Technical founders have nothing to lose

Technical founders have nothing to lose(blog.8thcolor.com)

9 points by martinvanaken 13 years ago | 12 comments

Technical cofounders have everything to lose.

If you are any good, you have a job and, therefore, the opportunity cost of launching a startup is massive.

martinvanaken 13 years ago | |

My point (as another commenter pointed), was more that, as long as you do not put a lot of money in, you'll have ample opportunities to recover, even in the worst case. Especially in the market we are in. This does not invalid your point, as I agree that there is plenty of jobs and money to do around here in the sector.

sqrt17 13 years ago | | |

Your point is valid if (and only if) your income stream from consulting or contracting can be scaled up and down fluidly enough to catch the ups and downs that your startup business generates.

Most enterprises/jobs prefer the 'surrender your soul' approach to hiring and contracting, partly to eliminate competition from current and former employees, partly because they prefer to get a stable stream of work from you.

coob 13 years ago | | |

'Ample opportunity to recover' does not equate to 'nothing to lose'.

ojbyrne 13 years ago | | |

Markets are fluid - that's what the word means. So just because the market is crazy for engineers right now, 2 years from now they could be begging on the streets. If you've been working on your own startup, and depleting any savings you have, the opportunity cost is going to be obvious to you.

palebluedot 13 years ago |

This seems a bit naive - perhaps it would be better targeted as "technical founders need less capital".

For instance, you still have legal liability risks, which may vary depending on the problems your startup / business is trying to solve. Especially in the early stage, even if you have a corporate entity wrapped around your startup, mounting a legal defense can be financially crushing. This is doubly true if you are augmenting your cash stream by consulting / contracting.

This may not be very likely, depending on the startup - but to say technical founders have nothing to lose seems a bit naive.

ojbyrne 13 years ago |

That's clearly not correct, since there is opportunity cost.

loceng 13 years ago | |

Perhaps "technical founders have less far to fall" makes more sense, though even that doesn't fully work. Technical founders, at the moment being in high-demand, more so will be able to rebound.

computerslol 13 years ago |

I have a deliverable due today; will someone elaborate on the following?

Career Trajectory. Job 1: 5,000 users. Job 2: 10,000 users. Job 3: 500,000 users. Job 4: 1,000,000 users. Job 5: 10,000,000 users. How many users does the startup have, how will that destroy my resume, and how long will it take me to recover my career if the startup fails?

Opportunity Cost vs. Peak Production Years Remaining. I am 20 something years old. I only have so many years of peak production remaining before it's time to have a family and a house and all that. Is a startup the best way to spend those years when I am worth $x per hour on the market?

sqrt17 13 years ago |

The basic advice in the article seems to be: use consulting as well as doing a lean startup to achieve (i) a fluid stream of income [from consulting] and (ii) a hopefully-growing stream of passive income [from startup]. (As far as I can tell, it's also what Patrick 'kalzumeus' McKenzie and others are recommending).

Part of the "nothing to lose" assumption seems to be that doing a startup gives you a learning effect that outweighs the lost revenue you had to give up for doing a (failed/failing) startup in the first place?

NateDad 13 years ago |

There's a lot more than opportunity cost. There's the actual money in my pocket lost from the (probably very good) salary that I would be making at an established company. Most people still have to pay the rent or the mortgage. That's the main barrier of entry. It's not that we think we'll have to max out all our credit cards... the cost of renting some EC2 instances pales in comparison to my mortgage, I can tell you that much.

martinced 13 years ago | |

"There's a lot more than opportunity cost. There's the actual money in my pocket lost from the (probably very good) salary that I would be making at an established company."

I'm probably mistaken on this but isn't your second sentence precisely the very definition of "opportunity cost"?

I mean, the opportunity cost isn't what it's going to cost you to buy ramen and rent EC2 instances: the opportunity cost is the money you're not winning should you be working for a company actually paying you.