Why are SA dev's not as into co-founding as the US

[eitai2001]

Hi Guys.

This is something I'd just love to know ... why is it SA Dev's are so risk averse, love secure corporate jobs working for someone else, rather than trying to co-found something (even part time...)?

In the US, for example, there are a lot more Dev's willing to bite the bullet and try start companies as co-founders. Especially amoung the younger mid 20's crowd who don't really have anything to lose.

Even on this forum, my previous posts (last one asking over a year old), was met with questions like "why would I work for free"...

I'd love to see SA begin to churn out more entrepreneurs ... but I'm finding that there is a surplus of business minds and deficit of tech minds in the startup scene, almost the opposite to the US. I recently met an Angel Investor locally who said the same thing.

It's really sad ... I've been trying for a few weeks now to find a co-founder, and it just seems like a pointless exercise. I know I'm in over my head for even what would be relatively easy code for a dev ... but I have no choice. That will mean crap code for now, until my business starts to make cash ... and then hire a dev ... which for one, means that dev does not get equity and that means they are not so vested in the idea, and two, makes for starting out to be a lot harder than it should and take longer until you have the cash to hire a dev.

So although I'm on a bit of a rant, I know , I honestly do want to know why SA dev's are so risk averse about this? Is it just that most of them don't care about starting their own company, and would rather drive the GTI as soon as they grad? I'm not talking about older dev's with families who obviously need to look after them, but rather younger dev's that could just as easily bootstrap their lives.

Just as an example, I'm about to qualify as a CA, but instead of moving on to a very high paying job ... I'm going to fully quit the corporate world, stay at home, buy a cheaper to run car if I have to, and try to start my own business. How come not many other dev's are willing to take that risk locally.

And more importantly, what can we do to begin changing the social climate so that dev's would be willing to risk more at an age where they can in order to start their own companies, drive change, and be their own bosses?

I get so excited with the idea of running my own business, and can't wait to launch in Jan! But I'd prefer to launch with a decent backend ... although for my minimum viable product, a crappy coded backend will have to do for now

Regards

Itai

 

[Rocket-Boy]

People need money to live. Not everyone can afford to work for nothing and still survive.
There are far fewer people in that situation in SA where the cost of living is much higher than in the US.

 

[eitai2001]

People need money to live. Not everyone can afford to work for nothing and still survive.
There are far fewer people in that situation in SA where the cost of living is much higher than in the US.

I agree people need money to live, but if you're in your 20's, most of us could easily stay with our parents, get a cheaper car and live minimum in order to try achieve great potential. If people can do it in varsity, there's no reason they can't when they finish.

The cost of living in the US isn't so much cheaper. Food isn't cheap, housing is more expensive, things like internet and stuff are not much cheaper (barring the fact that it's usually unlimited plans). Electronics are cheaper, but they aren't daily living expenses. Cars are also cheaper. But overall, the cost of living is higher ... ask my friends that lived in the States for 6 months, they can tell you. The difference is there your salaries are comparatively higher. But we're talking about people becoming Entrepreneurs.

The issue isn't that people can't afford to live ... most of us can or have saved for a rainy day ... the issue is South Africans are too risk averse ... it's the reason you don't see huge online startups coming out of SA, barring the very rare cases.

 

[kripstoe]

How are you paying for your home, etc in the meantime?

 

[eitai2001]

How are you paying for your home, etc in the meantime?

Well right now doesn't count, I'm locked into an employement contract until the end of the year, else I don't qualify as a CA. But from Jan when I'm technically unemployed ... I will live at home with my mother. I am currently paying off a car, and have saved money to pay it off if necessary, but might sell it for a car with a smaller engine and cash purchase.
I have saved money to cover medical aid and insurance, and can sustain that for a year.

I have targets in my business idea to hit around 50 orders per week by the end of June ... which will more than cover my living expenses. My business will be in food, so shouldn't be too difficult.

And also, if need be, I tend to hustle a bit ... buy and sell demo model stuff now and again to touch up my finances. Truth be told, if you want to, you can make a plan.

That said, like I said in my first post ... it's a lot easier when you are in your mid twenties, versus being married with kids ... right now, I do not have responsibilities ... and I have set it up that way on purpose ... I can wait before I buy a house or a nice car ... it's not important right now.

