Starting a Company

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  • Mailbag 11:17 pm on June 10, 2012 Permalink  

    I’ve started too many companies 

    I moved to Spain with my parents when I was 11.

    I have severe ADHD and dyslexia.

    I didn’t finish high-school.

    I opened a bar when I was 22 years old, and lost a ridiculous amount of money before it closed a year later.

    I started a software company with a friend of mine. I got tired of the friend and soon got tired of the company.

    I started doing freelance work in “online marketing” very generally. Did some work with some local fashion boutiques to get them online. I learned a lot, but I felt I was being dishonest with my clients and not delivering the results they needed.

    I decided I ought to go back to work, that I still lack a lot of experience and discipline and might be able to get this by working with more seasoned startupeers.

    I joined a start-up that dealt with online fashion sales. I was fired after one month. They said they couldn’t afford me, and that I’d oversold myself.

    I joined another start-up and got fired.

    I find myself losing faith in myself, not sure what I’m doing wrong. I’ve often times when reading your blog feel like your brutal honesty and ability to cut through the bullshit is something that would help me out. I feel that I am very strong at some things (thinking outside the box, risk taking, sales, schmoozing) but really bad at other things (planning, “sticking with it”, networking with people I don’t automatically like).

    In my heart what I want to do and be is an entrepreneur. I enjoy the thrill of creating something from nothing. But I don’t really have an “idea” now. My family urges me to keep looking for a job, even if it is one I’m not too excited about.

    I feel like I’m at a crossroads, and that if I compromise now I’ll lose something intangible.

    I haven’t felt this lost and directionless in probably at least a decade, and I think I’m at the point where I could benefit from your advice.

     

    • Penelope Trunk 11:26 pm on June 10, 2012 Permalink | Reply

      Force yourself to find an idea. You can’t work for someone else. You’ll always get fired. But that’s ok. That’s true of all entrepreneurs. I’ve been fired from every job I’ve ever had.

      You have been very successful working for yourself. Have faith in yourself that because you’ve been great working for yourself in the past you will be that way in the future.

      Here are some suggestions for finding a new idea. Sign up for Ramit Sethi’s class Earn 1K and read Chris Guillebeau’s book about the $100 startup. Those are good ways to get ideas.

      Good luck!
      Penelope

  • Mailbag 7:29 am on May 4, 2012 Permalink  

    Is the sex worker industry a good idea to get fast money? 

    I have an idea for a yoga studio in LA, but I don’t have much cash. I was thinking of escorting on the side to pay my bills while doing this. I was wondering should I do this? I’ve always been open minded. Have you ever participated in the sex industry, or tempted to?

     

    • Penelope Trunk 7:30 am on May 4, 2012 Permalink | Reply

      The problem with the sex industry is that it’s a dead-end job. So there’s no point in doing it unless you can turn it into something that is not a dead end. And in this case, I don’t think you are able to do that.

      Because I don’t think you have a good understanding of how yoga studios make money. The most successful business model for a yoga studio in LA is all marketing and connections. Running a yoga studio in LA has very little to do with yoga. The yoga world is way too competitive and heavily funded by companies who use the studio as marketing to get people to the things that really make money, like conferences and retreats.

      If the only way you can figure out to get money is the sex industry you’re probably not well connected enough to make a go of the yoga studio. Even with the extra cash.

      Penelope

    • Sadya 6:30 am on May 5, 2012 Permalink | Reply

      By far the most interesting question posted in the mailbag. What do you think about Belle de Jour ( http://en.wikipedia.org/wiki/Belle_de_Jour_%28writer%29 ) , she became a callgirl to sustain her education- Ph.D in forsensic science. And well lets face it she did make money in the short-term & with her identity revealed, in the long term as well.

    • Penelope Trunk 8:00 am on May 7, 2012 Permalink | Reply

      This seems like a pretty poor example. She is known for being a call girl to support herself, right? So that is her identity and I think very few women would want this for their life. The call girl thing as a means to an end only works if it’s temporary and gets you to somewhere new. Otherwise the call girl thing is a means and an end.

      Her story also speaks to a huge problem with the sex industry which is that many women think it’ll be temporary but the money and attention are intoxicating and it’s hard to stop once you start. I think she’s a good example of that.

      Penelope

    • Ellie 10:17 am on May 7, 2012 Permalink | Reply

      If she were in a good PhD program she would receive a stipend from the school, probably additional grants from the govt and outside grants from endowments and scholarship funds.

      A good rule for PhD programs- if the school doesn’t pay you enough to live- don’t do it. If you can’t make money doing your research as a student, you will never be able to after your PhD.

