Ask HN: Who is currently broke due to being in a startup?

https://news.ycombinator.com/item?id=1593533

by twidlit • 16 years ago

112 84 16 years ago

news.ycombinator.com

I am broke and in debt due to taking in 1/3 of my previous salary and having big delays to our v 1.0. I am married with 1 kid. My wife is footing some of the bill and I am on my fourth debt renewal. Wondering how people in the same situation are coping or getting by.

adrianwaj2• 16 years ago

Maybe you should just quit for the sake of your family. I am not being defeatist, or else just work out some milestones that you'll obtain from here onward. If you don't meet them, then quit.

twidlit8• 16 years ago

Quitting is not an option and even ridiculous to me. I dunno if its the founder optimism at work but I am sure this is gonna play out great after launch. We are just 6 months into the startup and have yet to release our v1.0 with the iphone / android app. (ETA 2 months). Its tough but not impossible.

keyle• 16 years ago

Can it be finished after hours or part time?

1- launching is always later than envisaged 2- you won't strike it rich on day 1 of release 3- doing something else on the side might actually make you more productive on your own project

Just don't crash and burn yourself. I'm a contractor and I work after hours. I rake a very decent hourly rate and I work my own hours.

adrianwaj2• 16 years ago

You've replied to 3 people in this thread. Telling one person to "Dude, drop the puppy" and me that quitting is ridiculous. Why'd you ask the question Dude? Are you just interested in publicity, or do you need serious advice or discussion? Too scared to ask your wife?

Your profile: "http://____.com to be notified of our launch in the next month or so"

I'll pass.

d_mcgraw3• 16 years ago

I took the first job I could get out of college. I am paid, like you, 1/3 of what I should be making (according to state stats). I have a mortgage, and a puppy to take care of. I barely squeeze by, but the company would be screwed if I left. I've tried to get other jobs with no success so far. I'm starting to feel like I'm stuck not only in my current job, but in New Mexico. Sorry for the rant, but I feel where you're at twidlit.

dhbradshaw• 16 years ago

Where in NM are you? (I'm in Los Alamos.)

d_mcgraw3• 16 years ago

I'm in downtown Albuquerque.

twidlit8• 16 years ago

Dude, drop the puppy. :)

Eliezer• 16 years ago

Waste not, want not. Eat the puppy.

d_mcgraw3• 16 years ago

Man after work every day I need that cute little bastard to play with and hang out with. He's amazing.

bradly• 16 years ago

How much more would you be delayed if did contract work 2 days a week? Would your startup be more at risk of failing if you freelanced those two days a week, or if you risked surviving without it?

twidlit8• 16 years ago

Yes, we are transitioning to that just to extend the runway. Our 1st step to building that safety net is spiffing up the company website and taking in Facebook and Twitter application contract work + white labeling the product we are building.

lsc2• 16 years ago

Yeah. Contract work sucks. it takes much effort away from your primary goal. But you know what? I think that contract work is usually less distracting than debit.

Debit, I think, has a ongoing negative effect... you are committed to paying $x a month, even after you've spent the original loan on your initial bad idea. Now you've gotta come up with operating cash for the business, for yourself, /and/ the cash to make a payment.

I see debit as more of a "you have this one shot... if you fail, bankruptcy" kind of thing. Which can be okay for some things... but it's not how I work. See, usually I end up doing the wrong thing first. After that, I have a better idea of what the right thing is... but if I took out a loan and spent it on the wrong thing? now I'm stuck with a pretty big debit payment. Only spending the cash I can get my hands on through the fruits of my own labour puts an upper bound on how much money I can spend on bad ideas.

Now, for me, I ended up just spending a while contracting and paying off the debit that way... if I hadn't been an idiot to start with, I'd be a year ahead now.

lsc2• 16 years ago

I dono, man. I mean, I'm making between 1/3rd and 1/4th what I'd be making normally, and I'm feeling pretty good about things because my net worth is increasing quickly.

I mean, things have been much worse. At its worst, I was personally on the hook for tens of thousands of dollars of company debit, and making even less money than I am now. failure is something that I've faced before and that I'll probably face again. But, the thing is, I've never had any real financial responsibilities. If failed, really, my creditors would have been the only people who were hurt. Hell, even now, yeah, I'm living with someone, but she's another bay area nerd and doesn't need my money.

