Brian has been pushing a bunch of different projects in Central Texas since the Boring Company moved here. None of them have actually gotten any real consideration.
The only real tunnel that is likely to get built here is a transit tunnel in downtown Austin under the Colorado river.
I used to do that with a friend at my first job. We'd argue for hours until we found a good solution. The joke, of course, is that everything before then was stupid.
Of course, this assumes goodwill and friendship between the arguing parties. There is nothing wrong with losing an argument when a better solution exists.
I'm surprised nobody mentioned good old H. Ross Perot, the Texas billionaire who made Bill Clinton president in 1992. (https://en.wikipedia.org/wiki/Ross_Perot)
Perot peeled off enough libertarian voters from the Republicans to enable a Democratic victory. It odd looking back at him. He was not a proto-Trump exactly but he ran against the NAFTA free trade agreement in a way that looks a lot like how Trump ran against shipping all heavy industry to China.
My first reaction was that Yang is going to splinter the Democratic coalition thus enable Trump to get a second term. But maybe he can pull moderates away from the Republican side (especially in Arizona).
After looking at it for a second time, it looks really out-of-touch with reality and will not have a significant impact. Political polarization isn't a product of a broken political system. People are angry for a damn good reason. It's a reflection of all of the economic gains of the last 40 years going to the billionaires.
Someone has got to take control of the country back from the 0.1% like FDR did. That someone will likely be an unknown politician in the Democratic party who makes them pay for the costs of addressing climate crisis. Unfortunately, it doesn't look like that's going to happen any time soon.
I may be misunderstanding this bit of history, but wasn't part of FDR's success due to his strong connections among the wealthy and powerful? He was essentially an insider who decided to use a lot of the knowledge he had to reform parts of the system. If we were to have a modern equivalent it would probably be someone from within the 0.1%.
> We will support candidates for office who align with our core principles so that we can reform the system and make it more responsive to the American people. This means that we will support Republicans, Democrats, and Independents - as well as candidates identifying themselves as Forward Party members.
Yang definitely hates Trump. He's not about to put him into power any time soon.
Yang is more about wielding influence on political discussion and trying to move the country away from incumbency than anything else. I really don't foresee anyone building a campaign on the forward party, but I can see a democrat or republican leveraging the forward party's ideas in the right environment to get endorsements from it to win in tight elections.
I live in Austin TX and got one of the mailers last year. I was wondering how you pulled it off.
The handwriting on the outside does make it look personal but, once you open it, it is obviously computer generated due to the consistency of the writing. If anything, I'd say the writing in inside undermined the message because nobody is going to handwrite a letter to solicit that business. You should test only doing the signature only and see if impacts your response rate.
We also got a couple of 'we want to buy your home' mailings. It does feel like it impacts our open rate but I can't tell if it is just due to novelty.
I think the main reason it 'works' as a business proposition is that the City is doing blanket increases and relying on protests to catch their mistakes. They do this (in part) because they are forbidden from using actual MLS data. It costs me 3-4 hours to do a protest so outsourcing it makes sense if your time is valuable. But when it came down to it, I wasn't willing to let them represent me -- something about it felt off -- and I wound up just accepting the increase.
The system doesn't feel broken -- just wasteful. How else are you going to do a property tax? I do wonder if this goes the way of medical billing (overcharge at first because you know you are going to lose some to protests) or it creates a watchdog effect that make the City limit the increases to an amount that is not likely to draw protests.
No way, you got one of our letters? That's crazy! I'd be curious which version you got. We sent a few different iterations. I'll have to look you up tomorrow when I'm back at the computer.
Re: the system. I can't disagree there. It's a disaster and there has to be a better way. Counties rely on a certain percentage of people protesting and the ones that don't get kinda screwed imo. The unfortunate truth is that everyone should protest every year. That's a broken system. Some other states only revalue every third year, so the counties have a better shot at fairly valuing everything because they have 1/3rd the workload. Not Texas though. They revalue everything every year, so it all just gets ballparked.
I assume it was yours. Everything fits your description and I don't think anyone else is doing exactly the same thing.
I don't think the system is broken. It's just not an easy problem, especially if you can't use the market to set the price. California's only-when-you-sell system seems a lot worse.
Now, you could have a fairer system, but this is America and we're not particularly concerned about fairness when you get down to it. Austin's system actually has some progressive features that it is quiet about so the State does make them stop doing it. For example, if you are over 65, you can defer your property taxes until you die and accrue simple (not compound) interest. And houses have a quality 'grade'. Lower grade housing stock gets smaller annual increases which makes the system mildly progressive.
