Startup escape path

117 points by tomh- 14 years ago | 32 comments

jqueryin 14 years ago |

Somewhere in those steps you should add "make a name for yourself." Marketing yourself and your company can lead you from a good idea/MVP/prototype to a successful business. I've seen it first hand on several occasions. It's not about what you know, but who you know. Numerous articles on HN have been targeted towards the difficulty of traction. "I have a good product, but I have no traction." There comes a point when a good product is not necessarily enough. This is especially true for niche markets. Marketing, marketing, marketing. And I don't mean the kind where you hire an agency. All they have is connections; you can make those with effort. There are all sorts of guerilla marketing tactics if you're looking for cost effective ways to get your name out there.

Some of the key points fall under the blanket of marketing:

    * blogging, guest blogging
    * submitting articles to HN, reddit, etc
    * connecting to local startup/tech communities

Don't live in a bubble. Your startup should not be your personal safe haven that you keep secret from everyone. People need to hear about it, talk about it, criticize it, tear it apart, love it, live it, hate it... you get the picture. You want people to have opinions about your product, strong ones. It doesn't matter if it's a 50/50 split of those that love and hate it. People KNOW about it. If nobody knows you exist, there's no exit.

That leads me to my next big topic: CONNECTIONS. Chose them wisely and treat them well. You are your own personal sales guy. Why do you think the startup incubators are so successful? Their connections. PG has connections, go impress him. I'll let you in on a secret though: he has a very high bullshit detector and has seen it all. It helps to know your target audience as well. PG has a preferential tendency towards startup ideas coming from founders that have domain knowledge (and aren't assholes.. he blogged about it).

Last point: DON'T BE AN ASSHOLE. Be nice to people, don't talk about them behind their back, always say nice things. It's all too easy to get in the habit of gossiping or talking shit about somebody when they aren't there. Word gets around. At some point they'll likely hear about it through the grapevine. Wouldn't you rather have them hear about the nice things you've said? That's friendship. That's a connection.

coolgeek 14 years ago | |

Okay - how about some criticism? What am I doing wrong here?

http://news.ycombinator.com/item?id=3356415

Everything's on the table - the site, the concept, the HN submission, even me. Tear it apart.

gphil 14 years ago | | |

Here's my criticism:

Knowing what groups are meeting in my community isn't a pain point for me at all. I'm aware of the goings-on in my community well enough already (too many for me to attend all the ones I'm interested in.) Of course, I'm just one data point, but this doesn't solve any problems for me.

Edit: Upon reflection, a related feature that would solve a pain point for me would be a service that helped provide me with videos/transcripts/minutes of the events I couldn't make it out to.

jqueryin 14 years ago | | |

Done. Not tearing, just constructive criticism from an outsider.

jsiarto 14 years ago | |

Marketing, marketing, marketing--best advice in this thread. Why do people care about what you're doing? Why do you care about what you're doing? You need to have story to tell and you need to connect with people at an emotional level.

jt2190 14 years ago |

Step 1, "Register a Business" (LLC or LTD) is not something I'd advise on a lark. It costs real money (hundreds if not thousands of dollars), will require an administrative burden (filing of annual reports, filing of additional tax forms, etc, out of state tax forms if you register out of state or move.)

I think a more realistic approach is to review and understand all of the requirements for registering a business: What papers to file, who to file them with, what the deadlines are, and what the costs are. Once you understand that, you'll know when your business generates enough income to at least cover these costs, or the business is risky enough to warrant the liability protection. (Most software is sold "as-is" and is not that risky.)

mindcrime 14 years ago | |

Granted, it does vary by state (and country I suppose, if you're not US based), but here in North Carolina the overhead of an LLC is minimal. And there is something about registering a legal entity that makes things feel more "real" somehow.

I did my own LLC papers and paid the filing fee, which was a whopping 200 dollars or so, and the annual report stuff can be done online and requires a yearly fee of around 125 dollars, IIRC. Tax paperwork is also relatively minimal during the "pre revenue" days.

So is it worth it? Hard to say, but on balance I'm happy that I did it. Even though we'll have to do some extra paperwork later to transition to a traditional corporation when the issue of taking outside funding comes up.

YMMV, of course.

pkamb 14 years ago |

>4. Build something someone uses: build something, anything, that at least one person other than you finds useful enough to use it at least 5 times. It doesn't have to look good or change someone's life. In fact, it shouldn't. Just find someone with a problem that recurs every once in a while and build something that solves that problem for them. Learn both how easy and how hard that is.

