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Are you sure you want to start a company? (A Letter to Y Combinator Applicants)

79 points by dongle 16y ago

il 16y ago
I don't think I want to change the world right now. I really don't. Does that make me a bad person or unfit to be an entrepreneur? All I want to do is solve a real problem for some segment of a large market and make their lives a little easier. I want to build as much value as possible for my customers, so that they are willing to pay good money for my software. And yes, I want to get rich. I agree that optimizing solely for a quick flip is not the best way to build a successful business. I would rather optimize for growth and creating value for customers and investors. But questions like "Why is there so much materialism? Why is it so competitive?" strike me as absurd. If you accept the premise that a startup is a business and a fundamentally Capitalistic(rather than Marxist) endeavor, why wouldn't there be materialism and competition? Isn't that the point?
- thekevan 16y ago
  I don't necessarily want to change the world either, but I do want to change my little corner of it. I think that is more than good enough.
- dongle 16y ago
  Your comment: "All I want to do is solve a real problem for some segment of a large market and make their lives a little easier." My article: "That drive to make a part of the consumer world better is the mark of the entrepreneur." I'm not saying everyone needs to cure AIDS. I think our sentences seen side by side align quite nicely.
  - michaelochurch 16y ago
    Here's what I would love to see, on the "make the world better" front. First, let's be honest about our industry: programming is a lot of fun, but our industry kinda sucks. Most software produced is sloppy and buggy with bad APIs, most decisions are made based on economic factors, and most programmers are seriously underskilled, which wastes the time of the skilled. (I love strong static typing, though. The guy who is always breaking APIs actually has to fix his shit.) Even in startups, most of the code is hastily written by necessity. Moreover, technology is the best industry out there. Software sucks, but everything else sucks more. I realize I'm hijacking your line of thought, but here's a problem that could be solved with enough thought put into it. Most smart people really want to work and, when they're motivated, will work very hard and very creatively. But less than 10% of people are doing what they want to do or are really motivated to do it well, so we have a shitty world where most people don't give a fuck. Most people, by age 35, are just jaded clock-punchers who just do what they're told because it's the path of least resistance. We're different; we're idealistic and trying to fight that trend, but "the enemy" (the ocean of suckitude outside our borders) is winning. So, let's solve that problem. Let's not just fix the software industry. Let's fix work. There are millions of creative people out there with amazing ideas not getting implemented, while the very rich get to implement their shitty ideas and impose them on the rest of the world. How do we make a world that harnesses rather than suppresses this enormous amount of creative and industrious energy that is not being utilized?
    - TheEzEzz 16y ago
      > How do we make a world that harnesses rather than suppresses this enormous amount of creative and industrious energy that is not being utilized? I think this is exactly what we're seeing more of. Sites like reddit really allow for people to tap into their inner creativity and make something that makes other people happy (like rage comics). Of course, no one is making money off rage comics (except reddit). I'd love to see more start-up ideas that empower regular people to make a living doing something they could be happy doing. In fact, I'd love to just hear some ideas along those lines, because my brain fails when brainstorming about this.
      - michaelochurch 16y ago
        I did a blog post on this sort of thing: http://michaelochurch.wordpress.com/2010/10/25/those-who-work-for-free-and-are-paid-to-do-nothing/ http://michaelochurch.wordpress.com/2010/10/25/those-who-wor... Sadly, I think that there are too many people in power who want the current arrangement to persist. Allowing people to work more creatively is great for society, but it's bad for the people who currently hold power (who care more about their relative position in society than the health of society as a whole). I don't see a non-confrontational solution. I'm half socialist. I actually think the best way out is to provide a substantial basic income. Emphasis on basic, not minimum, income. The difference is that MI means the government makes up the difference for low earners, whereas BI is an amount (of cash and services, such as healthcare and education) that everyone-- rich, poor, or middle-class-- gets. Then there's no "welfare valley" where a person becomes poorer by getting a job; one's income is a monotonically increasing function, as it should be, of what one earns. I think the BI should be about 50% of society's income, financed through flat taxation, a small wealth tax at the upper end, and very high (90+ at top) inheritance taxes. The other 50% is distributed by a free market. This actually makes most middle-class peoples' net tax (remember that they get the BI as well) lower. I would also, if you haven't guessed this, cut the military