    • Penelope Trunk 12:28 pm on May 7, 2012 Permalink | Reply

      Great point!

    • emily 1:32 pm on May 7, 2012 Permalink | Reply

      Also, I think the question is an example of a quick solution to something that requires the exact opposite. It may be totally reasonable to want to own a yoga studio in LA – but the type of long term thinking the project requires is exactly the opposite of doing quick and dirty work.

      And by dirty, I don’t mean sex work. I just mean work that requires very little of your own planning. In fact, I think sex work isn’t a fast and easy way to make lots of money. If it were, a lot more people would probably give it a try.

      Also, after reading the wiki entry on Belle de Jour, it seems to me that she was a writer who happened to do sex work for a short period of time. So her identity wasn’t just as a sex worker. If she were a guy, people would just call her a journalist.

    • Charles 8:04 am on August 3, 2012 Permalink | Reply

      This is another, perhaps more relevant example http://www.mcsweeneys.net/columns/bianca-the-covert-toronto-escort-with-a-day-job. Assuming that this is a true autobiographical account, it fits the model of a woman working temporarily as a sex worker, making money for a purpose, and then calling it quits. Not advocating for this or suggesting anyone else should do it. Also not arguing for or against any points already mentioned. I do agree with Penelope’s comments though. Just thought I’d submit this column because it is interesting and relevant to the discussion.

  • Mailbag 1:20 pm on November 28, 2011 Permalink  

    I Need Cash to Start My Company 

    I’m about to found a business that gives users full control over their personal data. We just need some 200k to start.

    We don’t have the funds to bridge the 4 months to the launch. If we don’t get the funding by the end of the year, we will have to work in our day jobs again. And watch as someone else puts something similar on
    the market. Are we doing something wrong? How can we get funding?

     

    • Penelope Trunk 1:21 pm on November 28, 2011 Permalink | Reply

      Why can’t you do your day jobs and build the software at the same time? Just do it at night.

      Penelope

    • Mailbag 3:01 pm on November 28, 2011 Permalink | Reply

      Thanks for your answer, Penelope. I am working on this with a partner, and we are both dads and want to see our kids and family. In my case, a day job would mean a four-hour commute per day, working long hours in a job that mostly drains me. My ADD adds to that in hostile ways, so I foresee a miserable time with little to no results. Been there, done that.

      I’m now trying to convince him that getting the product live should have priority over the fundraising. At least, there are higher odds that we can make money in the long run. An once people start paying for the app, it’s also easier to convince investors.

      Or should I apply a different logic here?

      • Penelope Trunk 3:02 pm on November 28, 2011 Permalink | Reply

        You can’t really do a startup and see your family. I’m just being honest here. There is a lot written on this topic. When you take in funding, you are on a clock. For various reasons, but that’s how funding works. So everything must happen very fast. Most startup founders either do not have kids or they have their own money to live off of at the beginning. (You can read about this on TechCrunch.com -it’s a popular topic over there.) This is why only 3% of the companies that get funding in the US are run by women: women refuse to give up seeing their families. Men are more likely to agree to give up on their families for their company. That said, it seems like you are not, so you probably should think of something besides raising funding.

        Penelope

    • Kathy Ver Eecke 9:55 pm on December 1, 2011 Permalink | Reply

      EXACTLY! David Tisch gives a great quote on this in the last season of TechStars. One of the startups he’s mentoring doesn’t know what to do about a qualified applicant who has a, gasp, family. Tisch says “tell him that the culture we want to set up is around busting our ass. We’re going to beat everyone else because we’re going to work harder than everyone else.” They all know that no matter how passionate the guy appears to be, he simply won’t have the time to be the employee they need him to be.

      (BTW – you might like TechStars P. And you can watch online. Only 6 episodes a season. Though it also may fan the ‘gotta start a biz now” bug you’re fighting.) You could also probably get booked as one of the mentors…now that I”m typing this I’m realizing that you probably already have….doh.

    • Sean 12:34 am on October 22, 2012 Permalink | Reply

      A 4 hour commute daily sounds like the perfect time to be working on your side business. Just ditch your car & take the bus/train
      S.

  • Mailbag 5:59 am on November 15, 2011 Permalink  

    How to Test a Business Idea 

    I have a couple of questions regarding and online start-up idea…
    If you have an idea for an online start-up, where should you go to see if others (influential people not just friends) think it is a viable (money making) option too?
    Where would you begin to look for investors if this is your first idea you would like to bring to fruition?
    How do you draw in investors in order to fund this idea while it is in infancy?
     

    • Penelope Trunk 6:04 am on November 15, 2011 Permalink | Reply

      First, 90% of business ideas are terrible. To test a business idea, you can ask almost anyone who has had a business before. Most business ideas are so bad that you don’t need a special person to give you feedback – lots of people can do it. (This is true for my ideas, too!)

