[HN Gopher] How on earth I became an entrepreneur
___________________________________________________________________
How on earth I became an entrepreneur
Author : herbertl
Score : 194 points
Date : 2022-03-14 11:31 UTC (1 days ago)
(HTM) web link (www.deepsouthventures.com)
(TXT) w3m dump (www.deepsouthventures.com)
| AussieWog93 wrote:
| I feel this guy 100%. The economics of employment simply don't
| make rational sense, and was a huge part of why I started working
| for myself too.
|
| You provide literally nothing of value to the customer, burden
| the customer-focused employees with unnecessary bullshit and use
| all of your political capital to advocate for the hiring of more
| deadweight employees? 100k per year.
|
| You advocate for, build and maintain a product worth $10m/year to
| the business? Wow, you're pretty special. You can have 150k!
| NAHWheatCracker wrote:
| That reminds me of a few years ago when a director gave a
| presentation to the whole organization about innovation. Near
| the end of the presentation, he summarized that everyone needed
| to share ideas. Then he anticipated a few questions.
|
| If we a good idea, would we be able to work on it? Probably
| not, the "innovation team", which was his team, would be the
| ones to build the prototype.
|
| If we had a successful good idea, would we receive any
| compensation? No, and that's very selfish. He insinuated that
| we should rethink priorities or place of work if compensation
| was important.
|
| He also talked about how he only wanted ideas that had the
| potential to make billions.
| cushychicken wrote:
| lol I've been on the receiving end of that pitch too.
|
| Felt a lot like: "Give us your best ideas, then GTFO of the
| room so we can implement your cool brainchild - with no
| credit to you!"
|
| There's practically zero reward for the folks with good ideas
| in that model, yet it's sort of the table stakes innovation
| model.
| NAHWheatCracker wrote:
| Exactly, at least it was easy to just not share with that
| team.
|
| A couple years later an engineering manager at the same
| level gave another presentation about how innovation and
| ideas have been lacking. He placed the blame on software
| engineers not trying hard enough.
|
| I think there's a certain type of person who thinks that
| the only type of success is one where all of the
| profit/credit goes to them. Sadly, they seem to be the
| leaders of many organizations.
| npsimons wrote:
| > we should rethink ... place of work if compensation was
| important.
|
| If that's not a glaring neon sign telling you to quit, and
| quit now, I don't know what is.
| NAHWheatCracker wrote:
| Well the compensation there is fine. It's not really
| correlated with results in my opinion, but that's typical
| in massive organizations.
|
| It probably sounds worse on paper and due to my phrasing.
| I'd say he was stating the reality and being a doofus (he's
| the excitable and friendly type). It wasn't so sinister.
| npsimons wrote:
| I myself might be overreacting a bit; having "noped" out
| of a large bureaucracy relatively recently, my "stick it
| to the man!" mode gets triggered easily by such things,
| as well as such articles as OP.
|
| Honestly, the line "had me question everything, including
| my self-worth, my identity, and purpose" resonated with
| me so deeply, not just the first time I was laid off, but
| even now 20 years later and having left by choice.
|
| On the flipside, to get CYA-managery, but any time
| someone in management says anything approaching "you
| should quit" that can be a bit worrisome. They might be
| doing you a favor, but the org is more than likely to be
| hurt by you leaving.
| xwdv wrote:
| What is the appropriate compensation then for someone who
| maintains a product worth $10m/year?
|
| Suppose it's $500k a year.
|
| Well, what if someone says they could do it for $200k a year?
| Or even less? Why keep the $500k employee???
|
| That is how they arrive at $150k. It maximizes profit and keeps
| costs to a minimum. Good business.
| AussieWog93 wrote:
| Congratulations. You've just lost an employee that created a
| $10m/year system from scratch.
| chasd00 wrote:
| on the other hand, if you lack the foresight to know
| putting your company in a position to be held ransom by a
| single employee is a bad idea then you deserve to go out of
| business.
| ipaddr wrote:
| You were relying on the output of one person and that
| person leaving caused you to close that office. You were
| already in that boat.