budget dramatically. Once BI is in place, you don't need the patchwork of semi-authoritarian and conditional welfare programs that require bureaucracies to prevent abuse and fraud or determine who should get it and who not: everyone gets it. The rest of the wealth is allowed to flow on an essentially free market (so you have a capitalistic engine on top of the socialist infrastructure). It's freer than the one we have. For example, once everyone has basic income, you don't need a minimum wage (which is just a clumsy minimum-income program paid-for by low-end employers, who compensate by hiring less, creating unemployment). No one has to work, so the least productive people probably use the option not to work, but the most productive people do a lot more: they're more creative, autonomous, and effective. Basic income wouldn't stop most people from working, but it would dramatically change how they work-- for the better. The net gain is positive. The worst thing about basic income is that it might create an underclass of entitled parasites at the bottom of society, but authoritarian corporate capitalism has a class of entitled parasites at the top of it, and that's a lot more unhealthy for society. One partial fix might be to "fix" job searching, but internet career sites are nothing new and, while they might match talented people more efficiently with jobs, don't fix the underlying problems of corporate capitalism. Startups are great, for people privileged enough to do them and connected enough to have a shot, but in the "real world", bad people are on top and hold the cards.
- dongle 16y ago
  And you're right that it was a little absurd for me to wind up in Silicon Valley doing a startup. I'd be glad to write a follow-up post about how that all happened.
  - il 16y ago
    Sounds really interesting, I look forward to reading it.
- grahamburger 16y ago
  I think making the lives of some segment of a market a little easier is changing the world. Maybe not all at once, but little by little. That's all Facebook has done, really - it has made the part of our lives where we try to keep up with people we care about a little easier. And since it's easier, we do it more often.
- michaelochurch 16y ago
  I used to be disgusted by materialism and greed, when I was in college, but my first job out of school washed my naivete away. It paid well but it was awful, and not because I had a bad boss (I had two, one good and one bad) but also because we were treated horribly by clients. They didn't respect us or our work at all. Why? Because they had money. No other reason. The fact that my job there was better than what 90% of people have (good pay and shitty conditions, when the norm is low pay and shitty conditions) made it clear that, unfortunately, money matters a fucking lot. If you don't have it, you can end up in jobs like that. So yeah, getting at least comfortable is a high priority for me and pretty much everyone else in this lost generation. Besides, long-term career mentoring is gone in most companies and no one listens to a smart person with good ideas unless he's rich, so what is there to expect from work other than a swing at owning one's life? Excessive greed is idiotic, like a mental illness. We'd call a guy with 300 cats insane, and not want kids around someone who has a different sexual partner every day, but someone who works 100 hours per week to chase inordinate amounts of money he doesn't need is lauded as a hero. That, I'll agree, is a pathology. On the other hand, moderate greed is (very unfortunately) a survival trait in this morally crippled, creatively desolate, fiercely individualistic world. That said, though I want to be rich, it's mainly because of the positive things I could do for the world, not what I would take from it. I can't ever see why I would want a private jet. If I had the money, I'd rather invest it in something that can make others' lives better-- maglev transport, green energy-- than fly around in absurdly ridiculous comfort as opposed to the merely ridiculous comfort of international first class. Besides, I'll probably marry my current girlfriend-- she's quite awesome-- so I have no interest in the "party" culture or impressing women, and I'm too abrasive to have a shot in politics, so what exactly would I need to be a billionaire for?
- mkramlich 16y ago
  > But questions like "Why is there so much materialism? Why is it so competitive?" strike me as absurd. Agreed. That kind of question I think only comes from a place where one has not experienced things like having a child or spouse or parent needing $100k+ for a medical problem. (To give just one easy example.) Or at least, not having the foresight to consider such events.
mindcrime 16y ago