The way I see it, people in their mid 20's should jump at an opportunity to try start businesses ... in fact, even if it doesn't work out after say 2 or 3 years ... if you then want to go corporate, you have gained experience, and many corporates love someone who tries to innovate, because they want that in their company.

 

[eitai2001]

And just regarding the points about people need to earn money to live ... as I mentioned in my first post, you could just as easily start doing it part-time ... yes, it will suck, and yes, you will cut down your 'night' life big time, believe me, I know ... it's what I'm doing right now ... but if everything was easy, nothing would ever be rewarding at the end.
So there is a way to do it, and still earn a living ... where there's a will, there's a way.

The biggest issue as I've said, is South African's are too risk averse, and many SA techies seem as though they lack entrepreneurial spirit. I'm not saying all though ... met a few who are giving it their all, but they are already invested in their own businesses.

But I want to understand why those who lack the entrepreneurial spirit (vast majority it seems), do so ... how can we get their mindset's changed so we can start innovating in the tech world in SA?

 

[eitai2001]

And this is a very real concern for me ... it is why I'm now the head of Startup Grind Jhb and why I'm bringing in a huge name in the SA tech industry, someone who is an entrepreneur, to interview him and ask him the questions about how he started ... to show all the techies that everyone needs to start somewhere. And this will all be in front of a live audience at the end of Sep.
I really want to make SA techies more passionate about starting a business.

 

[cguy]

In the US, for example, there are a lot more Dev's willing to bite the bullet and try start companies as co-founders. Especially amoung the younger mid 20's crowd who don't really have anything to lose.

That is primarily because there are a lot more Dev's there, in absolute terms. The startups, especially the successful ones get a lot of publicity generated, whereas the millions of Americans doing their 9-to-5's are never heard of. There may indeed be a higher ratio of co-founders vs. employees than SA, but I have never actually seen any evidence to support this.

There are plenty of people wondering why SA has never generated a Google or Facebook, but citing the above, I suspect that the answer lies not in lack of entrepreneurial spirit, but more from that fact that the population is 1/5th of the US, and of those, a vast majority are previously disadvantaged, and don't have the same education or resources as most Americans. Rather, it just becomes 10-20x less likely that such companies will form in SA.

The first company I worked at (in SA) was a start up. I was "employee 2", the now have a staff of approx. 100.

Is it just that most of them don't care about starting their own company, and would rather drive the GTI as soon as they grad? I'm not talking about older dev's with families who obviously need to look after them, but rather younger dev's that could just as easily bootstrap their lives.

I've heard and seen this pitch a lot, and there are several weak, yet often compelling arguments here - it's not just about risk=reward vs. non-risk=no-reward, it's about maximizing your expected return. Often entrepreneurship is pitched as, "risky, but if you do well, you will be rich b$#th!", but nothing here is quantified. If there was a 1 in 3 chance I could make R10M/y vs. a 99 in 100 chance, I could make R600K/year, I would absolutely take the former option, but trying to quantify the probablity of this type of success from my own peers (primarily, I have been able to watch a whole bunch of BSc, BSc(hons), MSc and PhD peers go out into the world, and have been able to see what they have gotten up to in the last 10-15 years), quite frankly, the real odds of success seem to be miniscule, especially when the going rate of experienced, talented devs/dev managers tends to be very high (I would say R800k+).

There are one or two sucesses (companies bought out, got paid out millions, etc.), but almost all the companies that were started fell apart -- the few that are still going, have been treading water for years. In contrast, most who "got work", climbed the ladders in their respective companies, and are now architects and managers. Many of them earn R800k to R1.2M, and the ones who left SA, often earn multiple millions.

There are a lot of caveats with the entrepreneurial pitch: I have seen people, so excited that they "scored a R5M buy out", or that they're now "paying themselves" R1.5M/year, etc., and they completely ignore the fact that spent most of their 20s and 30s (or longer, of course) living in their parent's house, or renting a tiny apartment, while others got to travel and live in comfort, with far larger social circles resulting from working in larger firms. A moment of success, doesn't negate years or decades of hardship - sure, perhaps it can if it is a particularly successful moment, but usually it isn't, and it just leaves me scratching my head.