There is no state income tax so a lot of stuff gets funded through property taxes. It's not like the money is used to build bombs to blow up people on the other side of the world. Taxes are the price of a civil society and gaming the system was one of the primary causes of the decline of the Rome Empire.
So I don't agree "paying the minimum taxes you can get away with" is the same thing as "being screwed". It literally is not worth my time to protest most years, or even to hire a 3rd party, and I'm okay with that. I see companies like yours serving to keep the system relatively honest. The only thing I would change is that I'd add a $20 filing fee which is refunded if they make an adjustment to cut down on the junk protests, which are paid for my property tax dollars.
I looked you up. If the word "Graveline" means anything to you, then I found the right guy!
It's possible that you got one of our handwritten letters, given the properties that you own. I think it's unlikely given the value of Bois though. But it's been a long time since we've sent the handwritten stuff now, so who knows! Small world either way.
Let me know if you want us to handle it next year ;)
I was in a similar position a decade ago. I took the money and it worked out for my ambitions (a nice living running a small company). It is up to you to decide which path to pursue.
In my case, there was an intermediary company and they loaned me the money needed to build the product and took it out of the future revenue. But a large company can advance you money or help you get a loan. Your job is to come up with a plan to do what they want and a price that makes it worth your time and ensures that you are around to support them in the future.
Some things come to mind:
1. It is hard to keep the product generic if you are serving a large client. I couldn't do it.
It might be easier for you if the product lends itself to selling 'seats'.
2. Find out how established your sponsor is at the company before investing too much effort in this deal.
Have they made purchasing decisions like this? Who would have to sign off on this deal? Does it help
them with one of their top 3 goals for the year? Just because you are talking to someone from a big
company that doesn't mean they can actually write you a check.
3. Get a copy of their MSA (master services agreement) and make sure they not expecting ownership
for derived work.
4. Everything costs x3 and takes x2 as long as you think it will. Always does. Plan accordingly.
5. Don't hire a business guy to run the business. It's your baby -- change the diapers yourself. It
really isn't that hard and you can hire consultants to do finance and legal. If you need sales,
think lead-gen. You personally will close every sale at this scale.
6. Hire someone who's entire job is to do client management. Get someone good and pay them a lot.
Build that into your price.
I personally love the small businesses that the startup community looks down on as 'lifestyle' businesses. Most startups are like rock bands. They toil in obscurity and fail. And then you and your baby get sold for pennies to pay back the investors.
...
Assuming you want to go the small business route, figure out what you think you need to run the business if they were your only client. Convert the roadmap into full-time heads and estimate what it would take for them to hire about a generic consulting shop to recreate what you are doing from scratch. Make sure each head is $20K/mo. Add 50% as a buffer. Your biggest risk is underpricing.
Then tell that you'd love to focus on them and it would cost you that amount to do it. Walk them through it. Talk about how it is less risky and faster to partner with you. See if it lines up with what they are willing to pay.
They may ask for ownership. If they do, ask why they want it? Being the largest client gives them more control than a 10% stake. If they insist, offer a 10% stake for the price you quoted to build it and reduce the ongoing price by 30% because the investment replaces the 'buffer'.
...
And a few more business/practical things that you might not know:
1. You need a C corp if you want to raise money. C corps are controlled by a board. An LLC is controlled
by a managing partner. You want one or the other and you don't have to spend a bunch of money to set it up.
On one business, I used generic paperwork from Techstars, Carta to manage the ownership, and a
registered agent to keep my government filings up-to-date. Took maybe 2 days and costs < $1K/year.
2. Once you get any scale, you have to pay yourself as an employee and report that as income. I think you
can get away with not claiming income at first but the IRS wants its share. Use a payroll service -- do
not write a check for labor directly, even your own.
3. If you have discrete chunks you can hand you, consultants can work. Finding good consultants is hard.
I personally favor direct hires because you get their full attention.
4. Make sure to have all employees/contractors sign an agreement that gives you clear ownership of the IP.
Reading the comments, I noticed that my advice is very US-centric. The core still applies but you want to approach pricing differently.
I would set your pricing around a proposed move to the US so you can ask for money at US labor prices. If the move doesn't work out, you've got the contract priced right at least. Or I would inflate the number of heads you think you need to get to the same place.
Make it low-risk for you. Make it worth your time even if the contact disappeared overnight because your sponsor gets fired. The easiest way to do that is charge enough that you always have a year of expenses in the bank.
The key point is to justify your costs against their costs to replicate and then get a contract that doesn't pay you for your time.