Most of that sounds pretty good, but I have to disagree with this bit: Ask yourself: would you sell your company? Would you sell it for $20 million? If you answered yes, at this stage, find a new idea. You don’t love it enough. That strikes me as an over-generalized view. Different people have different circumstances that are going to affect that decision. Somebody who has already had a successful exit and is already set financially, or someone who is very young, might have a different threshold for when they would or wouldn't sell, versus someone who's older and who has never had an exit. In my own case, as a 37 year old who's never had the "big exit" I can say that there are few - if any - ideas that I wouldn't sell for $20 million (assuming I owned a significant chunk of equity at exit and was going to be walking away with multiple millions of dollars personally.) Sorry, but the chance to assure myself of financial independence now and for the foreseeable future, and to buy myself the ability to work on whatever I want in the future, could conceivably trump my allegiance to pretty much any idea I might be working on at the moment. I'm not saying it would necessarily be a slam dunk decision, or a decision I'd make on the spur of the moment... but it would be awfully tough to say no to an exit like that, knowing that I'm not getting any younger, and that another chance might not come along. That said, if I were running a company, and owned enough equity to maintain control, and had to face that decision, I would say "no" if I believed the $20 million exit was far less than what we would eventually achieve, and/or if staying the course were the right thing to help more of the founders / early employees ultimately realize their own degree of financial freedom.
- il 16y ago
  viz. Bill Gates, who is changing the world and doing good in more tangible ways than almost any startup, despite having built up Microsoft with the clear focus of make money and dominate the market first, change the world later.
  - philwelch 16y ago
    Let's be fair to Microsoft--their mission statement was "a computer on every desk and in every home, all running Microsoft software". By the time Gates stepped down as CEO, they achieved that. For all its flaws and the sorry state it finds itself in today, Microsoft was more worldchanging than most startups.
ultrasaurus 16y ago
>Would you sell it for $20 million? If you answered yes, at this stage, find a new idea. Selling a business for $20M would make it a lot easier to get traction for your next idea.
- ChrisCooper 16y ago
  I think he's not suggesting it's bad to sell your company, but rather that going into a new one with the idea that you're only there to make money is a bad idea.
  - zackattack 16y ago
    or he's a shill for the "very rich" (lol) VCs at ycombinator trying to optimize for homeruns rather than community feel-good 20mm exits
    - dongle 16y ago
      Hey I think we've met IRL in an apartment on McKinley Ave. You know where I live and that it is not glamorous. I kind of hoped the text on the sidebar wherein I'm begging for money would contextualize the post appropriately.
      - deleted 16y ago
        [deleted]
  - dongle 16y ago
    Bingo. If you go in looking for an exit, you're going to fall on your face. I'm not at all against starting lifestyle businesses; those also do not have exits.
- borism 16y ago
  really? I think if your next idea sucks no amount of money will buy you "traction". $20M will run out pretty quick.
flipside 16y ago
I would totally be open to the possibility of selling my company someday, it's just that they would have to be just as crazy as me to take me up on my terms. Not everything revolves around $$$.
noverloop 16y ago
yes. The way I see it, the only way to have sustained positive impact on the world is to allow humans to be more human and entangle it in the worlds economic system so it remains in place. That construction can only be achieved by a business.
blazer 16y ago
He really motivates every YC applicant to become next big thing. He wants entrepreneurs to love the idea & grow it at its peak and exit. or sell it to $20M and fund yourself for your next big thing. Atleast try to make this 2nd idea to touch its peak.
mtran 16y ago
Your article made my heart race; all the way through I was thinking "That's US"! Especially the "touch of insanity" part because we are selling our house and taking some pretty big leaps to make this thing happen. We only learned about YCombinator about 2 weeks ago, within days of having decided to go "all in" but it's too great of an opportunity to pass up so we're scrambling to hit the app. deadline while getting the house on the market, planning next steps etc. But we are so energized everyday by the possibility of bringing our idea to life. The Ron Conway quote was right on time for me -“real entrepreneurs aren’t thinking about exits; they’re thinking about changing the world”... I always feel a little nuts for being sad when people say things like "you'll probably sell to...for millions"... but from now on, I'll think about you, Ron Conway and changing the world and smile because clearly, I'm not the only one! Thanks a bunch for this post.
brijeshp 16y ago
I agree with most of the other comments here regarding the over-generalization of the $20 million offer. "Would you sell it for $20 million?" There are so many variables for consideration in answering this question that can result in anything from a symbiotic relationship with a bigger player to augmenting the market using the buyer party's core competencies to just forfeiting the rights to the other party (which is the only viewpoint factored into the author's answer- "find a new idea"). Don't need to necessarily find a new idea as much as be a master of the idea's fate. Nonetheless, I heartily agree with the last section- mastery of a domain of knowledge. Advice needs to be slapped as a layer on top of hardcore expertise. I've made this mistake in the past of letting the allure of a tech lead me to an area where I didn't have the necessary expertise and idea dissipated quickly. Now I'm focused on an area that my partner and I have deep-seated expertise in and the advice is very easy to cut through to take only the nuggets that apply.
