Profit 101 #2: How to Start
May 10, 2023
By definition, when you start a new venture, you have no clients and no revenue.
So how do you take the leap and start? Do you have to have a big war chest saved up? Do you have to raise a pre-seed round or seed round with just an idea and a pitch deck? (not an easy thing to do unless you already have an exit under your belt)
Maybe you have to do what so many founders actually do - work on your startup fractionally. I won't call it a side hustle, because it's actually your main job. It just doesn't pay the bills yet. Don't take it from me - here's an early article in Startup Hacks (the forerunner to AngelList) extolling the virtues of starting a company while working.
But you can't focus on your startup properly if you have a job, you say? Consider that as a founder you have to wear many hats: you (and your cofounders) must be CEO, CFO, CTO, COO, CMO, CRO... you get the picture. To start a new venture, you're going to have to be able to do multiple jobs. Why not have one of those jobs actually pay your bills?
Let's talk time management specifics for a moment. Once your startup is in high-growth mode, expect to work 50-60 hours per week. I mean 50-60 real hours, excluding lunches (unless it's a sales lunch) and breaks. That means 8:30-6:30 M-F is only 45 hours (when you exclude an hour for inevitable downtime) - so tack in 8-10 every night to get to 55, and another 5 hours on Sunday to get to 60. That's an accurate description of my hours in the early days of HiddenLevers. I backed off to 50 hours once we were truly profitable, but that was several years in.
So you're going to put 60 hours in? The first step there is to keep your day job. If you've got a corporate job, and you've got the energy to be a founder, chances are you can do a good job for your company in 20 hours. So do that, and invest 40 hours per week in your startup. Maybe that doesn't quite work - then go 30/30. Either way you should be able to find 30-40 hours per week while getting a paycheck.
I've started four companies, and in every case I had a job for the first months (or years) after founding. Working full-time enabled me to shelve a key worry: paying the bills! Princeton University research shows that poverty lowers the impoverished person's IQ by almost 15 points - how much damage does the stress of making ends meet put on founders? What about the stress of a burn rate and running out of funding? I see founders scurrying around desperately trying to raise in a tough money environment, and I'm thinking - this is not the way to start a company! Wouldn't it be better to do your boring day job just a little bit longer, knowing that enables you to invest in your startup without worry?
If I'm proposing that you should start a company without quitting your day job, then I should answer another tough question: once you've made some progress, when is it time to quit? I'll answer that question in my next post, as I dive into how I made that decision at HiddenLevers, and how to establish the right goals and metrics around it.
P.S. I should acknowledge that this post is opinionated and narrow-minded in defining the effort founders should put in. Many founders have families. I'm indebted to my wife who put up with those hard hours and held the house together as we were in the midst of the startup grind with young kids.
But here's the challenge - the competition doesn't know about any of that. They are putting in the effort - hard work is the price of entry. Founders figure out how to balance it. I'm not saying you have to work 7 days a week - take that family or personal time. But if you can't find 60 hours total to put in, well I can guarantee that your competitors will find those hours.
I also empathize with those who have physical jobs - the desk jockeys can multitask much more easily. If you're trying to build a tech company, it may make sense to pivot over to a desk job first. There's never been a better time to try, given the shortage of workers in the labor force!
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Pursuit of Profits