The nuance about DCA that is commonly missed is that lump sum gives a better return on average. The key word is average; averages hide much!
When people struggle to understand that I say DCA can be thought of as a sort of insurance. You pay a price to insure your home to protect against the unlikely event that your house burns down. But on average buying insurance will loose you money. But the cost is comparatively low, and for each individual likely worth it to protect from total loss, even if in aggregate it's clearly a loosing proposition.
DCA is similar, most people will end up with marginally lower returns, however a small percentage of individuals caught close to a rare negative market event will be less impacted by sudden large drops and experience overall much greater returns in the long run than if they had invested as a lump sum due to the nature of volatility decay.
Absolutely. Sure, in a bull market you give up some upside but I doubt you're likely to really care. If I'm riding something all the way up and making profit, I'm happy. If I'm losing 20% or 40% of my money, I'm extremely unhappy. Human sensitivity to negative emotion makes the insurance worth it, imo.
And yes, averages are great for everyone but the outliers!
A few thoughts having gone through a similar journey from 0 to several million in revenue.
- The main thing when you are small to focus on is accurate high quality bookkeeping, rather than broader accounting. Almost all of the points you listed above are generally considered bookkeeping concerns (which ledgers to use, debits, credits, etc). So in terms of material to read and learn, bookkeeping is your starting point.
- Most small business accounting software will take care of more than half of the points above automatically - Xero, Quickbooks etc, just pick one and use it - but it is always useful to somewhat understand the underlying principles.
- The only accounting principles you really need to know are having a decent understanding of the balance sheet, P&L and cash flow statement - which are all interlinked. It is wise to be be able to understand each line item on them and to know how changing a figure in one would change figures in the other two and be able to do that even with just pen and paper. This is just useful as a business owner, and is quite a large topic which requires some study and practice.
- Actual statutory accounting I would entirely leave to a 3rd party as it's mostly just for tax and GAAP filing purposes. From day one I just hired a small external accountant and at year end gave them access to our books and let them prepare our filed accounts, I also paid them to file the quarterly tax returns even though our accounting software prepared the statements. That was a good choice as after we'd grown eventually I ended up having the accounts audited by PWC and it meant I could just point them at our accountant and leave them to it. It also means you won't make any silly filing mistakes.
- Set calendar reminders and do your bookkeeping, payroll etc every single month like clockwork, for years I just did it on the 28th of every month, and only later once we were large enough to hire an actual bookkeeper did we start doing it weekly.
- Lastly, once you're under way the things to keep your eye on as a small business is: your cash flow, your working capital requirement (keep it as low as you reasonably can) and your debtor and creditor days (which is part of your working capital requirement). Those are the things most likely to cause you issues.
Also, don't worry too much about it, it's a learning curve - as long as you improve your skills and tools in line with revenue it will be fine.
A lot of what you said lines up nicely with what the other commenter said.
I'll start practicing what you suggested. I do weekly bookkeeping for my family's finances, and I wrote a script to check it for inconsistencies. However, I'll also use it as a way to learn more deeply about the balance sheet, P&L, Cash Flow, and their links.
Best Buy has an inventory turnover ratio of approximately 6* - So clears its entire stock on average every 8 weeks. While there might be a large percentage of USB-A products currently, once a technology market shifts it's quite surprising how fast suppliers will also change their product supply and you see a fairly rapid change in stock even in big box stores.
Most of the devices I have purchased in the last year have been USB-C. Sony headphones, LG display, my car even has USB-C charge ports. Look at many manufacture lineups and the new flagships are USB-C. I do still have a bunch of USB-A devices, but they're older buys at this point.
I think there will be a few year gap, but 10 years might be a little too pessimistic. Time will tell I guess!
Well we're already 3 years in since the new generation USB-C only Macbook Pro came out. Let's call it 7 years for a total of 10. Not putting a lone USB-A port on it was an act of extreme arrogance imho
The most striking thing about visiting the southern industrial cities for me was how (especially towards the outskirts) they tend to build the exact same residential skyscraper several times next to each other. You just don't really see that in Western cities so much.