Another argument, is that the only way to become mega-rich is to be an entrepreneur -- there are a few exceptions, but I actually do buy this argument, however, (and I know this is just a personal bias that doesn't apply to everyone) I don't see becoming mega-rich as a do-or-die goal, certainly not one I want to trow a 100 sided dice on, hoping for a 39.

 

[eitai2001]

That is primarily because there are a lot more Dev's there, in absolute terms. The startups, especially the successful ones get a lot of publicity generated, whereas the millions of Americans doing their 9-to-5's are never heard of. There may indeed be a higher ratio of co-founders vs. employees than SA, but I have never actually seen any evidence to support this.

There are plenty of people wondering why SA has never generated a Google or Facebook, but citing the above, I suspect that the answer lies not in lack of entrepreneurial spirit, but more from that fact that the population is 1/5th of the US, and of those, a vast majority are previously disadvantages, and don't have the same education or resources as most Americans. Rather, it just becomes 10-20x less likely that such companies will form in SA.

The first company I worked at (in SA) was a start up. I was "employee 2", the now have a staff of approx. 100.

I agree that we have much smaller numbers in SA, but that isn't a good enough excuse. Why is it Israel, a country with a population probably around the same size as our currently advantaged (I am referring to people who are not poor, not a particular race) has more startups than any other country outside the US in absolute terms, and proportionally to it's population, the most startups in the world? Is it because Israeli's are generally high risk takers, have so-called "Chutzpah"? And if it is, why do we not start cultivating that culture amongst ourselves?
And I wonder if proportionally to our advantaged people, how money go on to do startups versus America (or even Israel).

I've heard and seen this pitch a lot, and there are several weak, yet often compelling arguments here - it's not just about risk=reward vs. non-risk=no-reward, it's about maximizing your expected return. Often entrepreneurship is pitched as, "risky, but if you do well, you will be rich b$#th!", but nothing here is quantified. If there was a 1 in 3 chance I could make R10M/y vs. a 99 in 100 chance, I could make R600K/year, I would absolutely take the former option, but trying to quantify the probablity of this type of success from my own peers (primarily, I have been able to watch a whole bunch of BSc, BSc(hons), MSc and PhD peers go out into the world, and have been able to see what they have gotten up to in the last 10-15 years), quite frankly, the real odds of success seem to be miniscule, especially when the going rate of experienced, talented devs/dev managers tends to be very high (I would say R800k+).

There in lies another issue with most South Africans (myself included) ... we think too much. It's way we have some of the top CA's in the world (I speak for the profession I know). We just think too logically. It's something I'm beginning to realise just does not work in the startup world ... it's a world where you literally should just enact, at the cheapest possible cost ... and if it doesn't work, so what, move on and modify your idea until something does work. We think to hard and long, and become so attached to our idea's when we think we've finally thought it through, that we are just too stubborn to modify the model when it doesn't seem to work, and boom, you fail.
When I was speaking to this Angel Investor recently, he told me that I've thought through my plans thoroughly and that's my problem ... I should be doing, not thinking. (Ok, I don't really have a choice until my articles finishes, but as soon as they do, I will churn out new things for my business as quickly as I take down the things that aren't working).

If you don't think this is a good idea, there are two books you should read:
- Blink: The Power of Thinking Without Thinking by Malcolm Gladwell
- Screw It, Let's Do It: Lessons In Life by Richard Branson

There are one or two sucesses (companies bought out, got paid out millions, etc.), but almost all the companies that were started fell apart -- the few that are still going, have been treading water for years. In contrast, most who "got work", climbed the ladders in their respective companies, and are now architects and managers. Many of them earn R800k to R1.2M, and the ones who left SA, often earn multiple millions.

There are a lot of caveats with the entrepreneurial pitch: I have seen people, so excited that they "scored a R5M buy out", or that they're now "paying themselves" R1.5M/year, etc., and they completely ignore the fact that spent most of their 20s and 30s (or longer, of course) living in their parent's house, or renting a tiny apartment, while others got to travel and live in comfort, with far larger social circles resulting from working in larger firms. A moment of success, doesn't negate years or decades of hardship - sure, perhaps it can if it is a particularly successful moment, but usually it isn't, and it just leaves me scratching my head.

