Or, don't start a business with a loan. If you're gonna bootstrap (the "right" way) then step zero is have 12mo runway of your own capital and step one is start a business
> $130k to pay a single employee for one year. I don't know about you, but it's extremely difficult for most people to save up that kind of runway.
I think the idea is that step one isn't hiring a subordinate employee; it's having secure enough finances that you (or you and your co-founders) can work for yourself for a time.
Step two is actually working on the business, and step three is growing is revenues to the point where it can sustain you, four is growing them further to the point where they can support an employee, and five is actually hiring that employee and paying them $130k a year.
Co-founders? Why are they co-founding? Profit sharing?
That's an excellent way to devolve into squabbling about who gets what. VC also protects against that: the money is for the company, and it's illegal to siphon it out of the company.
Unfortunately in practice your suggestion tends to become "You're working for yourself, alone." And sure, I love the idea of a one-person company. Lots of talented devs can sell, if they try. But lots of talented devs are also trying to get rich on the iOS app store; few do.
I am a cofounder of a non-VC backed startup. We work together because (1) we're friends (2) like working together (3) have complimentary skillsets. We split the equity 50/50 and receive the same salary. We've been doing it several years and we've never had even a single conversation on the topic, we just assumed from the beginning it was an even split and that's how we went about it.
> Co-founders? Why are they co-founding? Profit sharing?
Because they had an idea with you and want to work together to make it happen? Or all kinds of other things like that?
And yeah, if you're going to do that, you're going to have to be careful make sure you're not the kind of people who will need adult supervision to avoid squabbling.
VC might have its uses, or provide some service, but that shouldn't be misunderstood to mean that it's essential or alternatives aren't worth considering.
The other thing to note is that one of the things VCs do is sell the VC paradigm, so they're going to try their hardest to make it seem like it's essential or at least the best product out there.
Hmm. You're dodging the question: Why would a cofounder want to start a company with you? No handwaving.
People cofound to get rich. Can your company offer that to your cofounder?
If you focus on that question, the rest falls into place. Unfortunately a lot of people don't want to focus on that question, because it's at the heart of why bootstrapping rarely works.
"Not needing adult supervision" indicates that you probably haven't done what you're saying. It's not a matter of supervision. It's managing expectations. You are legally required to lay out what you offer, in clear terms, and what you expect in return. That's the basis of a business arrangement.
So, we're going into business together. How will your company make me rich? Why should I work as hard as I possibly can to make the company succeed?
The model happens to be aligned with how and why people actually start companies. It's not my model.
You have to come up with a persuasive answer to "Why should I work as hard as I can on this company, rather than go work for Google?" That question is in fact so hard that it (possibly) almost killed YC in the crib, back in '08. No one wants to work for a startup when they can get paid far more and live an easier life.
What you're proposing, if I understand you correctly, is that someone works extremely hard, for no concrete gain other than perhaps intellectual curiosity. Sure, you can argue that the usual benefits apply: you're free to do as you please, and to self-manage. But that's not a very convincing argument in the face of $RIDICULOUS_SALARY at a bigco.
It's cliche to say "Don't hate the player, hate the game," but I believe it applies here. Neither of us chose to live in a capitalistic society. We were born into one. Why not make the optimal decisions, all else being equal?
> The model happens to be aligned with how and why people actually start companies. It's not my model.
That someone else created the model and you believe it doesn't mean it's true.
> You have to come up with a persuasive answer to "Why should I work as hard as I can on this company, rather than go work for Google?" That question is in fact so hard that it (possibly) almost killed YC in the crib, back in '08. No one wants to work for a startup when they can get paid far more and live an easier life.
Actually, I don't. Honestly, you seem kind of set in your thinking, and I don't think it's worth the effort to try to figure out how to persuade you out of your misconceptions. There are counterexamples even in this subthread that falsify your model. It's up to you to either be open to them or not.
Statistically you are right that big tech currently provides the best expected value for a programmer, but in practice people's decisions aren't based on a single criteria. A lot of people find working for Google soul crushing and would happily take a $100k job that gives them more control and impact versus trying to navigate the path to promotion and relevance in a sea of stillborn products at Google.
I also agree founders want to get rich, I mean who doesn't? It's a nice fantasy. However if they don't have a deeper motivation to solve a problem for its own sake they will fail. If you're super smart and just want to get rich, the right move is to go into finance because you'll never cross the chasm of building something people actually want. Even the language you use to describe the premise indicates you don't really get what makes successful founders tick. Founders don't "work for a startup" and they don't need to be convinced—the whole point is these are people who have decided for one reason or another that they are passionate about building a company. You might think them fools because 25yo engineers are making $500k at FAANG and that is a high bar to clear for any startup (it is), but consider that all SWEs under 35 have never known a recession, and they may have come to believe that a programmer is inherently worth $500k even though this is just market rate given todays demand. If there is another dot-com style correction, a bunch of folks might find out real quick what the value of knowing how to make your own dollar is.
They co-found to make money. It's just not as fast paced as the VC option but it's the same thing as any business. The founder thinks that with more than 1 person, each person would make more money than if only the founder worked.
