Author here. As always, I'm happy to take any feedback or answer any questions about this post.
replies(8):
I'd like to understand the steps leading up to these six years. What motivated you to create that particular product? was it simply something that interested you and that you believed had potential? What was the goal when you created TinyPilot? Thanks!
Really interesting to see that adding a metal box and making the product more premium made a huge impact on revenue. Have you run any pricing experiments after that?
i wonder if with sales increasing in spite of the 10% price increase, he could increase it even more. personally i would rather have less fulfilment and a higher profit margin if possible
>Have you run any pricing experiments after that?
No, I haven't tinkered with the price much for the past few months.
I have a hard time doing price experiments because at my volumes, I have to collect a few weeks of data before I think the evidence is strong, and I don't have a good way to A/B test different prices in parallel, so it's easy for two different time periods to have different results independent of price.
I've also found that there's a lot of friction around changing prices too frequently. When I reduce prices by a significant amount, we get emails for a couple of weeks after from people who are annoyed they paid a higher price just before a reduction, so I've been reticent to invite those complaints.
I don't have strong evidence for it, but $399 for base and $499 for premium "feels" right because they're round numbers and they're close to optimal based on different prices we've tried.
I take the support really seriously because I get so frustrated with most companies' customer service and technical support. When customers contact TinyPilot, I always want them to feel like they're talking to a real person who's knowledgeable and making real effort to help them. It's nice to hear that this comes through in the experience.
* /r/tinypilot link in the footer leads to a locked sub, so it's kinda pointless.
The biggest difference was that in 2022, I hired a paid ads consultant to set up ads automation for me on a few different platforms. That had a high up-front cost, but then it was inexpensive to maintain those ads in 2023.
I also spent money experimenting on more channels in 2022, so in 2023, I cut out spending on the ones that weren't earning a positive ROI.
Edit: oh and congrats on the success this year! I’d have to imagine it feels insanely rewarding!
>Shipping a hardware product as a bootstrapped founder sounds (at least) an order of magnitude harder than a software product.
Yeah, it ended up being way harder than I expected.
I actually didn't even mean to make a hardware product. In the beginning, I thought people would just buy off-the-shelf components and pay me to make nice software to tie everything together.
It became pretty obvious early on that people were a lot more interested in a pre-made hardware solution than a DIY project with ready-made software. And I'm glad I made it to the point of profitability and worked hard at it, but I also definitely got lucky a lot. There are so many more existential threats to a hardware business, especially in the early days.
I am curious about your ad spend. I noticed that it dropped 24%. Can you talk about your strategy for marketing your business?
Edit: Sorry, I just realized you meant my blog, not the TinyPilot website. My blog is just Hugo + Netlify, and the source is public.[2]
--
The web tech stack is actually one of my biggest regrets. It's a static site generator called Gridsome[0] that the maintainers abandoned about three months after I used it to launch the TinyPilot website.
At the time I made the TinyPilot site, I was very excited about Vue, so a Vue-based SSG seemed great. Since then, I've come to find SPAs and most frontend frameworks to be way too much complexity, so I've moved away from Vue, but the TinyPilot website is still stuck on Vue 2.x and bootstrap-vue (which is tied to Vue 2 and Bootstrap 4).
So, it keeps creaking along, but building the 100ish pages on the site takes about five minutes, whereas I think something like Hugo could probably do it in a few seconds. Plus, we get random runtime errors[1] that are pretty hard to debug.
That part is so true. Even trying to make everything systematic has a cost.
What if you just explicitly guarantee a price match for say 30 days? People would feel safe and you can do your experiments.
>I am curious about your ad spend. I noticed that it dropped 24%.
I added a few more details about that in a different reply: https://news.ycombinator.com/item?id=39398746
>Can you talk about your strategy for marketing your business?
For the first two years, I was primarily reaching out to bloggers and YouTube creators that I liked. TinyPilot appeals to people in the homelab / IT prosumer community, and I've been involved in that space for a few years, so it always felt like a pretty organic way to get the word out.
There have been diminishing returns to that strategy, though. When we got our first big review, our sales nearly tripled overnight.[0] At the time, we were the first affordable KVM over IP on the market, so YouTube creators were very excited about to be able to break a story about it, and their viewers were excited to buy our product.
Since then, we continue to work with reviewers, but even high-quality reviews don't get that many reviews because we've been around for a few years and there are similar products like ours.
We've been experimenting with new channels, but nothing has been a huge hit. One of the things I'm trying to do is talk to bloggers and YouTube creators about doing projects with TinyPilot rather than just reviewing it. We had one a few years back,[1] and I think there's potential for new interesting use-cases for TinyPilot through experiments, but I haven't found anyone with a good idea yet.
It seems like our most successful channel has been word of mouth. I think it's a result of putting a lot of effort into customer service, so our customers feel good about working with us and tell other people about the product.
[0] https://mtlynch.io/retrospectives/2021/02/#tinypilots-first-...
>/r/tinypilot link in the footer leads to a locked sub, so it's kinda pointless.
Oh, thanks for catching that! I've been unhappy with reddit's direction ever since the 3rd-party APIs meltdown, and the subreddit was scattering our support resources, so I shut it down.
We have a dead link check as part of the build, but I guess it wasn't picking up an HTTP error from the locked sub.
I've just removed it!
Suket Karnawat also left Google to pursue a similar path, and he writes regular updates about his progress:
A full A/C plug pwr control is useful too, but a much bigger hardware delta.
I find it redeeming that despite having a gift for development - software and hardware - the biggest factors affecting profitability and growth here are things that most MBAs would do in a business quite regularly (outsourcing design/packaging/fulfillment, streamlining costs, doing price elasticity experiments, polling customers and markets for product improvement).
I enjoyed seeing the inverted perspective that product/engineering is straightforward and low risk but things like optimizing fulfillment and operating costs is a new exciting endeavor.
One tip I suggest doing is leveraging google ads to figure out features that customers are willing to pay for before you build them... if they're clicking the ad they are searching for it and interested in buying it. Start a few very low cap campaigns calling out features you are thinking of building into the product, and see which one get's the most impressions and clicks per marketing dollar and focus on that. The added advantage is you know it will be easier to buy advertising for it once the feature is done.
- Global warming and how we don't seem to have any plans to a path to hit any of the less-than-apocalyptic warming targets, - Corporate regulatory capture, with more and more wealth going to a smaller and smaller segment of the population while the impoverished fraction grows on the daily, - The rise of right-wing and/or outright fascist authoritarianism across the world, even in countries that would have fought strenuously against it a scant hundred years ago, - This one is a combination of all three of the others (and a lot more), I suppose, but capitalism eating itself and taking a lot of really helpless-feeling people with it.
A lot of things do keep improving, but a) a lot of people never get to see or benefit from those improvements, maybe more than you think, and b) there are these terrible monsters on the horizon and nobody with the power to do anything about it seems to be willing to actually do so. It shouldn't take a whole lot of empathy to project yourself into the shoes of someone for whom shit is the worst it's ever been, nor a lot of creative thinking to realize that there's a whole lot of those people out there.
Muslim here. I think this is completely immoral and I don’t want to ever participate in stock market if/when I found a company. I want my business to be valued with the actual value it provides to people (the amount they are willing to pay me for my products), not the hypothetical future money it may potentially provide to rich people who gamble with their money and the economy.
Yet, the production of fossil fuels remains near record levels, and producers are aiming to scale up, as opposed to scale down. Political discourse on this topic often amounts to "but my expenses are already too high."
