8 ms·

Yeah I noped out of this as soon as I saw it. The guy is suggesting investing in startup founders but not giving them enough to live while they get that company

by dbbk 6y ago

Yeah I noped out of this as soon as I saw it. The guy is suggesting investing in startup founders but not giving them enough to live while they get that company off the ground. What is the point of that? Completely self-defeating.

czbond 6y ago
It is not YC’s job to support the company. That is the founders job. I’d suggest money supporting the company at seed diverts from a focus on monetary fit asap. $25k is enough to scrap by for enough months which should be the initial goal
- TomMarius 6y ago
  The problem is there are many brilliant people that can't just scrap by - with a mortgage and family. But I respect the VC's right to choose the kind of people they sponsor.
  - forbiddenvoid 6y ago
    Yeah, the idea of creating an environment that only favors young, privileged, unattached folks has always been pretty off-putting for me. Larger checks certainly attract the 'free sabbatical' folks that the author seems to dislike so much, but it also enables entire classes of potential founders to have access to capital that enables them to focus on their business rather than their kids' stomachs.
    - jasonwatkinspdx 6y ago
      It's why we've had a glut of startups doing lifestyle products that appeal to mid/late 20's bros with lots of disposable income. These... haven't been great startups as a generalization.
    - peterwoerner 6y ago
      Counterpoint. As a father of a baby, I have significantly less energy and time for work. With starting a company you tend to have to plow a ton of hours and energy into the endeavor, especially if you want to move at bottleneck speed. With the baby there are many weeks where I have a difficulty working a mere 40 hours. That being said, I have significantly more insight (due to experience) than I did when I was more free and willing to work 60+ hours a week and was willing to live off of 20k a year.
      - hkt 6y ago
        As a father of a 4 year old I don't think it is my job (or yours) to vet who gets the help they need when they decide they need it. You may not have felt you had the time and ability to commit, but why should you be able to speak for anyone but yourself?
        peterwoerner 6y ago
        Very valid.
      - kaitai 6y ago
        But that's the thing -- most successful businesses (as opposed to youthful adventures that paint one as 'innovative' on a resume) are started by older founders who have a depth of experience in their field. As parent of a 3-yr old, babyhood goes fast. You'll be sleeping & able to put in extra hours, if you wish, at some point. You'll also notice that your patience for bullshit has decreased, your patience with actual important shit has increased, and by the time the kids in their teens you might be ready to be a founder who doesn't do the hustle-grind-performative-dance and actually... creates a business.
        peterwoerner 6y ago
        Super valid point.
  - czbond 6y ago
    Yep - that's life. It's called 'the choices we make close doors'. Responsibilities we take on, have repercussions. Founders with such obligations can work at home after their job like every other person starting a small business that is not tech. That way they have infinite runaway, and personal life stress, but not 'monetary stress'.
- whymauri 6y ago
  YC is an incubator, not a game show.
  - throwaway5752 6y ago
    Yes. They invest seed money. They help you turn an idea into a series A. Maybe it has lost it's soul because the round structures are so much looser, or the greater availability of angel money. Seed money used to be a godsend because you had a good idea that wasn't at a scale enough to interest traditional VC and you didn't know an angel. YC was particularly great because it had the emphasis on the network and the larger number of investments allowed it to distribute risk across the class. They purpose was not to build a company or make a good living, it allowed you to create a company you wouldn't have been able to, otherwise. I agree with the gp post, the goal is not to fund a sustainable company, it's to get one off the ground.
- save_ferris 6y ago
  No, it just diverts focus from building a successful company to figuring out how to eat. Forcing entrepreneurs to risk devastating personal bankruptcy just isn’t kosher, and there’s zero evidence that it creates healthy companies. It just encourages founders to take even more risks, which aren’t always ethical (i.e. Instacart’s predatory pricing and tipping model).
  - sushshshsh 6y ago
    While this strikes me as possibly true, maybe even probably true, I would prefer to see actual simple data about this. Sure it would be hard to get but here's the schema I imagine would be needed. Founder ID, Founder bank account balance average during company's first year, Founder health metrics array [acute visits to hospital or clinic for diet/mental health issues], Outcome of company --- If we notice that founders with low bank balances, lots of health events in their life, and unsuccessful business outcomes are popping up in the data, and then conversely founders with 100k in their personal bank on day 1 are never visiting the hospital and their companies are doing fine, then I think we could call check size a definitive contributing factor. This would fly in the face of "ramen profitability" as a virtue. EDIT: and i think there are enougg startups out there (40,000 probably??? ask crunchbase) to have a meaningful sample size
