So should I sell my house to fund my startup to some milestone? I don't need cars nor houses, I only care about building stuff and learning, only things that make me happy. Should I YOLO the fuck out of my life?
What happens is that if you do sell your house, (assuming you'll pay rent) things will get a lot more stressful for yourself financially, and this will severely hinder your mental performance and chances of success.
An even better idea would be to get a regular job and bootstrap your business in your spare time, on weekends. Once it takes off, you can quit the job and focus full time in it. Successful startups coming from this kind of environments are way more common than those coming from YOLO, all-in approaches you are thinking of. And this is precisely because of the way the mammal nervous system works. The ability to do creative mental work is severely impacted when under a perceived threat (financial doom in this case).
All 25yrs olds are confident their idea will work. Only some listen to older people like me and accept that they may fail.
I’m sorry but you either roll the dice a ton of times with extremely small amounts and hope for a big win Which is very unlikely or you have to play with other people’s money. In case you haven’t attended Stanford, too bad I guess. You’d have to meet rich people some other way.
At this point I regret investing the net worth I accumulated through my companies and investments in more pointless companies of my own trying to shoot for the 9-10 figure net worth. It’s pure nonsense unless you use OPM. I regret not buying a home in bad conditions and fixing it up to luxury and living happily in it with my girlfriend and dog. It would’ve been fun and awesome and wholesome. Then I could’ve done that many times over, slowly building a fancy net worth in decades instead of years but living Vicariously through every minute of it. So since I just turned 24, my plan is to do exactly this.
So no don’t sell your home please
But reality is obviously different. Not YOLOing and keeping my day job let me work on the next one without too much stress and let me improve my skills as a founder.
Finally my 7th one (which I started with a group of friends) is going some where and I'm working in parallel to launch 8th (with same guys) while we are trying to improve traction for 7th. I can confidently say now that startups are less about technology and more about getting to solve customer problems. Often even the idea isn't going to be original but as long as its helping some one, there is a chance to make a product out of it.
Startups the SV way are hard to do, if you are not part of the bubble. As you said, you don't have an "in" so nobody is going to easily give you money. You have two options:
1. consider a different growth strategy, startups are not the only way to grow a business, focus less on growth and more on stable income, try to acquire at least one recurring client
2. build your reputation, then you will get capital, doing no.1 first will also help you with no.2.
But even in that case I would try to take advantage of the frothy market before selling a house. Raising money is hard and takes a lot of effort even for people with connections and good credentials. But if you succeed it's probably going to be more money and much less financial risk for you.
The best advice I can give to you is try to join a startup accelerator. It sounds like I used to be in the same position as you are (no FAANG, no fancy degrees, not knowing any founders / investors, also a foreigner. I didn't have a house to sell though, lol). Joining a startup accelerator changed that very quickly for me and helped me raise money.
My recommendation would actually be to double-down on the house and pay off any mortgage you may have on it. Once you have a paid-off house, you have basically infinite runway for playing around with startups.
Our brains are not equipped to predict the money it takes or time it takes for a business to become successful, because the variables are too great. Selling your house would be like me raising $200k. It’d buy you a year. But at the end of that year, it’s still very unlikely that your business will be paying for itself, let alone paying you a salary.
But! To provide a contrarian example, one of guys involved in creating Guitar Hero faced this exact dilemma and took out a second mortgage on their house in order to fund the first round of production of guitar controllers: https://www.vice.com/en/article/wx8bey/the-oral-history-of-g...
The circumstances were unique because at the time investors were extremely hesitant to fund specialized hardware runs. His gamble paid off handsomely but it's probably the exception to rule.
It’s slower, but the contracts keep you in constant contact with real customers, and it’s lots of small dice rolls until one comes up good, rather than a big one that can’t go bad. Plus the house goes up in the mean time
We’re now scaling up the team and looking at capital so it’s worked well
Maybe you can consider selling the house (it'll take a while) and pouring SOME of that money into a startup, if that's your dream. But always keep X months worth of your expenses in the bank. Where X is probably >24 or more since you likely won't be profitable right away.
Here is an idea. Take debt on CC or a line of mortgage. Pay a contractor or two for a while to develop the product a bit and see how it goes.
Successful founders are great communicators. If you aren’t one, it’s unlikely you will make it to a senior position - whether it’s your own venture or not.
Signal you are looking to sell your house is on when investors tell you - “I understand what you’re building. It’s great. You even have customers MOUs signed and maybe even have paying customers, but I can’t fund you because market size is too small. Good luck.”
You need a place to live, money for a potential future time when you can't work, and other basic necessities. Investing is about balancing risk tolerance with reward potential. There is a massive risk associated with investing basically everything you have in a startup when relatively very few become successful. It's extremely likely that you will lose it all.
1- Raise from VCs/Angels with just a pitch deck. Loads of people do this and there's lots of advice online. Big downside is that you give the VC most of the company. Big upside is low personal risk. If you really need to hire engineers immediately (despite being technical) then this is probably the only route.
2- Sell the product to a client before the product exists. Use the money the client pays you to build the product.
3- Save 70% of your income for a year, work evenings and weekends. Quit your job when you've got enough runway saved up.
4- Become a contractor, work 4 months for clients, 8 months on the startup.
5- Start the company with grant money. There are lots of grants for small tech business
I've worked for people who did all of these. Currently I'm trying #4.
Get someone to pay for what you are selling. Then find another customer. Iterate and keep building from there.
Once you have established some traction, then you can start thinking about (and ask HN) how to approach outside funding/how to scale the business.
Money follows money. So if you start having success, ultimately you will be able to find outside investment, if you even want it.
Side note: I have worked for several startups. Most in the beginning had investments from friends and family.
A dedicated founder in a good market is often fundable.
You have a house at 25, let that sink in for a bit. Why fuck yourself when you don't have to?
If someone else has set you up I think it is worth consideration before you yolo. A lot of work may have gone in to get you where you are.
Even if you don't build a successful business/startup, you are going to learn so much that making the money again is going to be a piece of cake!
It's not the same being homeless than being unemployed.
(Also my vote is no. If you’re already technical, just bootstrap the engineering work yourself. Unless time to market is an existential risk, there’s no reason to hire more engineers. If need be find another cofounder or two to split the work.)
Keep going, but find a way that doesn't involve risking homelessness.
Don't! Haha.
You are not your startup.
Keep your personal finances as far away from your startups finances.
Live with it.