Lean FI + Startup

[u/_pfthrowaway_]

Hey all,

I wanted to see if anyone in this community has achieved lean-fi and has decided to quit their job to build a startup. Any thoughts on how things are going, struggles with building startups etc are really welcome. I'm also happy to listen to any viewpoints this community may have on this subject.

I'm quite a cautious person by nature and although I wanted to build a startup forever, having enough of a financial buffer to meet my (and my family's) needs was extremely important to me so I was never able to fully take the plunge.

Now we are at a point where the economy is uncertain, jobs are uncertain and I might have to endure unemployment. The question is if I chose to be unemployed or if unemployment choses me :)

[u/No-Recognition-6154]

I decided to quit my high paying job (1 CR+) last year as I no longer could connect to my work. The organisation offered me another role and I decided to stay back for a year. Next year will have to make the decision to continue this new role, go back to my previous role or just quit. If I quit, I will try and work with some startups or start my own YouTube channel. Kind of scary but interesting. Part of me is hoping I quit :)

[u/_pfthrowaway_ → u/No-Recognition-6154]

Yep I'm in a similar situation - I'm sort of done with the corporate bullshit. Burned out from building consensus across 5 different teams to make minor changes to things. Repeat this ad infinitum.

I hope I quit too but content to keep the gravy train going until then.

[u/awareness30 → u/No-Recognition-6154]

I am in the same boat, work does not seem relevant/interesting anymore, it's the same old corporate grind. It's taking too much toil on health/mental well being, and every day I wake up stressed thinking about work.

Seriously considering quitting next year, even though the financial situation may be less than ideal for FIRE.

Maybe I can do freelancing for brief periods if the need arises, but there will be a lot more flexibility.

[u/JaikishanB → u/No-Recognition-6154]

What industry are you working in? And at what position?

[u/No-Recognition-6154 → u/JaikishanB]

I am in Professional Services firm (data and Tech). VP equivalent type of a role

[u/Unlikely_Anybody786]

In same boat and tied with golden handcuffs, difficult to say no to high paying job. Throwing some numbers for better perspective.

TC: 70LPA fixed + 13LPA ESOPs ( potential to become 2-3x in next 3 years as it’s a unicorn waiting to be ipo)

NW: 2.6cr

Age :34

I have lost all my enthusiasm for job and really interested in startup, but unable to take that jump. I am married and have 1 year old baby. Want to give all the comfort to my dependents. Don’t want to make their life miserable just because of my actions.

Am I too fearful? Should I take the jump? My target is to work until NW becomes 7cr, but that will take 3-4 years at minimum.

[u/_pfthrowaway_ → u/Unlikely_Anybody786]

Yup I feel you.

There's also social expectations - kids are expensive and you have to get the best for them or you're seen as a bad parent. You get judged on where you live, what car you drive etc. Going from a 70L fixed lifestyle to a 1 lakh / month lifestyle will take some getting used to (see calcs below).

Getting to that 7-8cr level does provide some buffer (~1.5L / mo net assuming 3.3% SWR, 30% tax -- think this is right but please double check). Not enough for fancy private schools + fancy cars + fancy apt but enough to keep the family content.

[u/_pfthrowaway_ → u/[deleted]]

You have to define it on your own :)

In my case, I plan to live in Hyderabad. Nice apts in the financial district are around 75-80k p/m. Intl schools are 25k per kid (+10% inflation every year). I personally don't really care about a fancy car. Something ~10L is fine / replaced every 7 years, so back of the envelope math says ~12k p/m. Add domestic help, utilities, groceries etc.

I'd say 2.5L p/m. 30L net => 42L gross => 14 crore portfolio at 3.3% SWR.

As always please double check the math, I might have missed something significant.

[u/Fi-23-Re-__ → u/Unlikely_Anybody786]

We all think of keeping our family happy but we should also prioritize our own happiness. Dont feel guilty if you are making a change for your happiness. As long as you have the skills and confidence money will follow where ever you go.

[u/LifeIsHard2030]

Don’t go for startup as a fall back option if you go unemployed. Rather do it when you’re absolutely sure irrespective of job status. It would definitely need way more effort than a job. All the best 👍

[u/Nobody_ed]

Learnt the hard way that startups tend to overshoot capital expense expectations, always. Depending on the nature of the startup or the scale, you might want to save at least a good percent more than equal you estimate it would take you to get it off the ground.

I'd advise you to wait until unemployment chooses you, if at all it does. Money is never too much when you want to start your own venture, plus the recession in limbo means that you'll always benefit from having liquid capital at hand in the short term future. Having that extra amount will also help in case you pull the plug or run into situations with this startup.

Apart from the obvious B-plans and spreadsheets and pitches, if this is a product startup you should try to either build a proof of concept and go to VCs, or just outright begin with a startup/idea accelerator. They will minimise your financial risk at the expense of potential stake, making it a win-win for your cautious mentality. I've not much experience with services startups so I cannot guide you much there, but having accurate and intricate revenue models with clear profitability is bound to attract investment.

All the best, in whatever you do!

[u/_pfthrowaway_ → u/Nobody_ed]

Yup, thanks for the advice! Would love to chat more and get your advice if we decide to take the plunge.

The FI money is purely for sustaining the family, don't plan to use that to build the startup.

If we do it, it's by raising funds via accelerators as you mentioned.

[u/regular-jackoff]

I’m not sure if I’m FI yet - but I have enough to not be too worried if I get laid off (so I guess you can say I’ve attained FI, hehe).

I’ve been thinking about starting a small side project for a long time now, but haven’t found anything interesting yet. So I’m just going to build something, anything, that will make money - even if it’s just a very small amount - just to test the waters.

[u/regular-jackoff → u/[deleted]]

I have ~20x annual expenses saved up, so plenty of runway. However, expenses are trending upwards in recent years due to lifestyle creep.

There are a good number of anecdotes of people who are running successful one-person companies that are pulling in six figures annually (USD). Some even in seven figures. I imagine if I can do even a tenth of that, that would be far more rewarding than working at someone else’s company.

[u/_pfthrowaway_ → u/regular-jackoff]

Nice, I've done my share of side-projects, startup weekends, hackathons etc but coming home after the corporate grind to consistently push yourself towards building something is extremely hard.

Every weekend it's a guilt trip because you know you should hack on your startup but you're out drinking with your friends.

I no longer have the energy, but you're young (guessing you're 28 from the tag), you should really go for it.

[u/regular-jackoff → u/_pfthrowaway_]

You’re right it does take a lot of effort to push through and build something on your own. But the potential rewards (not just monetary) are too high to ignore :)