I think it's because I moved from Employee to Contractor, to Consultant/Occasional Contractor before I really got deep into building products that it never seemed like I was in a particularly scary place.
I was already spending several months at a time voluntarily without work, and taking contracts when I needed to. The only real difference was that instead of travelling and rockclimbing full time during those breaks, I was parking it in one spot with the laptop and writing code. And I guess I started referring to those consulting gigs as "bootstrapping".
That might be a good path to look into if you want to make the transition from "guy in a cubicle" to "dot-com thousandaire". There's plenty of room to take it slow.
Moving to contract work is pretty straightforward. It's essentially just finding a new job. Lots of places prefer to hire contractors for individual projects, so it's not too tough to pick up a 3/6/9 month contract someplace.
Most contractors tend to try to move from one contract to the next with as little downtime as possible, or work for an agency that sorts it all out for them. For me, the downtime was the big payoff, since contracting pays roughly double what a salaried job does. If you have no attachments, you can spend a fair amount of time slacking off before picking up another contract. I used to push it as far as 9 months off between 3 month contracts and still put plenty into savings.
Repeat the above enough times, and you'll be able to break off work that doesn't require you to be on site, or pick up work from new clients from word of mouth. Some people refer to this as freelancing, but then they don't get to charge as much if they use that term in front of a client. Naturally, it's best to describe yourself as a consultant instead, and double your rate again.
The transition from full-time to contracting is what terrifies me. Having to constantly look for a new job every few months just worries me. Of course, it's probably because I am the sole breadwinner for my family but how do you overcome that sort of paralyzing fear? I've had thoughts that maybe I will do it later on down the road when everything is more settled but I don't know if things will ever be "settled".
I'm not sure where you're based (and I'd guess it makes a difference), but in the UK going contracting is incredibly easy once you make the decision.
Save up a couple of months salary if you can, make your CV all shiny, and send it out to every job board you can find, with your phone number, email and location at the top. At the same time, send a friendly email and your CV to everyone you've worked with, saying "Hey I'm available for contracts doing X, Y or Z. If you hear about anything, please let me know".
There's no need to quit your job early, you're just going to be leaving like you would for another permanent role.
When someone says they've got a contract for you, sign up for Parasol or a similar umbrella company so paperwork is at a minimum, and away you go!
I'm not hugely experienced at contracting, but since I started doing it a few years ago, another couple of friends have gone down the same route and it's worked out well for them too.
If you're good, learn quickly, and you're honest about what you can do, contracting is a great route for a few years of experience across a range of projects.
After the first couple of contracts, if you're happy with how it's going, then get yourself setup with your own limited company which means you'll end up with more paperwork, but more money in your pocket.
It definitely helps to establish a reputation for yourself before you take off and start contracting. You should be at the point where you know without a doubt that you could send out a few emails (or respond to one of the standing offers in your inbox) and pick up another gig. As such, "paralyzing fear" never came into the equation for me or any of the successful contractors I know.
And of course once you've done it a few times, you'll have previous employers bringing you back in for more projects. So at most you might only need to go through that fear stage a few times before you've established yourself.
> "It definitely helps to establish a reputation for yourself before you take off and start contracting."
Does this mean moonlighting and taking side gigs? If so, can it be done without sacrificing personal/family life? Not to mention, possibly living with exhaustion.
No. Just work for a few different companies and demonstrate that you're the best guy on the team to the people who matter. Eventually you'll get a call from a guy who's putting together a team and got your name from one of your old managers as somebody who's good at that sort of thing.
Of course, it never hurts to build cool, visible things that you can point to when people ask what you're capable of.
Build up savings. The traditional "have 3 months of savings in the bank" line you hear from personal finance gurus doesn't really apply when you're a self-employed breadwinner with a family. I'd suggest a min of 6 months with a goal of 12 months if you can. It will make those in between times much less scary.
Not surprisingly, health insurance isn't that expensive if you only want to cover the 'big' things. It gets worse as you get get older of course.
But if you're healthy, 20 - 30 type, and you're seeing the doctor once or twice a year and maybe using prescription meds occasionally for a bacterial infection, then you get the 'high deductible' plan, you end up paying for that stuff yourself but if you happen to be in a wreck or you get cancer or something the insurance will cover it once you get past your deductible.