I personally would feel very different about taking the risks I take if others were depending on me. Would I do it anyhow? I don't know. but I'd think much harder about it. (and yeah, this is part of why I've avoided taking on those responsibilities.)

On the other hand, I do know other very successful entrepreneurs who made their money while supporting families. But most of those took the lower-risk 'productize your consulting business' route.

themullet2• 16 years ago

Just fixing this problem myself at the moment. Currently living with parents working on a new version of my main startup. Bartered a work exchange with a designer for a new design for the site so I can purely work on the code. Last week picked up a side contact for 5 days every 2 weeks for a minimum of 10 weeks and got another possible contract after they have finish their funding run.

So will probably be back working full time with contract combo and will just hire out simple bits of code / skip sleep for my start up

spotted_at4• 16 years ago

I am. I usually pull about 150 - 175 a year contracting and now I am making 0 because I am working on my startup. Money starts to disappear fast when none is coming in.

mgkimsal• 16 years ago

Can I assume you meant 150k per year? Obviously money going out with no income depletes cash on hand. However, it would seem making 150k for a year or so should buy you a pretty big runway. I'm guessing you have a lot of outgoing if it feels like it's disappearing 'fast'.

spotted_at4• 16 years ago

Yea, 150k. I thought I had enough savings to last about 2 years; I was wrong so I am seriously cutting back.

If mainly feels like its going fast because I was accustomed spending what I want and not seeing my bank account drop.

Now that I don't have anything coming in thats not the case. The impact of what I spend is much more visible now.

jasonkester• 16 years ago

Funny how pulling in $150k/yr can actually be a downside. Reading between the lines, it sounds like you managed to adjust your lifestyle to match the income.

Most people can live comfortably in the US for under $2k/month all in. So in theory you should be able to save something like 4 years worth of runway with a single year's contracting.

In practice, you just convince yourself that it takes $10k/month to survive and as a result burn yourself into the ground 5x faster than everybody else.

ezl• 16 years ago

I am broke.

Sep 1 will be the 1 year anniversary of my decision to go out on my own. In the last 10 weeks I have missed rent payments, missed insurance and had it cancelled, sweated 2 dollar bus rides, not eaten sometimes because I didn't want to spend money on food.

At times, I have regretted my decision to leave a comfortable life, doubted, cried, bargained, been depressed and thought things the former me could have never imagined me thinking.

I've learned a lot, but not enough, and while part of me is deeply worried, the bright spots are really bright and I am hopeful that I'll emerge stronger. I've separated some real friends from fake friends, learned where I'm strong and where I'm weak, realized how amazing my girlfriend is, and grown up a lot.

I'm still depressed and unconvinced I'll be net better off. And this might sound awful, but part of me is glad when I see that other people have pains and doubts, because it makes me imagine that I'm not alone in the struggle, that the lack of immediate success doesn't mean I'm incompetent.

twidlit8• 16 years ago

Yes it does give us strength to know that others are powering thru the same situation as us. Stay strong as I am staying strong but the keyword i think is balance, I am not quite at the point of sweating about $2 but i feel your pain. find a contract job or do something on the side, retreat on the quest to fight another day.

rooshdi• 16 years ago

Yes, I sympathize with your struggle, as bootstrapped startups hold an especially difficult financial burden. Personally, whenever I'm feeling down, I try to focus on what exactly am I doing with my current startup that is innovative and going to push the world forward. I think with purpose also comes peace, so I think it's always important to get back to that.

delano2• 16 years ago

"It's better to be at the bottom of a ladder you want to climb, than halfway up one you don't."

filmschool2• 16 years ago

Where did you find this quote? Or is it original? Very nice.

klahnako• 16 years ago

I am in a very similar situation: Mortgage, kids, wife and in an almost failing startup. First, you need to know how much risk the wife can stomach. Second, the money does not matter to children; they may be better off if you have more time to spend with them. Third, always have small contracts on the side to balance the startup losses. Fourth, it is important that you contract to other companies, instead of being employed. This will help with the small contracts, but also allows you to own the copyright you build for the startups; maybe not directly useful to you, but adds to your personal library and makes you more productive to your customers.