- dongle 16y ago
  Again, you're totally allowed to sell your company for $20 million dollars (or less) when the offer comes. If you're thinking about exits at all at the SEED FUNDING STAGE of your company, that offer is never going to come.
  - michaelochurch 16y ago
    If you're thinking about exits at all at the SEED FUNDING STAGE of your company, that offer is never going to come. If the maximum potential is $20 million, and we're talking about the VC-style go-big-or-go-home sort of business, I agree. A business that will be worth $20 million if everything goes right is likely to end up near zero. The distribution is non-normal and most companies don't reach 50 or even 25 percent of their maximum potential, but less than 1 percent. If the IPO option isn't at least open, try again. On the other hand, I think people should be honest about all the possibilities. Choosing a path based on what happens for the winningest of the winners is a terrible idea (even though it's what a lot of people do, and why companies overpay their CEOs; overpaying executives is actually cheap when you consider how much harder the chumps work for the slim chance of reaching that level). Which is better, a 60% shot at a $20 million exit, or a 1% shot at $10 billion? Expected value (which VCs care about) says one thing and common sense says another.
michaelochurch 16y ago
Ok, it's time to pour some cold water here: there's no such thing as the "true spirit of the entrepreneur". This phrase is reminiscent of the "you cannot grasp the true form of [X]" meme. Cool it, Giygas. An entrepreneur needs confidence, freedom, and opportunity. There needs to be a problem for him or her to solve, he or she must believe that it can be solved, and he or she needs the resources and freedom to do it. Then, he or she needs to be right on the solubility of the problem given available resources, and able to capture the value created (if he or she cares about being wealthy). That's all. It's not wizardry. It is something that few people have the freedom to do. I think 20-year-olds' garage startups are very cool but overrated. People write about it because it's rare. The best time to start a business, for most people, I would put around age 35-50, when one is still young but has the experience to judge whether it will work, enough years to one's name that one can hire experienced people (no one wants a younger boss) and the connections to pull it off. (I'm 27, by the way; not an older person trying to justify himself.) Y Combinator gives the people in their 20s a bump by providing connections they'd otherwise never have, and that's an awesome service, but that's atypical for people of that age, and the prestige and contacts of YC, if not singular, are something most of its brethren don't have. Also, I think it's very naive to believe anyone wouldn't "sell out" for $20 million personally. At $20 million, that lie school tells smart people about the world being their oyster becomes true. Ideas come and go, but being rich means you actually own your life instead of renting it from a series of employers (or, if you're lucky enough to be in a startup, VCs). The second-best thing about being rich is having the freedom not to work, but that (from what I've heard) is like a toy that gets boring after a few years. The actual best thing about being rich is having the freedom to work. (The shuffling around and taking orders from others, in an artificially stressful office environment, that most people do? Not really work. Real work improves the world and matters.) I can think of very few legal and ethical things (and some ethically acceptable but illegal ones) I would not do for $20 million; I'd have the confidence of knowing that I can do real work for the rest of my life. Seriously, I'd love to kill all of life's stupid anxieties and dedicate (most of) my existence to useful work.
- dongle 16y ago
  Dude, it was in all caps for comedic effect. It's the most melodramatic WOO MONEY AND STARTUPS phrase in my article. Was that an Earthbound reference? I'll give you some points for that, at least. The rest of your comment is rehashing things that have already been discussed above.
mttwrnr 16y ago
I can relate to a lot of what Jon is saying in the article, but quite honestly the impression I've gotten is that investors are only interested in the "quick flip" and don't want to hear the grandiose plans. It seems like if I were to talk to a potential investor and tell them the ideas I have to change consumer behavior for the better and connect an industry in a way that hasn't been done before, they'd tell me to stop dreaming and to forecast their 10x. If every company sells to Google when they get a chance, who becomes the next Google?
Apocryphon 16y ago
I wonder how the case of Kevin Rose and Digg gels with all of this.
seanahrens 16y ago
Jonathan, thanks for the great post. I agree with you (unlike a handful of HN commenters) on feeling uneasy about the materialism, doing a startup for the money, etc. I saw (and experienced) a lot of that first hand and never really understood it. Doing a startup to get rich off a startup in my opinion is like playing in a rock band for the fame and money, not for the music.
rythie 16y ago
A better question than the $20m question would be: Would you sell knowing the aquirer would shut down the product, like many that sold to Facebook have for example.