|
| By your logic having someone 2x as sucessful at sales is
| risky and you should let that person go.
| BizarroLand wrote:
| True. Seems like the smart thing to do would be to "buy"
| the software from the employee, pay them a trivial sum in
| addition to their salary to train 2-3 other people to
| understand the software back and forwards, inside and
| out. That way you now have 3 people who can run the
| software. You made us $10m in repeating annual revenue,
| here's a one-time $20,000 bonus for your services (and a
| trophy, sure, why not?)
|
| Builds good will, makes people happy, and secures your
| ownership of a product that has added tremendous value to
| your company. That's a win all around.
| csa wrote:
| > train 2-3 other people to understand the software back
| and forwards, inside and out
|
| I think you grossly underestimate how hard it is to find
| one person, much less two or three people, who can and
| will actually do this task diligently.
|
| Your best hope is that the PM gets bored and wants to
| move on, and you let them hand pick their successor(s).
| altdataseller wrote:
| Why is it hard to find even 1 person?
| xwdv wrote:
| Hopefully that included some documentation?
| vsareto wrote:
| You're missing a whole lot of risk here, and for only a small
| gain.
|
| You may not be able to guarantee that the new person can do
| it. This isn't a given, otherwise we would have all figured
| out how to hire the right devs for any given product and
| team.
|
| There's a ramp up time to learning the product (and codebase,
| if it's software). If an emergency happens, only the new
| person will be fixing it and they will lack a lot of
| knowledge to fix it quickly or effectively.
|
| Did the maintainer have any customer relations like customer
| feedback, including what works and doesn't in the product and
| what features they would like to see? Those have just been
| forfeited as well. Same for intra-company relationships.
|
| The person you just fired could also go help make a competing
| product (legally or not), since they're the best person to do
| so. Chasing this down would require legal resources, which
| requires further expenses.
|
| Sounds like a whole lot of extra potential complications for
| a measly +$300k.
| xwdv wrote:
| This is a very employee centric view.
|
| In reality, if you are depending on one employee to make
| your business that is a huge risk.
|
| That employee needs to document and transfer his knowledge
| and relationships out to the company at large. You must
| raise the bus factor.
| rileymat2 wrote:
| What is an employee's incentive for raising the bus
| factor? Outside the ability to have a real vacation?
| zamfi wrote:
| Stock. Or, other skin in the game.
| csa wrote:
| > In reality, if you are depending on one employee to
| make your business that is a huge risk.
|
| This is extremely common in many/most SMBs.
|
| > That employee needs to document and transfer his
| knowledge and relationships out to the company at large.
|
| Most employees who are rainmakers/linchpins like this are
| also aware that they are rainmakers/linchpins.
|
| First, knowledge documentation and transfer in reality is
| hard. Very few people read docs, even when they are told
| to and those docs are critical to their job and the
| business as a whole. If you do it face-to-face, it's
| almost always the case that the person learning politely
| listens and is already making a mental list of changes
| (often catastrophic) that they are going to make.
|
| Second, relationships are extremely valuable, and anyone
| who has them pretty much knows this. Why would they give
| this up freely? Oh, you will fire them? I guess the
| company's competitor would love to have your rainmaker
| and all of his/her contacts.
|
| In all of the sustainable and stable businesses I have
| seen, these rainmakers/linchpins get paid outsized
| amounts of money due to the processes and connections
| that they have and have made. Imho, they deserve it.
|
| The company has to have a BATNA in the event that the
| employee demands something outrageous, but usually the
| best course of action is to reward them generously for
| sustained profitable performance. If you are lucky and
| skilled as an executive/manager, some of these superstars
| will be happy with a slightly smaller (but still
| relatively large) income in order to work in what is
| hopefully a healthy work environment.
| FredPret wrote:
| If I owned this business, I would throw money at this
| employee and try and convince them to bring their peers
| onboard as well.
|
| Firing/antagonizing them makes no sense.
| vsareto wrote:
| It would definitely be a good move to pay for additional
| hires at less than $500k unless they are writing their
| own $10m products; no disagreement there.