Another argument, is that the only way to become megar-ich is to be an entrepreneur -- there are a few exceptions, but I actually do buy this argument, however, (and I know this is just a personal bias that doesn't apply to everyone) I don't see becoming mega-rich as a do-or-die goal, certainly not one I want to trow a 100 sided dice on, hoping for a 39.

The thing about this second part is you assume it's just about the money ... and if that's why someone becomes an entrepreneur ... then probably, like you say, stick to corporate.

Personally, if I am taking home R1.5m a year from something that I built from the ground up, even if it did take me 5 years of living with "mom", then yes, I will tell the world ... because I did it from the ground up. There's a lot more qualitative effects ... call it psychological wealth if need be. I guarantee you all the big names out there who had startups that add value to the world (Jobs, Gates, Musk, Zuckerburg, Branson, etc) positively did not do it for the money ... in most cases where you are passionate and succeed, money is simply a bi-product ... and almost all startups today that succeed, started out of passion (There are ofcourse exceptions to any rule). So is that something we need to instil more into South Africans ... passion for doing things that interest them that could also change peoples lives for the better?

On a side note, currently being in corporate, and seeing my friends who are entrepreneurs, and do earn much less than me ... I am jealous ... their quality of life is just so much better. They do not stress for their bosses, they get to go to things during the day when they want to, they live life in general. Obviously they have lots of stresses, but so do I ... and my stresses suck because I also have pressure from the million people breathing down my neck.

In terms of social circles, I believe mine would be bigger if I left corporate ... in the past few weeks, I have met tons of new people in the entrepreneurial scene because we are always looking to meet new friends / contacts / etc ... in the corporate world, we mostly tend to stick together with the people we know, and occasionally meet someone new in the firm ... it is VERY clicky. Perhaps that is just an Audit thing, I don't know.

 

[eitai2001]

I really do want to slowly help change the landscape, and I can tell you, if I can grow my company to the point where I can afford to hire a small team of say 2 Dev's, 1 Designer and 1 UI expert, then I plan to do exactly that. Their sole purpose will be to do rapid prototyping of idea's I (or they come up with) ... doesn't matter how crap the code is, just get something to the point an Alpha test can go public to see if the concept will work. And for each of those employees, they will get a share in each idea that makes it past the prototype stage. And we should be mocking up 1 prototype every 2 - 4 weeks depending on size.

Maybe that will show that it is worth investing money and time into idea's in South Africa.

Gonna have my own Z-Labs (Like Google X Labs, but Z for the letter in my surname - Etzman) one day

That's my current vision, and I hope to god my business next year succeeds within around 1 - 1.5 years to the level that I can get this going.

 

[cguy]

I agree that we have much smaller numbers in SA, but that isn't a good enough excuse. Why is it Israel, a country with a population probably around the same size as our currently advantaged (I am referring to people who are not poor, not a particular race) has more startups than any other country outside the US in absolute terms, and proportionally to it's population, the most startups in the world? Is it because Israeli's are generally high risk takers, have so-called "Chutzpah"? And if it is, why do we not start cultivating that culture amongst ourselves?
And I wonder if proportionally to our advantaged people, how money go on to do startups versus America (or even Israel).

Israel has a lot of unique characteristics, from a general do-or-die attitude, exceptional resilience as a people, proximity to Europe, to great social benefits (fantastic pensions), to a historical and cultural affinity for business ownership. I can understand why Israel is excelling here, but I don't think that Israel's relative success implies that South Africa is some how significantly worse than average, or significantly worse than the USA (per unit comparable capita).

There in lies another issue with most South Africans (myself included) ... we think too much. It's way we have some of the top CA's in the world (I speak for the profession I know). We just think too logically. It's something I'm beginning to realise just does not work in the startup world ... it's a world where you literally should just enact, at the cheapest possible cost ... and if it doesn't work, so what, move on and modify your idea until something does work. We think to hard and long, and become so attached to our idea's when we think we've finally thought it through, that we are just too stubborn to modify the model when it doesn't seem to work, and boom, you fail.
When I was speaking to this Angel Investor recently, he told me that I've thought through my plans thoroughly and that's my problem ... I should be doing, not thinking. (Ok, I don't really have a choice until my articles finishes, but as soon as they do, I will churn out new things for my business as quickly as I take down the things that aren't working).

