Item — HN Reader

Starting a business is really challenging, as anyone who has tried it knows. Trying to make the finances work in something ephemeral is likely even more challenging. In any case, most businesses fail so ephemeral business is sort of the default unless you succeed.

There are individual businessmen who ride different business waves (like getting into frozen yogurt a little over a decade ago). But the skill those people have is in marketing and raising money and that transfers pretty well to different business types. There's also a whole world of business outside of tech that most of HN is not familiar with, and many of those people do extremely well for themselves. They also tend to be less idealistic and more focused on the money, which probably helps with adapting the business over time and figuring out what product/service the market actually values.

2 comments

Starting a VC backed startup is hard.

Starting a trade business is orders of magnitude easier, especially right now with a shortage.

I helped a friend lease a floor sander and they make almost what I do in tech after a couple years (I took a pay cut for reduced work load; not making FAANG cash) Bought their own floor sander.

The VC-tech bubble really screwed up the economics for the majority. Will be great if higher rates mean bunch of people working for funds and yet another clone of bear are scooping ice cream in a few years

If we removed VC backing, the world would be a better place. Sure, less businesses, but they'd exist for tangible reasons, rather than just being short-term vehicles to make VCs richer with no longer-term vision to actually solve problems.

The people giving VCs money aren't dumb and VC has been a pretty good asset class over the past two decades, which is when it really exploded in size. It's a self-correcting problem, when VC returns are no longer attractive (might be starting already) the fund sizes will go down and only the lucky and/or skilled firms will remain.

> There's also a whole world of business outside of tech that most of HN is not familiar with

I once read that the most reliably money-making business in America is a car wash. Comes with a built-in monopoly because people will only drive so far to wash their car and reliably generates low 7 figures in sales. Plenty of repeat customers and low churn if you meet a quality bar.

But who wants a 70% chance at being a millionaire, when there's 0.01% chance at being a billionaire on offer? We on HN know what we want. (numbers for thought experiment purposefully chosen to have a similar expected value)

Unfortunately things like car washes are zero sum games - if there already is one "in town" and you open a second all your business at best comes from what the other already had, and in the worst case it starts a price war and make far less.

Sure I won't go to the next town for my car washes, but just on my short route to the office I pass 3, and I know of a couple more that would be an insignificant detour. I think this is pretty typical for most city dwellers. (not to mention I work from home most days)

This is exactly it - and the car washes that "make the money" are more and more the ones attached to gas stations, where they have the latest robotic car ticklers.

Some people (larger trucks, etc) might still pay to use the manual car wash, but the costs are very similar and most will just use the gas station one.

It's like laundromats - there's a very defined market in an area for them, and if you supply that market you can do well, but if it's already supplied you're in for a world of hurt.

Marketing can increase the size of the market. Making deals with other businesses can too (they pay a fixed monthly fee and get unlimited washes for all their cars, etc.). I used to wash my car myself but the automated car wash is so convenient I just go there instead. There's also a customer service aspect. I used to go to a more expensive car wash because the employees there were really friendly and at the other one they weren't.

Then there's the business aspect of starting this sort of business: deciding on what location is best, whether it's even a good business to start, etc. This is one area where people who want to be tech entrepreneurs are handicapping themselves and people who just go into business to make money do better. Lots of people think, "I need to start an AI startup" or devops, or whatever, instead of asking what opportunity is best for them.

To some extent marketing can help you, but for the most part car washes are a fixed game. Unless you are using marketing for a price war people who see your ads are likely to go to the other car wash anyway.

Don't get me wrong, marketing is very important. However there is only so much you can grow the pie for many businesses no matter how much you do. There is also a limit to the number of people you can attract away from your competitors. (the limit is different depending on how you compare on price and quality of course)

> But who wants a 70% chance at being a millionaire, when there's 0.01% chance at being a billionaire on offer?

Literally anyone in the world will take the first deal.

Nope.