Very much agree with this, but I'd add to SELL that solution you built. App stores make it insanely easy to sell and (sorta) promote a minimum viable app.

I did this with Reddit Notifier, a simple Mac OS X app that gives your menubar the same "orangered" envelope you get on Reddit:

Reddit Notifier: http://itunes.apple.com/us/app/reddit-notifier/id468366517?m...

That "wow, people will pay real money for this little app I made" mindset goes a long way towards encouraging your loftier startup/technology goals.

divtxt 14 years ago | |

Wow, I'd love to know if you're really get sales for this at $1.99?!!

pkamb 14 years ago | | |

Yeah, it normally bring in enough for a coffee or lunch every day. Nothing to brag about, but the key is getting that passive income mentality.

philwelch 14 years ago |

Here are the points I would question. I don't speak from any experience or expertise, so let these thoughts stand on their own merits:

2. Connect to the local startup community? More important to connect to customers and users. I won't discount the value of the startup community entirely, but there are echo-chamber and groupthink effects. Connect to customers first, and then the startup community might be more valuable to you. Treat the startup community as an end in itself and you just end up creating derivative, unprofitable ideas.

3. Read Hacker News? Maybe 2-3 years ago this was more valuable. Now I would suggest skimming Hacker News and using what you can, but also find the important forums and venues your customers use, and read those more closely.

6. Start a blog? Not bad advice, but the more general point--to write--is more broad than that. Blogging is only one medium, and there are many other mediums you have to write well in.

dholowiski 14 years ago |

I'd like to add that if you live in Canada, do _not_ register a 'corporation', unless you know exactly what you are doing. Your accountant will tell you a good idea, your lawyer will tell you it's a good idea, but wait until the end of your first fiscal year and it costs $2,000 + to have your taxes done!

In Canada, just wing it as a Sole proprietor!

mattadams 14 years ago | |

Disagree. As a Canadian entrepreneur and someone who has previously worked as a sole proprietor for many years you should absolutely consider incorporation.

If you are a sole entrepreneur looking to go with a Canadan Controlled Private Corporation you should NOT pay a lawyer to get your business set up. Do your research, choose the jurisdiction that fits you best and get to it. It's dead simple and once you've determined the correct steps you can easily accomplish what need in a matter of days, or less.

Secondly, if you are paying $2k+ for your first fiscal year (let's assume that the company has not broken even) then you are being ripped off, plain and simple. You do not need audited accounts at this time. I paid roughly $450-550 annually for the first couple of years for the services of a very competent firm who I would refer in a heartbeat.

Being a sole proprietor is simple, both from the tax and setup perspectives however it is not without some drawbacks. The tax rate is much higher than that of a corporation and you will be doing business as yourself. This has far reaching legal ramifications if you want to accept money from people you don't know (online sales for your SaaS, for example) and many things that you will need to get to this stage are going to require a registered business at the very least. There are also some avenues that will be inaccessible to you because of your sole proprietor status (certain grants, tax credits, etc.) and you will constantly be fighting the little guy image.

The moral of the story is, if you ever want your business to move "beyond yourself", you should seriously consider incorporating.

jjm 14 years ago |

I think as developers we try to put our experiences in to patterns that we can repeat or at least have the illusion of repeating (to ourselves, or others).

Ultimately, you can do all these things but still not have a successful startup. There are varying definitions of what success is depending on who you talk to, 500, 37sig, PG, other VC. In fact the word startup means different things to those folks.

The only sure thing you can do, for your own good; learn about everything you come across with. People, products, companies, emotions... I say this because at the end of the day/year/startup, you'll have something to show... to yourself. You will be more defined, confident, passionate.

Sometimes it's not the goal, but the journey that defines who we are and what we do next. Those experiences, however infinite in choices and patterns is what sets you up _passionately_ for greatness.

Predicting the future is impossible.

hndl 14 years ago |

I would've liked it if the author factored into account how you would sustain yourself financially after you take the leap or if it is assumed that you save before making that escape.

hughesdan 14 years ago | |

I agree. For many people the smart escape path is to continue working your soul-sucking corporate job while building your startup on the side. Quit only after you've succeeded in convincing a few people to pay for your product and you know where to find other people just like them. Pretend your corporate job is an angel investor who takes a 0% equity stake (and demands daily 9-5 board meetings).

dpapathanasiou 14 years ago |

4,8,9 all need to be higher and not in that order (I'd say 9 should come first).