For many people, this is still an abstract and slow moving problem. Yet, it is a very real problem with dire consequences. (That are somehow easy to ignore!)
Is the world getting worse?
In some ways, it's getting better.
Yet, we seem doomed to cause so much destruction. It's gonna be bad. Very bad. But not right away (for many of us).
https://www.sei.org/publications/production-gap-report-2023/
https://www.washingtonpost.com/climate-environment/2024/02/0...
Seems risky if you are dipping your toes into something you do not have a deep understanding of the product market for.
Anecdotally I've seen with video games (the communities tends to be very vocal and somewhat centralized?), where inexperienced developers promise things that are realistically way beyond the capabilities, or promise things too early based on their honeymoon period for rough implementations. Then suffer on the other end when they fail to meet roadmaps or delivery of features at all.
It seems like an even worse situation with serious software with asks for larger amounts of money? Then again maybe this strategy can get away with it, because there is that lack of cohesive communities with some degree of group think who would get up in arms over bad promises?
There will be new startups that eclipse all of these companies in interestingness. The one for the next 20 years is probably OpenAI.
I think people realize this more than they used to which explains so much of the tech pessimism
This sounds to me like typical toxic silicon valley startup mindset.
I think this is naive cynicism, as it were. Lots of companies are started by people who eventually want to sell them, be it after 5 years or 50. Being biased against Silicon Valley won't give you a good handle on this stuff.
As an aside, this is such a nifty product! Don't personally have a use for it (yet), but it definitely evokes gear lust.
“Hussle” ethics of “if it works it’s OK” are so damn gross.
It has been 6 months (not 6 years) since I quit my full-time job as a Rust developer to start my own business.
As time goes by, I can feel the pressure of mortgage and car loans, and I can also feel the care and pressure of my family.
My original plan was to make a new IDE for Glicol (https://glicol.org), and to develop relevant hardware with firmware written in rust for school education.
I sent some cold emails to VCs, but most of them got no reply.
I also sent an email to the Norwegian Museum of Science and Technology, offering to perform for children for free, but they didn’t reply for two months. I shamelessly sent it again, and someone finally replied with a rejection.
Only one VC talked to me and thought that I should convince and validate a partner first, and he suggested that I go to an incubator.
Very good advice.
Later I learned that even Norwegian education startups skipped Norway and focused directly on the US market.
People from the incubator also told me that it is impossible for Norwegian schools to accept new things independently.
This is very enlightening to me because most of Glicol's visitors are indeed from the US. And it took me so long to discover this fact.
But if I don’t start, I’ll never get past those six months.
Oh here is a definition of whataboutism: "the technique or practice of responding to an accusation or difficult question by making a counteraccusation or raising a different issue".
I am assuming you won't be able to figure it out though.
The company is generating profits currently at this rate Y, and is growing at this rate X, that means that over 3 years it should return those profits + the growth of that profit back to the buyer (in cash as dividends and/or in enterprise value), and that is factored into a rate of return - if that rate is greater than the rates elsewhere, compared to the risk, then it makes sense to buy it at that value.
Consider comparing the business to a traditional investment. How much money would you need to have invested in medium-risk markets to return $236k/yr? To beat the market average you'd need about $2M invested to generate those returns. Now factor in that the company itself is growing, and the company will likely generate >$236k next year, and more the following year... so how much do you need to invest today in traditional markets to generate 236k+360k+500k (1.09M) over the next 3 years? It's around $3M now. Consider that in 3 years time you could have taken $1.09M out in profit, and you now own a business that is worth $4-4.5M (based on future earnings potential).
You don't need to be an evil wallstreet hedge fund manager to think like this - the owner of a business should consider the enterprise value of their business at all times in making decisions about their business.
This is how the entire economy works - if you're saying that is against your moral Muslim faith then you should not be buying any goods right now from public companies, hold any mortgages, or keep any money in a bank.
The way I think about investors, they are an extremely high interest loan. I have a money partner in my startup, I negotiated his equity down to 70% from the 80% he wanted. So if this product hits (already have a regular customer) and makes a million, he'll get $700K for investing less than $100K. I'll get $300K for investing probably about $300K worth of my own time and hand half of that to the IRS. Balance that with keeping 100% of $0 = $0.
You are allowed to be sad about the world without helping it get better, which the parent never implied they were. They're just agreeing with you that things are bad, assuming they work in tech they're probably just as conflicted about it as you or I am, so the attack felt kinda out of left field and unrelated to the original debate, which is whether things are getting worse in general.
> I don’t draw a salary, so the total amount I earned from TinyPilot in 2023 was $236k.
and
> Result: I worked 35-40 hours per week, a reduction from previous years, and traveled more than any previous year.
This is a person who is effectively full-time CEO of this business and whose market salary is likely at least $236k. If they sold the business, the new owners would have to pay someone else to put in those 35 hours.
Maybe the new owner could employ a less-skilled manager and pay them less, or maybe there's still lots of potential growth or room to cut costs, but that's all quite speculative: right now the business has a profit, and therefore a valuation, closer to zero.
Do you not see a point in valuating a company?
Because if you do see a point, how else will you do it without assessing how much someone else would be willing to pay to acquire it, i.e. how much would it sell for?
I'm guessing tax liability is mostly a wash, as if you are taxed as an S-Corp, you pass through the profit into personal income and pay income tax on that.
I've been building NeuML (https://neuml.com) for the last few years. It all depends on the situation but if you need to replace salary, then of course cash flow is important. It can't just be about the future value, you have to live.
With that being said, I like to look at it as similar to renting vs buying a house. In both cases, there is cash flow except with buying you are also building equity.
For those interested in more about NeuML, I published this year-in-review last month: https://medium.com/neuml/neuml-2023-year-in-review-560457b97...
I agree with you about VC and you are obviously more experienced as well. At that time, I just thought, try VC. Later I could understand the track they wanted me to take, and I also had other options such as bootstrapping.
But if it has to be some exponential growth and I am forced to change the attitude of exploration, that is not my original intention. I'd rather do some other business and keep open source software going.
Tech startups had high multipliers in the past 10 years thanks to dumb money, low interest rates, and lot of hope. Most of those things are drying up and many tech startups that had decent valuations are now worthless.
Not everyone wants to IPO, or sell to big player.
You may want it to stay in the family, or protect the original culture. Maybe you found someone in your team that will be a great CEO.
Maybe you like that life.
You don't even need to big huge, look at 37 signal.
If it's legally dodgy; if accounting is a total mess; if it relies entirely on personal connections or favors; if tax returns or licensing are a mess; if there is no documentation; if there is no consideration for bus encounters; etc; etc - then it would take major work before it could be sold and it is worth little until that work is done. (Besides the current payouts to the owner which only exist as long as the owner works on it.) That's because if the owner quits or is incapacitated, the company just about doesn't exist anymore.
I dont have the type of income to contribute to it EVERY year, but even if you use an employer’s 401k you can roll it over into yours as soon as you leave or are eligible
solo 401ks remove all the guess work and limitations of your other employer’s random plans. you can invest in anything, not just random vanguard mutual funds, you can borrow against them instantly instead of however long the bureaucratic machinations take, you dont have to ask anybody - people that dont know the answers that they should know
and most importantly, the annual contributions are just the first step, it grows tax free and should vastly exceed your contributions. once it independently has a big enough net worth it can be an investor in private equity and hedge funds’ feeders and be ready for some large moonshot bets or losses.
but remember, if you equate retirement accounts with the least risk possible, generic advice gets generic results. its more important that it grows tax free.
not advice, just what I do.