Good luck!

themullet2• 16 years ago

So true with the contracts on the side. A lot of start ups end up taking years, need something for living/server costs so you can keep following the dream.

endlessvoid942• 16 years ago

I've been in the bay area living off savings for a few months now. i have a website that has started to generate money, so I'm on my way out of being poor (hopefully).

it's incredibly tempting to spend all the revenue on myself. the business won't grow if i do that, though. it's hard.

exit3• 16 years ago

can we see your website?

endlessvoid942• 16 years ago

http://www.thathigh.com and http://www.footprintanalytics.com

garrettgillas• 16 years ago

This post actually makes me feel kind of grateful. I have kept my day job while working on my startup and am still single. I'm 27 & I work from home. The upside is that I have a place to live and work comfortably, I'm not broke and I can support my "startup habit". The downside is that I never get much sleep, my girlfriend hates it, almost everyone I know says that I should quit my startup and get married like a normal person, my student debt isn't going anytime soon, and the stress of that and everything else never seems to subside much these days.

Overall though, I feel like the chips are up for me right now. I've been in a spot once or twice in the past where I felt pretty desperate and depressed like you have mentioned. There's few things worse than professional failure with conveniently ill-timed personal trials happing simultaneously.

Luckily, this time around I've prepared a little more for the hard times that might soon come due to professional trials. Also, my past hardships have helped me prepare better mentally, knowing that I've pulled myself out of slumps before and that I will do it again when the chips are down.

I guess my point is, keep at it and remember that you're going to make something amazing. I always tell myself that I'm here to "create epic shit". It helps restore my ambition and makes me giggle a little. Maybe I'll have to say it more often if and when I take the startup full-time...

lionhearted• 16 years ago

> The downside is that I never get much sleep, my girlfriend hates it, almost everyone I know says that I should quit my startup and get married like a normal person

Be careful in your long term thinking with your girlfriend. I've seen a lot of guys work like crazy while their girlfriend doesn't like it, and the guy thinks, "Well, if this pays off she'll understand." In my experience - not true.

People have different temperaments, and if she dislikes risk or wants a more regular amount of time and affection, that's unlikely to change and money doesn't fix the problems there. The best couples for entrepreneurship are ones where both guy and girl are excited by the process of working hard, striving for the impossible, putting in long hours, and can handle the emotional burden and strife that comes with that. If your girlfriend doesn't have the temperament and you do, money likely won't solve that later.

AmberShah3• 16 years ago

I hate my husband's workaholic tendencies and I agree and disagree to this post. On the one hand, no it never does go away even if it pays off. On the other hand, that's not necessarily a sign that you shouldn't be with her. There may be other reasons, but wouldn't you rather be with someone who wants to spend more time with you rather than less? I've seen relationships like the latter and they were no spring picnic either.

garply• 16 years ago

I graduated from college (thankfully without debt) and started righted away. Developed product / failed for about a year, which left me just as broke as when I was in college - but I was used to that standard of living, so it wasn't a huge deal. A little more than a year from that, things are starting to look up, my quality of life is only improving.

The downside is my fellow students who went straight to jobs after college lead much cushier lives than I do and sometimes make me envious, but I expect that to change given a few more years.

onwardly4• 16 years ago

I have over $100k in student loan debt from undergrad, and have nearly run through savings for the startup I'm working on. My loan payments kick back in in two months.

We're launching in 2-4 weeks, and the nature of the project is such that if it doesn't take off immediately then it may never take off. Talk about a fire under your ass!

That said, I'm loving it. I'm actually living in India at the moment, working from my laptop. Its dirt cheap over here, and during the breaks I take I get to experience India. And did I mention its cheap? $5/day food, $6/day housing, $5/day miscellaneous.

PStamatiou• 16 years ago

I am in the same boat (except for living in SF not India). Been doing startups since I graduated 2 years ago. Near $100k loans from undergrad, needing to pay off the convertible note from my first startup that didn't convert to equity, car payment and a few months into working on current startup where I haven't taken salary yet. Though the best thing I did was cancel my credit card a year ago.