      When no one you know can tell you big objections to the idea you have then it’s time to pitch people you don’t know. Most entrepreneurs will field and email that says, “Hi, I’m thinking of doing [business idea in three sentences.] Does it sound like a good idea to you?” Entrepreneurs love evaluating business ideas. They will probably respond to the email as long as it’s a short email.

      When people you don’t know are telling you it’s a good idea, then pitch investors. The first one you pitch to will probably kill the idea. That’s okay. it’s a process. Then you start over. This is normal for an entrepreneur.

      The most important thing is that you should tell the idea to anyone who will listen. The more feedback you get the more you know about your company. If you are afraid someone will steal your idea then it’s probably not a great idea. You want to have an idea that you can implement better than other people — that’s your barrier to entry. And every fundable business has a barrier to entry.

      Penelope

  • Mailbag 8:14 pm on October 30, 2011 Permalink  

    Tips for Going Freelance 

    Are there steps that you recommend taking when beginning a freelance career in the middle of the recession that perhaps wouldn’t be done if the economy wasn’t such an unknown? I’d like to know if there are any specific precautionary steps that one should take, such as having 6 months of expenses covered, etc. etc.
    Thank you for your help. It’s very scary to think about going freelance. I’m procrastinating, but I know I need to start pitching for work.
     

    • Penelope Trunk 8:19 pm on October 30, 2011 Permalink | Reply

      First, when thinking about one’s career, there is never any point in considering the wider economy. Meta issues of the economy should not impact your personal career decisions because you do not have control over the economic winds of large governments. You do, however, have control over the things that make the difference between success or failure: grit, risk tolerance, optimism, lowering expenses, staying focused on revenue.

      So keep your eye on your goals, and don’t worry about the economics of the world around you. It’s very hard to have six months of money saved up, and it’s not clear that that will help you much, anyway. Because the life of a freelancer is learning to deal with an endlessly fluctuating and uncertain income. So whether you get started getting used to that six months later, or six month earlier, I”m not sure matters.

      The most important thing to do to prepare for going freelance full time is to pitch yourself full time. Most freelancers spend 80% of their time marketing and 20% of their time doing the work they are pitching to do. So you can start doing the marketing right away. Pitch all day. Think of a wide range of ways to drum up business and try them all. Don’t put all your eggs in one basket. It’s a cliche, but it’s a cliche for a reason: it’s so much easier to have one basket than ten.

      Penelope

    • Lori 3:54 pm on November 14, 2011 Permalink | Reply

      i love your response here, penelope.

      i started my first business while freelancing. basically, i freelanced so i could afford to start a business. my recommendation would be to find a way to soft land — find a part-time gig or line something up that would cover up to half your money needs while you start building a client list. ALWAYS ask current clients for ideas of other people to ask for work. that’s how i got most of my business — word-of-mouth referrals from people who would never have coughed up the information if i didn’t ask them for it directly.

  • Mailbag 3:43 am on October 27, 2011 Permalink  

    Should I Go Freelance? 

    I’ve been with a social media marketing start-up for a little over a year now. Our founder has made a lot of bad choices. Partly because he doesn’t know social media and also because he put his faith into a poor sales team.
    We are now at a make it or break it point. I feel like I know what it would take to make a successful social media marketing company, but it would be entirely different from our current company, which may not fall into the vision of the founder.
    Also, I currently do all the social media fulfillment for our clients. Everything. I’ve invested a lot of my own money in reading business books, seeing Seth Godin speak, and spend most nights blogging and reading articles on Hacker News. Yet, as long as the CEO/owner is in charge, I lack faith in the direction of the company.
    Is it worth rebuilding the company or better to just start my own? How do you know when you should leave a start-up as an employee?
     

    • Penelope Trunk 3:46 am on October 27, 2011 Permalink | Reply

      What you’re really asking is should you be do freelance social media instead of working for a company, right? Because that’s what you’d be doing, at least at first — you’d be selling the clients and then fulfilling the sales.

      So if you can make it on your own, then you should leave. But selling social media is way more difficult than fulfilling social media. So if you think you can sell social media and do it on your own, try it now, while you’re employed. Get a few gigs on the side to see if you’re good at selling. And if you are, then by all means, strike out on your own.

      But if it turns out that you don’t like the sales part, then maybe you should just go get a job at a company that has a vision you respect.

      Penelope

  • Mailbag 3:15 am on October 13, 2011 Permalink  

    Startup Self-Doubt 

    I have a startup and sometimes I am struck with extreme panic and worry. Do you have this? What do you do about it?