| diatone wrote:
| Good business... ceteribus paribus. Which is to say, rarely
| if ever at all.
| itsmemattchung wrote:
| This whole article is music to my ears. I left behind a
| rewarding career to test out entrepreneurship and while rocky
| initially, it's paying back in ways I could not have imagined.
| Similar to the author, I'm perfectly content with a 9-5 job but
| since taking the leap, I can now no longer imagine returning to
| my position.
| jacobobryant wrote:
| I hate how HN automatically strips out words like "how", "why",
| etc and this is a hilarious example of how that fails.
| manxman wrote:
| ...on Earth as it is in Heaven. Amen!
| phgn wrote:
| Context: the HN post title was originally "On earth I became an
| entrepreneur".
| swyx wrote:
| its been fixed, but now i wish it hadn't.
| ProAm wrote:
| Heh I would have read that post too. Great title (but I agree
| with OP about stripping words)
| [deleted]
| ValtteriL wrote:
| What determines the value for a domain? 18k for duderanch.com
| feels insane.
| subpixel wrote:
| When a single vacation costs several grand, your commissions
| add up fast across hundreds of vendors - especially when there
| is little competition in the early days. This is before they
| had reservation software of their own tying then directly into
| other marketplaces.
|
| This is an example of understanding and recognizing an
| opportunity earlier than the big guys.
|
| Nowadays it looks like simple paid ads - but that can still add
| up to a lot.
| cushychicken wrote:
| >This is before they had reservation software of their own
| tying then directly into other marketplaces.
|
| Dude ranchers are, for the most part, not a very technically
| savvy group, and that's an opportunity he's pursued pretty
| heavily. (This is reading from his own tweets and writing,
| plus a bit of my own experience growing up in Montana.)
| Peter's main gig these days is running RanchWork.com, which
| is a job board for dude ranchers. He's been writing and
| tweeting about how he paid like $3k for a print ad in a
| ranching magazine and nearly tripled his posting revenue the
| following month. ($3k posting per month before the print ad,
| $8k after.)
|
| Most dude ranches are mom and pop shops out west. They're not
| owned by Hilton or Mariott; there's no software engineering
| staff helping them build SEO platforms and booking systems.
| subpixel wrote:
| > there's no software engineering staff helping them build
| SEO platforms and booking systems.
|
| All true, but on the one hand even commodity tools, the
| ones moms and pops most likely set up on their Wix page or
| whatever, now have SEO optimizations like open graph tags
| and the like.
|
| And on the other hand they are very likely using AirBnb,
| Booking.com and related platforms.
|
| So I maintain the best time to develop a market among these
| vendors was ten+ years ago, when you were giving them a
| true leg up.
| cushychicken wrote:
| Most dude ranchers I've met have barely figured out text
| messaging and email.
|
| To assume that they know about Wix, or Squarespace, or
| even AirBnB, vastly overestimates their level of
| technical capability.
|
| That's the gap you can fill. Find Luddite industries, and
| serve them. There is far more opportunity there than I
| think anyone realizes.
|
| I say this as someone building a job board around a
| decidedly non-Luddite industry (www.rtljobs.com). If a
| really tech savvy industry segment can use the help,
| imagine what the Luddites need!
| subpixel wrote:
| `"dude ranch" site:airbnb.com` produces 1600+ results.
|
| Luddite industries do exist, but many of them are well-
| served by tools and marketplaces that abstract away all
| the technology and just bring them business.
| tetsusaiga wrote:
| I don't know either, but I can confirm that's within the scale
| for a domain I sold in the last year. Got 6.5k and it wasn't
| even a .com
| ianpurton wrote:
| I guess it depends on the investor, but one question to ask
| would be.
|
| Does it get traffic, and if so can I convert that traffic to $
| eightturn wrote:
| Peter here.. I mention how I valued the duderanch.com domain in
| this essay I wrote a few years back, if you're curious:
| https://www.deepsouthventures.com/dude-that-built-duderanch-...
| chasd00 wrote:
| but duderanch.com was going to be the name of my blink182 fan
| site :(
|
| Value is what you do with it not what the name is.
