Comment by ilamont
3 months ago
Had an epiphany like this after an earlier startup project failed, which my cofounder and I had tried to do following the formulaic approaches advocated by various accelerators, investors, and experts (often people with zero experience running a startup, but had been involved as angels after BigCo stock options vested, and then got into mentoring local accelerators).
I hated the startup theater, pitching, networking, and accelerator applications including YC and TechStars and MassChallenge. My cofounder flaked. I wound down business #1, returned most of the investor capital, and then started out on #2, determined to do things completely differently.
For #2, I had 3 criteria:
1) Prototype on my own, without an engineer
2) Don't just talk lean, do lean
3) The product must generate revenue from day 1
While I am not an engineer, I had strong enough digital skills to set up websites and leverage other tools to prototype. Month 1 was building the prototype, month 2 was getting it out to the marketplace and actually getting some early sales ... and then plowing that money back into the business to improve the product. 10+ years later, the business brings in a respectable middle class income, has helped put my kids through college, and, as TFA articulated, lets me "pursue any and all ludicrous business models, with no oversight."
Like a lot of people who bootstrap, I had to consult as well (still do, mainly as a hedge against platform risk). I am eternally grateful to my spouse who not only has an income to help support the family, but also good health insurance (more on this below, see https://news.ycombinator.com/item?id=40707068).
The career accelerator people kill me. Honestly why do I want to hear from someone who's biggest risk was getting a job talking to people taking big risks.
I have a similar startup backstory to this, for my second venture I went fully to the get paid to do your work camp. It's still hard, harder than anything I've ever done, but it's working out.
> The career accelerator people kill me. Honestly why do I want to hear from someone who's biggest risk was getting a job talking to people taking big risks.
Professional talking heads will always try to convince you they are needed.
The harder they're pushing, the more suspicious I am. If they were needed as much as they'd say, why would they need to persuade me so much?
> 3) The product must generate revenue from day 1
You must have picked out your:
- Payment provider (e.g. Stripe)
- Authorization server (e.g. Auth0)
- Backend language and framework
- Frontend language and framework
- CMS for your website (e.g. Wordpress)
What else is there in your list of things you had to pick when starting a project? I'm very curious.
Most obvious thing missing is your hosting provider and how much control you want there (SaaS, PaaS, IaaS)
> but also good health insurance.
I'm always amazed how blatantly clear it is that having health insurance tied to employment specifically discourages this kind of entrepreneurship, and the ability to "strike out on your own".
Literally handcuffs keeping people at their jobs.
It really is a detriment to entrepreneurship in the U.S., as well as early retirement for those who have saved up enough money but are locked into a job until Medicare kicks in at 65.
One other observation: During the pandemic my spouse left her job to work with me full time. We had COBRA (health insurance based on her previous plan per federal law) for 18 months, which was great. Then we had to go to the open health marketplace. What a freaking disaster that was.
If you make any sort of middle class income, which we did through my business, you don't qualify for any breaks in our state's marketplace (Massachusetts Health Connector). The broker database they had for small businesses insurance was a joke - no one ever returns your call; it seems they are looking for midsized businesses where their commission will be larger.
I spent many hours comparing family plans on the Massachusetts Health Connector and eventually decided to bypass the marketplace and purchase insurance directly from the insurance company because it was a little less expensive and had a slightly lower deductible (but was still sky-high compared to COBRA/her previous employer's plan). We got reamed on the monthly insurance cost as well as the crazy-high deductible. She eventually went back to her old employer, and one of the primary reasons was getting access to affordable health insurance without crushing OOP costs.
Alright here are three health care reforms that we could implement without going all the way to Universal Health Care:
1. Anyone who pays cash for a procedure should pay a price that is no more than the lowest price that any insurance company has negotiated for the same service.
2. Anyone who buys a health care plan from the marketplace should get a price that is no more than 10% higher than the cheapest negotiated price any company pays for the same plan.
3. Anyone should be able to deduct the cost of health care for income tax purposes, not just companies that buy health insurance for their employees.
All else being equal, I'd rather see the pricing pressure done by market competition rather than enforced price caps benchmarked against some metric controlled by the industry (see Medicare Part D - gov. negotiates hard to only reimburse xx%, drug industry says fine, we'll just raise the book price - you'll get your talking point, and we'll still get our asking price).
So more significantly:
* bring back association health plans across state lines and industries, so small businesses can band together for group rates. https://news.bloomberglaw.com/daily-labor-report/biden-admin...