Thanks for the post! It couldn't have come at a better time for me. I'm actually in the process of quitting my "real" job (next Friday is my last day). I'm completely terrified but so thrilled to do something that's exciting, scary, and where I will undoubtedly learn a ton.
Congrats! I wish you good luck and prosperity. :-)
I am in a similar position. Starting in April, I'm dropping my full-time employment down to 3 days/week to give myself time to start building my business. It's exciting to put things in motion and stop dreaming, hoping, wishing, and other effectively useless activities.
Interesting skydiving analogy. The overall advice maps pretty closely to general guidelines for going into the literal sport.
1. Cut personal costs to a minimum.
Skydiving is an expensive sport. You can and will spend thousands just to get the lowest level USPA license. Plan to make cuts so you can plan to jump regularly. Being too cheap or having an irregular jump schedule is not good for you, especially when starting out.
2. Do not take funding.
In a few cases, a drop zone might let you clean bathrooms and pack parachutes in exchange for student jumps. However, taking out loans isn't worth it in the long run.
3. Connect with mentors and peers and listen to them.
Skydivers are full of opinions some of which are well-intentioned. However, the wise student will listen to their skydiving instructor and take advice from non-instructors ( or "peers" in general) with a very big grain of salt. This includes advice from the Internet.
4. Don't tie yourself to one idea.
It's smart to have a plan but you have to make sure you have a plan B or C both in freefall and while flying a parachute. The situation on any given skydive can turn on a dime and you have to be ready to react without panicking.
5. Don't make plans or set deadlines.
The tag line for that is a bit deceiving with respect to what the advice here actually says. You DO want to plan your skydive. The bit about "not looking back" once you commit I can buy. Once you're out of the plane, it's obviously too late to change your mind and go back in.
"Do not take funding...For most new entrepreneurs, investment is a cushion that delays their learning. If you're thinking of raising investment to cover your personal costs, don't - instead, learn to make money. It's really not that hard."
You said this was controversial so I don't feel at all bad for refuting this. I'll start by agreeing with the idea that making money is a learning experience and entrepreneurs should do whatever it takes to make money...but don't forget these two things:
1) An investment is way more than the money. If you accept an investment round from a reputable investor, you are accepting mentorship--in the form of recruiting help, connections to other companies or industries, not to mention an investment is made to help an entrepreneur to scale so the company can make money at an exponential rate.
2) Some companies do not strive to make money initially--their goal is to create a great product for their users--but for their service to continue, they need money to operate and scale...this is has been especially true in social media, case in point with Pinterest. Pinterest has raised a shit ton of money, but haven't started monetizing to a great extent. If they had just gone for the money from the beginning, whether through ads or what not (and this applies to even Facebook), their service would probably have been far less attractive and usage significantly lower. Many times, monetizing is about timing. Pinterest WILL monetize as Facebook did and Twitter is figuring out, but it has come after a while of being in establishment. Without investment, these companies would again, not be where they are today. That money is absolutely necessary to keep operations going, whether its through labor, scaling, office space, etc.
So your companies may have been revenue-generating from the beginning, and if that's the case then by all means, making money and not taking investments is decently good (still controversial) advice but that advice is not applicable to companies that aren't revenue-generating in the beginning. You can't forget about these companies as they actually tend to be what consumers move towards and is exactly why when companies like these do monetize, they are able to.
1) Yes, but you can get the mentorship without the burden of the investment, which locks you into a specific idea and protects you from learning how to make money.
2) Absolutely correct. If you're just starting out, don't start one of those companies. These are great companies to start after you've built something profitable and learned the basics of running a successful business. Why not start a lottery ticket company (that's how I call them) first? Because they're harder and less likely to succeed. I'm a big fan of setting yourself up to succeed. :-)
1) What if your company is indeed growing but not scaling at the rate that it needs? An investment would boost that ability correct? An owner would be able to hire more employees, perhaps buy more necessary technology, etc.
2) I don't think that is good advice. Zuckerberg had built things previous to Facebook but never anything that made money. I am not as familiar with Twitter and Pinterest's founders but I don't believe they had money-making businesses before. If a service is good and attracts people, why not build it??
1) Then you're not in the "early founder who just jumped out of the corporate world" ship anymore. Congrats. You're now the owner of a successful business looking to scale.