     

    • Penelope Trunk 3:15 am on October 11, 2011 Permalink | Reply

      First of all, if you are not scared that everything you are doing is stupid then you are not doing a startup.

      The way I cope with those feelings is I redirect. I tell myself to think of something else. I remind myself that I grow mentally bored when I do not have a company that I’m working on.

      If that doesn’t work, I tell myself, what else am I going to do? Get a job? And then some days I’m like, yes, I should get a job. And then when it’s time to send out resumes I tell myself, no I don’t need to do that because I’m doing a startup.

      Penelope

    • Jennifer Soodek 4:18 am on October 21, 2011 Permalink | Reply

      Start up anxiety is real. Every time we start something new, we take a risk that it may fail. I have been training teachers and parents for years, espousing that the definition of learning is trying something you haven’t done before. It is a risk. You may succeed, you may fail. But either way, learning will occur, and actually I believe deeper and more meaningful learning occurs when we fail, because then we need to strategize, think creatively, and problem solve to right the wrong.

      I am on my third start up, feeling the stress because I can’t predict the future. When I start to panic, I write a blog post, tweet, read, research, and make sure I am doing something constructive. It is a challenge, but that is what I need. So i take it day by day, and try to learn something new, reach out to someone, connect, and interact so I can network with people who are facing similar issues.

  • Mailbag 6:15 am on September 8, 2011 Permalink  

    Business Idea: Help People be Creative 

    I´m an ex creative director. I worked in advertising for many years and then had to leave the agency life because I was unable to combine it with parenting.

    Now that I go to playdates I´m quite horrified of the lack of creativity that I find in most homes. I strongly believe that creativity thinking should be a compulsory subject in any school, specially nowadays. We know that academic results won´t translate into success and our kids will have to invent their careers, and yet we put them in front of the tv or give them toys that are all but inspiring or challenging.

    I want to start a business to teach creativity thinking in schools. I also would like to teach directly to families ( I would visit them, talk about their values etc, play with the kids for a while to understand their personalities and then give them a bunch of tools and info they could use to improve their creativity skills).

    What do you think about it? Any advice, ideas…? I´ve never started a business so I´m quite clueless of where to start.

     

    • Penelope Trunk 6:18 am on September 6, 2011 Permalink | Reply

      There’s no money in teaching people to be creative except if you want to teach corporate America. And selling anything to schools is very hard procedurally.

      I think you don’t need to solve other peoples’ creativity problems. I think you need to solve your own. You’re bored.

      I know the feeling. That’s why I’m answering your email with my kids sitting right next to me :)

      -Penelope

  • Mailbag 12:23 pm on August 29, 2011 Permalink  

    Funding for Non-Tech Companies 

    I am trying to get a startup funded, but high tech seems a lot easier to get funding for. I am interested in the fashion industry and I think it is harder to get funding.

     

    • Penelope Trunk 12:24 pm on August 27, 2011 Permalink | Reply

      It’s easy to get funding if you have a good idea. The idea is the hardest part.

      Funding works if you present to investors a big possiblity of an exit. Investors want a big exit. If you can’t give them that then they are just investing for their ego — and you have a really small investor pool for that.

      That’s why I said if you have a good idea (like, one with a big exit) then funding is easy.

      Fashion, restaurants, etc, are not really fundable. There’s no exit except in rare cases.

    • Alesya 5:20 pm on August 29, 2011 Permalink | Reply

      While I can’t offer you funding, I could offer you some ideas to keep start up costs low for the fashion market. Feel free to reach out!

  • Mailbag 2:55 am on August 2, 2011 Permalink  

    Book List for Founders 

    I am a huge fan of your work, and I recently started to consider starting my own business. I was wondering if you have ever published a list of your favorite books for starting a company?

     

    • Penelope Trunk 3:03 am on August 2, 2011 Permalink | Reply

      Rework, by Jason Fried so you can recognize when you are getting nothing done.
      http://amzn.to/qT8Ltr

      Art of the Start by Guy Kawasaki for a fun, Silicon Valley-centric intro to startups.
      http://bit.ly/nJJcJ3

      The Dip by Seth Godin so that you can see what startup life is really like. (Preview: It’s very very hard.)
      http://amzn.to/qtNs6V

      Really, though, you should read blogs. You should read about where you are — you know, if you’re at the beginning then you’re not at the dip, for example, and if you’re funded then you are not at a good spot to read Jason Fried.

      Blogs are more helpful than books because you can find exactly the right topic at the right time if you search blogs. And read Tech Crunch, too, so that you know what’s going on right now. Tech Crunch will enable you to talk the talk.

      Penelope

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