Startups for the Risk-Averse


I have been involved in a few startups here and there and I absolutely love the excitement, the hard work, and the opportunity to create something.

Fast forward from my younger years and I'm now gainfully employed as an Architect at a bank. I have a wife and three kids and I'm no longer free to live like a nomad on Ramen and the good graces of friends. I believe I still have the vision, ideas, ability, and passion to contribute to a startup but I don't have the option of living without a regular paycheck and benefits for my family. Have I lost my shot at building something new?


asked Nov 6 '09 at 02:29
126 points

9 Answers


No, but get "risk-averse" out of your vocabulary. Any new venture carries risk. It requires an investment of time and money. If you really were risk averse you would be asking about insurance and IRAs; how to invest in gold lest the Dollar plummet, etc...

The answer is not to give up on your dreams, but rather to learn to manage risk.

It's not as easy as before (believe me, I know): You need to have the full support of your spouse to begin with. You need to set up budgets (gotta feed the family first), you need to strike a time balance (can't abandon your family because you're working all the time). You need to leverage resources very well (ie, don't waste time on online forums, hehe).

Finally, you need to put a very high value on time. It's the only resource you cannot make more of. It's finite. Don't watch TV, don't work more than you have to at your day job, don't steal time from your family; those are all things you need to take into account.

Don't underestimate rest either. You can learn from long-distance runners: They quickly learn that the most important and strategic part of training for a race is the time they rest. If you are not rested, you are not performing at capacity. You need to put in quality time, not a lot of time.

But it is possible though. Startups are not just for single 20 year olds. Those extra years of experience give you the tools you need to leverage resources and use time better. Read "The 80/20 Principle" book if you have not already.

answered Nov 6 '09 at 03:04
Gabriel Magana
3,103 points
  • Great advice. I know there's no such thing a risk-free entreprenuership, I just don't want to bankrupt my family (financially or personally) while I shoot for the moon... – Dave 14 years ago
  • +1 for pointing out a) that it's not just college kids who start successful companies and b) that 80-hour work weeks are not the only way, either. These two are very undervalued in the perception of entrepreneurs. – Hanno Fietz 14 years ago


I've considered myself to be fairly risk averse - in fact, I'm trying to learn how to become more of a risk-taker. When I started up, I didn't have three kids... but I did have a mortgage and a whole bunch of other bills to pay. Plus, I never really liked Ramen noodles.

Before taking the plunge and quitting the day job, I figured out what my monthly expenses needed to be (it was less than my current income, since I didn't need to drive to work, buy lunch, etc). After that, it was a matter of guessing how much money I'd need to start (server, hosting, software, business cards, etc) and how many months it would take before I would see income.

Once I had those threenumbers, I setup a company bank account with (2 * MIN(Months_Needed,3) * Monthly_Expenses) + Startup_Costs. The plan was, each month, I would transfer Monthly_Expenses to my personal checking. If, at any point, the company bank account fell below Monthly_Expenses * 3, then I would call it quits and start looking for a job. I'm an experienced software developer (and it sounds like you are), so finding a job in 3 months wouldn't be a problem.

answered Nov 6 '09 at 02:57
Alex Papadimoulis
5,901 points



I struggle with the same problem. I'm in my 30s with a wife and kid, mortgage, and a good job. Yet I'm always looking for ways to be involved in startups. Lately I've assembled a team of 9 people who are all dedicating time outside of their day jobs on an idea I had. All of us still work our full time jobs, so the financial risk isn't there. There's still the concern of time and missing out on family activities. Most of my team doesn't have a family, so it isn't a big deal for them. For me, it's an individual decision I had to make.

The result is a bigger team (would probably only need 3 people full time) but a more diverse set of skills. Add to that virtually no operating expenses to get off the ground, and it's a formula at least worth look at. We are looking to launch a beta website in January, and up to this point have only had about $300 in expenses total, with over 600 man-hours on the project.

Almost everyone I talk to says this model won't work, but so far it has and I'm really hoping to prove them all wrong in the long run. If you want to talk more about this model and how we are able to operate like this, I'd be happy to discuss with you further.

answered Nov 6 '09 at 04:45
71 points
  • Interesting variation. I think "this model won't work" is hardly ever right. Any model may or may not work, and the odds depend on so many factors that can vary greatly among individuals, situations, products and timing. If there's enough perseverence, almost anything will work, eventually, especially because the model will adapt over time where it turns out to be weak. – Hanno Fietz 14 years ago


I'm assuming you already have a plan that's based on very conservative projections.

  1. Get family support (especially your spouse)
  2. Cut expenses and save now, so you have money during the start-up.
  3. Once you take the plunge keep the cuts from step two.
  4. Have a drop dead date where, if you aren't hitting a certain benchmark, you will go back to a job.