This is true. Most people don't want to buy and run a restaurant, bodega, hardware store, etc.
SaaS companies, on the other hand, are much more attractive to buy. They can be run remotely, often do not require many employees, and can be managed by a team that manages other companies simultaneously.
The author's company falls into a middle ground. Hardware manufacturing has certain idiosyncrasies that make it less turnkey than SaaS. But nonetheless, many of the functions (shipping out units) can be carried out by staff who are trained but not necessarily highly technical. And it sounds like the advertising has been pretty dialed in and automated (though would need to be tweaked in future years, undoubtedly).
There are some types of businesses that are hard to sell. Law firms, for example, can only be owned by lawyers! But companies like this one (and SaaS companies run by many HNers) are much more attractive for buyers.
But even if it's not ever sold, the notion of valuation is still useful because it quantifies the value of the future cash flows and the anticipated time-cost of running the business.
Is this true of standard businesses like laundromat or plumbing?
Or is it a matter of such businesses rarely being in a condition that makes a sale easy? If these are in a good condition accounting-wise for example, they should integrate readily and for a basic multiple of sales into one of the neighbors?
What I have seen is unrealistic prices - and that's another matter.
That idea also applies here.
There are lots of different exit strategies, but oftentimes a sell of some sort is the only one that really makes sense.
Valuation of business isn't necessarily determined by profits (perhaps for commodity businesses), It's just one of the metric. This is a business that has strong operations, product, assets, and IP, honestly quite surprised with this take.
Also, a nit fwiw, you automatically assumed the entire profit of the business is the market salary for the person running this business
I think the company is too early to realistically sell - but I don't think the value today is zero - it's likely worth at least 2x revenue today given growth potential.
Look at lantronix (nasdaq:ltrx) - the company that makes the "spider" product line - the original strap-on oob/ipmi. Worth $160M while doing $120M of revenue and losing $9M/year.
One of the biggest obstacles was that I hated all of the affiliate apps on Shopify. They all require all your customer data (email, names, shipping addresses), and most of them have privacy policies that grant themselves very broad permissions with user data.
I refused to give up our customer data like that, and so we rolled our own by hand, but it's very manual, so the only way for affiliates to find out their earnings is when I manually run a script and pay them once a month.
Recommended. Saved me a lot of hassle. Thanks for the product!
I'd like to be able to power cycle the attached machine but that seems inherently messy to implement.
>where do your advertising dollars go and how do you measure their success?
Sorry, but advertising spend is one of the few things I avoid sharing publicly. Most other things about my strategy, I think our execution is what makes the difference, so I don't care if competitors know. With advertising, it was expensive to figure out a successful strategy, and it's the kind of thing that a competitor can copy perfectly.
I can talk about measuring their success, though. The metric I focus on primarily is revenue on ad spend. Material costs make up about 33% of the revenue from TinyPilot's product sales, so if we get $1.50 for every $1 we spend on ads, we'd end up about breakeven ($1.50 from revenue - $1 for the ad - $0.50 for materials), so I aim to be at 2.25 ROAS or higher on any channel so we have a comfortable margin.
I suppose we can both say there are things we don't understand.
I think it's very possible that my prices are suboptimal, so I will think more about how I can do some price experiments while minimizing the downsides.
I would assume that most users of this are in a rack/datacenter/server environment and have switched PDUs they can remotely trigger power with, and it might make more sense to build in PDU management as a software feature over the network than try to reproduce the hardware functions.
Would be kind of cool to have a C14 input plug on the device and a C13 out beside it that goes to the server/device, then you can put an relayed interrupt inside it and also an ammeter clamp to measure power draw and detect drops or spikes in device power - for those systems that don't have built in IPMI already.
>I'd like to understand the steps leading up to these six years. What motivated you to create that particular product? was it simply something that interested you and that you believed had potential? What was the goal when you created TinyPilot? Thanks!
It was a "scratch my own itch" kind of path. I had a home VM server[0], and any time I messed up its network settings or wanted to install a new OS, it was a huge pain to drag it over to my desk, disconnect my main desktop from my monitor and keyboard, swap everything over to the server, and then put everything back how it was.
I saw an article about how Raspberry Pi could emulate a keyboard, and I tried that out and got it working.[1] And then I felt like there had to be a way to capture video and stream it too, and I finally found a way to do that.
I came in at a lucky time because people had been experimenting with Raspberry Pi as a KVM over IP for years, but there weren't great video capture options. But right as I started looking, these cheap HDMI to USB dongles appeared on the market,[2] which made it cheap and easy to build a v1.
In the beginning, I thought it was too niche to be a real business, but it got a positive response when I launched on HN,[3] and more and more people kept buying, so I stuck with it.
[0] https://mtlynch.io/building-a-vm-homelab/
[1] https://mtlynch.io/key-mime-pi/
"with more and more wealth going to a smaller and smaller segment of the population while the impoverished fraction grows on the daily"
Poverty around the world is being reduced on a massive scale. There are undeniable issues with wealth gaps, but the world population is still benefiting greatly from the imbalanced amount of downstream wealth coming to it.
"The rise of right-wing and/or outright fascist authoritarianism across the world, even in countries that would have fought strenuously against it a scant hundred years ago"
The world has been dominated by these ideas for the majority of its existence. Several of the world powers still operate within these ideas, not to mention many of the third world countries, the power just moves from regime to regime. Acting like authoritarianism is "new" because the OP just got an inkling of it in their own country is pretty dense.
TLDR op just plucked a few news headlines that get re-iterated and made that their world view.
[0] of course most of time it would just go under the radar, but you can find yourself in trouble, especially if the device malfunctions
You are an inspiration. I have been following your journey since your post about quitting Google hit the HN front page. And what a wild ride it has been.
You tried many projects (https://mtlynch.io/projects/), and it took a while for you to find your winning idea. And I have read each of your retrospectives on TinyPilot (https://mtlynch.io/retrospectives/) and know that it wasn't easy.
Your journey shows how hard it is to build a business (especially hardware-based), but with discipline and perseverance, it's definitely possible to create one as a solo founder.
I also have a business idea that I would like to work on, but I am not ready to quit my full-time job yet. I have a few questions for you:
1. Have you always been so disciplined in life? If not, how did you improve it? 2. As you shared here (https://mtlynch.io/solo-developer-year-1/), doubts are natural when you haven't succeeded yet; how did you keep going? Did you ever come close to giving up and going back to corporate America? 3. I believe you have a partner; how did this affect your relationship with your partner? 4. Knowing what you know now, what would you do differently?
If you are ever in NYC, please hit me up; I would love to buy you a drink and chat more in person.
You’re thinking of this like an engineer rather than a business person.
1. When selling a business like this, the $236k would be called SDI or SDE (seller discretionary income/earnings).
2. The buyer determines what, if any, of that SDE will need to go to paying someone to do what the seller does. These duties could be assumed by the buyer, they could be assumed by existing people the buyer employees, the tasks could be reduced or eliminated, etc.
3. Based on 2, the buyer will typically adjust the earnings multiple that they are willing to buy at.
4. For complex businesses that need someone doing one or more specific roles, the listing agency for the business, if good, will encourage the seller to fill certain roles to improve the overall salability of the business and multiple of earnings that it will be sold at.
