I bet none of the internet web-based get-rich-quick folks would like to hear this, but something we have learned by runnning many companies and talking to people running different kind of businesses; you can make any business succeed as long as you can hold out for three years.

I assume other people might have other experiences, but this is my experience being one of the founders of a quite large number of companies. These companies, I must admit, are all related to software, so I cannot vouch for other businesses, but as far as software is concerned this way of working seems to be consistent.

To give the reader an idea of what kind of companies I am talking about, here is a list of the ones I created (on my own or with other):

• A 1 man Delphi software services company
• A 2 man Java software services company
• A 3 man TCL/TK Point-of-sale software product company
• A 5 man portal/website for Linux software
• A 4 man PHP portal/e-commerce company
• A 200 man Java portal company
• A 3 man hosting and hosting software company
• A 25 man WYSIWYG portal website builder company
• A 2 man website flipping company

All but one of these (the last one) became succesful after running for a solid three years of, simply put, total misery and earning too little for our good.

Most of these companies are still running and the largest is currently running for almost 7 years and making millions. While the other ones are making good profits.

Even in this modern era of internet and the cheap start-up costs of such companies and the huge figures (billions of $ these days) paid for them; most of the famous and huge web companies also exist more than three years.

When hearing people say they want to be rich or even make a very good living after only 1 year, I also wish them luck, but ofcourse they almost never make it that fast. And also they will notice this almost magical boundary of the 3 year run.

As an experiment we started a small hosting company called Software Libre. This company is based on the creation free software and services based on free software as well. We would build our servers ourselfs (like Goooogle) to cut costs.

We just used this fact as USP and spent no money and very little time on advertising our efforts; just counting on organic traffic to our niche (GPL/Linux/free software) and see if clients would come. So starting the company, we made the following cost in total:

• A small office for working on hardware and software - $500/month
• A few components to build the first servers - $1000 one-off
• A half-rack to host in + 10 mbit - $100/month

So down $1600 we started off. After a week we got our first client and after a month our first big client. Meant we had to invest in more servers and a rack, so, after one month:

• A complete rack instead of the half-rack - $450/month
• 8 home-made servers to build servers - $2600

Down more than $4500, but we had income too now:

• 9 servers rented out at $59/month = 9 x 59 = $531/month
• Monthly spending; $950 and income $531, down $4500 one-off.

After this, apparently we exhausted our ‘organic traffic’, as we didn’t get such a big hit in the next years; at the end of the third year, we had a full rack. Using a quick (not entirely accurate, but ballpark and too optimistic calculation:

• Out: 4500 + 35 x 950 + 26 x 333 = 46408
• In: $531 + 35 x 35 x 59 = 72275

This would mean profit, however, the calculations are off as this would mean everyone paid from the first month on. But the potential is there ofcourse.

The real figures showed a slight loss (of about $2000 in december 2006). But, as you expect from the above, the turnaround came when the third year (this year) started. The existing clients started buying more servers, which enabled us to get more racks and buy servers without a loss. New clients just arrive at us, because we get good search results.

The end result of this experiment (can we start a hosting company and make a profit in a saturated market) succeeded and is;

We have 4 racks filled with paid servers now
We make very nice profit which we use as our income, supporting 2 employees fulltime.

And this example is not alone. I think you need the investment of those first 3 years to actually get somewhere; like some kind of law. Google will rank your urls higher, people will know your name, you have (hopefully) chatter in forums; all stuff you cannot robustly create in less than a year. The exceptions prove the rule!

So, my advise (which I always stick to these days); no matter how much in a hurry you are, stick with it for at least 3 years before giving up. You might be surprised. I start about one serious company per year, and suddenly you see a huge boost in income every three years!