Thank you so much Joshua for taking the time to write this! This is amazing advice! I will take some time to digest it and get back with questions once they come up.
Not sure if it's the language barrier but could explain again what you mean with "I would set your pricing around a proposed move to the US so you can ask for money at US labor prices" ?
It might not work but.. I was suggesting that you try to do the reverse of what they are doing.
Large US companies look to other parts of the world to reduce their labor costs. If you try to justify the cost of the contract with them on your costs, then it would benefit you to use the higher US developer costs rather than the lower rest-of-the-world costs.
But, to have that work, you have to have come up with a reason that you need to be in the US.
It is probably easier to just sell them on hiring extra people in the place you are but you might get them to pay for you to move your business to the US.
Prior articles I've read point to R's startup time and memory footprint as disadvantages relative to Python. I don't have any experience with R so I'm not in a position to comment on it personally.
I would find an existing business that is hosting on the public cloud. Often, it is just a bunch of VMs that don't really leverage what the cloud has to offer -- they are just convenient.
Offer to migrate them from the cloud to a private hosting for what they are paying today but place them on hardware that has x2-10 the existing capacity. You provide all the IT work that they are paying Amazon to avoid.
I basically did that for myself. I was paying $10K/mo to Azure. To get the RAM I really needed would have pushed my costs to $20K/mo so I bought $30K (4 machines) in hardware and signed up for coloc @ $1K/mo but it cost me two months in my time to move everything. The time hurt more than the cash.
If you can do that for one company that is spending $100K/mo at Azure/AWS/Google, then your runway gets a lot longer.
Hard to take the analysis seriously when it (a) take UNIX as an example and (b) pretends Linux doesn't exist.
The Linux kernel looks to be a successful Bazaar project with a single person (Linus) having nominal responsibly.
I recently return to UNIX after a 20 year break. Linux in 2020 is much better than Solaris in 1998. However, Windows made giant leaps as well. Both still have massive amounts of deadwood but Windows does a better job of hiding it.
Windows has the vested interest (customers and money) to make their deadwood compatible.
There are some great stories about the engineering they've done to continue to support legacy applications (because those applications matter to customers).
It's friendly, laid back but there is plenty of startup activity. (Power situation is better than SF in general because nothing is burning around here.)
Culturally, the vibe of SF is that everyone must to be exceptional at something. It values being (or pretending to be) AWESOME. I feel like the people of Austin are more interested in living a good life. However, there has been enough transplants now that everything is more mixed up.
The core difference in tech is that there is not the same level of money sloshing around. Less big crazy dreams. Less competition to standout. More bootstrapping. People who raise capital either do it on much worse terms or they go to the bay to get funded. Maybe rewind the clock by a decade or three (but not two) and it starts to look like SF.
Everything costs a lot less but you get paid less as well. I think you come out ahead if you have a family because you can actually afford to buy a house.
Also, it is pretty easy to work for an SF company from Austin if that's your thing.
Once COVID is over, easiest way to get a feel for the tech scene is to come to two to the bi-annual startup crawl organized by the Capital Factory.
Only take VC money if you want to create a large company and sell it in a 5-7 time frame. Or go out of business trying...
The main reason you should raise seed money is because (a) you need it to build the product and (b) you are worried someone else could take your market and need to move faster. Otherwise, build the business (as opposed to the product) and then raise 7-10M to expand it.
A common pattern is that you give up 20% of the company and a board seat then spend through the Seed round much quicker than planned with revenue lagging expectations. Then either fail to raise the A (happens most of the time) or have to give up another 20% and control of the company.
The control issue might be subtle too -- one board seat for the seed, one board seat for the A, two for the founding team BUT the money brings in a new CEO who has the 5th vote. The board actually controls the company (even it you own a majority of the stock) and the CEO will side with the money when it matters.
I would prove your economic model (will your current users actually pay for it?) before taking any money. In fact, probably the first thing to do is just ask them (see https://blog.asmartbear.com/vetting-startup-ideas.html).
...
My experience was that we raised $700K because we needed to cover the business guy's salary based on a trial by a single large enterprise client and couldn't get anyone else to adopt. The investors were great but it would have been better for all parties if we'd done something else with our time and their money.
My final bit of advice is put your revenue and growth expectations in a spreadsheet and game out the no-money vs with-money scenarios. Then increase your expense numbers by 20% and cut your revenue growth curve in 1/2.
Brian has been pushing a bunch of different projects in Central Texas since the Boring Company moved here. None of them have actually gotten any real consideration.
The only real tunnel that is likely to get built here is a transit tunnel in downtown Austin under the Colorado river.