5. Without really looking into the business, I’m almost certain that it can be sold for much closer to $1m (or more!) than to your suggestion of (edit) closer to $0.
Yeah, power cycling is one of our top requests and a feature I'd like to have personally.
If we just plugged into the ATX pins on the motherboard, that would be technically pretty straightforward, but it increases the work and expertise that end-users have to have. I've looked into something like a smart plug, but then users need to configure their BIOS to always power on when power is available.
Definitely on my list of considerations for Voyager 3.
The first may also be true, but would depend on the cost at which the labor can be outsourced reliably, and what oversight would need to be done of these outsourced activities.
I would agree that most people would take some job flexibility/autonomy in lieu of part of their bigco salary, but my guess is that this particular Xoogler would be making well more than $236k (including stock) if he had stayed at Google.
EDIT: that doesn't mean he should have stayed at Google, just that his market salary would very likely soak up all of the profits this year. If he can keep up the growth (and ramp down his hours), then it would be clearer that the enterprise could throw of cash even after paying for all the labor.
>How did you manage stress/depression during the time?
I don't think I ever reached the point of depression, but I definitely had bouts of severe stress and anxiety about the business.
Some things that helped me were:
- Having a supportive partner
- Forming a meetup group and talking to other founders who have had similar struggles
- Committing to a work schedule where I'm working or not working and avoiding looking at work things during non-work hours
- Separating my work email to a whole separate account and disabling push notifications so that work doesn't intrude into my non-work hours
- Using a GTD-style to-do list so I'm not carrying around a mental task list
- Starting my day by sketching out my schedule in 30-minute blocks so I have a good idea of what's achievable that day
- Scheduling time to exercise 3-5 times/week
- Reading Dale Carnegie's "How to Stop Worrying and Start Living." Carnegie books are all kind of hokey-sounding, but I find some of his lessons really effective.
But if you're growing, have big upside, and can be a rollup or been operating quite inefficiently 4x would be ridiculously low.
- Solar and wind power
- New Nuclear options
- Grid Storage
- Electric vehicles
It would be nice if we'd done a hard left turn on the economy and somehow never got here but that was probably never realistic.
I feel that is a common opinion amongst people that haven't started a business. It is too easy to judge others.
If you are selling a product/service you can't avoid becoming part of the capitalist system and you are supporting "immoral" companies through your suppliers (e.g. paying Google for advertising, paying Amazon for fulfilment).
It is difficult to start a business and keep true to your ideals. And people that do walk the line between creating a business and keeping their morals is uncommon enough that they tend to be remembered for it e.g. Bob's Red Mill: https://news.ycombinator.com/item?id=39366542
It is much easier to be tritely moralistic if you don't start a business. I often really admire people with idealistic values - and morality is critical in business. I don't admire people if they go to negative extremes: https://en.m.wikipedia.org/wiki/Splitting_(psychology)
Almost by definition starting a business means taking on risks. Mixing risks and money is "gambling" and it is an inherent property of businesses. Deciding what is good gambling and what is bad gambling is a very old problem. Buying insurance is reducing risk (less gambling) but insurance is gambling by definition. Unfortunately you have chosen the moralistic word "gambling" to talk about the normal issue of managing risk.
Perhaps you just don't like the rich? One can have shares and own a business without being/becoming rich - you don't need to directly involve wealthy people.
One can bootstrap a company without taking rich-peoples investments - see article. Unfortunately we get hoodwinked by the success stories from the VC investment sector. We hear less about the losers in the VC game or other ways to play the game of business.
Edit: a business is just a complicated machine. If you believe selling a product is moral, then you must believe that selling a business is also moral.
Breaking it out into SDE + adjustment is what the comment already does, albeit without using that terminology.
One cannot hire a person who can do all the things this owner does. The person is a smart former google engineer. These people don't grow on trees. It would take a few people to do a bad approximation of what he does. The adjustment to SDE is going to be 100's of k and you get to 0 cash thrown off.
Taking into account all the things you mention, many reasonable people who spend time buying and selling businesses all day would value this business at zero.
The nit is generous - 236k is not going to cover the iq points and hard work required to do the role of this owner.
Serious question… have you bought a business before?
It’s what I do.
This business is not worth close to zero, and the stuff that the current owner does (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) can be handled any number of ways that cost less than $236k by some buyer. This may not mean you or the person that I replied to, but you two most likely aren’t a part (and certainly not a significant part) of the market of buyers for businesses like this.
I can’t tell if you’re circle jerking the owner, xooglers, or the (limiting) engineering way of thinking about businesses.
Who is the buyer? The logical buyer of this hardware business doing $1m per year and can backfill all the things this guy does at some low enough number that this business generates cash. And then, enough cash that it's worthwhile to go through diligence and paper up a deal and take on the risk that there isn't skeletons in the closet.
Strangely I haven't found a relay in the same packaging anywhere else.
Only high-growth, high-margin businesses can get 7x+ earnings.
Creating a sufficient level of growth to garner 7x valuation is very tough to do bootstrapped.
---
EDIT: The only reason anyone gets a 10x etc valuation is because they're doubling+ year-over-year, and very likely they'll be 3x bigger in 18 months.
So basically, that's a 3-4x valuation...of your probable revenue in a year and a half.
But bootstrapped business with growth rate for 7x+ (non-trivial) revenue are uncommon.
4x may be "ouch" for a VC but not a bootstrapper.
Even bog standard SAAS companies struggle to sell at a decent multiple when they are really small, and they aren't especially complex.
Plus you'd want a ATX header to RJ45-or-whatever port per machine. Workable but not very elegant.
Realistically, the best buyer would be someone who has deep connections in a market that the current owner hasn’t penetrated that could 5x the volume almost instantly.
They would hem and haw about whatever small multiple the seller is asking for, and then laugh all the way to the bank after close.
I’ve seen this happen many, many times.
> And then, enough cash that it's worthwhile to go through diligence and paper up a deal and take on the risk that there isn't skeletons in the closet
For a business of this relatively small size, an agency would likely be used, and they would do all of this scutwork, and their fee is paid by the seller. Which agency or agencies have you used (if any)?
Also those cloud expenses look significant. That looks like an 80% increase year-over-year which is substantial. Is there a way to shave off a significant amount by moving to a different method for architecture? Or will that break your system? I worry about rapidly growing cloud expenses especially when you're not that huge of a company.
Finally I'm curious about those dividend earnings! Living off them is great, especially as you were doing so in the lower-interest rate years. Can you share insights in the high yield dividends you're earning that are also low risk enough that the underlying investment value doesn't erode?
> I would agree that most people would take some job flexibility/autonomy in lieu of part of their bigco salary
This is one of the point the author has repeatedly stressed the importance of and I very much agree as well. The chance to chart your own journey and the excitement a business could bring is anyday more valuable than the predictable path of employment for many (including myself)
This is a nice theory. And it could be true, and it does happen, but it's more than likely not.
You must be using better M&A brokerages/bankers than I ever have. None of them do actual diligence, they are selling the business...They are actively making the business look different to what it is. They certainly don't take on any risk (they are not a party to the agreement in any way) and they certainly don't obviate the need to use and pay a lawyer (and most small deals are each person pays their own costs).
With respect, are you actually buying businesses? Or just doing contracted technical DD? It feels like you are missing a good chunk of the picture here. The default take on the value of this business by a lot of folks buying businesses is going to be "close to zero". I mean, to be fair, I have not ever bought a hardware business so I'm a little out of my depth here... but.. not miles out.