- jasonwatkinspdx 6y ago
  This is absolutely terrible advice. There are a few professional services that can have a dramatic impact on the early success of a startup. You need the best PR firm you can get to return your calls. That ain't cheap, but it has a rather huge impact if used properly.
  - _curious_ 6y ago
    "You need the best PR firm you can get to return your calls." Saying someone "needs" something (ie paid PR) in order to succeed could also be deemed terrible advice.
    - jasonwatkinspdx 6y ago
      This has been one of the critical differences between the startups I've worked at that have found successful exits and those that floundered. A good PR firm can you get a national audience for pennies compared to paying for ads.
      - _curious_ 6y ago
        I believe it, though there is plenty of opportunity for earned media - its not PR firm, ads, or nothing...
- bananaface 6y ago
  It's not about "who's job it is", it's about supply and demand. The founder could probably get a 300k salary at Google or a six-figure stipend with another investor. If Y-Combinator wants to compete they have to provide something that outweighs that.
  - cameronbrown 6y ago
    How is it YC's problem? The founder is choosing to start a company and asking YC for money. Clearly they're not short of startups on the supply side of their equation.
    - bananaface 6y ago
      You're not thinking about it the right way. It doesn't matter if they have "enough" applicants. They're trying to fill the positions with the best candidates out there - who they will just have to compete for. The more barriers they put up, the shittier the candidates they will get.
  - czbond 6y ago
    Why would Y comb need to compete with someone who is considering an offer to G? In that case, the founder would leave for the better deal anyways - so it's best to leave before it gets REALLY hard.
    - bananaface 6y ago
      Ok, but now you're filtering out a good chunk of people smart enough to work for G - so your applicant pool just got dumber.
      - czbond 6y ago
        Disagree. If someone's choice either is to work for G, or start the company, it is the founders risk to take and give up that job for the outsized risk and return of starting up. It is not YC's need to compensate a founder for their alternative.
seertaak 6y ago
> Yeah I noped out of this as soon as I saw it. I must be misunderstanding you; I read that as you stopped reading the entire thread because there was a single point you disagree with. Is that what you mean?
- klyrs 6y ago
  Suppose the first slide of my 10 minute sales deck described building a house out of literal waffles, and letting customers eat those waffles. Would you actually pay attention to the other 9 minutes? Overlooking the fact that if I attempted such a thing it would be amusing as hell. Imagine somebody taking that idea very seriously.
  - CalChris 6y ago
    Waffle House exists [1] and so this sounds likes like a buried lede which is way better than most pitches. I've heard worse, much worse. [1] https://www.wafflehouse.com/ https://www.wafflehouse.com/
    - tedivm 6y ago
      There's a difference between "sells waffles" and "constructions a house using waffles as the building material", and I'm reasonably sure the second one doesn't exist.
      - sjm-lbm 6y ago
        I feel like the point is "you never know when an apparently crazy idea will turn into something reasonable, so you should always stick with someone until the end of their pitch and/or point." Admittedly, I'm not sure that's universally true (we all have a limited amount of time, and it's reasonable to focus that time in places where it is going to give us the most benefit), but I'm pretty sure I see where the commenter is coming from.
        bananaface 6y ago
djsumdog 6y ago
I think back to Paul Graham's list of things that kill a startup: http://paulgraham.com/startupmistakes.html http://paulgraham.com/startupmistakes.html He does list having both too little money and too much money. I agree, maybe the $25k made sense back before life in California was more expensive than living in Manhattan, and it should be enough to cover more living expenses. Maybe alternatively, YC could provide less money, but basic housing and needs so founders minimals could be met, while also providing them a collaborative environment?
- KajMagnus 6y ago
  > basic housing What about a YC building complex a bit outside SF? Maybe one close to NY too, and ... two in Europe, two in ... each continent? :- ) "Ycplex"? "Hackerplex"? There could be a gym so people could stay healthy (and what about child care & school?).
Nasrudith 6y ago
I think the idea is to not be an "attractive nuisance" to get strung along by ideas which look good but don't work out. There is some theoretical strategic merit but it doesn't seem to synergize. It seems at odds with the Venture Capital model in the first place of rushing growth over profits and letting the wins make up for losses. Especially if he has a larger pool of capital than when he started (which he should unless he is doing it wrong), smaller checks /and/ wanting more personal attention and less canidates. That just cannot scale up to larger ammounts of money by definition, even if it would yield a better rate of return on investment in dollars. Diversification is another option for fund self-perpetuation but it will likely not have the same yields and cause total portfolio growth to decline with size. As for motivations I guess either trying to eat his cake and have it too.

