Like thousands of other software developers, I have read the majority of Paul Graham’s blog both past and present. He’s a fantastic writer. He has great insights into software startups and building a startup
software company. I even went to one of the Startup School
presentations that he helped organize at Harvard last October, and you
I was sorely disappointed.
It occurred to me that Mr. Graham has a huge following of developers who all want the same thing. They all want to know how to start a company, get VC funding, sell the company, make millions and retire at a very young age. It’s a worthwhile goal, and I don’t blame anyone who makes the attempt. Paul and several of his colleagues even started Y Combinator, which is essentially an early stage investment group for software developers who want to make the attempt. If Paul and the other Y Combinator owners think your idea has merit, they’ll fund you and up to four of your colleagues with $6,000 each for 12 weeks to work on your idea.
Unfortunately, there’s some fine print.
First, you have to move.
You and your co-founders are asked to relocate to Cambridge, MA for three months during the summer or the Bay area during the winter so that you can work on your idea and interact with the people at Y Combinator. Doesn’t seem like a big deal.
Next, you have to be willing to give up around 6% of the company.
Again, nothing major. If you’re going for VC funding, you’ve already come to terms with the fact that you’re going to give up roughly 80% ownership over multiple rounds of funding.
Third, you have to be selected.
This is the part which you have very little control over. Y Combinator only accepts a handful of groups twice per year. My best guess is that the actual number is probably less than a dozen groups per year total. At the Startup School presentation I went to in Cambridge, the auditorium was packed to the gills. There were people sitting on the stairs so they could listen to the presenters. This was more than a year ago. With all the publicity since then, I’m betting that the field of competition is pretty fierce.
Overall, the Y Combinator program seems like a great deal until you do the math and take the fine print into consideration. Then you realize that there are vast numbers of developers who simply couldn’t participate in the Y Combinator program, even if they wanted to. The entire program is geared towards developers who are young and don’t have anything to tie them down. If you have a mortgage, it will likely be difficult to manage an apartment in either the Bay area or Cambridge while still paying your mortgage. And to get that mortgage, you had to have a job, which you will need to quit in order to take this chance. And don’t delude yourself; you are taking a chance.
Are you married, or involved with someone? Well, you’re going to be gone for the next three months. You’ll be gone for much longer if things go well for the business. If you’re married, it’s going to be a hard sell to the wife (or husband) that you intend to quit your job and move away for 3 months at a minimum. I suppose this might be a good time to get divorced if you were seriously thinking about it.
All of this begs the question that myself and thousands of other developers have probably asked themselves.
“What about me?”
I’m going to let you in on a little secret since I believe I’ve found the answer. You don’t need Y Combinator.
Go back and reread that because it’s important. I’ll wait.
I mean no disrespect to the people at Y Combinator but given that they’re ignoring the rest of us, I think they’re going to understand. They’re running a business and are targeting a specific group of developers because they think it is the best target audience for them. Any business needs to segment the market and target its members aggressively to do well. Y Combinator is no different. They openly state that although they originally had benevolent intentions, it is not a charity. They expect to make money on their investments.
But the requirements that will come as part of the offer leave a hollow feeling for the rest of us who can’t uproot our lives and shirk our existing responsibilities for a chance like that. What if you’re a little bit older? What if you have already graduated from school, maybe bought a house, moved in with someone, your student loans have kicked in, or can’t live on $2,000/month for one reason or another? What if you have kids? Then what do you do? Shirking responsibilities like those is just not cool my friend.
As I said before, you don’t need Y Combinator. It would certainly help to be associated with them because you can never have too many business contacts, especially people who know people. But the fact is, if you’ve got what it takes to make it big with the Y Combinator program, you can make it big on your own, too. It’s just likely to take a little bit longer and will be a bit more work.
Last August, I spent the money to incorporate Moon River Software and since October I have worked for my new company full time. Approximately 10 months later, I have an office in downtown Worcester, a decent list of clients, a great deal of incoming work, enough money in the bank to survive with no income for the next six months, and am currently looking to hire additional help to keep up with the workload.
All that and no outside investment capital. I did have a chance to accept outside investment early on and I never actively pursued it beyond the initial stages because I wanted to be the master of my own destiny. That’s the reason I started the company to begin with.
I could certainly continue with my accomplishments thus far, but I fully believe I would inadvertently cross the line from being proud of how far my business has come and waltz into the realm of bragging.
What I’m really trying to accomplish with this article is to illustrate that anyone can do it. I don’t think you need to be a hotshot programmer who can do crazy hard things like write a compiler to translate C into Lisp. You don’t need to “know the right people” to be successful, although I won’t deny that it would help. In fact, there are only three things that you really need to get a software company off the ground and build it into a successful business.
First, you need to be dedicated.
If you don’t tend to follow through with side projects you’re never going to make it as the founder of a new company. Building your company needs to be at the front of your mind. It doesn’t need to be at the top of the list mind you, but it needs to be in the top five in the same slot that a real job would be. Putting family first is fine, and in fact I would encourage that. You’re going to need a motivational support group anyway. Just don’t expect them to understand in any way, shape or form what you’re going through. The bottom line is that if you’re starting a business because you want freedom, you’re going to have to sacrifice a lot of it in the beginning
The second thing is you need to be a decent developer.
You don’t need to be in the top 1% of the world, but you need to be decent. I’ll be honest and say that this is really hard. Not because this is governed solely or even mostly by innate ability, but because it is governed first by perception and then by ability. We developers are an arrogant lot, and it’s difficult to look at things that other developers have worked on and think that we couldn’t do a job that was equivalent or better, hence our perpetual desire to rework and rewrite what we consider to be ‘bad code’. During interviews, we make snap judgments based on 30-120 minute conversations that sum up the career experience of a total stranger and inevitably determine that the person is either not as good as we are or is equivalent to our experience. It’s difficult for our fragile egos to fathom that a complete stranger could be a far better developer. This is why nearly every developer describes themselves as an ‘above average’ programmer. A more accurate measure than the people you interview is your peers. If you find that you can hold your own in a group of your peers who have about the same level of experience that you do, then you should be alright. If not, you’ve got your work cut out for you.
Finally, you need a little bit of money.
You didn’t think you’d get away that easy did you? It takes money to make money. Anyone who tells you otherwise is selling something. Whether it’s hardware, software,internet access, phone lines, office equipment, paper for your printer, pens, notebooks or whatever. You’re going to need a little bit of money. If you’re planning on quitting your job outright to attempt starting a business, you’re going to need a lot more money than if you worked on your new business in your spare time. If Y Combinator can invest just $6,000 per person, chances are good that you can build a company with less than that.
If you can manage just those three things, you’ve got what it takes to build a successful software business.
Special thanks to Rob Walling for reviewing drafts of this article.