I have a side project with a few friends that's gradually getting more serious. We're nearly at the stage where we'll be taking some early clients, which is really exciting after about a year of intermittent part-time effort. The product is a web service, and so the startup costs are almost entirely time rather than money.
I have a tight schedule, and this isn't something I do entirely for fun, so I try to challenge myself to justify the investment of my time, from a financial perspective. I'm having trouble! I'm effectively working for equity or stock rather than salary, and unable to resolve the dissonance between this arrangement and prevailing advice that:
- Most startups fail
- It's not a good idea to invest in individual stocks unless you have the knowledge and resources of a large investment firm
- As an early employee of a small company, therefore, prioritize cash compensation over equity, which is effectively "a lottery ticket"
I do have conviction that our service brings a lot of value to the industry where we're introducing it, and get excited about that opportunity, but it just doesn't square with what's become financial common sense at this point.
My question isn't about seeking personal advice, it's this:
For the reasons above, why does anybody ever start a company?
New companies are started every day, so I must be missing something. Are all companies started by people with the hubris to think they're the exception to these rules?