79 points by dongle 16y ago

il 16y ago

I don't think I want to change the world right now. I really don't. Does that make me a bad person or unfit to be an entrepreneur? All I want to do is solve a real problem for some segment of a large market and make their lives a little easier. I want to build as much value as possible for my customers, so that they are willing to pay good money for my software. And yes, I want to get rich. I agree that optimizing solely for a quick flip is not the best way to build a successful business. I would rather optimize for growth and creating value for customers and investors. But questions like "Why is there so much materialism? Why is it so competitive?" strike me as absurd. If you accept the premise that a startup is a business and a fundamentally Capitalistic(rather than Marxist) endeavor, why wouldn't there be materialism and competition? Isn't that the point?

thekevan 16y ago
I don't necessarily want to change the world either, but I do want to change my little corner of it. I think that is more than good enough.
dongle 16y ago
Your comment: "All I want to do is solve a real problem for some segment of a large market and make their lives a little easier." My article: "That drive to make a part of the consumer world better is the mark of the entrepreneur." I'm not saying everyone needs to cure AIDS. I think our sentences seen side by side align quite nicely.
- michaelochurch 16y ago
  Here's what I would love to see, on the "make the world better" front. First, let's be honest about our industry: programming is a lot of fun, but our industry kinda sucks. Most software produced is sloppy and buggy with bad APIs, most decisions are made based on economic factors, and most programmers are seriously underskilled, which wastes the time of the skilled. (I love strong static typing, though. The guy who is always breaking APIs actually has to fix his shit.) Even in startups, most of the code is hastily written by necessity. Moreover, technology is the best industry out there. Software sucks, but everything else sucks more. I realize I'm hijacking your line of thought, but here's a problem that could be solved with enough thought put into it. Most smart people really want to work and, when they're motivated, will work very hard and very creatively. But less than 10% of people are doing what they want to do or are really motivated to do it well, so we have a shitty world where most people don't give a fuck. Most people, by age 35, are just jaded clock-punchers who just do what they're told because it's the path of least resistance. We're different; we're idealistic and trying to fight that trend, but "the enemy" (the ocean of suckitude outside our borders) is winning. So, let's solve that problem. Let's not just fix the software industry. Let's fix work. There are millions of creative people out there with amazing ideas not getting implemented, while the very rich get to implement their shitty ideas and impose them on the rest of the world. How do we make a world that harnesses rather than suppresses this enormous amount of creative and industrious energy that is not being utilized?
  - TheEzEzz 16y ago
    > How do we make a world that harnesses rather than suppresses this enormous amount of creative and industrious energy that is not being utilized? I think this is exactly what we're seeing more of. Sites like reddit really allow for people to tap into their inner creativity and make something that makes other people happy (like rage comics). Of course, no one is making money off rage comics (except reddit). I'd love to see more start-up ideas that empower regular people to make a living doing something they could be happy doing. In fact, I'd love to just hear some ideas along those lines, because my brain fails when brainstorming about this.
    - michaelochurch 16y ago
      I did a blog post on this sort of thing: http://michaelochurch.wordpress.com/2010/10/25/those-who-work-for-free-and-are-paid-to-do-nothing/ http://michaelochurch.wordpress.com/2010/10/25/those-who-wor... Sadly, I think that there are too many people in power who want the current arrangement to persist. Allowing people to work more creatively is great for society, but it's bad for the people who currently hold power (who care more about their relative position in society than the health of society as a whole). I don't see a non-confrontational solution. I'm half socialist. I actually think the best way out is to provide a substantial basic income. Emphasis on basic, not minimum, income. The difference is that MI means the government makes up the difference for low earners, whereas BI is an amount (of cash and services, such as healthcare and education) that everyone-- rich, poor, or middle-class-- gets. Then there's no "welfare valley" where a person becomes poorer by getting a job; one's income is a monotonically increasing function, as it should be, of what one earns. I think the BI should be about 50% of society's income, financed through flat taxation, a small wealth tax at the upper end, and very high (90+ at top) inheritance taxes. The other 50% is distributed by a free market. This actually makes most middle-class peoples' net tax (remember that they get the BI as well) lower. I would also, if you haven't guessed this, cut the military budget dramatically. Once BI is in place, you don't need the patchwork of semi-authoritarian and conditional welfare programs that require bureaucracies to prevent abuse and fraud or determine who should get it and who not: everyone gets it. The rest of the wealth is allowed to flow on an essentially free market (so you have a capitalistic engine on top of the socialist infrastructure). It's freer than the one we have. For example, once everyone has basic income, you don't need a minimum wage (which is just a clumsy minimum-income program paid-for by low-end employers, who compensate by