. More power to you folks, but—at least for now—I'm sick of the rat race.

[radicalbyte]

The funny thing is that the value provided by YC style funding isn't in the funding itself. It's in the network provided by the VC (and to a lesser extent the marketing).

This is best reason to enter YC with an established (but small) company: to turn your small "life style" size business into something with a very large reach.

I'm sure that the latest batch of YC companies would agree with my reasoning. You give YC a fraction of a small pie to greatly increase the chances of your plan to turn it into a big pie.

My 2-5 year plan: build a $2 - $5m business (and the core team) in Europe around an idea that has the potential* to be a $500m+ business in America: then give YC a slice in exchange for their advice.

* What I'm working on has massive niche in a sector far away from the web. So we can build the idea, business and tech out away from the prying eyes of the incumbents. Now most of the incumbents will have trouble competing with us (different strategy), with one massive exception. If they knew about the niche we knew about, they would fill it (the niche along can support several $100m + companies).

[dstorrs]

The kindest thing I can say here is that I find your interpretation odd and that it contains some substantial And unusual interpretation of the text.

Melanie said she tried the standard (accellerator leading presumably to VC) route, it didn't work, she tried another, nonstandard route, it did. Now she is sharing the lesson that alternatives exist.

[olalonde]

Yeah, we have this same rant every few weeks on HN (I admit this one is pretty well written and features an interesting back story). The biggest problem I see with the expected value math is that it only factors in the money side of the equation. A lot of entrepreneurs (most entrepreneurs?) are doing a "go big or go home" startup for many reasons, money not necessarily being the primary one. If all Melanie cares about is money (I bet that's not the case), she'd probably have a higher "expected value" at studying medicine and becoming a surgeon.

Anyways, as a Silicon Valley outsider, it's weird to see those blog posts encouraging people not to take VC money. Is there actually so much pressure on taking VC money that people actually feel the need to write posts like this? Seems like a first-"first world" problem to me...

edit: Here's an interesting take on expected value by a statistician: http://simplexify.net/blog/2012/5/6/i-am-a-statistician-and-...

> So why do I still buy lottery tickets? Definitely not for the expected monetary return on investment. I think of it as a discretionary entertainment spend. I get literally hours of enjoyment from fantasizing what I’d do if I won. I happily spend $25 for two hours of entertainment at the movies, and I don’t judge the value of that experience based on its expected return. For me, a lottery ticket for the occasional big draw has just as much entertainment value, or more, than the many other things that I spend money on to entertain myself.

I bet this line of thought applies to a lot of startup founders.

[jasonkester]

"Settling" for several hundred thousand dollars a year on a handful of hours of work per week? That doesn't sound like very many people's definition of the word.

"Settling" is usually used to describe accepting a somewhat bad situation because you know you're never going to find one that's better. The situation you describe above would be the fantasy of pretty much every human being on the planet.

"Why I solved my financial situation for good and retired at 19". Find me anybody apart from yourself who thinks there's no upside to that.

[seehafer]

Posts like this always essentially boil down to one statement:

"The startup (in the pg sense of the term) lifestyle is not for me."

And that's ok. For most people, making a dent in the universe is not an existential need.

[oinksoft]

I always forget the name of that startup where Torvalds wrote Linux ... he couldn't have made a dent without a startup, could he?

[olalonde]

But the same reasoning applies. What was Torvald's "expected value" at the time he wrote Linux? Probably -XXXXX$ if we factor in opportunity cost.

[dmor]

you don't have to have a startup to make a dent, but if you make your goal "work 30 hours a week with a nice salary" to doubt you will achieve anything close to creating Linux

[melanie_io]

OR, most people realize that building a wildly successful photo app / car sharing service / daily deal site does not 'make a dent in the universe.'

[olalonde]

"wildly successful" is usually a good proxy for "make a dent in the universe" (assuming he/she didn't literally mean physically denting the universe).

[dusing]

99.9999% of startups are not denting anything, or really even trying to.

[seehafer]

I'd agree that most aren't, but that doesn't mean they're not trying to (laboring under mistaken assumptions and the like)

This also depends on what making a "dent in the universe" means to you.

[dusing]

Personally I use Steve Jobs' definition. And yes some may "think" they are.

[kazevedo]

The way I read it, the post primarily advocates a focus on being sustainable and profitable rather than optimizing for a VC raise. You said as much yourself in the recent TC article on Referly's seed round, no?

As the common wisdom goes, the best way to raise money is to not need it. Whether you decide to take funding at that point to accelerate your growth is up to you.

While looking to raise capital and "go big or go home" is perhaps a good barometer of desired impact, I don't think it necessarily correlates to actual impact. From personal experience, there are plenty of companies that go through accelerators or do the "startup" route that are completely optimized for a flashy launch and raising a few $MM. Even if they do eventually prove to be disruptive and earn an exit, the definition of "impact" is a separate discussion, and, I would argue, not solely based on sale price or how many users you've obtained.

[dmor]

I'm not advocating for or against raising money here, but I think the post offers a very low intensity approach as a meaningful way to build a successful business. And for more entrepreneurs, especially first timers, I don't think that is going to work out.

[adambratt]

I both agree and disagree. If you're throwing in all your chips you better have an idea for a business that is scalable and has massive revenue potential.

That's where a lot of so called startups miss the mark.

[dstorrs]

"I am doing a startup because...."

So, to you, it's not a startup unless it's what the OP calls the "go big or go home" approach. The OP asserts that that is not a critical element of starting up a business, nor a healthy one, nor necessarily one that will increase your odds of success.

Honestly your argument seems odd. If you were able to do a successful company ($2mm / year rev, $3mm exit after 10 years by OP definition) at 19, why didn't you? Why not use that money to fund your "bigger is better" startup instead of taking VC? Or did you?

[jkaykin]

Can't agree with you more.