The US, on Main Street and elsewhere, is just awash, coast to
coast, in successful sole proprietorships started with minimal
invested cash and no employees until they got (1) and (2).
Hiring employees and not being able to meet the payroll is a
really seriously bad BUMMER.

Starting a business from a bedroom is not a point of shame.
Some businesses move on to much more, and some do not, but in
either case vast expenses with half-vast revenue is a BUMMER.

A business in software has some astounding advantages: (1)
Can be nicely setup for software development for a few thousand
dollars in hard/software, and would need much more for most
Main Street businesses, e.g., an auto repair shop, an auto
body shop, a pizza restaurant, a BBQ restaurant, a franchised
fast food restaurant, residential general contracting, an
insurance agency, or just the truck and supplies for an
electrician. (2) Software, once written, usually has near
zero per unit cost of reproduction, and this fact can create
nearly a license to print money. (3) A piece of custom
software frequently needs revisions, and the revisions can be
really easy for the original author and essentially impossible
for anyone else forcing them just to discard the existing
program and start over, thus, putting them at a terrible
disadvantage compared with the original author. (4) The
software business continues to change rapidly yielding good
new business opportunities for people leading the change. In
strong contrast, in nearly all the Main Street businesses,
change usually comes very slowly with nearly everyone in the
business able to do nearly anything that is done. (5)
Software gets to surf the wave of Moore’s Law along with the
growth in the Internet, digital media, etc.

These advantages, however, do not mean that a software
business should rush to having expenses far above revenues.
So, still run the business with used furniture, cheap tables,
dangling cables, stuffed into a back bedroom until finances
clearly indicate it is time to get some actual office space,
etc.

..But how do you answer the VC’s who say you need a “team” before we’ll consider it? the old horse and cart problem.

what i have said is we’d rather spend the money we are generating on marketing and sales…not auxilary resumes.

I’m not sure that’s the right approach but wonder your thoughts…since you’ve likely said you wanted a team and yet warn against hiring too fast. I’m sure you have to thread the needle as to when to hire folks but any insight would be great.

thanks and really enjoy your blog!

So the thought of having to pay someone not only to make your envisioned product, but then have to pay them for all the revisions that will go into it before it is really making sense means dropping a /big/ chunk of change before upfront for something you have no idea will be desired.

Everytime I hear this I say spend $100 on LAMP books and while you waiting to get funding or an available engineer see if you can get even a simple version of the site going.

I’ll send them to this entry now too ;>