Let me tell you two stories.
Bob and Misha are both entrepreneurs. They each have startups in the software-as-a-service (SaaS) space. Each started with the same initial investment of their own money. They started their companies at the same time. They both had trouble finding product/market fit, and they each spent 3 months iterating, trying to develop a service customers would pay for.
Bob was determined to persevere, and kept his burn rate low and his company running for 6 months on his initial investment before eventually running out of runway and failing to find product/market fit. He finally shut down the business and moved on to his next project.
Misha took a different approach. After the first 3 months, Misha hired a few people to help him with customer development. He paid higher advertising and staff costs, and he ran lots of experiments quickly. After just one month, Misha determined that there wasn’t actually a need for his product. He shut down his company, having spent nearly all of his initial funds, and was ready for the next challenge.
Which entrepreneur would you rather be?
Bob’s company floundered for nine months as he tried to find product market fit. Misha’s only lasted four months, and he ended up at the same place. In fact, by the time Bob’s company failed, Misha was 5 months into his next project.
When you’re thinking about the costs of running a startup, don’t forget to factor in the cost of your own time – and how you could be spending it.