There's an entire income/asset range where the former isn't enough to justify passing up the latter. E.g. if you already have $3M+ in the bank, the marginal utility of that extra million is starting to diminish.

Now, a roll with a decent chance at $1B sounds much better.

And, flip side, if you have almost no money and almost no experience, you might also take the first one - because it leaves you with a 100% marketable set of skills that'll likely translate into much more than 1M.

If you have $3M in the bank then you are already a millionaire and the choice as framed above doesn't make sense anymore. It's not a 70% chance of being a millionaire—it's a 100% chance of being one already with a 70% chance of making another million which, as you say, looks a lot different to somebody who already has $3M than to somebody who has < $1M.

I think that's whst he's saying. You're saying what he's saying.

There is no disagreement.

No, I don't think we are in full agreement. In the part of my comment after "as you say", I did call out that her reasoning re: the marginal utility of $1M for someone who has $3M vs. ~$0 is (imo) correct, so we do have that common ground, but you ought to read the part of my comment before "as you say" and compare it to the context of the comments above it.

You might accuse me of splitting hairs, but I think it's an important distinction in the context of vkou's comment and parents.

What she's saying :) We're rare, but women in tech exist.

But otherwise, yes. I was pointing out that "everybody" isn't quite true.

And yet here we all are on HN not taking that deal playing pretend that any day now our lottery tickets will turn into billions :)

I actively look for sales of car washes, laundromats, and other such businesses.

Most of the time it’s more than the amount of money I’d have, and I’d have to get lucky to make the numbers work to even break even. And I’d only have one shot.

I don’t know which deals you’re finding but everything I find is more than just a 70/30 risk.

I mean, who among us hasn't scrolled through Loopnet and dreamed about switching careers?

Who is "we all"?

The number of founders and #1-3 employees reading and posting on HN is dwarfed by the number of literally everyone else.

One community focusing on this is r/sweatystartups - which often discusses how to start a pressure washing business, or how to scale their lawn care service.

Looks like r/sweatystartup, A hub for entrepreneurs of regular old fashioned businesses, is more active.

This is super fascinating, thanks. Especially threads like the tankless water heater cleaning guy.

I must admit I was relieved an automower saved me from hiring a lawn care company.

A single car wash isn't making most people a millionaire.

After a low 7 figures in sales, you've got to subtract costs and wages, and the money left over will hopefully cover your family's living expenses. Being able to save up a million is going to be tough. And starting a car wash from scratch probably isn't going to wind up being worth close to a million either, in most locations, in terms of being able to sell the business.

If you run a network of 10 car washes then sure, but good luck with that. The market is already pretty saturated so building up a profitable network is going to be tough.

I believe the wealth is in the car wash itself, not the profit you keep. You have to sell when it’s time retire/exit.

I am also not claiming that this wealth building process is anything close to fast.

How does one get a car wash in the first place? It seems to me that either:

a. You start a new car wash which, given that the market for car washes is already saturated, probably has a much lower success rate than 70%. You also need to be able to afford the startup costs, which are substantial.

b. You buy it, in which case you already have money, and you're probably better off investing in index funds.

c. You inherit it.

It seems like the best way to have a successful car wash is to be born into it. But that's true of many things, and not necessarily relevant to those of us who head the misfortune to be born to parents who don't own a car wash.

I know someone who owns several and is quite wealthy. He started out owning a small, shitty car wash and he gradually built/acquired more and upgraded them. You succeed in business the same way you succeed in any other aspect of life, you either get lucky or you work hard or some combination. In his case it was mostly hard work over at least a decade.

The fixation so many people in the comments have on starting a carwash is why most businesses fail. The right approach is to figure out what you're likely to succeed at and start that business, not to pick one because it has a high valuation and copy it (this is how must tech entrepreneurs work). Maybe the carwash market is saturated, some other market isn't and someone will make a bunch of money filling that gap.

Or you borrow money from a bank.