On the "up" side, I have never had a real, structured, paying job so I have never made real money. Just some scraps that my blog makes each month. So being broke and (trying to) live within my means has become natural.

onwardly4• 16 years ago

2008 grad too.

I like your second point here. I still live basically like a college student which makes it easy to live off very little. Heck, you should see some of the shitholes I've slept in in India to save $5 for the night.

I made great money one summer working as a management consultant, but hated the work. The perks were great though: first-class international plane flights, no per diem and lots of extravagant meals, blahblahblah.

None of that stuff means anything though. I'm not an ounce happier for sleeping in a nice room, or having an extravagant meal. Those things fade away as soon as they're done.

But I've never been happier working for something that I care about and that's mine.

DrJokepu2• 16 years ago

Just out of curiosity, what kind of project "never takes of if it doesn't take off immediately"? What makes you think that?

You don't need to be very specific though if you don't want to reveal secrets, don't get me wrong.

onwardly4• 16 years ago

We're about to launch, so just about time to throw off the cloak anyways.

Its a videochat website, which if I described you'd immediately compare to Chatroulette. If we don't achieve critical mass early, everyone will leave.

To a degree it is like Chatroulette, though there are different types of rooms and a security mechanism that actually keeps perverts off (you sign in using FB connect, though we never reveal to anyone who you are. This is just to track you so we can block you permanently if reported. And no, you can't create a new FB account and get back on; you have to have 20+ friends to sign in).

If you show up and noone is on the site, you're going to leave and never come back. Thus, need a critical mass to keep it going.

Based on some calculations I've done, to keep a minimum of 50 people on the site at all times we'll need 15k visitors per day.

There are a few other features that I'd be thrilled to go on and on about, but I hope I answered your question. If you're curious and have more questions, you can find my email address in my profile.

phoenix24• 16 years ago

I too am wokring on my startup from india, more or less reasons similar to yours. absolutely off the topic., if you are in india would you like to catchup sometime?

onwardly4• 16 years ago

yea, definitely. just saw this. shoot me an email at jessecmaddox [at] gmail . Didn't see any info in your profile, but if you happen to see this let me know!

benologist2• 16 years ago

I'm not broke, just poor. A bit over a year into my startup, about to launch the version that'll actually make money.

twidlit8• 16 years ago

How sure are you that itll make money? I mean what are you basing that on?

benologist2• 16 years ago

I have a lot of users that have known all along it'll cost at some point. That plus I'm widely acknowledged to be about 1000x better than the alternatives, and everyone's excited about the final features I'm putting in place.

fleitz• 16 years ago

May I ask why you are not cutting features to hit your launch date?

I'm broke and in a startup, been at it 1 month to the day, planning a launch in early Sept. I actually need to be code complete for the 28th of Aug as I'm going to Burning Man.

No I don't think it's going to be perfect and there are a lot more features I'd like to see going to launch but since I don't have a budget for a national media campaign I doubt it will make a difference and at least I will be getting feedback.

You're still going to be in debt whether you think about it or not. If you stopped now would it improve the situation? Probably not. So get ready to launch, launch it, talk your book, make some cash. You can still build those features with some paying customers. Stop coding, start cold calling. Thats what I will be doing come Sept whether it be potential clients for the startup or potential clients for contract work.

I get by, by not thinking about it. Spend 2 hours thinking about the worst possible outcome, you blow all your money/credit/etc, and have zero income. Then think about what you will do. Now you have a plan. Never think about it again until the day comes that you need to put your plan in action. Then execute your plan.

redorb• 16 years ago

why are you broke and still going to burning man?

mattmanser• 16 years ago

Some things are more important than money?

Also tickets were on sale from Jan 2010, he could easily have bought them back then.