I thought this had a lot of good data: https://www.bizbuysell.com/learning-center/industry-valuatio.... For "Software and App Companies", the multiple was 3.17.
How big would that savings account need to be for these dividends to amount to something substantial to live off of?
Our business has a significant amount of cc spend because of ad networks that don't charge processing fees, and high CC limits acting as nearly free lines-of-credit. This generates something like ~$100k annually in points value for us.
We got some opinions from a few tax attorneys and CPAs a while back on how to handle this, and the consensus was clear that as long as points stay in the programs and are redeemed for flights/hotels/etc, they won't need to be recorded as rebate to expenses or as income.
Applying the rewards against your balance should be recorded as rebate against expenses rather than income. Also, worth noting that some cash back programs have started issuing 1099s, depending if it's a "Bonus" or percent of spend.
writing.billprin.com
I’m definitely a huge fan of mtlynch and was very inspired by his transparency especially around year 2 when he was pretty far in without much working.
I’d also recommend Jon Yongfook who bootstrapped an image generation api for social media marketing to 50k as well. Tony Dinh is also a must read. I actually have a notion database with a bunch of other bootstrapped bloggers but on the go at the moment.
For communities, Indie Hackers is the best known one, though there’s many others, Microconf, smallbets , etc
I’ve done it / do it with taking products and services to certain East Asian markets. And sometimes scaled quickly at much more than 5x of the original revenue.
> You must be using better M&A brokerages/bankers than I ever have.
FEI is one such broker, and know people on both sides of transactions done through them that are happy. I haven’t used them personally, but that’s one example.
They definitely do due diligence.
> With respect, are you actually buying businesses? Or just doing contracted technical DD? It feels like you are missing a good chunk of the picture here.
Funny, I was about to ask/say the same thing.
Yes, I buy businesses. No, I don’t do technical DD contract or otherwise (frankly, I’m not tech savvy enough to do that on my own — I can sniff out some bad code, but I let the pros do what they do).
I/we are on HN reply delay to prevent “flame wars”, even though I don’t think we are flaming. As such, I will stop here.
If you are what you actually say you are, I wish you luck and all the success in the world. That said, I stand by everything I have said above.
But, they don't appear to be useful in remote management. To the extent that this external device is necessary. Is that correct and/or why?
I never deal with asia. Maybe everything I'm saying is off base given it's hardware and asia is a thing in that realm.
I hadn't heard that about credit card rewards. I'll talk it over with my accountant. Thanks for the tip!
>Also those cloud expenses look significant. That looks like an 80% increase year-over-year which is substantial. Is there a way to shave off a significant amount by moving to a different method for architecture? Or will that break your system? I worry about rapidly growing cloud expenses especially when you're not that huge of a company.
The big one is Shopify ($4.7k). That's partially because they charge a percentage of our sales and partially because we had to upgrade to the $300/mo plan when we switched to the 3PL in order to get features that bridge our 3PL's system to our Shopify account.[0]
The other big jump was in HelpScout ($2.4k) because we used to have a discounted rate as a startup, but that ended after two years, so we pay a whopping $50/seat.
>Can you share insights in the high yield dividends you're earning that are also low risk enough that the underlying investment value doesn't erode?
Oh, really nothing especially clever. Just the popular Vanguard index funds like VFIAX (S&P 500) and VBTLX (total bond market).
I had some money in VLGSX (long-term treasuries), which didn't have a good time when interest rates increased in the last couple of years, but fortunately, I was diversified enough for stocks to compensate.
[0] https://mtlynch.io/retrospectives/2023/04/#should-we-pay-150...
Folks love Shopify, and it does work very well. But for my small businesses I've been very happily using Woocommerce on Wordpress, basically nothing but the hosting cost for Wordpress, and it's been delivering very well. I've done several million annually on the Woocommerce / Wordpress combo.
That being said, even eliminating or reducing Shopify would still have you at a premium vs last year so there must be some other Saas / Cloud expense driving that bill up.
>Have you always been so disciplined in life? If not, how did you improve it?
No, I was a lot less disciplined when I was younger. I remember as a teen trying to learn Java several times and always getting bored a day or two in. I was a good student, but I would procrastinate work and distract myself while working.
I probably became more disciplined in my twenties, but I unfortunately don't think it was something I tried to do as much as it just happened.
One thing I think helped was protecting my focus more. I used to hop between different tasks a lot and constantly check social media or email if I had a moment of downtime or boredom, so I became more aggressive at stopping that.[0]
I also found the book Deep Work by Cal Newport to be helpful in staying more focused.[1]
>As you shared here (https://mtlynch.io/solo-developer-year-1/), doubts are natural when you haven't succeeded yet; how did you keep going? Did you ever come close to giving up and going back to corporate America?
I went into it with the expectation that it might take 3-5 years for me to find a successful business, so I think that was helpful. I've spoken to other founders who feel disappointed that nothing they're doing is working because they were expecting success to come quickly.
I definitely did worry that I wasn't cut out for being a founder and that my skills made a lot more sense for a big tech employee. The thing I found comforting was reading stories and listening to podcast interviews with other founders where they talked about how many failures they had before they landed on the right business.
I never came close to going back to a corporate job because I knew I had enough savings to last me, but if my financial situation had been different, I might have given up before I landed on something that worked.
>I believe you have a partner; how did this affect your relationship with your partner?
There are lots of effects in different directions. Me not having a regular job means that my income is less consistent and certain, and she absorbs some of the risks I take. I also feel like I'm not a good partner when I'm stressed a lot about work, and so part of my motivation in de-stressing the business has been to be a better partner in my personal relationship.
>Knowing what you know now, what would you do differently?
I wish I'd done educational products ("info products") earlier. They're like a microcosm of the experience of launching a product because you have to find customers, pitch to them effectively, and then deliver something they'll want. Like you can do that whole cycle in a month, whereas it would probably take 3-10x that long to do it with a SaaS. I made my first course right as TinyPilot was getting traction, and that course made more than anything I'd done in the previous three years.[2]
[0] https://mtlynch.io/eliminate-distractions/
[1] https://mtlynch.io/book-reports/deep-work/
[2] https://mtlynch.io/solo-developer-year-4/#hit-the-front-page...
That's the dream, but the number of startups that check all the boxes to fall into this category is extremely small.
There's a lot of data supporting 2-4X for small SaaS companies. You'd have to be growing at an extreme rate year over year over year for 4X to be considered "ridiculously low".
I think most of what one needs to know is already out there. The key is being adaptable to the current environment and being aware of one’s value add (skill set, network, etc.).
The problem with writing specifics about what I do is that it invites competitors and/or haters (e.g., review bombers or DDoSers). Some parts of my businesses have enough moat such that I don’t care, but other parts definitely do not. It’s not something I want to spend additional brain cycles on.
> Buying businesses sounds interesting, can you expand on this?
It’s largely not. It’s financially comfortable, and it’s nice being your own boss / leading your own team if that’s what you’re into (I am), but I’ve done more interesting work while working for “The Man”. A lot of what I do is just streamline a system that was inefficiently run/managed.
What I do is very similar to what Andrew Wilkinson of TinyCo has done, except I am about 10 years back on his timeline, and I’m not sure I will end up going public. I recommend looking for interviews and podcasts with Andrew — I have found them to be super interesting.