If you don't think this is a good idea, there are two books you should read:
- Blink: The Power of Thinking Without Thinking by Malcolm Gladwell
- Screw It, Let's Do It: Lessons In Life by Richard Branson

Yes, thinking too much can certainly hinder progress. Similarly, forcing hundreds of people to run aimlessly through a mine field, helps to find mines faster. In business, this is approach is informally refered to as "throwing s$#t at the wall, and seeing what sticks." - in a wholistic sense, new industries that were never previously conceived of can be created this way, but there is a radically higher probability of just becoming collateral damage (i.e., the s$#t that didn't stick).

Personally, if I am taking home R1.5m a year from something that I built from the ground up, even if it did take me 5 years of living with "mom", then yes, I will tell the world ... because I did it from the ground up.

If you do, that's great, but it is very very unlikely. The handful of peers I have who have reached that point, did so after 15-20 years.

There's a lot more qualitative effects ... call it psychological wealth if need be. I guarantee you all the big names out there who had startups that add value to the world (Jobs, Gates, Musk, Zuckerburg, Branson, etc) positively did not do it for the money ... in most cases where you are passionate and succeed, money is simply a bi-product ... and almost all startups today that succeed, started out of passion (There are ofcourse exceptions to any rule). So is that something we need to instil more into South Africans ... passion for doing things that interest them that could also change peoples lives for the better?

Sorry, I disagree with you here. I am fairly sure that most of them did it for dosh and/or prestige. Any sense of altruism (where applicable) only came much later.

On a side note, currently being in corporate, and seeing my friends who are entrepreneurs, and do earn much less than me ... I am jealous ... their quality of life is just so much better. They do not stress for their bosses, they get to go to things during the day when they want to, they live life in general. Obviously they have lots of stresses, but so do I ... and my stresses suck because I also have pressure from the million people breathing down my neck.

You've barely even started your life or career. The more you grow within a corporation, the more freedom and control you have. I haven't had anyone breathing down my neck in 10 years. In contrast, your entrepreneurial friends' lives will likely become more and more frantic as their fiscal responsibilities inevitably increase, and earning no longer becomes optional. You likely haven't seen that look some of your friends are unfortuantely bound to get when they're no longer sure where their next rand is going to come from.

In terms of social circles, I believe mine would be bigger if I left corporate ... in the past few weeks, I have met tons of new people in the entrepreneurial scene because we are always looking to meet new friends / contacts / etc ... in the corporate world, we mostly tend to stick together with the people we know, and occasionally meet someone new in the firm ... it is VERY clicky. Perhaps that is just an Audit thing, I don't know.

You haven't even started your business yet. Trust me - you don't know what it is like once you actually have to dedicate your time to it. Your company is a tough mistress.

Anyway, I feel like I've been very negative in response to your questions. Not really my intention. My stance is that the smart thing to do if you are a skilled developer, is to work for a company that is hopefully doing exciting and innovative work. If you believe that you have seen an opportunity, or a hole in the market, or if you have some sort of real edge (skills, investment, contacts, etc.), then it probably does make sense to explore this as an entrepreneur. Becoming an entrepreneur because you want to become exremely rich, because you can be your own boss, or because you've convinced yourself that you have a "passion" for something as mundane as e-payments, is just a recipe for disaster.

 

[vangend]

Itai

I have done sw for a start-up for a 20% share in the company. I have been approached by other entrepreneurs etc for similar deals, but most come with really K@k ideas and no business plan etc. I will only do it if I think it will work.

 

[guest2013-1]

Short-answer? Most SA Dev's are brilliant at what they do and have been ripped off by "joint venture work for free it will pay off" type deals all the time.

One of the most notable ones that I know of is Pastel (yes the accounting software). This was before Sage bought them, the company sold it to that company and fired the creator of the software, leaving him without a cent.

I'd rather do it on my own than go into business with the prospect of MAYBE getting paid for my time spent on the project and then getting screwed over by someone (happened to me recently actually)

 

[icyrus]

Some things to consider:

- South Africa's regulatory environment. Everything about starting and running a business is a pain in the ass, especially if you have employees at any stage
- Sources of VC. There is far less liquid capital for tech startups here
- Applicable audience. Local audiences for high tech startups are tiny in SA.
- General tech atmosphere. We are about a decade behind most of world in connectivity and tech penetration. Anything that even resembles SaaS or cloud based solutions here has a massive technical hurdle to get over.