by dbbk 6y ago

czbond 6y ago

It is not YC’s job to support the company. That is the founders job. I’d suggest money supporting the company at seed diverts from a focus on monetary fit asap. $25k is enough to scrap by for enough months which should be the initial goal

TomMarius 6y ago
The problem is there are many brilliant people that can't just scrap by - with a mortgage and family. But I respect the VC's right to choose the kind of people they sponsor.
- forbiddenvoid 6y ago
  Yeah, the idea of creating an environment that only favors young, privileged, unattached folks has always been pretty off-putting for me. Larger checks certainly attract the 'free sabbatical' folks that the author seems to dislike so much, but it also enables entire classes of potential founders to have access to capital that enables them to focus on their business rather than their kids' stomachs.
  - jasonwatkinspdx 6y ago
    It's why we've had a glut of startups doing lifestyle products that appeal to mid/late 20's bros with lots of disposable income. These... haven't been great startups as a generalization.
  - peterwoerner 6y ago
    Counterpoint. As a father of a baby, I have significantly less energy and time for work. With starting a company you tend to have to plow a ton of hours and energy into the endeavor, especially if you want to move at bottleneck speed. With the baby there are many weeks where I have a difficulty working a mere 40 hours. That being said, I have significantly more insight (due to experience) than I did when I was more free and willing to work 60+ hours a week and was willing to live off of 20k a year.
    - hkt 6y ago
      As a father of a 4 year old I don't think it is my job (or yours) to vet who gets the help they need when they decide they need it. You may not have felt you had the time and ability to commit, but why should you be able to speak for anyone but yourself?
      - peterwoerner 6y ago
        Very valid.
    - kaitai 6y ago
      But that's the thing -- most successful businesses (as opposed to youthful adventures that paint one as 'innovative' on a resume) are started by older founders who have a depth of experience in their field. As parent of a 3-yr old, babyhood goes fast. You'll be sleeping & able to put in extra hours, if you wish, at some point. You'll also notice that your patience for bullshit has decreased, your patience with actual important shit has increased, and by the time the kids in their teens you might be ready to be a founder who doesn't do the hustle-grind-performative-dance and actually... creates a business.
      - peterwoerner 6y ago
        Super valid point.
- czbond 6y ago
  Yep - that's life. It's called 'the choices we make close doors'. Responsibilities we take on, have repercussions. Founders with such obligations can work at home after their job like every other person starting a small business that is not tech. That way they have infinite runaway, and personal life stress, but not 'monetary stress'.
whymauri 6y ago
YC is an incubator, not a game show.
- throwaway5752 6y ago
  Yes. They invest seed money. They help you turn an idea into a series A. Maybe it has lost it's soul because the round structures are so much looser, or the greater availability of angel money. Seed money used to be a godsend because you had a good idea that wasn't at a scale enough to interest traditional VC and you didn't know an angel. YC was particularly great because it had the emphasis on the network and the larger number of investments allowed it to distribute risk across the class. They purpose was not to build a company or make a good living, it allowed you to create a company you wouldn't have been able to, otherwise. I agree with the gp post, the goal is not to fund a sustainable company, it's to get one off the ground.
save_ferris 6y ago
No, it just diverts focus from building a successful company to figuring out how to eat. Forcing entrepreneurs to risk devastating personal bankruptcy just isn’t kosher, and there’s zero evidence that it creates healthy companies. It just encourages founders to take even more risks, which aren’t always ethical (i.e. Instacart’s predatory pricing and tipping model).
- sushshshsh 6y ago
  While this strikes me as possibly true, maybe even probably true, I would prefer to see actual simple data about this. Sure it would be hard to get but here's the schema I imagine would be needed. Founder ID, Founder bank account balance average during company's first year, Founder health metrics array [acute visits to hospital or clinic for diet/mental health issues], Outcome of company --- If we notice that founders with low bank balances, lots of health events in their life, and unsuccessful business outcomes are popping up in the data, and then conversely founders with 100k in their personal bank on day 1 are never visiting the hospital and their companies are doing fine, then I think we could call check size a definitive contributing factor. This would fly in the face of "ramen profitability" as a virtue. EDIT: and i think there are enougg startups out there (40,000 probably??? ask crunchbase) to have a meaningful sample size
jasonwatkinspdx 6y ago
This is absolutely terrible advice. There are a few professional services that can have a dramatic impact on the early success of a startup. You need the best PR firm you can get to return your calls. That ain't cheap, but it has a rather huge impact if used properly.
- _curious_ 6y ago
  "You need the best PR firm you can get to return your calls." Saying someone "needs" something (ie paid PR) in order to succeed could also be deemed terrible advice.
  - jasonwatkinspdx 6y ago
    This has been one of the critical differences between the startups I've worked at that have found successful exits and those that floundered. A good PR firm can you get a national audience for pennies compared to paying for ads.
    - _curious_ 6y ago
      I believe it, though there is plenty of opportunity for earned media - its not PR firm, ads, or nothing...
bananaface 6y ago
It's not about "who's job it is", it's about supply and demand. The founder could probably get a 300k salary at Google or a six-figure stipend with another investor. If Y-Combinator wants to compete they have to provide something that outweighs that.
- cameronbrown 6y ago
  How is it YC's problem? The founder is choosing to start a company and asking YC for money. Clearly they're not short of startups on the supply side of their equation.
  - bananaface 6y ago
    You're not thinking about it the right way. It doesn't matter if they have "enough" applicants. They're trying to fill the positions with the best candidates out there - who they will just have to compete for. The more barriers they put up, the shittier the candidates they will get.
- czbond 6y ago
  Why would Y comb need to compete with someone who is considering an offer to G? In that case, the founder would leave for the better deal anyways - so it's best to leave before it gets REALLY hard.
  - bananaface 6y ago
    Ok, but now you're filtering out a good chunk of people smart enough to work for G - so your applicant pool just got dumber.
    - czbond 6y ago
      Disagree. If someone's choice either is to work for G, or start the company, it is the founders risk to take and give up that job for the outsized risk and return of starting up. It is not YC's need to compensate a founder for their alternative.