In relatively vague terms, I started a web dev agency, and then used that cash flow to start buying businesses that generate additional cash flow. Rinse and repeat. This is exactly what Andrew did. Note that I didn’t learn about Andrew until last year, so I was happy to see someone taking a similar path and scaling to a holding co worth over half a billion.
Some things that I think folks don’t do well when buying and/or valuing businesses (both buyers and sellers):
- Keep an active deal flow pipeline, ideally one that is not widely tapped. This usually entails talking to people… lots of people. For example, finding solid businesses on FEI is possible, but they will be very competitively priced, and it will be prudent to have some sort of pocket growth “hack” in mind if you want to make it pay off handsomely. On the other hand, targeting some “mom and pops” that have little or no idea about SEO and SEM can present some soft deals.
- Figure out ways that one party can scale that others can’t. This is the type of “growth hack” that I mentioned above. I know one guy who has one main move. He looks for businesses in which he already buys some of their inputs at a huge volume discount that smaller businesses can’t access (supplements are an example of this… I don’t recommend getting into supplements unless you are already eyeballs deep in that world). Another example is having access to markets or distribution that the businesses you are targeting to buy don’t have. One area I target (when relevant) that many others don’t is East Asian markets. Another area I target is just increasing prices (usually via segmentation). So many businesses charge way less than the market will bear.
- Learn how to negotiate, including how to say no. Many people just lay down and leave a ton of money on the table. You don’t have to be an asshole about it, but it’s prudent to be aware of what the value is for both the buyer and the seller, and it’s not uncommon for the buyer to have significant upside potential.
- As someone else said, you’re basically turning over a lot of rocks. There are a lot of people trying to bamboozle you, and there are a lot of solid businesses that don’t really offer a growth opportunity that you can efficiently maximize. When you find something that fits, it’s often a no-brainer.
Let me know if you have any other questions. I will be happy to answer.
I will add as a caveat that I can only give you perspective from my limited experiences — there are myriad ways to buy and sell businesses profitably, and my path is only one of them.
If you buy this company and hire somebody who can do all those things, that $235k of net profit becomes $0.
Buying it just to shut it down without continuing the product- eh- does your product really address all the needs of the customer base? Or will they go to another competitor instead?
We are struggling to find ICP. We built an MVP but interest has faded away from early customers. We know problem exists because large players are solving it. Either our message and who we are reaching out for sales is wrong or our product approach is wrong.
We need guidance. Email in profile if you are interested in mentoring us.
> I can’t tell if you’re circle jerking the owner, xooglers, or the (limiting) engineering way of thinking about businesses.
I don't know why you're being so unnecessarily demeaning about ex-Google people or trying to downplay the accomplishments of the person who wrote the blog post. There's no need to call it "circle jerking" if someone acknowledges that the founder of a successful business has accomplished a lot, well above and beyond what an average engineer can pull off.
I love especially that you share all the nitty-gritty details that so many would hold back (e.g. raw revenue/profit numbers, where bootstrapping savings came from, failures along the way, etc.).
It's so important for people to share success stories without sugar coating the difficulties, good, undiluted positive feedback provides so more information than generic negative posts like "VC funding sucks". https://monadical.com/principles.html#:~:text=telling%20some....
I don't love Shopify, but it's been overall fine. It mostly does what we need, and it's been stable, so I've been reluctant to change. Even if we swap out Shopify, we still have to pay someone whatever credit card processing fee.
>Regardless, Those 2 only add up to $7.1k so I'm curious where the bigger ~$9k remainder is coming from.
It's just a lot of little things. A lot of them are around team collaboration. Here are the next top five:
CircleCI: $2.3k
Plane (contractor management): $1k
Time tracking: $700
TalkYard (support forum): $700
Inventory management: $600 (we stopped using this after we switched to the contract manufacturer)
If your business idea is dependent on being able to do a complicated thing, then a POC or a demo might make more sense for testing the waters and seeing if there's any technical impediment to the idea
As many small business owners learn the hard way, it's nearly impossible to find someone capable of single-handedly operating a small startup who would rather operate your startup than their own startup.
Frequently, you can find someone to take the role for a while. They might even perform well while you're training them up. Then they're likely to go off and start their own thing, which might come uncomfortably close to competing with you (while staying just outside the reach of noncompete agreements).
If you're in your thirties or forties, a million bucks won't even get you a school teacher's lifestyle for the rest of your life. A million bucks makes the rest of your work life low-stress, but not non-existent. You still have to work, you just don't have to worry about paying rent, or getting exploited by your boss. You can always quit, and you can always say no (one of the reasons some bosses like a hint of desperation on their employees)
They bought water view condos, one got his teeth fixed, and then they had to go right back to work.
Now, I see no traction after building an MVP. We are in EduTech and eCommerce space. It is so hard to get any response from decision makers.
People would rather pay big corporations millions than talk to a regular person who is offering $200 software.
I don't know what to do.
Fair comment, and I thought about changing it. I didn’t for reasons listed below:
- The comment was mainly directed at xooglers, specifically the mindset some folks have towards them. Googlers and xooglers were something to behold in the “don’t be evil” days. That reputation has decreased substantially since, imho (I’m guessing directly or indirectly due to structural changes in the org). This is not to say that there aren’t some super impressive googlers and xooglers (there are), but the hit rate is much lower than it once was. If the op had just said “a smart engineer”, I wouldn’t have commented on it — I imagine the dude is plenty smart, although I doubt that it makes his efforts difficult to replace (see below).
- In general, I try to take the air out of reputation virtue signals that I think may not be warranted. Google, googlers, and xooglers are now in this category. Other groups in this category are groups like Harvard grads, Stanford grads, MBAs, PhDs, name brand consulting firms, name brand IB firms, etc. Note that I am a member of several groups that sometimes send these virtue signals (I try my best not to), so I’m dog fooding my own criticism every day.
- I don’t know the engineer who owns the business, but I find it unlikely that he does things that both must be done and must be done at a (relatively high) labor price that the owner could command in the market. I expect neither are true. The “circle jerk” comment was a reference to me thinking that the person I was replying to was putting far too much weight on something that has (imho) much less impact on the profitability and ultimately the price of the business. I’m OK disagreeing on this point — different strokes for different folks, and that’s why the market price talks.
The math on multiple needs a revision for 2024. SalesForce and Atlassian are valued at 6x and growing faster than ever with over $1B in revenue. No one else is getting a better multiple than that in SaaS right now without a very eager buyer.
Enterprise Value is great in theory. In practice once you get to enough free cash flow you are really just making the decision on whether to take X years of profits in advance for selling all future profits.
Even at 2x-3x, it comes out to “I’ve made enough money/I’m tired, I’m gonna cash out and pay a big tax bill.”
I’d rather make a business that is run by the team and stay with it.
Here is Adrian's Digital Basement putting computers in the dishwasher:
https://www.youtube.com/watch?v=3eX3IGPq8AQ
And the 8 bit guy:
So I think I figured out the secret to him making almost a million dollars a year: he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? But $400 is ridiculous.
It would also help to know the TAM(total market area). How big is the remote KVM market? That gives you an idea on how many devices it's possible to sell in a given year.
Looks like the device sells for about $400.
I’m in the infancy of a bootstrapped company while witnessing the general enshittification of all these formerly treated VC backed companies as they prepare for /adjust to being public companies. I also recall many decent products like Quora (yes there was a period where it was actually good) go to shit and fail chasing $$. I feel like the culture is shifting for new founders and a lot us want to aim for sustainable businesses that deliver real value rather than VC moonshots that say yes to everything that makes them more money.