| bradrn wrote:
| Note that this is the same person from
| https://www.deepsouthventures.com/i-sell-onions-on-the-inter....
|
| (HN discussion: https://news.ycombinator.com/item?id=19728132)
| eightturn wrote:
| Peter here (author).. I'm guessing the person who laid me off
| from eTour may read this.. hi Jim! no hard feelings : )
| amrrs wrote:
| Hey Thanks so much for the amazing article. What would you
| advice for someone in a full time job but feeling like the
| same?
|
| I know a lot of people say quit and try freelance consulting
| but I'm not sure if it'd be sustainable. Would love to know
| your thoughts!
| eightturn wrote:
| See if this essay I wrote (on buying & developing on neat
| .com domain names) helps:
| https://www.deepsouthventures.com/build-a-side-business/
| dbancajas wrote:
| In OP article you had a lot of skillsets acquired through
| the years. For somebody just starting, what would be the
| most important ones: html, adsense, seo, codings skills ?
| Any pointiers.
| eightturn wrote:
| it doesn't matter, just start building.
| cushychicken wrote:
| Peter is an unsung genius of web businesses. Domains are
| automatic marketing jet fuel in a way that few other things are.
| barrenko wrote:
| The classic example of how (sometimes) when you're an employee
| you can't capture not even nearly enough of a value you create,
| as the existing form of employment was really not designed with
| this end in mind.
| polalavik wrote:
| I've been saying it for years - all roles should work somewhat
| like sales. Sales incentivizes work and productivity. The
| harder you work the more you may get paid off that sweet sweet
| commission. That isn't easy to do for engineering roles though.
| How do you quantify productivity in engineering? There are
| probably a few ways:
|
| 1. royalties for reusable code (you no longer receive this if
| you leave, incentivizing people to stay as your royalties stack
| up). Any time code you've worked on is reused you get % x
| (equivalent hourly wage when you wrote it) x (# of hours it
| took to write the first time around). Possibility of backfiring
| if people ramp up hours spent producing high value stuff to
| maximize that royalty. This also only works in a job that
| allows you to build a lot of tooling for the team or something
| like that.
|
| 2. royalties/bonuses per team every time that teams work is
| used. This only works in highly profitable businesses maybe
| like google - i.e. anytime your code that served an ad is used
| the team gets a portion of that money to distribute evenly to
| the team. This doesn't really incentivize anything except
| getting onto productive teams.
|
| 3. in a fair and just workplace some sort of bonus based on
| democratic vote/ranking system on who is the most valuable to
| the entire team instead of one single person deciding (the
| boss) haha! that would never work.
|
| 4. bounty on features or something like that?
|
| I don't know, I wish there was a way though.
| kubb wrote:
| > So I sold my house to stay afloat - unloading a $130,000
| mortgage that I was fortunate to break even on
|
| oh, brother
| JoeAltmaier wrote:
| Used to work at Intermec, which got bought by Honeywell. They
| just wanted the customers, so began to cut back the midwest
| office. Guy I knew who still worked there, a customer special
| projects Engineer, got asked "What would it take to keep you?" He
| said "$1M a year and my own budget". They said "No, really?"
|
| See, he routinely made several times that annually for the
| company in retained customers and won contracts. If they'd had
| any sense, any idea of how profit and loss worked, they'd have
| snapped him up in a minute. But they let him go.
|
| Of course later the office closed entirely, not making enough
| money. What a surprise.
| alexpotato wrote:
| Reminds me of the whole "I left b/c I asked for a raise to $X
| and then the company had to hire 3 people at a total cost of
| $2x to replace me" scenario.
|
| Seen similar discussions of: "Well you have the skills of 4
| people but we don't want to pay you 1.5x of what most people
| here make so we're not going to hire you."
|
| I always wonder if this is just a poor understanding of the
| value individuals bring or just short shortsightedness on the
| part of management/the finance team.
| trabant00 wrote:
| You are going to get hired at 1.5x, you are going to get
| hired even at 10x, but only on the top of the hierarchy.