AmberShah3• 16 years ago

Uh... -because- he's going to burning man? No seriously, so long as he's not asking for a handout, who are you to judge where he spends his money?

twidlit8• 16 years ago

We changed course 3 months into the startup, and decided to line up our ducks in a row for 5 months (inc. user experience, tech, user flows, design, etc). we had a lot of mishaps along the way but i think we are on good grounds with our Sept milestones. We both actually have the same timetable. Nice advice. plan and execute. got it. :)

patio112• 16 years ago

Can I recommend consulting for smoothing out cash flow issues? It has really helped me this summer -- the time it cost my development schedule has been worth the peace of mind gained by not having to either smash my piggy bank or borrow four paychecks worth of cash at consumer interest rates.

mebassett3• 16 years ago

how does one get started in consulting?

3dFlatLander• 16 years ago

I've seen this guide to consulting several times on HN. http://unixwiz.net/techtips/be-consultant.html

gawker• 16 years ago

Yes I'd like to know the answer too. It seems like everyone says just consult but how does one get clients and more importantly get clients to trust you and figure out the pay rate and what not?

javery3• 16 years ago

I did this a couple times last year and found it to be a huge distraction, sure it was great to get a good cash infusion but when I look back I realize that I lost probably 2 months of progress on my startup because of the distraction. I am no sure it was worth it.

I was dealing with a pretty high maintenance client though, and dealt with scope creep and other consulting mainstays. If managed correctly this can be a good way to go, just be careful.

mattbee• 16 years ago

...and I hired a couple of keen consultants 3 years ago who were working on a startup "on the side" (of course it was my work that was on the side). It took them nine months of doing very little before they admitted they weren't going to get the job done. If you're going to consult "on the side" of your startup, hide the fact that you've got a startup from your potential clients. If you can complete outside work satisfactorily, as well as keep motivation for your startup, well, that's a sign you're a hard worker :)

joezydeco2• 16 years ago

Are you consulting on the side while married with a kid? Family starts to take up a significant amount of your time once you have kids. Sure, you can be the dad-thats-never-home, but is that why you had a family in the first place?

I'm just saying that the equation becomes a lot more complex at this point.

javery3• 16 years ago

It's easy to solve that problem, work from home. I work 10-12 hours most days but I see my daughter all the time because I work from home and we get to eat three meals together and play after dinner.

Hoff• 16 years ago

Consulting can provide an income source, and can broaden your knowledge, and can improve technical and customer skills, and can lead you into new markets and opportunities for new products.

Consulting is not without its downsides. It doesn't scale up (well, it scales up with added in-house or out-sourced staff, and the associated project management and administration), and it tends to be price-competitive if you're working in a "mainstream" area of expertise.

Consulting can be a very effective distraction to your concentration, too.

Two or three days on customer work, and some focus on billing and proposals and related administration, and then several hours or more of spooling back up to speed on whatever part of the product or debug that you had been working on when the call came in. Then you realize your week is shot.

Put another way, TANSTAAFL.

Make sure you aggregate the financial and focus costs in your estimates. And make sure you can also efficiently encapsulate and snapshot whatever you were doing when the customer work arrives; hone your process skills around in-swapping and out-swapping projects.

Consider providing an end-project summary - not just for the customer's benefit and for the marketing, but also so that you can in-swap the project more quickly if there's additional associated work. The same approach can work for a summary and status for whatever you were doing on your project when the customer call arrives, though that can be a couple of cryptic paragraphs in a text file.

il• 16 years ago

Consulting takes time and saps your focus, but it also feels incredible to work for 1 day and make enough to pay rent for a month. When you're not stressing about whether you'll be able to make rent this month, you may find your productivity increase tremendously.

krmmalik• 16 years ago

I can't say im broke as such. I just moved into an apartment, so i'm able to just about run the place. I have no dependents currently, so that's probably what makes it easier.

That said, i have to think very hard about every purchase, because i have zero disposable income.

pramit• 16 years ago

To fund my local news sharing website bighow.com, I sell The Success Manual, a compendium of business and self-help advice.

HouseMan• 16 years ago

The good news is that you are at the bottom and things can only get better...if you're focus is tight, your execution even tighter, and you zero-out the emotion of not wanting to fail and look at where you are as dispassionately as you can.

I've had to shut-down two start-up's--the lead developer lost his mind on the first (1996) and the money ran dry on the other (2003). In each case, I went and got a job. It sucked working for some numb-nuts with a limp handshake, but needed the money. And I had two puppies and a girlfriend trying to get out of college on the first blow-up, which was no fun. Luck of the draw. I'm launching my third literally this week.