I think “lifestyle” business carries negative connotations and bootstrapping/roof shots don’t capture this mindset yet. For me personally I guess it’s like, I’d rather have a $100m business that does cool shit and is focused on doing one thing, than be forced into chasing growth at all costs in all directions to get a potentially much bigger exit. If I had such an exit I’d draw it down at a sustainable rate anyway that ends up not being different from the earnings of a private company of similar value.
I guess with similar luck and results maybe I could be a billionaire instead of a hundred millionaire, but idk if that really matters, and I’d then get the typical SV meaningless ennui while being glad to leave the shitshow I created before it got even shitter. Running something I’m proud of for the long term seems like a more meaningful and rewarding way to spend my time and it can actually make the world better even if it doesn’t capture as much of that value.
Like, what if the dominant social media company had refused to serve ads and optimize for watch time? What if major cloud providers had a cohesive vision instead of cobbling together every stupid thing a $100mm spend customer wanted? What if YouTube could serve recommendations based on similarity/enjoyment? They could still be major successful companies. But selling your company, taking on investors, and maybe even lending against your equity threatens to destroy that.
Forgive me but I'm not sure I see the relationship to my comment.
People who find this small device useful must just not want to spend their (likely high $/hour) time with mundane things getting their expensive toy home servers working or something
But you can't justify $300 for installing and configuring free software. As you say, you can get a much more powerful computer for even less than they are charging.
Why should an exit be the primary goal? There is nothing wrong with starting a business with the intent of continuing to run and own that business. This should be normal.
Not really a big assumption given that the person is capable of operating an entire software and hardware business by themself.
It’s more complicated than that, though: The salary someone receives from a company isn’t 100% passed through untouched. To pay everything from taxes to benefits, the most they could realistically expect to take in equivalent compensation would be closer to $150K (approximate), which is actually below market rate just about anywhere for someone with these qualifications.
It seems like a lot of concentrated risk, and scaling is a challenge, considering the number of Amazon roll-ups that were on fire 2020-2021 and are now on the ropes (See "Amazon aggregators fall on tough times", https://www.axios.com/2023/09/05/amazon-aggregators-tough-ti...)
Same for us. One of the business cards we use gives 5x rewards on online ad spend, which translated to lots of free flights and hotel rooms over the years.
During the early part of the pandemic when points were not usable, we converted them to cash or credited them to existing expenses (the card gave a 25% bonus to use this feature).
It's the same CPU because inside it is a Raspberry Pi 4. We publish instructions for people to build their own.[0]
>he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? But $400 is ridiculous.
$65 isn't even enough to pay for the raw materials. If I sold for $100, I'd barely cover the cost of raw materials and the labor to assemble devices, test them, and fulfill the order.
There are a lot of expenses to running a hardware business, and I listed them in the post. How do I pay software engineers, hardware engineers, support engineers, and customer service staff if I'm selling a product whose profit margins are only a few percent?
[0] https://tinypilotkvm.com/blog/build-a-kvm-over-ip-under-100
Selling 100 units per year is a nice spot to be in because you're making sales frequently enough that you probably have some knobs to adjust and see what impact it has on your results, and that makes it so much easier to improve. That's why I've always been afraid of businesses that rely on enterprise sales, where you're going for 3-4 big deals per year, and the sales cycle is 6-18 months. It seems so hard to know whether you're doing well or poorly until it's too late.
Do you have recommendations for granular time tracking? I don't know of any tool that seems like it would do what I want. I know there are tools that track your active window, and I'm not crazy about the privacy aspect of those, and I don't think window titles map perfectly to activities. And then I could manually log every hour of my day, but I feel like the time I'd spend bookkeeping aren't worth the insights I'd get from it.
It’s not something I do due to the “concentrated risk” you mentioned. Scaling can be done, sometimes quite easily and effectively (e.g., Amazon ads can be quite efficient at scaling).
In general, I try to avoid or minimize exposure to capricious single points of failure, especially in sales/marketing, production, and/or distribution. I consider most large tech companies to fall into the capricious category unless I have someone on the inside who can make things right for me. This access to insiders is not as robust as I would like, but I’m working on it.
All that said, I know plenty of quite successful business owners who have gone all in on a single platform like Amazon or YT.
Regarding the roll ups, i think many of the businesses were bought at unreasonably high values. The linked article refers to this.
Covid changed many markets, in some ways permanent, and in other ways temporary. I was passing a lot on what I considered unreasonable prices for certain businesses. I could have played hot potato, but there was no reason to do so.
Our hardware engineering partner subcontracted the design to a team of industrial designers they'd worked with in the past. We ordered prototypes of the design from both China and vendors in the US. The Chinese versions were better by leaps and bounds.[0]
We iterated a few times from there and eventually landed on a design we liked and worked with the Chinese vendor to produce the first few thousand. The Chinese vendor kept running into issues, though, so they were producing them at about 50% the speed they quoted, which was just barely enough to keep up with our sales.
When we switched to the contract manufacturer, they took over manufacturing the cases in Vietnam. They had trouble getting started as well, but they got the hang of it after a couple of months and can produce cases much faster than we consume them.
[0] https://mtlynch.io/retrospectives/2022/11/#with-metal-cases-...
Easiest place to start is valuations arent capped at one year of profit, or last years profit...the silly mistake is the one year thing, the more advanced mistake is looking at profit instead of cash flow.
I've been thinking about risk a lot in the past year. I used to feel like I had this safety net of getting a job in big tech again if the founder thing didn't work out. When all the layoffs and hiring freezes began, I realized that my safety net may have disappeared.
It's scary to lose the safety net, but at the same time, I felt grateful that I've had the last six years to practice earning money without an employer. If I had been laid off, I'd be in a terrible position of competing against thousands of other recently laid off employees who are all desperate for work. If TinyPilot were to fold, I don't think I'm guaranteed another successful business, but I feel like I'm more likely to build a profitable business than to get a job as a developer in a poor tech economy.
A) poverty can be reduced while inequality increases. And inequality is definitely increasing. And the assessment that inequality isn’t that big of a deal and that we should focus only on poverty is very from a “categorical” assertion, imo.
B) “the world isn’t getting worse because bad things have existed in the past” isn’t a very clear argument. I think the BBC says it best: “Nationalism has always been a feature across Europe's political spectrum but there has been a recent boom in voter support for right-wing and populist parties.”
Yeah, I guess I’m being somewhat disingenuous. I like optimizing systems, but I’m aware that it’s not everyone’s cup of tea.
You learn that very quickly at cocktail parties when people ask you what you do, ask for more than the headline answer, and then have their eyes glaze over when you get into the details.
> than working for the man, as you put it.
As a nerd/geek, and I fall into that category, working in a good skunk works type of place is pretty damn fun. It usually doesn’t pay well compared to most tech jobs, it’s often not that prestigious, but damn… it can sometimes tickle the brain like no other.
One potentially bad part of it is that most skunk works are funded in some way by the DoD, so some folks may object to that.
> Thanks for writing this out.
My pleasure.
> It seems very difficult to get into.
Hmm… my first instinct is to say that it’s not, but I might be short-selling my skills, network, and (frankly) privilege if I say that.
I think it’s open to far larger group than is actively trying to participate in it.
I think the main keys are:
- Understand fundamentals of business. I have been around this my whole life, so it came quite naturally to me. That said, it’s learnable, and a lot of things fall into the common sense or empathy categories.