Having paying customers is one of the first things that makes a new business real.

donw 14 years ago |

Speaking as someone that had a corporate job before, I think that 'working for somebody else's startup' is also a really great idea, especially if you don't immediately know what kind of company you want to build.

You still get a paycheck, but at the same time have a chance to gain a lot of important skills, meet a lot of important people in the community, and understand what life in a startup is like.

jriley 14 years ago | |

Me too; good advice.

My two cents: Remember contracting is a decent bridge / fallback; maintain corporate relationships.

Get a revenue problem - multiple friends failed by obsessing over business structure.

Change attitude on risk/analysis; corporate often analyzes how things can fail while many successful entrepreneurs take uncertain gambles and pivot.

loceng 14 years ago |

This doesn't address getting investment, nor finding a technical co-founder. You don't mention how much personal money they are bootstrapping or have access to either.

I've been doing this a long while now and after bootstrapping and making mistakes, I am seemingly still not near being able to do what I want (either through getting investment or finding a technical co-founder).

yesimahuman 14 years ago |

At this point, only other tech startup people care what stack you are using, and they probably aren't going to be your customers. If you have the ability to make something in a technology you already know, why waste more time learning something you don't, like node.js? Just make something already!

billpatrianakos 14 years ago | |

Agreed. This post comes at this in a way that's indicative of the broader mentality about startups these days. The word startup no longer defines a small but rapidly growing business. Instead it now means a website or some sort of technology with "app" appended to the end with young founders and millions of dollars worth of funding plus hype. The stack you use is now a way to judge your product. If Facebook were to be up and coming today they may very well be laughed out of the valley for using lame ass PHP and old stale MySQL to start instead of some über cool nodejs, Rails, MongoDB, plus Scala and CoffeeScript for some reason. I think it's nuts that the tech stack you use is somehow more important than the actual product. If I cured cancer with HTML4 I'd be laughed at. But if I did it using nodejs I'd be immortalized as the greatest man ever.

sunahsuh 14 years ago | | |

I beg to differ. These technologies come with real, actual benefits -- one of the biggest ones for most of these being speed of execution. Many of them fit much better with agile development methods. Others that you list offer scalability benefits, which will save headaches down the line. If you're a tech startup that doesn't at least understand these benefits and has a good justification for why you've gone with other technologies, I'd have questions about the skill level of your technical team. If you already know PHP, learning Rails to start building is like, an investment of a week (or should be if you're a decent programmer). Have you read up on the hoops that Facebook has had to jump through to make PHP scale for them? The future costs of trying to hire excellent developers when you're bound to a stale tech stack is another significant consideration.

I'm not disagreeing that you can make a good product with old tech, but I'd contend that producing a good product and using some of the newer tools are not unrelated, on a number of levels.

swombat 14 years ago | | |

I'd argue that if you have no experience running a business, web-based experiments are probably the best bang for your buck in terms of learning the basics with minimal risk.

If anything, though, I'm looking at a much wider definition of "startup" than just the technology kind... so I definitely don't think the "tech stack" is somehow more important...

jes5199 14 years ago |

Oh, I was hoping to read how to escape from startups.

smweber 14 years ago | |

Me too. I even tried climbing a tree.

billpatrianakos 14 years ago |

Registering as a corporation may not be smart if you're planning on bringing some VCs on board. You'll likely end up having to reincorporate in some other state for some reasons. Even when you apply to YC the guidelines say its preferable that you haven't filed as a corporation. You can get a simple DBA for real cheap and still be considered a company. I started off at my local County building and paid only $5 plus another $90 for a 3 week required newspaper ad.

But I'm not so sure this post talks about how to do a startup as much as how to start a side project.

tptacek 14 years ago | |

People say this every time the topic of incorporation comes up. It's true: if you take funding, they're going to tear up your existing corporate structure and rebuild it. This argues for keeping your pre-funding structure as simple as possible. But what's not true is that you'll get passed up (for anything) because you're already set up as an LLC. If your pitch is so flimsy that $1000 of legal work kills a deal, you never had the deal to begin with.

chayesfss 14 years ago |

actually pretty good read