 

[Other Pineapple Smurf]

@OP Its obvious you've never been to Cape Town.

 

[Ancalagon]

etai, what technical skills do you have?

The reason why developers dont want to help in most cases, is that you are not a developer. You have started a few businesses, you should know - starting a business involves a lot of hard work. The developer is going to be spending sleepless nights coding, and what will you be doing, if not coding? Do you think the contribution is equal?

Here is the thing - ideas are useless without implementation. You can have the best idea in the world - if you take it to venture capitalist, and unless you are a serial entrepreneur with a string of successes behind you, he will tell you to get lost. Go to him with an implementation, and a deal can be done. So to say that your idea is worth the developer's hard work, is just completely false.

However, if you were a developer, and you were to say, I am looking for someone to help me because this is too much work for one person, that is different. Suddenly the contribution is equal.

I do agree that, on the whole, SA developers are somewhat risk averse, but, if you are not a developer, I dont think I'd want to help you either - unless you paid me.

 

[Batista]

Job stability is a huge factor for me especially when you have a bond, and family to support.

 

[noxibox]

In the US, for example, there are a lot more Dev's willing to bite the bullet and try start companies as co-founders. Especially amoung the younger mid 20's crowd who don't really have anything to lose.

What are the percentages?

Even on this forum, my previous posts (last one asking over a year old), was met with questions like "why would I work for free"...

That's because engineers/programmers tend to get screwed in these deals.

I'd love to see SA begin to churn out more entrepreneurs ... but I'm finding that there is a surplus of business minds and deficit of tech minds in the startup scene, almost the opposite to the US. I recently met an Angel Investor locally who said the same thing.

Where is this surplus of business minds?

And more importantly, what can we do to begin changing the social climate so that dev's would be willing to risk more at an age where they can in order to start their own companies, drive change, and be their own bosses?

Well any engineer or programmer who has spent any time at all working for a company is likely to quickly become jaded. They will have seen first hand that business people value their contribution about as much they do a paper clip.

People need money to live. Not everyone can afford to work for nothing and still survive.
There are far fewer people in that situation in SA where the cost of living is much higher than in the US.

You'd be in a for a rude surprise. First thing people have told me when they went to work in the US is that they couldn't believe how expensive everything is. That fancy Dollar salary that sounded amazing turns out not to go as far as they'd thought it would.

Short-answer? Most SA Dev's are brilliant at what they do and have been ripped off by "joint venture work for free it will pay off" type deals all the time.

One of the most notable ones that I know of is Pastel (yes the accounting software). This was before Sage bought them, the company sold it to that company and fired the creator of the software, leaving him without a cent.

I'd rather do it on my own than go into business with the prospect of MAYBE getting paid for my time spent on the project and then getting screwed over by someone (happened to me recently actually)

In my experience most businesses do everything possible to keep the engineers from benefiting.

 

[eitai2001]

Shu ... didn't check for a day ... some loooong replies here ... I'll have to take my time replying to them, most likely tomorrow ... one at a time, so expect a lot of replies from me

Right now I'm busy learning the CakePHP cookbook ... I've given up on customizing CMS's, they're just too complex for me to get started (with the customizations I need) ... funnily enough, it's easier to learn from scratch (And at Ancalagon, that should give you an idea of my technical skill )

 

[BobsLawnService]

My experience is that there are a lot of people out there with ideas but not many who can actually make them happen. I don't want to work my butt off while some "idea man" sits on his arse doing nothing but talking, and when the idea fizzles out loses absolutely nothing while I lose everything.

Now that I have said that I want to give some advice. Don't be an idea man. As a developer I don't want to commit myself to working my butt off while someone else does nothing. Prove that you are being more than an idea man. Find customers willing to commit to paying for your product before begging for someone to do the work.

Don't say : "I have this awesome idea and I need someone to implement it for me.".

Instead say : "I have 20 customers waiting for a product who are going to pay X. While you're busting your ass off making a product for them I can have another 50."