Starting Your 1099 Economy Is What No One Is Teaching Us Engineers Practicing Entrepreneurship

By Larry Chiang

If you’re taking an entrepreneurship class on the farm, money boils down to two words, “venture capital“. Not to sound like an Eskimo who has 17 words for snow, but we need to get at least 17 words for the concept of money.

We need more than 2 words for money because it turns out not 100% of Stanford engineers get vc money. It turns out first time YC founders have a tough time raising money too*. 

*@mwseibel

	Michael Seibel (@mwseibel)
6/10/17, 5:45 PM If you are a first time founder having trouble raising money consider this:

*** Top 5 Money Concepts***
We need to expand our vocabulary to words that we heard when we were preparing to score 2400 on our SATs. 

-1- Proprietorship. This is a company of You Inc where your social security number acts like a tax identitfication number. Social security is a ponzi paid-in account [your money is not sitting there, it’s paid out to an old person as soon as you pay social security 🐥]

Right now your Stanford startup is a proprietorship**. This means the income you generate will cause a 1099 year end tax form. While this blog post does not constitute as tax advice, you should know there are some very fine points you need to discuss with your tax attorney. See my tax hashtag #cs183tax

If it’s less than 1,800.oo, the IRS does not require a 1099.

-2- Zero-ing out a E145 startup

Taking in revenue. Charging for a solution. Getting paid on a #JTBD… so you take “money in“…, you need to spend the equivalent ‘money out‘. When money in minus money out is zero, you have zero’d out your #ENGR145 startup. 

Document. All. The. Everything. [the Larry Chiang Filofax System works great at a level below $2,000,000]

-3- Getting Paid in Fraiche

Okay, so this is what billion dollar vc’s call “playing small ball”. None of this scales! So, you have a check that’s owed. Make it payable to Fraiche Yogurt at 644 Emerson (now 200 Hamilton)

Then, spend that Fraiche like  you’re a drunk sailor. 

Starting Your 1099 Economy Is What They’re Teaching Over at #cs183tax

-4- distributed work teams means a lot of independent contractors. 

When you’re testing your MVP, it’s a mistake to add a corporation pending (with application for a fed tax ID number. Just accept the revenue via a very specific founders social security number. 
Starting Your 1099 Economy transforms to the Fed Tax ID Economy

-5- taxed personal income as a small business proprietorship. At around the $2,000,000 revenue level, you need to incorporate – so you’re going from a personal social security number to a corp tax ID. 

Congrats on getting a thriving small business that’s doing $2,000,000! In no time, you will make more money than getting 0.5% in a unicorn startup (cc Ryan Hoover)