These are part of the same apartment complexes, which are like gated planned communities in the states, except with apartment buildings rather than houses. In Beijing, most housing outside of the 3rd ring is like that...heck, even inside the 3rd ring, you'll see a lot of communities, just with lower height buildings because they were built much earlier.
Not just beijing, but other big northern cities as well. Hell even "small" cities. River fronts along songhua on all the cities around there have >>30 story apartment complexes with like 5-20 identical buildings each. One of them uses giant lights to make a sort of pixelated movie screen at night, which only passably works cus the buildings are all the same and run by the same complex.
Repeated, cheap residential housing is common everywhere, it's just a matter of height. In the US, we have cookie cutter suburbia. In England, you have row houses. In Spain, depending on the city, you go from 5 stories to 12 or so, depending on the city: For example, do an image search on Malaga around the bullfighting ring. China is just building taller.
There is a huge amount of cheap, cookie-cutter housing in American suburbia. In fact, I suspect a large majority of single family suburban houses built in the last 50 years are rubber stamp clones from homebuilder planbooks.
See the very old song "Little Boxes" by Malvina Reynolds, also famously covered by folk singer Pete Seeger. I loved it back in 1960, when I was a kid revolted by the sameness of the suburbs.
The blueprint was Corbusier's "Radiant City" proposal [0]. It took hold in the US in the form of lower-income housing projects. It turns out that it combines the worst of city life (anonymous neighbors, no personal outdoor space) with the worst of suburban life (unused common areas, lots of wasted space).
I don't understand these criticisms. As an American, I think our cities would be vastly improved if we copied this form of housing for lots of people, instead of just low-income housing. (In my city, the low-income-only housing is usually the highest quality housing across the city, and is far nicer than anything a mid-income person is allowed to purchase).
The current alternative that US prefers is far worse, in my opinion -- these micro-unit apod-ment things, with no personal space, no outdoor space, grossly overburdened personal-areas-forced-into-common-areas, and general dorm-room-for-life lifestyle.
The research on this tells a pretty dismal story. They seem like they should be better, but people almost universally report preferring the slums that were torn down to build them.
Communities that grow organically look messy and gross. And there's a certain personality type that wants to come in and fix the mess.
-Central Park is a desirable place to spend time, unlike the artificial, pseudopublic spaces that separate highrise complexes.
-Population density is _much_ higher in those neighborhoods than you get with multi-building highrise complexes.
-There are shops nearby that, along with the park, provide a reason for people to spend time there throughout the day. People don't like spending time in deserted plazas.
> Central Park is a desirable place to spend time, unlike the artificial, pseudopublic spaces that separate highrise complexes.
Have you ever lived in a high-rise surrounded by open space? A lot of people, myself included, really like it.
You're stating your own personal preference as if it were some universal fact.
You also seem to have a limited understanding of housing design. For example, lots of Corbusier-inspired high-rise developments have shops and restaurants mixed in among the parks and buildings.
I suspect the bulk of the complaints people have with high-rise housing projects for low-income residents in the US are driven more by the policies and operations of low-income housing - lack of maintenance, poor security, etc. The design model has worked out quite well for higher income residents in plenty of places - even in the US, for example, near south Florida beaches.
You're right; I'm commenting the negative examples that constitute developments I've seen. I'm sure that it's possible to enjoy them. After all, people love cruise ships.
To an incredible degree. We moved apartment complexes in Beijing because one had a better central area than the other (both were used, but the latter one was used much more).
> You just don't really see that in Western cities so much.
You should visit the projects in the NY area or chicago. There are rows and rows of same red apartment complexes. But those seem to be falling out of favor now as they are being torn down.
There are many things you can not indemnify yourself against - so indemnification against 'any consequences' is not possible.
Apple can not update their EULA for Apple pay, and avoid being held negligent if they messed up and all their customers money was stolen from their accounts. Otherwise every single EULA would make all software companies legally untouchable - which they aren't.
> Apple can not update their EULA for Apple pay, and avoid being held negligent if they messed up and all their customers money was stolen from their accounts. Otherwise every single EULA would make all software companies legally untouchable - which they aren't.