hiring less, creating unemployment). No one has to work, so the least productive people probably use the option not to work, but the most productive people do a lot more: they're more creative, autonomous, and effective. Basic income wouldn't stop most people from working, but it would dramatically change how they work-- for the better. The net gain is positive. The worst thing about basic income is that it might create an underclass of entitled parasites at the bottom of society, but authoritarian corporate capitalism has a class of entitled parasites at the top of it, and that's a lot more unhealthy for society. One partial fix might be to "fix" job searching, but internet career sites are nothing new and, while they might match talented people more efficiently with jobs, don't fix the underlying problems of corporate capitalism. Startups are great, for people privileged enough to do them and connected enough to have a shot, but in the "real world", bad people are on top and hold the cards.
dongle 16y ago
And you're right that it was a little absurd for me to wind up in Silicon Valley doing a startup. I'd be glad to write a follow-up post about how that all happened.
- il 16y ago
  Sounds really interesting, I look forward to reading it.
grahamburger 16y ago
I think making the lives of some segment of a market a little easier is changing the world. Maybe not all at once, but little by little. That's all Facebook has done, really - it has made the part of our lives where we try to keep up with people we care about a little easier. And since it's easier, we do it more often.
michaelochurch 16y ago
I used to be disgusted by materialism and greed, when I was in college, but my first job out of school washed my naivete away. It paid well but it was awful, and not because I had a bad boss (I had two, one good and one bad) but also because we were treated horribly by clients. They didn't respect us or our work at all. Why? Because they had money. No other reason. The fact that my job there was better than what 90% of people have (good pay and shitty conditions, when the norm is low pay and shitty conditions) made it clear that, unfortunately, money matters a fucking lot. If you don't have it, you can end up in jobs like that. So yeah, getting at least comfortable is a high priority for me and pretty much everyone else in this lost generation. Besides, long-term career mentoring is gone in most companies and no one listens to a smart person with good ideas unless he's rich, so what is there to expect from work other than a swing at owning one's life? Excessive greed is idiotic, like a mental illness. We'd call a guy with 300 cats insane, and not want kids around someone who has a different sexual partner every day, but someone who works 100 hours per week to chase inordinate amounts of money he doesn't need is lauded as a hero. That, I'll agree, is a pathology. On the other hand, moderate greed is (very unfortunately) a survival trait in this morally crippled, creatively desolate, fiercely individualistic world. That said, though I want to be rich, it's mainly because of the positive things I could do for the world, not what I would take from it. I can't ever see why I would want a private jet. If I had the money, I'd rather invest it in something that can make others' lives better-- maglev transport, green energy-- than fly around in absurdly ridiculous comfort as opposed to the merely ridiculous comfort of international first class. Besides, I'll probably marry my current girlfriend-- she's quite awesome-- so I have no interest in the "party" culture or impressing women, and I'm too abrasive to have a shot in politics, so what exactly would I need to be a billionaire for?
mkramlich 16y ago
> But questions like "Why is there so much materialism? Why is it so competitive?" strike me as absurd. Agreed. That kind of question I think only comes from a place where one has not experienced things like having a child or spouse or parent needing $100k+ for a medical problem. (To give just one easy example.) Or at least, not having the foresight to consider such events.

mindcrime 16y ago

Most of that sounds pretty good, but I have to disagree with this bit: Ask yourself: would you sell your company? Would you sell it for $20 million? If you answered yes, at this stage, find a new idea. You don’t love it enough. That strikes me as an over-generalized view. Different people have different circumstances that are going to affect that decision. Somebody who has already had a successful exit and is already set financially, or someone who is very young, might have a different threshold for when they would or wouldn't sell, versus someone who's older and who has never had an exit. In my own case, as a 37 year old who's never had the "big exit" I can say that there are few - if any - ideas that I wouldn't sell for $20 million (assuming I owned a significant chunk of equity at exit and was going to be walking away with multiple millions of dollars personally.) Sorry, but the chance to assure myself of financial independence now and for the foreseeable future, and to buy myself the ability to work on whatever I want in the future, could conceivably trump my allegiance to pretty much any idea I might be working on at the moment. I'm not saying it would necessarily be a slam dunk decision, or a decision I'd make on the spur of the moment... but it would be awfully tough to say no to an exit like that, knowing that I'm not getting any younger, and that another chance might not come along. That said, if I were running a company, and owned enough equity to maintain control, and had to face that decision, I would say "no" if I believed the $20 million exit was far less than what we would eventually achieve, and/or if staying the course were the right thing to help more of the founders / early employees ultimately realize their own degree of financial freedom.