2) That's a lottery ticket, not a plan. 99.9% of the facebook-alikes failed so miserably you didn't even hear about them. That's roundabout your chances if you go that way. I wouldn't quite my job for a 0.1% chance of making it.
Both ended in a somewhat messy way (in fact, Woobius is still not quite ended) so I didn't feel like there was a clear point to draw a line and write a post-mortem.
Thanks for writing the article and for sharing what went wrong. I really love your advice for not taking funding and connecting with mentors and peers.
I'm sitting in my comfortable chair so I don't know what the other side of the field feels like but I am curious about the advice regarding not setting plans or deadlines. This might be a personal thing but I always found myself more focused and more likely to do something if I have a plan and/or deadline.
Does your advice specifically mean don't go back to the corporate world by X months or does it extend to all aspects of trying to find that right idea?
The advice there is specifically about not setting a plan that "if it's not successful in 6 months, I'll go back to this other job in a corporation" - because I can practically guarantee you the deadline will pass without the desired success and it will just make you feel bad, or worse, you might have made a public commitment and then maybe you'll actually go through with it.
So, do make plans about what you'll achieve, but don't make plans to "achieve it in X months or go back to the corporate world".
Food for thought: I also took money for my first ($10s of millions), and while I did OK I'm no philanthropist. (Odds are high that the bits you are reading traveled through equipment that my company built.)
It might be: Because of taking money the first time that we appreciate the ability of dialing back the burn to zero and building from scratch. Investors are rarely worth it.
This was a great write up - thanks!
Taking the leap is especially scary, particularly when I've got a mortgage and so many bills. I hope to make it one day.
For me it is a crazy leap, I have huge student debts, some other random debts, normal corporate jobs don't pay enough to cover the debts, and finally, there are no bankruptcy for individuals in Brazil, you stay forever in debt, and when you die relatives inherit your debt.
That sounds pretty terrible... is there a way for you to escape from this crazy country to one where you can declare bankruptcy? It sounds like you're basically in indenture servitude at the moment.
The best wage I found for a programmer is around 2000 USD/mo (unless you work with SAP, then you can get 7k/mo but I don't work with SAP)
There are no way that I would cover my debts with a normal job unless I got really lucky and someone decided to make me CTO of a medium company or something like that
Situation isn't much better here in Portugal, but it is slightly better. Why not jump over the ocean?
Average for a developer is around 1000-1200 EUR/month. If you are good and have a good track record 1500-2000 EUR. It isn't much after taxes, but compared to 500 USD/month should allow you to pay for your living expenses if you are frugal and make a dent on your debt.
And if whoever in the government is handling that really wants to be evil, he can give your debt to third degree cousins.
Of course, those third degree cousins can sue back to not get the debt, and there is a fair chance for they to win and avoid it... But if the government is hell bent enough in taking your money (usually happens when you debt is taxes debt) it can try that.
Brazil has two types of heirs, mandatory, and others. You cannot give more than 50% of your inheritance to others in your will, the point of that law is to now allow someone to give money to a distant cousin instead of wife, kids or parents. The issue is that this law summed with the debt inheritance, means that distant cousins are potential (But not mandatory) heirs of your debt, and evil enough government lawyers can make it happen...
My guess is that this was setup because Brazillians had the habit to go in debt sprees when they knew they would die (for example, guy know he has cancer, then he buys a yatch and enjoys himself until he dies, this law is to prevent that, but the side effects are terrible).
It'd be nice if the title were changed from "Taking the Leap" to "Taking the leap"; as well as being the true title of the article, it would remove any potential confusion with the Leap Motion devices. (I know I was initially uncertain which it would be talking about, though I considered the correct one more probable.)
I think it's because I moved from Employee to Contractor, to Consultant/Occasional Contractor before I really got deep into building products that it never seemed like I was in a particularly scary place.
I was already spending several months at a time voluntarily without work, and taking contracts when I needed to. The only real difference was that instead of travelling and rockclimbing full time during those breaks, I was parking it in one spot with the laptop and writing code. And I guess I started referring to those consulting gigs as "bootstrapping".
That might be a good path to look into if you want to make the transition from "guy in a cubicle" to "dot-com thousandaire". There's plenty of room to take it slow.