This is very different, Apple are responsible not because they are providing you the software but because they are providing a service and that service involves transmission of funds and that scopes them to a completely different set of obligations. If I provide you with an open-source bitcoin-wallet under an MIT license and do not make claims of security or guarantees of any kind and you lose bitcoins due to security issues in said software - it's your own problem. That is in the former and later-case there is a clearly identifiable party which is providing the service, or in the later-case self-service.
With Ethereum it's much more of a gray-area, one could argue slock.it is only providing source-code and your choice to use it in a particular way (interacting with other users, the DAO) is done entirely at your own risk; though I'm not sure that interpretation would stand, since there definitely is a degree of centralized marketing by particular participants - and obviously non-compliance with SEC rules etc.
I was just using an example to refute the claim that it's possible to indemnify software creators and users against 'any consequences' via a EULA. A EULA can not indemnify you against tort.
I think your example is convoluted. Free open source software has no contract. For a contract to be legally binding it must have consideration (exchange of goods / services / promises). This is not met.
EULAs and 'Software licences' (like MIT) are't the same thing. A EULA is a legal contract between the copyright holder and the end user, containing consideration, to which the user must agree. An open source licence such as MIT is just a declaration of permissions of use, and has no consideration.
So above it seems to me you are comparing having 'no contract' to 'a contract'.
But the DAO definitively has a contract, not a licence agreement.
Now, the DAO contract basically says 'no one can be held responsible for anything' - which in my opinion is a legal fantasy, contracts can not supersede the law. Regardless of the technological hoops in between, there are real people, with a binding contract - thus there can be tort.
I do accept when ever something new comes along and case law hasn't yet settled any technical loop holes there will always be debate, but I do think this looks pretty clean cut.
But who's the responsible party? If the developers did their due diligence and everything that could be expected of them, who other than the thief could be sued?
And under what circumstances can you even declare that person to actually be a thief in the sense of the law? Everybody's assumed to have studied the thing they're paying for - whose perception of what the system allows and is meant to do goes, legally?
That of the person with the best understanding of the code (would mean the thief can't be legally wrong), or of the majority (would mean that highly technical niche contracts could be completely derailed legally by "noobs" flooding the market), or case-by-case?
Setting the standard as "what the code appears to do when reviewed by average developers" would be very legally unpredictable. It would also illegalize a lot of useful and beneficial benign "hacks".
Well how things would go if they went to court I have no idea. That's anyones guess really. But that's a different tangent.
All the questions you're asking are, essentially, what would be argued on.
But my point was that none of the involved parties can just indemnify themselves against any consequences. With sums of money like that, any of those parties could well be sued, and end up in court. You can't EULA yourself out of that.
I don't think that is the same - There is no claim that rules of written law always gives the most favourable outcome. But rather that the written law (or contract, in this case) allows for the reality of human error or omission by leaving space for human interpretation, enforcing the underlying intent, rather than strictly enforcing 'bugs' in the contract.
After all, there are almost always small mistakes in complex systems. The system of case law is, essentially, a structured way of turning differing interpretations into a stricter framework over time.
There are no bugs, there is just the contract, and the intent, and the difference between the two.
My point is, the institution of law needs to be trusted, yet patent-trolling exists because the institution has failed to apply fair judgment and common sense such that ridiculous legal structures have prevailed.
I disagree. While the use of the word 'bug' is often stretched (i.e. feature requests being made in the issue tracker), the contracts in this case are not purely the product of a writer - they are also a contract, as in a written, explicit agreement. Calling an unintended consequence a bug may be true from the perceptive of the writer, but not necessarily from the perspective of the second-party, who may have agreed to the written contract, but not the "intent". Hence a document with two parties does not have objective bugs in that sense, unless both parties agree, which is not the case in disputes requiring a judge.
But my point was the patent trolling exists because the law is unfavourable. Not because there is a system of mediation in place. If the patent system should be abolished or not doesn't really relate to how inconsistencies in contracts are handled, as far as I can see?
In the UK at least, under case law (Hyde v Wrench, 1840), if you give a counter offer it legally voids the original offer. So if you offer to buy something for £1m and the seller responds that they will sell it to you for £2m, the original £1m offer is legally terminated - so in the UK, legally speaking, this would count as a refusal.
Unfortunately I'm not familiar with how this translates over to US law, but I'd be interested to find out.