Number 4 is very important. This is an investment, and just like stocks, you need to know when to cut your losses and not 'send good money chasing after bad'

Good Luck

answered Nov 6 '09 at 07:07
649 points


One way to balance your desire for start-up adventure and building something new with having a family to care for is to look for franchising opportunities. There are lots of start ups/ventures looking to globalize using a franchising strategy. They are an opportunity to get involved in a proven business that's none the less completely new, and needs to be built up and customized for your corner of the world.

This route gives you more excitement and ability to build than classic small-business self-employment and is less risky than being an entrepreneur in a completely new under the sun venture.

answered Nov 6 '09 at 04:23
250 points


  1. Rehearse your best idea for 4-8 weeks.
  2. Stop thinking about it for 4 weeks.
  3. Review your original idea and decide if you are still passionate about it (many ideas fall-off after just few days or you need different skill set or whatever)
  4. Now you can mentally prepare a game plan depends based on your areas of interest. Its always best to bootstrap yourselves.
  5. Other ways to support yourselves during startup mode are taking some consulting gigs
  6. Remember your-idea can ONLY be done your way ONLY by yourself Good luck.
answered Nov 6 '09 at 05:38
264 points


Here's some brutal truth. You're probably done with startups.

With a wife and three kids your month expenses are probably very high, plus most wives will expect to be kept in a certain lifestyle, so it's not like you can shut the tap off.

Also, most people spend what they earn, have 30K in credit card debt, a car loan (or two), and have no idea what they spend per month. To me, risk adverse sounds like "I live month to month and have no room for error."

Here's some good news, if I didn't just describe you, then you have good chance at getting back in the game as an adult with responsibilities. If the following list describes you, then you're good to go.

  1. You're living below your means.
  2. Have a lot of money in the bank.
  3. Your wife is giving you permission to not make money for a year and work 16 hour days.

If you're not doing #1, then you probably don't have #2, and you definitely won't get #3.

answered Nov 6 '09 at 04:25
448 points
  • If you manage risk (i. e. neither avoid it nor take it unnecessarily), and apply some creativity to your daily life, I doubt that you are bound to such tight constraints. – Hanno Fietz 14 years ago
  • Hi Hanno - What your saying is so abstract, I'm not sure what you mean. How does one "manage risk" in this situation? What type of daily creativity are you talking about? – Ian 14 years ago


No you haven't. Its just that you are not prepared yet.

As I see it, it seems possible in near future and you don't really have to quit your day job.

  • Clearly write down your idea and take feedback from your family/friends. Improve. Repeat.
  • Plan your budget and execution strategy, revise.
  • Try joining hands with someone who shares your visions and compliments your strengths.
  • Hire someone offshore to prepare your first prototype. Get a real cheap deal.
  • Take your prototype to people who work in the same vertical as your business. Feedback. Improve. Repeat.
  • Probably by now you know what your chances are, and what to do next. :)
answered Nov 6 '09 at 05:51
Arpit Tambi
1,050 points


I believe in large part our upbringing, education, cultural norms, conventional wisdom, and/or the people surrounding us condition us to believing a start-up endeavor is inherently more risky than full time employment with a big company.

In addition to analyzing the startup risks, I'd be sure to question conventional wisdom and also consider the personal and financial risks in the status quo. Along these lines, have you, your work colleagues, your family, and/or friends asked you any "devils advocate" questions like the following?

  • How financially secure is your job at the bank anyway? What's to keep them from laying you off, in which case your income would go from 100% to 0% in an instant?
  • Have you hit an apex in your job, such that you are ready for a change to refresh your skills, work on something different, new challenges, etc.?
  • Have you considered the plus side to your personal/family life? For example, you might be at home more with the kids, traveling less, etc. (albeit, holed up in your home office from dawn until dusk).
  • Is it really too late to start something new? The way I see it, even if you're in your mid 30s, you still have over 2/3 of your career ahead of you. You might as well do, or at least move yourself in a direction of doing something you enjoy.
  • Why should you view your startup endeavor any differently than any other career changing event, like going back to grad school? For example, people quit their jobs all the time to go back to grad school, after which they have new knowledge, school loan debt and a diploma. How come nobody questions the risk in this? Arguably you'll learn just as much, if not more, in your start up endeavor.
  • If she's not already, can your wife go to work for a year or 2, for benefits and to stabilize your household income?
  • Are there ways to mitigate the financial and personal risks before you quit your day job? On one extreme, you could quit your job and work full time on your startup. Or, you could start prototyping, building up your "war chest" of money, then quit once you've mitigated more of the product and financial risks.
  • If losing the benefits and paycheck is not an option, are there still creative ways to get your startup going? For example, like Nathan described in his answer.

I'm 38, have a wife, kid, mortgage, and I've been working full time on my boot-strapped startup/micro-ISV for about a year (still under development). Before I ventured out, I also tried to ask myself questions like the above, not just the ones which exposed startup risks. It remains to be seen whether my endeavor will be financially successful, but thus far I've learned more in 1 year (about business and new technology) than I ever did in grad school or on the job. Admittedly, I'm getting a little tired of peanut butter and jelly sandwiches :-)

answered Nov 6 '09 at 09:09
Steve Roehling
141 points

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