il 16y ago
viz. Bill Gates, who is changing the world and doing good in more tangible ways than almost any startup, despite having built up Microsoft with the clear focus of make money and dominate the market first, change the world later.
- philwelch 16y ago
  Let's be fair to Microsoft--their mission statement was "a computer on every desk and in every home, all running Microsoft software". By the time Gates stepped down as CEO, they achieved that. For all its flaws and the sorry state it finds itself in today, Microsoft was more worldchanging than most startups.

ultrasaurus 16y ago

>Would you sell it for $20 million? If you answered yes, at this stage, find a new idea. Selling a business for $20M would make it a lot easier to get traction for your next idea.

ChrisCooper 16y ago
I think he's not suggesting it's bad to sell your company, but rather that going into a new one with the idea that you're only there to make money is a bad idea.
- zackattack 16y ago
  or he's a shill for the "very rich" (lol) VCs at ycombinator trying to optimize for homeruns rather than community feel-good 20mm exits
  - dongle 16y ago
    Hey I think we've met IRL in an apartment on McKinley Ave. You know where I live and that it is not glamorous. I kind of hoped the text on the sidebar wherein I'm begging for money would contextualize the post appropriately.
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- dongle 16y ago
  Bingo. If you go in looking for an exit, you're going to fall on your face. I'm not at all against starting lifestyle businesses; those also do not have exits.
borism 16y ago
really? I think if your next idea sucks no amount of money will buy you "traction". $20M will run out pretty quick.

flipside 16y ago

I would totally be open to the possibility of selling my company someday, it's just that they would have to be just as crazy as me to take me up on my terms. Not everything revolves around $$$.

noverloop 16y ago

yes. The way I see it, the only way to have sustained positive impact on the world is to allow humans to be more human and entangle it in the worlds economic system so it remains in place. That construction can only be achieved by a business.

blazer 16y ago

He really motivates every YC applicant to become next big thing. He wants entrepreneurs to love the idea & grow it at its peak and exit. or sell it to $20M and fund yourself for your next big thing. Atleast try to make this 2nd idea to touch its peak.

mtran 16y ago

Your article made my heart race; all the way through I was thinking "That's US"! Especially the "touch of insanity" part because we are selling our house and taking some pretty big leaps to make this thing happen. We only learned about YCombinator about 2 weeks ago, within days of having decided to go "all in" but it's too great of an opportunity to pass up so we're scrambling to hit the app. deadline while getting the house on the market, planning next steps etc. But we are so energized everyday by the possibility of bringing our idea to life. The Ron Conway quote was right on time for me -“real entrepreneurs aren’t thinking about exits; they’re thinking about changing the world”... I always feel a little nuts for being sad when people say things like "you'll probably sell to...for millions"... but from now on, I'll think about you, Ron Conway and changing the world and smile because clearly, I'm not the only one! Thanks a bunch for this post.

brijeshp 16y ago

I agree with most of the other comments here regarding the over-generalization of the $20 million offer. "Would you sell it for $20 million?" There are so many variables for consideration in answering this question that can result in anything from a symbiotic relationship with a bigger player to augmenting the market using the buyer party's core competencies to just forfeiting the rights to the other party (which is the only viewpoint factored into the author's answer- "find a new idea"). Don't need to necessarily find a new idea as much as be a master of the idea's fate. Nonetheless, I heartily agree with the last section- mastery of a domain of knowledge. Advice needs to be slapped as a layer on top of hardcore expertise. I've made this mistake in the past of letting the allure of a tech lead me to an area where I didn't have the necessary expertise and idea dissipated quickly. Now I'm focused on an area that my partner and I have deep-seated expertise in and the advice is very easy to cut through to take only the nuggets that apply.