|
| On the bottom of the hierarchy the lowest managers do not not
| want to hire special cases. If you are that good then the
| manager will really have no power over you and can't even
| replace you if it becomes needed.
|
| So you only have 2 options if you are significantly above
| average. Fight your way up for big money or stay at the
| bottom and work very little to compensate for the small
| salary. You should be able do get an average work load done
| in no time if you really are good.
| jelliclesfarm wrote:
| The highly paids at the top of the hierarchy are not
| compensated for what they know(that's a given) but for who
| they know...the money is for the network and 'Rolodex'.
| npsimons wrote:
| > I always wonder if this is just a poor understanding of the
| value individuals bring or just short shortsightedness on the
| part of management/the finance team.
|
| I'm thoroughly of the jaded opinion that when it's not a
| power play (no one's lizard brain wants to admit there's
| someone smarter than them), it can actually be a sort-of-
| rational decision: don't be beholden to someone hard to
| replace. Hence why you see tons of PHP jobs, but few in
| languages like the Lisps or Haskell.
| marcosdumay wrote:
| People are replaceable cogs, and since people are replaceable
| cogs, one person can not create as much value as 3 other
| reasonably competent ones.
|
| Since that is common knowledge shared by all the
| administrative personal, it's impossible to justify somebody
| paying 1.5x your salary range. Even if you personally realize
| some specific person doesn't look replaceable (who am I
| kidding? You don't. You don't stay in management on places
| like those and keep that ability, you either move or change),
| you can't communicate that fact.
| yarky wrote:
| > one person can not create as much value as 3 other
| reasonably competent ones.
|
| That's the key behind that reasoning : If your so skillful,
| go right ahead and create your own business. Otherwise,
| it's your place in the hierarchy which dictates your
| salary.
| Zababa wrote:
| Sounds like administration is made of replaceable cogs that
| are projecting.
| lazide wrote:
| Understanding if someone actually is more valuable (or
| less) than the slot they are filling is hard, and
| requires actual knowledge and time on the ground working
| with someone.
|
| Which is expensive and doesn't scale very well, as it
| requires you also keep a positive company culture,
| hire+train and keep good managers, etc.
|
| The reason why corp goes that way eventually is because
| defining specific slots and requiring people to fulfill
| the requirements of those slots 'or else', and paying
| them as expected for those slots scales better (for
| certain definitions of better anyway), requires far less
| skill to identify if someone is or is not fulfilling
| those requirements, and allows central negotiation and
| better leverage for compensation which scales better for
| the company too.
|
| It tends to not work great for creative areas, but it
| does work pretty well for boots on the ground crank
| turning. Since it's relatively easy to quantify how hard
| and much the crank was turned, and often to what quality
| measure.
|
| Which sucks for humans, but works.
|
| At some point, that stops working too, and at that point
| the blatant 'cog' thinking has also made everyone jaded
| and shitty.
|
| Depending on the level of market capture for the company
| /organization and competitive pressure then defines if it
| will implode, or be the next 'DMV' or worse 'Comcast',
| where it is somehow 'functioning' despite itself.
|
| The US has a ton of these industries right now, but due
| to various still working market capture elements, we're
| still putting up with them. Everything from Banks,
| Telcos, major ISPs, etc.
|
| Frankly it seems to be to the backbone of the US economy
| right now.
|
| One big disadvantage those orgs tend to have is they
| often suck at being adaptable. Most of the org is just
| fighting internal inertia, and the moment the direction
| needs to change it can fall apart and become actively
| counter-productive to itself or delivering value.
|
| And considering how many consolidations and buyouts have
| been going on with cheap money, it's about time for the
| stack of cards to implode a bit. Which would result in
| mass unemployment unfortunately, as 36% of Americans work
| for megacorps now, and a great many smaller companies
| depend on their business.
|
| Which is great for startups and companies that keep a
| useful workable culture with decent management through
| this mess. I don't know of any off the top of my head
| right now though.
| SQueeeeeL wrote:
| They are, it's why corporations are so soul crushing.
| They literally serve no one except the abstract concept
| of profitability.