* Expand Direct Primary Care. https://www.dpcare.org/
* Allow primary care physicians, dentists, etc. to offer services without a state board providing "certification of need". This seems to just be gate-keeping / moat-building.
I'm not saying either or all of these are a perfect solution (nor do I think we need to find that solution immediately). As a small business owner, they'd make the health insurance handcuff problem easier to navigate by driving costs down.
I will say this - flying solo without health insurance does make you a FAR better consumer of healthcare services. You will comparison shop (made easier by price transparency rules). You will critically consider the necessity of gratuitous tests / procedures. You will learn that doctors are running profit-minded businesses like everyone else.
It also makes you reconsider some life choices (re: physically risky behavior).
I think the biggest fear I faced was the lack of catastrophic coverage (cancer, etc.). When we didn't have insurance (both small business owners) my wife and I probably consumed less than $1000 of direct services combined, per year. That part (direct pay for services used) was fine. Walking the tightrope without a safety net for expensive medical developments was our biggest risk. With kids it's even less of an option to operate that way. I've known many that have returned to corporate jobs for this reason alone.
It’s not as easy in reality as theory.
1) Services are often unique per patient. Even for patients with the same ICD-10 codes, the quality of service will vary. Hospitals cost different amounts to run. If you always peg the price to the lowest, it will be a race to the bottom for quality of service.
2) Patients are unique, with different health profiles, with different preferences for paying. Markets are different. Some markets only have one insurance payer.
3) Healthcare is already tax deductible
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Or just have Medicare for everyone.
The current scheme only benefits rich people whose ability to pay outrageous insurance rates is easy and less than taxes. Poor people get substandard care, middle class workers get boned. I spend more on healthcare than taxes, and half my taxes are paying for stupid healthcare, either directly or through proxy.
Is that universal healthcare with extra steps? Almost, but on a serious note, why not go all the way with universality?
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4. Go back to county hospitals. If you want to pay extra for the Cadillac plan and go private good for you. But let them compete against the county just like the 80s and prior.
Those are fair. But why impose them through regulations?
Entrepreneurs see business potential on this arbitrage opportunities.
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Yep. I’ve been saying for awhile now that universal healthcare would likely lead to one of the biggest small business booms ever. Not only does it help people strike out on their own, but makes easier/cheaper for them to hire.
Same for housing. In Tokyo median rent price for a 1BR is $600-$700. No onerous contracts either with month-to-month rental options. The freedom to explore creative and business endeavors without these worries cannot be overstated.
I'm going to be honest, I don't believe this at all. It seems like one of those things that everybody says because they want it to be true.
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On the other hand, it would make it harder for big business to retain talent.
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People don't appreciate how expensive health insurance in the US is. A high-quality PPO plan for a whole family on the open market can cost $4k/month.
On the other hand startup culture and entrepreneurship are much more common in the US, compared with the EU. But the latter does not tie health insurance to employment, in most countries. Probably other factors are more important.
I don't think so. I think it means other factors are also very important.
I think both things are true, that we're getting a bunch of things right toward a successful entrepreneurial culture, but are also getting this one thing massively wrong and leaving a huge amount of further potential on the table!
Doesn't mean Universal Healthcare wouldn't be a net win for entrepreneurship.
We should unlock all barriers to entry that we possibly can
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What are some good examples of countries with a different healthcare policy and more entrepreneurship, small businesses, and/or craftspeople than the USA?
Taiwan has a solid national health insurance plan. The number of small and medium sized businesses is very high for a country with a working age population of 16 million people:
Taiwan boasted more than 1.59 million small and medium enterprises (SMEs), according to the White Paper on Small and Medium Enterprises in Taiwan, 2022. This accounts for more than 98 percent of all enterprises, an all-time high. Further, SMEs employed 9.2 million people, representing more than 80 percent of the total workforce.
https://www.moea.gov.tw/MNS/english/news/News.aspx?kind=6&me...
I think the official number undercounts the many micro-businesses that exist around the food industry, markets, and services.
This is highly dependent on where you live. If you're unprofitable, you can qualify for Medicaid and various state benefits. If you're profitable, there are strategies that can make nearly all health care dollars tax-deductible.
It should still cost you less to hire yourself than it'd cost a company to hire someone to compete with you, even before considering things like pass-through taxation and agency problems.
This is not an accident.
This is the whole point.
Would love to know more about how you did step 1. What tools would you use or would you use today if you were in a similar position.
Any chance you can share? I don't have a particular project I need to pay a consultant for right now, but I'd be honest: if you wrote a book, I'd buy it and put it right on the top of my reading list.