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30. Startups for startups. I think Y Combinator doesn't take its model far enough. What I'd like to see could be called "Human Resource Investment"- investing

30. Startups for startups. I think Y Combinator doesn't take its model far enough. What I'd like to see could be called "Human Resource Investment"- investing in people, not startups per se. This would be structured as a debt and/or equity deal. You find a talented person, and invest in them using money, technology, education, and social resources. Then you charge a high interest rate (for the reliable people), or make money off of a % of all their future income (for the high risk types) for the next 30 years or whatever (in addition to the principle). The advantage to the investee that this has over credit card debt and other forms of debt is that you don't require anyone to make debt payments until they are making over a certain $ figure per year. This way nobody has to worry about going bankrupt, becoming poor, or social shame. They also get access to major institutional support, which is difficult for people to get (and social/institutional support is one of the few things people are generally missing in their lives, if they don't go to church). No longer do the poor, inexperienced, young- but energetic and talented- types need to scrap for everything. The advantage to Human Resource Investment, Inc., is that even if there is a high rate of delinquency, just a few Zuckerbergs and Grahams and you make a fortune. You also can make money off of them, even if they fail a few times, since it's a long-term contract, rather than a project contract. This way other VC firms don't make money off of Y Combinator having educated someone with a failed venture, and then they do another, successful startup with Sequoia or whomever. You also have access to a large pool of talented people with whom you have a good relationship, and you've already evaluated, who would make good potential hires for startups or whatever other companies you are affiliated with. If HRI were savvy enough, you could lock up most of the available talent the VC world relies on, before anyone is taking a percentage of the money they're going to eventually make. Think of it as government for profit- you choose the people to invest in, helping them enormously (as government services are supposed to do) and you make a profit with "taxes". Given that governments have to invest in everyone, and are inefficient to boot, yet still roughly break even, I see no reason why a private company couldn't do the same thing, but focus on talented people, do a good job of it, and make a nice profit. I've done the math before, and the conservative estimates I used worked out to a very handsome profit. But it gets complicated, and it depends very much on the assumptions that are made. If anyone wants an example, I'll be happy to provide it.

jerry5 18y ago
> "Human Resource Investment" Oh yeah, humans just love to be called 'resources'.
- foompy_katt 18y ago
  Ok, objection noted. The name isn't important- you can call it "Pie Love" if you want. In case you couldn't tell from the post, I was talking about investing in the talent people have. I'm not talking about slave labor, I'm talking about doing the kind of stuff Y Combinator does, and making it even more personal and supportive over the long haul. A real partnership, so that people are even more likely to succeed in the long run.
  - jerry5 18y ago
    No I couldn't tell, because I stopped reading at "human resources". But since you stand corrected I'll stand corrected too and wrote a thoughtful reply above.
jerry5 18y ago
This is pretty much what universities do, especially the more elitist kind. Alumni don't have a contractual obligation to pay x% of their income, but in practice they end up making donations to their alma mater for the rest of their life. However I don't like this idea at all, it's what creates elitism and closed circles in the first place. Our society already is institutionalized to the hilt, I wished people again found their natural ability to create trust relationships, from scratch.
- foompy_katt 18y ago
  "I wished people again found their natural ability to create trust relationships, from scratch." I completely agree with this. I don't honestly feel people of good faith need to deal with complicated rules or institutions. But not everyone is willing to go that route, so this is an idea which might serve the other 99%. First off, it might be the case that anyone could be worth investing in (in time, money, energy, expertise, caring). I think if done right, it's true for everyone. I don't really have it as a goal that just the "talented" people are invested in. Just that that is the obvious place to start. And I think that if someone who is talented is already well-connected or has a rich family, this would probably have little use for them. But, for someone who is ambitious and hard-working but starting out from a low place, this would be a boon- they need some kind of support, more than anyone else. If they could find others willing to create "trust relationships", presumably they would do it, since that is obviously a better deal. But few seem to manage it :/.

jerry5 18y ago

> "Human Resource Investment" Oh yeah, humans just love to be called 'resources'.

foompy_katt 18y ago
Ok, objection noted. The name isn't important- you can call it "Pie Love" if you want. In case you couldn't tell from the post, I was talking about investing in the talent people have. I'm not talking about slave labor, I'm talking about doing the kind of stuff Y Combinator does, and making it even more personal and supportive over the long haul. A real partnership, so that people are even more likely to succeed in the long run.
- jerry5 18y ago
  No I couldn't tell, because I stopped reading at "human resources". But since you stand corrected I'll stand corrected too and wrote a thoughtful reply above.

jerry5 18y ago

This is pretty much what universities do, especially the more elitist kind. Alumni don't have a contractual obligation to pay x% of their income, but in practice they end up making donations to their alma mater for the rest of their life. However I don't like this idea at all, it's what creates elitism and closed circles in the first place. Our society already is institutionalized to the hilt, I wished people again found their natural ability to create trust relationships, from scratch.

foompy_katt 18y ago
"I wished people again found their natural ability to create trust relationships, from scratch." I completely agree with this. I don't honestly feel people of good faith need to deal with complicated rules or institutions. But not everyone is willing to go that route, so this is an idea which might serve the other 99%. First off, it might be the case that anyone could be worth investing in (in time, money, energy, expertise, caring). I think if done right, it's true for everyone. I don't really have it as a goal that just the "talented" people are invested in. Just that that is the obvious place to start. And I think that if someone who is talented is already well-connected or has a rich family, this would probably have little use for them. But, for someone who is ambitious and hard-working but starting out from a low place, this would be a boon- they need some kind of support, more than anyone else. If they could find others willing to create "trust relationships", presumably they would do it, since that is obviously a better deal. But few seem to manage it :/.