- Be good at contracting and hiring/firing. There are a lot of bozos in the workforce, but there are also plenty of hidden gems.
- Be good at marketing/sales. Although it’s possible, I think it’s tough to hide behind a screen and also scale.
- Talk to your customers. PG beats this drum, and there’s a good reason. Note customers here are customers of any business you own as well as business you want to buy or entities you want to sell a business to.
- Start small, but do things that scale. People think you need a lot of money to start doing this. You don’t. If you do really well, you don’t have to ask around much before relatively large sums of money start finding you. I currently prefer to self-fund, but I’m thinking about transitioning to some sort of dividend growth entity — I think that they will be en vogue in certain circles over the next 10 years or so.
The finances work out better too. Market salary as a software engineer is easily in the 200-300k range and increases over time with experience and skill. You can also more easily cap your work hours at 30-40 hours a week especially if you're remote. Then if you can figure out a way to do that while living in Southeast Asia, it's hard to imagine quality of life getting better than that as you're now living like a king and should be able to save as much as 50% of your income and retire young.
This is Hacker News. Not news-news. HN does not have to, and should not, look or feel like a news site.
Not really, the S&P 500's P/E multiple has historically been at around 15x and now is somewhere around 30x [0]. And with that, we're talking about large, mature businesses that are not growing super fast -- more like 6-7% annualized, post-inflation [1].
[0] https://www.multpl.com/s-p-500-pe-ratio
[1] https://www.investopedia.com/ask/answers/042415/what-average...
For what is worth, I appreciated your comments in this thread.
Can you recommend some?
But let's go with it anyway, why is that different? It's just a way to have multiple owners, more easily very many of them than you could manage in a private sale. So why is the stock price not the actual value people see that slice of the company as providing them?
My special relationship to Glicol is a different story as it was not designed for commercial use and it's purely experimental during my phd.
It's just because of people's encouragement that I try to build the education interface for it.
And after checking a few existed edu interface, I realise the core tech on their products is close to zero. All the hard work is on the sales team and marketing.
So the first few deals are the most important at the moment, and I need to fight with the idea that I want to improve the code before I talk to schools.
At least that's what I learnt so far.
Most people aren’t entrepreneurs, most people are risk-averse, cynical big company worker drones.
The worker drones have way more time to spend on hacker news, since any job at a big company is infinitely easier than being an entrepreneur.
Hence why the comments on every Show HN post for the last 7+ years is dominated by low stakes nitpicks. The type of things you hear in big meetings at big companies. “I would rephrase this on the landing page.”
- Pieter Levels: https://www.indiehackers.com/podcast/043-pieter-levels-of-no...
- Tracy Osborn: https://www.indiehackers.com/podcast/029-tracy-osborn-of-hel...
Josh Pigford (who sold Baremetrics for $4M) has also documented all of his failed ventures:
I don’t have any opinion on if this interpretation squares with their religion but it is certainly true that stock exchanges are run on extending credit and paying a premium for it.
Probably because when given a chance, you don't take the chance to explain yourself better, and just do a junior high Uno reverse card response.
Investing a million today say in real estate over 20 years will give you money to live on while you rent and a the property can be sold for double in 20 years. Repeat and this strategy would bring increasing wealth for a 20 year old.
As you said it depends on interpretation, and I think it depends but it's not as clear cut as the comment I was replying to could make it seem for others.
Absolutely they would. It's common to put finished boards into an ultrasonic bath, even.
This is kind of like saying, just be a successful actor. It’s significantly not up to you.
TIL a $230k income is meager. Jokes aside, what am I misunderstanding here?
There is a lot confusion in this thread (sorry) over "earnings multiples" vs "revenue multiples."
On HN you will almost always see revenue multiple discussed.
For the first half of the decade, I used to drink the cool-aid too: rewriting components using the framework-of-the-day, stating my opinion on whatever I considered to be important on HN, Reddit... Resulting in a lot of stuff, but not in reasonable ARR.
A few years ago, after making lots of cliche mistakes, I had another rough period, resulting in me buying out my partner's half that I gave to him for free without any contingencies, and having to consult again to finance the buy-out.
After that I decided to take the leap for the third time, and took a deep dive myself into sales and GTM, resulting in what I consider a ramen profitable ARR right now for someone with a family of four with a working spouse (little over 100K€ ARR).
I'm now slowly and steadily growing, but reinvesting almost everything I make back into it.
My next big learning step will be figuring out at least one repeatable way to get new clients.
I'm still in dubio whether I should do proper marketing, or just hire 2 SDRs and hand them a list with contacts...
I am very picky on my customers, so they tend to be very sticky, and buy extra modules as they renew their licenses, so I'm quite happy with how everything is evolving...
However, the whole thing takes time, a lot of time, and it requires a lot of grit and patience. So while it might sound interesting in a short comment on HN, it's basically just grinding every day, throwing things up to a wall, and seeing what sticks... If I'd blog about this every week, it would probably be really boring.
It might take 2, 3, 5 or 10 years to get to € 1M ARR, or maybe I'll never get to this amount, but I'm ok with that. I have friends who got investors, sold or were acqui-hired, and to me they seemed not to be happier at all during the job. And while it's nice to get FU money, I'm not sure that I'm willing to exchange years of my life for it, as i'm currently mostly enjoying myself and building the kind of company that I would love to work for.
The reason I'm no longer posting on Reddit, HN and the likes, is that - all things considered - I already have too much things on my plate, and posting on social media is not the best use of my time.
I do keep skimming articles to get the big picture as a hobby, but skip most of the shiny new things (TM), and stopped contributing because the value-add for me is so low.
Highly relevant comic for me: https://xkcd.com/386/
I imagine there are many others that share a similar story.
I tend to think of a prototype as a rough sketch. Unless of course they told me it was a demo to win the job.
Something that helps with this fast cycle is that many people have prior experience which they can turn into an info product. For example, Daniel worked for many years at AWS, and then after quitting could write up https://dvassallo.gumroad.com/l/aws-good-parts by leveraging his many years on the job.
If the info product is along the lines Daniel describes,
"This is an opinionated book. We only cover topics we have significant first-hand experience with. You won't find most of the knowledge we share here in the AWS docs."
it's really valuable.
I find it similar to how it's more effective for a fresh university student to ask senior classmates which classes are good and which professors to avoid, rather than asking professors or academic advisors. They'll get more relatable advice from peers.
The same goes for lots of knowledge or skilled work, whether accounting, construction, or something else. First-hand experience that doesn't appear in textbooks can be so valuable to others.
In 2022 you spent what looks like at least $150,000 in what’s now classified as Research and Development. So this means you’d have a tax burden of around $30k even though you only made $10k in profit.
https://www.goodreads.com/book/show/566213.The_Secrets_of_Co...
aka Earnings before interest, taxes, depreciation and amortization
I've coming up on a crossroads where I'm considering leaving my high-paid low-pressure cushy remote job at some big tech company to chase some silly ideas I have. The timing feels right - but I can't help but be fearful of a jump without any sort of indication on whether I can actually pull that off.
Thanks for the transparency and sharing - you've got a new fan!
Man this was one of the biggest silver linings on the pandemic. Chase allowed groceries and home improvement purchases to be paid for with points. 1.5x redemption. Paid for all the materials for my home renovation with them.
The one vendor that called back accepted the job, but when it was done, they just handed me the prototype and asked for my money. They never asked whether I was satisfied or if there were things they could improve if given the opportunity.