Unlike the previous occasions, I'm better educated. And I'm a lot less emotional. This is business. I have a standard that stipulates the following--if v 1.0 is over 1/3 late, you're probably throwing good money after bad, so time to ask where the execution bottle necks are. At 2/3 late, time to "come to Jesus" on your start-up and start asking some very tough questions, like how did this get so borked and how can it be rescued. And at 100% over-run, don't think about it, just bail because you've screwed something up so bad that no amount of talk or analysis is going to rescue you. Get a job, build back up your finances and your marriage, and look for another opportunity.

And reflect on why you are in a start-up. Are you trying to change the world or have a cool work-place?

Start-up's are not for everyone, and certainly should be pursued carefully by those married and with financial obligations.

If you're putting your family through hell, you have to ask yourself how long is reasonable to do that. Ruining the finances of your family, or worst case getting turfed out of your home, is unacceptable. And when you have kids, it's no longer about your dreams and desires--it's about providing. You had your chance, it's gone, so suck it up and get ready to do what our own Fathers did--work for the Man and hope for the next generation.

I know that sounds harsh. But I've been on the other other side and watching your home get yanked away is not something your children should ever, ever experience.

twidlit8• 16 years ago

"the lead developer lost his mind" im more interested in that story :)

its just 7 months into building this stuff and its all our first time so i think its par for the course. Certainly excited to launch soon.

mebassett3• 16 years ago

I'm broke. but I'm a student and am pretty much use to it.

I decided to do a startup (sneffel.com) over the summer instead of finding an internship, I was hoping it'd be profitable by the end of the summer. I tried selling to basic users/consumers with no real customer in mind. I really thought it would work at the time. As you might expect, it didn't happen. Now it all appears obviously silly. In any case, I'm broke. my rent contract ends in a few days, and I need roughly 1000gbp for rent and deposit on a new place. A few friends have been buying me groceries and I've been trying to do freelance work (scriptlance, elance, odesk), but haven't had much luck there either!

retube• 16 years ago

I think there's huge opportunity around these academic/teaching collaboration tools. Your site looks sweet. Why hasn't it worked out?

mebassett3• 16 years ago

I don't really know, but here's my guess: I didn't know who I was selling to. I tried selling directly to random users, which no one bought. But I realized recently I should be selling to schools and teachers, but have yet to put much effort into that. It could also be that I build something that no one wants. I really don't know.

sandcore• 16 years ago

Started working part-time while launching new startup after previous startup failed. Gave me peace of mind to have some stable income (and met some cool people), though the situation was not too dramatic - lowest point was 100E in bank and some bills to pay. We successfully launched the new startup with less features than desired and I've been slowly adding features since. Now slowly transitioning to a combination of being employed by the startup and consulting.

Reedge• 16 years ago

Indeed services is great while working on an app. I am thinking of going into services using my app. That way we smooth out bugs while making income :-)

filmschool2• 16 years ago

Someone should open a startup halfway house. It can be funded by people it helps who eventually get back on their feet.

keeptrying• 16 years ago

The one great thing about having started at startup, is that your actually good at building things. 95% of the employees I know couldnt say that.

Use this amazing skill that you now have. Get a job in Manhattan, make 200K a year for a couple of years and then try again.

If your worried that this will make you fat and lazy then theres a way to make sure this doesnt happen: 1. Never listen to what your boss says but be cordial as you would be with someone you met on the street. 2. Do whatever is best for the system and for sales of the system. 3. Say no to office politics in all its forms.

If you follow the above 3 rules (ie no brown nosing whatsoever) then you'll see that, even in a corporate environment, the only reason they'll keep you there is because you know what your doing.

navarroc• 16 years ago

Starting-up while the head of household is a tough decision. It has to be well thought out since it's not just you. I took the approach of establishing my management consulting firm first, then used this income to fund my start-up and ensure a stream of revenue while in start-up mode. I have others doing some of the consulting work to keep that business going. Something to consider

Ask HN: Who is currently broke due to being in a startup?

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