| pirate787 wrote:
| If you've ever worked for an unprofitable company, you'll
| understand there's nothing "abstract" about profit and
| loss.
| trabant00 wrote:
| > People are replaceable cogs, and since people are
| replaceable cogs, one person can not create as much value
| as 3 other reasonably competent ones.
|
| What is circular reasoning?
| yitianjian wrote:
| I think OP was sarcastic
| marcosdumay wrote:
| Not exactly, as the second statement does not lead
| entirely to the first.
|
| It's a cult-dwelling means of solving cognitive
| dissonance. If you look, you will see it in more contexts
| than this. The first statement is just an unshakeable
| premise, and needs no justification.
| orangepurple wrote:
| I can't tell if this is sarcasm or delusion
| jcelerier wrote:
| it's a sarcastic representation of delusional individuals
| who absolutely do exist
| mellavora wrote:
| No true person would be an unreplaceable cog!
| jelliclesfarm wrote:
| How are all the young people we churn out of colleges going
| to find employment if someone has acquired skills or
| experience to do the job of 3-4 people?
|
| Maybe it's not a bad thing to employ two or three people at
| 2x cost. Or we'd end up with unemployment or underemployment.
| criddell wrote:
| I'm getting strong Harrison Bergeron vibes from this
| comment.
| jelliclesfarm wrote:
| I didn't mean it like that. I think it's more apt for
| those with more years and experience than aptitude.
|
| Being able to do the work of 2-3 people is over-
| qualification. They are better utilized in smaller or
| failing companies that need the advantage of the boost.
|
| Altho it is unlikely that most people will be willing to
| give up the bargaining power to convert experience to
| currency. So what do we do?
|
| Who would want to go to a job if you have to struggle and
| make less than a YouTube influencer. It's already
| happening to the youngest adult generation. The struggle
| is real.
| Karrot_Kream wrote:
| > They are better utilized in smaller or failing
| companies that need the advantage of the boost.
|
| ... And why would they do that? Smaller companies often
| can't pay the same and failing companies are mental
| health events waiting to happen. Most people leverage
| their experience and effectiveness into a better
| bargaining position.
|
| Also why are you thinking that labor is zero-sum? Most
| developed countries these days have lots of jobs that are
| zero-sum, but software is definitely not one of them.
| There's a voracious demand for software developers all
| across the skill spectrum.
| jelliclesfarm wrote:
| It's not about what I think. I am trying to look at it
| objectively.
|
| I am not saying labour is zero sum. Higher demand doesn't
| necessarily translate to higher pays. Low level coding is
| an easier skill. But it can also be automated.
|
| At higher levels of employment, there isn't that much
| demand. The higher up the hierarchy, the number of years
| of experience and skill and education matter.
|
| By siphoning labour to low level skill jobs, when high
| level skill ages out, there won't be proper succession
| for knowledge transfer.
|
| There will be a lot of casualties and smaller companies
| will die. So will successful companies that don't know
| how to scale. Or don't have enough money/capital to
| facilitate scaling.
|
| What is important is stability for any company that has a
| long term vision. Eventually smaller companies will have
| to hire more people and if doing that means they can't
| meet margins, the company is in trouble.
|
| The only reason to reduce workers after reaching steady
| state is if the company automates essential key
| processes.
| gumby wrote:
| That's the "lump of labor" fallacy:
|
| https://research.stlouisfed.org/publications/page1-econ/202
| 0....
| cushychicken wrote:
| You've gotta make your request _just_ ridiculous enough, but
| not _too_ ridiculous.
|
| I don't doubt that he generated that value - it just sounds
| like he may have overshot just a bit.
| JoeAltmaier wrote:
| As a negotiation tactic, perhaps. But as a realistic estimate
| of value - it was low.
| swyx wrote:
| what does "and my own budget" mean though? like are we
| talking tea pantry budget or several millions. maybe that
| was the sticking factor.
| ProAm wrote:
| > See, he routinely made several times that annually for the
| company in retained customers and won contracts
|
| Did he explain that to them in a friendly professional manner?
| Or did he expect them to recognize his greatness right off the
| bat?
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