That's an interesting question about US case law, but my guess is that the negotiations had lots of clauses like "this supercedes any prior offer" and in this case things are a bit cut and dry, legally speaking. That's why we have lawyers, after all.
I think an analogy more in line with the parent comment would be - if you tried to sell 30% of Apple stock in a single day would the dollar collapse, wiping out all remaining shareholder value.
Having read through all the answers here, I really think that HN is possibly not the best place to ask such a question.
Solve a problem
Seems to be the largest response. Solving problems is hard. If you want to earn $100k this year, don't solve a problem, don't do a startup[1].
Startups deal with problems, are capital intensive, risky, and high reward. If you want to potentially make a lot more than $100k in the next few years then, sure, go find a problem.
If you simply want to make $100k this year, then my choice would be to start a simple service business. No need to build anything new or solve a complex problem. The majority of SME businesses fit this mould really, everything from software agencies to recruitment companies.
Pick an area you have some knowledge in, start on your own, and execute to the best of your abilities. The main challenges are usually managing cash flow and the day to day realities of running a small business. But if you end up with 4-5 employees and stable cash flow, you now have your own earning power plus around 20% of the people below you typically.
That or review your CV, and plan the most aggressive route towards a position in a financial / high yield company, adding $100k to your salary as an employee could be feasible depending on your background.
Either way, the people who just stumble upon money are outliers. So the really short answer is just work harder and accept more risk in you decisions.
On the left you have a salaried job. On the right a shoot for the moon VC startup. In between you have the entire range from trying to build products for 'passive income' on the side, to going alone starting a small cash-positive business, or freelancing. Your level of risk is entirely up to you, and the reward will usually be fairly linear, within your own earning capacity and skill set (money is fairly efficient in that sense!).
Working more hours or quitting your job fits into that scale along with all the other factors. If your appetite for risk is on the lower end such you won't quit, then you will have a harder time competing with people who've positioned themselves with more risk.
There will always be the outliers who just break the model though.
Thank you for the response. I agree, more or less. In this case, of course, I made the assumption that OP didn't want to quit his job. His skill sets are fairly common, based on what he posted. Considering that, I thought he will have a better chance of building something on the side, since getting high enough consulting rates for PHP work is hard, especially when you are trying to do it part-time. (As you said, there are outliers for this also. I assumed OP falls close to the mean/median when I wrote that.)
You make an assumption that the PHP/mySQL role consumes all of his time. That isn't necessarily true, he may be in a position where he's just tweaking scripts occasionally.
I agree that it is very difficult to find the required momentum. Some things which may help, based on my experience:
1. Divide the whole problem into subsets. Identify others who are having the same problem subsets, and partner with them to resolve them. This way, nobody has to divulge their whole business model/idea and yet can collaborate.
At the smallest level, this can be as simple as posting a technical problem on StackOverflow and participating in the discussion that follows. At a higher level, this can be something like identifying a common person to write content for multiple businesses.
2. Keeping intermediate easily reachable goals. This helps to ensure you have momentum, however small it may be. Reaching those goals also peps up your spirits, especially when you are working alone.
If you are ruthless in cutting unnecessary spending, you're probably going to end up cutting salaries, firing people, or going cheap on other things that actually affect staff, which is likely to be your largest expense.
The quote was either phrased worded or the author doesn't understand the word. Ruthless people are not nice.
Like you said it's unnecessary spending. Firing a slacker can be both ruthless and nice (towards employees that put in real work). There is no obligation to pay people and no right to be paid. Cutting wages is not some horrible or cruel act if it's done for good reasons.
but the point is that "ruthless" doesn't mean "great at seeking out waste" but specifically "having no compassion". it applies only where compassion would reasonably be applied by others.
When people struggle to understand that I say DCA can be thought of as a sort of insurance. You pay a price to insure your home to protect against the unlikely event that your house burns down. But on average buying insurance will loose you money. But the cost is comparatively low, and for each individual likely worth it to protect from total loss, even if in aggregate it's clearly a loosing proposition.
DCA is similar, most people will end up with marginally lower returns, however a small percentage of individuals caught close to a rare negative market event will be less impacted by sudden large drops and experience overall much greater returns in the long run than if they had invested as a lump sum due to the nature of volatility decay.