Start-up like it’s 1999

(Originally published in Beta, CSE@UNSW’s student newsletter, week 13 session 2, 2007. http://cgi.cse.unsw.edu.au/~beta/archive.php)

Alex knows nothing about starting a business, which is why he did.

What are you going to do after you graduate? Sell your talent, creativity and daylight hours to a bank? Stave off the soul-selling by doing a PhD? Well stop right there; there’s another option that’s both harder work than a PhD and pays less than a pin-the-graduate-on-the-donkey job. You can start your own business, code that sweet application you’ve always wanted to and take on the world on your terms. And as it happens, your complete lack of experience may turn out to be an advantage.

The benefits of launching a start-up are probably already apparent to you – work on something you really enjoy, in your own hours, wherever you want, doing it your way. What you might not realise is that you can actually do it. Right now, your biggest barrier to starting is probably your fear or lack of confidence. But soon after graduation, when you’re young, enthusiastic and unencumbered is the perfect time.

Being young has serious advantages when it some to starting something. You’re idealistic, enthusiastic and persistent, not yet having been beaten into submission by the real world. Starting your own thing takes a lot of enthusiasm and stamina, perhaps even more so than it takes actual talent. While your skills will improve with experience, your enthusiasm for tackling hard stuff is unlikely to rise throughout life. Just as importantly, you have no idea that what you’re dreaming of can’t be done. Or, if it can, how hard it will be. This is ideal, because if you knew what was in store you might never start. Ignorance coupled with enthusiasm is a formidable weapon. You also don’t need to know much about business to start a start-up. Actual success might require some knowledge but you can pick that up along the way. Your real focus should be creating a kick-ass product or service that everyone loves, which is much harder. Only with your product will business experience even become relevant.

Fresh from uni you’re also cheap, another advantage. Reducing your quality of life is hard; someone whose climbed up to a six-figure income will have a far harder time rationing savings than will a student. You live in poverty already so not having a regular income won’t seem like a big deal. For many start-ups, the biggest cost is the people. If you and your mates work for free then your costs will be practically zero. (Living with your parents is even better – not only is life cheap but you don’t have to waste valuable coding time on meanial tasks like cooking and cleaning).

Another advantage of youth is that you’re not tied down; by responsibility, by family, or by (much) debt. A mortgage and a family to support makes it difficult to justify the risk of dropping everything to follow your dreams. Age breeds risk-aversion. But right now you have nothing to lose. Sure, you’ll burn through some savings and quite likey fail, but that’s far less of a deal in your early twenties than mid-thirties. You’ll have plenty of time to pick yourself up and start again. Later on in life, you might not have that luxury.

Somewhat paradoxically, failing at starting a company when you’re young is actually a huge success. Failing when you’re older and supposedly wiser is probably pretty embarrassing, especially if you end up broke. But failing when you’re young and stupid is, if anything, glorious. Everyone will be full of praise for your determination and guts*, wishing they’d been as reckless when they were young. A good thing, since failure is the most likely outcome. But it’s fear of failure that’s the problem, not failure itself. Running your own business, even if you fold, is great fun, and failure will teach you many lessons. Far better than getting a job, failing at a start-up is probably the best experience you can get to prepare you for… the next one.

If you dream of working on your own terms, now is the time to do it. In fact, why wait until graduation – if you work fast you can probably fail one business even before you’re wearing the mortar board.

 

* I hope

PPX update

I’ve been playing the PopSci Predictions Exchange since writing about it a few months ago. I only have time to visit a couple of times a week so I’m no day trader (and the site is so slow, day trading would be a royal pain). I find myself doing quite well regardless. My goal is to break, and stay inside, the top 1000 traders. I’m currently sitting just outside at around 1050. There are some 20,000 trader accounts so this puts me in the top 5%. No doubt many accounts are quickly abandoned so a percentile ranking increases naturally just by holding money in the bank, hence my goal is an absolute ranked position. To maintain that I’ll need to continually improve.

There’s a clear power-law distribution of trading success. Relatively few traders do very well, and there are large gaps between the top players. Then as you move further down the rankings more and more traders have similar balances and any given difference in rankings is marked by a smaller difference in balance.

I’ve only recently discovered techniques for getting my virtual dollars to work harder. I was initially disappointed that their market prevented huge risk/reward profiles otherwise possible by shorting unlimited stocks and using this “borrowed” money to go long. Instead, money is taken from your account equivalent to the short stock’s value, and repaid when you cover. But I have now realised that if a short stock falls a fair way you can cover the bet, recovering capital, then short again at approximately the same price but with a far lower capital outlay. This leaves a bunch of your money free to invest in other stocks but, apart from a small commission on trades, doesn’t affect your total profit from the shorted stock when you eventually cash out.

Given this fairly recent discovery, I’m confident I can crack the top 1000 without devoting too much more time to trading. I would really like to find a real-money technology prediction market, trading against other punters. Even given the number of traders who probably don’t take PPX too seriously, my performance is probably an indicator I’d do quite well out of it. Unfortunately all the for-profit markets I can find are political, sporting, weather etc. Maybe I should start my own.

Update: I cleared the top 1000 since this post. I’m now in the 800s.

A call to comic authors: annotate

Amongst the many gems that Ryan over at Dinosaur Comics has produced there is a strip about how the humour of a joke varies in inverse proportion to the number of people who will understand it. I love that strip and was looking for it recently to help me make a point, but I couldn’t find it. As enjoyable as browsing the Dinosaur archive was, the experience was marred by frustration that I could find what I was looking for. These days, everyone is used to being able to find whatever they want online, and find it quickly.

The problem, of course, is that I can’t use a search engine to find it. None of the queries I tried turned up the comic, or a page linking to it. For very popular strips this is sometimes not a problem — enough bloggers will write about and link to the comic that it’s easy to find. The strip itself still won’t show up in search results though, which I think is sad. XKCD should be the top result for “retrograde wheelbarrow”.

So this is a call to webcomic authors: transcribe your comics so that they’re easy to find, and take the recognition you deserve. You can hide the transcription in a hidden HTML element so it needn’t clutter up your page, but the search engines will find it.

P.S. Does anyone have a link to the Dinosaur comic I’ve been looking for?