dongle 16y ago
Again, you're totally allowed to sell your company for $20 million dollars (or less) when the offer comes. If you're thinking about exits at all at the SEED FUNDING STAGE of your company, that offer is never going to come.
- michaelochurch 16y ago
  If you're thinking about exits at all at the SEED FUNDING STAGE of your company, that offer is never going to come. If the maximum potential is $20 million, and we're talking about the VC-style go-big-or-go-home sort of business, I agree. A business that will be worth $20 million if everything goes right is likely to end up near zero. The distribution is non-normal and most companies don't reach 50 or even 25 percent of their maximum potential, but less than 1 percent. If the IPO option isn't at least open, try again. On the other hand, I think people should be honest about all the possibilities. Choosing a path based on what happens for the winningest of the winners is a terrible idea (even though it's what a lot of people do, and why companies overpay their CEOs; overpaying executives is actually cheap when you consider how much harder the chumps work for the slim chance of reaching that level). Which is better, a 60% shot at a $20 million exit, or a 1% shot at $10 billion? Expected value (which VCs care about) says one thing and common sense says another.

michaelochurch 16y ago

Ok, it's time to pour some cold water here: there's no such thing as the "true spirit of the entrepreneur". This phrase is reminiscent of the "you cannot grasp the true form of [X]" meme. Cool it, Giygas. An entrepreneur needs confidence, freedom, and opportunity. There needs to be a problem for him or her to solve, he or she must believe that it can be solved, and he or she needs the resources and freedom to do it. Then, he or she needs to be right on the solubility of the problem given available resources, and able to capture the value created (if he or she cares about being wealthy). That's all. It's not wizardry. It is something that few people have the freedom to do. I think 20-year-olds' garage startups are very cool but overrated. People write about it because it's rare. The best time to start a business, for most people, I would put around age 35-50, when one is still young but has the experience to judge whether it will work, enough years to one's name that one can hire experienced people (no one wants a younger boss) and the connections to pull it off. (I'm 27, by the way; not an older person trying to justify himself.) Y Combinator gives the people in their 20s a bump by providing connections they'd otherwise never have, and that's an awesome service, but that's atypical for people of that age, and the prestige and contacts of YC, if not singular, are something most of its brethren don't have. Also, I think it's very naive to believe anyone wouldn't "sell out" for $20 million personally. At $20 million, that lie school tells smart people about the world being their oyster becomes true. Ideas come and go, but being rich means you actually own your life instead of renting it from a series of employers (or, if you're lucky enough to be in a startup, VCs). The second-best thing about being rich is having the freedom not to work, but that (from what I've heard) is like a toy that gets boring after a few years. The actual best thing about being rich is having the freedom to work. (The shuffling around and taking orders from others, in an artificially stressful office environment, that most people do? Not really work. Real work improves the world and matters.) I can think of very few legal and ethical things (and some ethically acceptable but illegal ones) I would not do for $20 million; I'd have the confidence of knowing that I can do real work for the rest of my life. Seriously, I'd love to kill all of life's stupid anxieties and dedicate (most of) my existence to useful work.

dongle 16y ago
Dude, it was in all caps for comedic effect. It's the most melodramatic WOO MONEY AND STARTUPS phrase in my article. Was that an Earthbound reference? I'll give you some points for that, at least. The rest of your comment is rehashing things that have already been discussed above.

mttwrnr 16y ago

I can relate to a lot of what Jon is saying in the article, but quite honestly the impression I've gotten is that investors are only interested in the "quick flip" and don't want to hear the grandiose plans. It seems like if I were to talk to a potential investor and tell them the ideas I have to change consumer behavior for the better and connect an industry in a way that hasn't been done before, they'd tell me to stop dreaming and to forecast their 10x. If every company sells to Google when they get a chance, who becomes the next Google?

Apocryphon 16y ago

I wonder how the case of Kevin Rose and Digg gels with all of this.

seanahrens 16y ago

Jonathan, thanks for the great post. I agree with you (unlike a handful of HN commenters) on feeling uneasy about the materialism, doing a startup for the money, etc. I saw (and experienced) a lot of that first hand and never really understood it. Doing a startup to get rich off a startup in my opinion is like playing in a rock band for the fame and money, not for the music.

rythie 16y ago

A better question than the $20m question would be: Would you sell knowing the aquirer would shut down the product, like many that sold to Facebook have for example.