Startup Tips: Get Ready To Be Poor

Today I’ve read an interesting post at Technologica about launching a startup. Scott Lake has been involved in three startups, here is what he thinks:

Get ready to be poor!
The one thing that holds most people back from starting a company
is that they don’t want to spend their own money to do it. The days of
free money are long gone so for the most part you have to spend some
money to get things going. The best way to be able to deal with this
fact is to get ready to be poor. By this I mean get ready to have the
mindset of not spending money. Also if you are serious about starting
something, start saving now because it generally takes 6 months to a
year of unpaid work before you can even show your product to a VC or
angel. Once you are in the mindset of not spending money you soon
realize you don’t actually need that much money to live or start a
company. If you can make that mental leap, you’ll realize that you can
save on everything and after a while it becomes fun stretch every

Paul Graham is another guy who writes excellent stuff about launching startups.  Here are some more tips:

Three things to succeed:
You need three things to create a successful startup: to start with
good people, to make something customers actually want, and to spend as
little money as possible. Most startups that fail do it because they
fail at one of these. A startup that does all three will probably

Everyone works for stock. Rent your servers.
You don’t pay salaries at these levels of funding. Everyone works
for stock. The main costs end up being hardware and hosting (and
possibly development if you outsource some stuff to eLance or another
service). I took different approaches to hardware with ONElist and
Bloglines. WIth ONElist, I rented machines from Digital Nation. With
Bloglines, I purchased the machines and hosted them at a local co-lo.
The advantages of renting machines are that you have a lower up front
cost and you don’t need as much sysadmin experience, because they will
handle a bunch of the work for you. The advantages of purchasing are
that it’s cheaper in the long term and you’re not limited in your
hardware selection. Now that I have experience with both approaches, in
general I’d probably go with renting. Renting saves a lot of effort
(configuring and racking machines is work), and costs less in the
beginning. This lets you get your start-up out the door more quickly
and cheaply. And that’s a good thing.

If you like these tips, you are going to love his essays:

-> Ideas for Startups
-> How to Fund a Startup
-> The Venture Capital Squeeze
-> Hiring is Obsolete
-> A Unified Theory of VC Suckage


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