This is a topic I care a lot about, thank you for bringing it up
I’ve been an entrepreneur for 5 years. I started out like most Software Developers—by starting a startup. After a few years, I became convinced that this is NOT the best way to achieve the outcome you’re talking about (financial independence, aka ~5mil USD).
My basic problem with your post is simple, and others have pointed it out—you can make up all the numbers you want, but empirically, MOST startups fail. The usual figure given is 10% of startups fail, but this is a gross simplification, and I tend to think the number is much higher. More importantly, the number of years that it takes to fail can be long—the number of years before a successful exit is usually >5. Failures can happen earlier, but the worst-case scenario is to “fail at the last minute”.
To convince me that you’re going to achieve your goal within 10 years, you have to show that for some reason, you’ll do better than the statistics suggest.
The problem with #1 is you have no real reason to think you’ll do better than anyone else. This is where a lot of people get lost—they hear this statement, they nod, but they think to themselves “but I’m [better/smarter/more rational] than everyone else.” But here’s the thing—even if that’s true, it doesn’t mean you’ll succeed where others failed. Why? One of several reasons:
Being better/smarter/more rational might simply NOT be important in startup success. It’s possible that luck is more important. It’s possible that other things are more important, and we simply don’t know what they are. A lot of things are possible. The best minds in the world still don’t consistently pick winners, why do you think that is?
Even if you ARE better/smarter/more rational than most people, and even if that trait IS important, the statistics of 90% failures includes a lot of people who are clearly, demonstrably better than you. It includes the VC’s son, who has unlimited funds and a lifetime of learning. It includes the serial entrepreneur building his 10th startup after 9 successes. It includes the co-founder of Facebook, who has a billion dollars in the bank, unlimited press, and obviously some amount of familiarity with building startups. These are some of the people WHO STILL FAIL 90% OF THE TIME. So even if you’re incredibly confident, do you honestly believe you’ll do better than THEM?
So where does that leave someone who wants to apply intelligence/rationality to making money (like me)?
Well, there are lot of routes to take. I hope I’ve at least given you food for thought as to why startups are not necessarily the best route. Personally, I still think becoming an entrepreneur is a net win, at least if you like the idea. What I personally did after my failed startup is build a Software Dev Shop, and started selling software services. This will (probably) not get me a big exit, but the expected value of my money in this is still higher than in a startup.
Another route to take is to build a bootstrapped company, which will fail/succeed on a smaller scale, but which has other benefits: it might fail/succeed faster, it might need less work to get to the FU money stage, etc.
When you’re rationally weighing your options, and aren’t stuck in “Startups are the obvious way to get rich” thinking, then you can start learning about the wider world of business which has plenty of other interesting opportunities.
This is a topic I care a lot about, thank you for bringing it up
I’ve been an entrepreneur for 5 years. I started out like most Software Developers—by starting a startup. After a few years, I became convinced that this is NOT the best way to achieve the outcome you’re talking about (financial independence, aka ~5mil USD).
My basic problem with your post is simple, and others have pointed it out—you can make up all the numbers you want, but empirically, MOST startups fail. The usual figure given is 10% of startups fail, but this is a gross simplification, and I tend to think the number is much higher. More importantly, the number of years that it takes to fail can be long—the number of years before a successful exit is usually >5. Failures can happen earlier, but the worst-case scenario is to “fail at the last minute”.
To convince me that you’re going to achieve your goal within 10 years, you have to show that for some reason, you’ll do better than the statistics suggest.
The problem with #1 is you have no real reason to think you’ll do better than anyone else. This is where a lot of people get lost—they hear this statement, they nod, but they think to themselves “but I’m [better/smarter/more rational] than everyone else.” But here’s the thing—even if that’s true, it doesn’t mean you’ll succeed where others failed. Why? One of several reasons:
Being better/smarter/more rational might simply NOT be important in startup success. It’s possible that luck is more important. It’s possible that other things are more important, and we simply don’t know what they are. A lot of things are possible. The best minds in the world still don’t consistently pick winners, why do you think that is?
Even if you ARE better/smarter/more rational than most people, and even if that trait IS important, the statistics of 90% failures includes a lot of people who are clearly, demonstrably better than you. It includes the VC’s son, who has unlimited funds and a lifetime of learning. It includes the serial entrepreneur building his 10th startup after 9 successes. It includes the co-founder of Facebook, who has a billion dollars in the bank, unlimited press, and obviously some amount of familiarity with building startups. These are some of the people WHO STILL FAIL 90% OF THE TIME. So even if you’re incredibly confident, do you honestly believe you’ll do better than THEM?
So where does that leave someone who wants to apply intelligence/rationality to making money (like me)?
Well, there are lot of routes to take. I hope I’ve at least given you food for thought as to why startups are not necessarily the best route. Personally, I still think becoming an entrepreneur is a net win, at least if you like the idea. What I personally did after my failed startup is build a Software Dev Shop, and started selling software services. This will (probably) not get me a big exit, but the expected value of my money in this is still higher than in a startup.
Another route to take is to build a bootstrapped company, which will fail/succeed on a smaller scale, but which has other benefits: it might fail/succeed faster, it might need less work to get to the FU money stage, etc.
When you’re rationally weighing your options, and aren’t stuck in “Startups are the obvious way to get rich” thinking, then you can start learning about the wider world of business which has plenty of other interesting opportunities.