seertaak 6y ago

> Yeah I noped out of this as soon as I saw it. I must be misunderstanding you; I read that as you stopped reading the entire thread because there was a single point you disagree with. Is that what you mean?

klyrs 6y ago
Suppose the first slide of my 10 minute sales deck described building a house out of literal waffles, and letting customers eat those waffles. Would you actually pay attention to the other 9 minutes? Overlooking the fact that if I attempted such a thing it would be amusing as hell. Imagine somebody taking that idea very seriously.
- CalChris 6y ago
  Waffle House exists [1] and so this sounds likes like a buried lede which is way better than most pitches. I've heard worse, much worse. [1] https://www.wafflehouse.com/ https://www.wafflehouse.com/
  - tedivm 6y ago
    There's a difference between "sells waffles" and "constructions a house using waffles as the building material", and I'm reasonably sure the second one doesn't exist.
    - sjm-lbm 6y ago
      I feel like the point is "you never know when an apparently crazy idea will turn into something reasonable, so you should always stick with someone until the end of their pitch and/or point." Admittedly, I'm not sure that's universally true (we all have a limited amount of time, and it's reasonable to focus that time in places where it is going to give us the most benefit), but I'm pretty sure I see where the commenter is coming from.
      - bananaface 6y ago

djsumdog 6y ago

I think back to Paul Graham's list of things that kill a startup: http://paulgraham.com/startupmistakes.html http://paulgraham.com/startupmistakes.html He does list having both too little money and too much money. I agree, maybe the $25k made sense back before life in California was more expensive than living in Manhattan, and it should be enough to cover more living expenses. Maybe alternatively, YC could provide less money, but basic housing and needs so founders minimals could be met, while also providing them a collaborative environment?

KajMagnus 6y ago
> basic housing What about a YC building complex a bit outside SF? Maybe one close to NY too, and ... two in Europe, two in ... each continent? :- ) "Ycplex"? "Hackerplex"? There could be a gym so people could stay healthy (and what about child care & school?).

Nasrudith 6y ago

I think the idea is to not be an "attractive nuisance" to get strung along by ideas which look good but don't work out. There is some theoretical strategic merit but it doesn't seem to synergize. It seems at odds with the Venture Capital model in the first place of rushing growth over profits and letting the wins make up for losses. Especially if he has a larger pool of capital than when he started (which he should unless he is doing it wrong), smaller checks /and/ wanting more personal attention and less canidates. That just cannot scale up to larger ammounts of money by definition, even if it would yield a better rate of return on investment in dollars. Diversification is another option for fund self-perpetuation but it will likely not have the same yields and cause total portfolio growth to decline with size. As for motivations I guess either trying to eat his cake and have it too.