4 ms·

This reminds me of the Greg McAdoo vs David Heinemeier Hansson debate at Startup School. It totally polarises 'the VC approach' and 'bootstrapping' and talks in

by langer 18y ago

This reminds me of the Greg McAdoo vs David Heinemeier Hansson debate at Startup School. It totally polarises 'the VC approach' and 'bootstrapping' and talks in very general terms. I don't believe there's a right answer to this. Surely the answer is always "it depends". And what it depends on is the interesting part of this whole debate.

fallentimes 18y ago
I think it depends on your time line and whether you can create a working, valuable website/application/product/whatever by bootstrapping. Some industries you can, some you can't. We could have easily done http://TicketStumbler.com http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.
- ryanwaggoner 18y ago
  As Guy stated, for most companies, going the YC route qualifies as plan B more than plan A. Two guys living in their parents basement and giving up 6% for 15 - 20k so they can scrape by for six months is a far cry from giving up 30 - 40% for $1-2m so you can hire five people and burn through that money in less than a year building a product for all the users you're sure you're going to get.
  - fallentimes 18y ago
    I definitely agree. I was responding more to langer's comment than the article itself. Now the decision is: does the money, leverage and ability to expand faster (in theory) we'd receive from plan A outweigh the amount of additional equity we'd have to give up.
    - MaysonL 18y ago
      And the time and effort expended in the process of fundraising.
      - fallentimes 18y ago
        And the enjoyment experienced from all the free breakfasts/lunches/dinners/beers/paint ball outings. :)
    - netcan 18y ago
      I think that there's another question (& I think it's part of the point he's making): 'Is leverage and ability to expand faster, something you want?' In other words. not can you play the Startup/VC game without a VC but, should you be playing that game at all? One of the points was that 10,000 users was a failure for a VC funded startup. That's not necessarily the case if you don't have an inherent valuation you need to aim for.
- rrf 18y ago
  "...but YC moved our time line up by at least six months to a year..." - can you explain further - in broad terms of course - was that because of the focus of the YC process; the connections being a YC funded company brought, or something else?
  - fallentimes 18y ago
    Oh yeah sure - I was able to leave my job and focus on the startup with 100% of my time (instead of say 10-30%). The connections and being able to bounce ideas off of other really smart people was invaluable as well. What's really hard for many founders (myself very much included) is telling your friends and family you're leaving this good job with health care benefits to do a startup. Having a name behind you makes this a lot easier; the YC money was almost irrelevant.
    - mwerty 18y ago
      My suggestion to those thinking about this: do the math. Having just quit my job, I found that health care is cheaper than you'd think. COBRA ensures that you are covered for 18 months under your existing plan. I can't think of any other benefit I'm missing. It seems to give a warm and fuzzy sense of security to a lot of people.
      - fallentimes 18y ago
        COBRA was super expensive for me (over $250 a month) luckily we qualified for this young adults program in MA which is ~$130 per month. In the west coast, you can find even better deals. Obviously, this is a much bigger issue if you have a wife and kids.
      - menloparkbum 18y ago
        If you are in any sort of accident, the insurance pays for itself. I had an allergic reaction while uninsured, and it cost me $3700. An old roommate was in a bicycle accident while uninsured, and the bill was close to $18,000. COBRA is a pretty bad deal though. Mine was almost $250. You can get a good Blue Cross plan for that much, or a simple disaster plan for much less.

by langer 18y ago

fallentimes 18y ago

I think it depends on your time line and whether you can create a working, valuable website/application/product/whatever by bootstrapping. Some industries you can, some you can't. We could have easily done http://TicketStumbler.com http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.

ryanwaggoner 18y ago
As Guy stated, for most companies, going the YC route qualifies as plan B more than plan A. Two guys living in their parents basement and giving up 6% for 15 - 20k so they can scrape by for six months is a far cry from giving up 30 - 40% for $1-2m so you can hire five people and burn through that money in less than a year building a product for all the users you're sure you're going to get.
- fallentimes 18y ago
  I definitely agree. I was responding more to langer's comment than the article itself. Now the decision is: does the money, leverage and ability to expand faster (in theory) we'd receive from plan A outweigh the amount of additional equity we'd have to give up.
  - MaysonL 18y ago
    And the time and effort expended in the process of fundraising.
    - fallentimes 18y ago
      And the enjoyment experienced from all the free breakfasts/lunches/dinners/beers/paint ball outings. :)
  - netcan 18y ago
    I think that there's another question (& I think it's part of the point he's making): 'Is leverage and ability to expand faster, something you want?' In other words. not can you play the Startup/VC game without a VC but, should you be playing that game at all? One of the points was that 10,000 users was a failure for a VC funded startup. That's not necessarily the case if you don't have an inherent valuation you need to aim for.
rrf 18y ago
"...but YC moved our time line up by at least six months to a year..." - can you explain further - in broad terms of course - was that because of the focus of the YC process; the connections being a YC funded company brought, or something else?
- fallentimes 18y ago
  Oh yeah sure - I was able to leave my job and focus on the startup with 100% of my time (instead of say 10-30%). The connections and being able to bounce ideas off of other really smart people was invaluable as well. What's really hard for many founders (myself very much included) is telling your friends and family you're leaving this good job with health care benefits to do a startup. Having a name behind you makes this a lot easier; the YC money was almost irrelevant.
  - mwerty 18y ago
    My suggestion to those thinking about this: do the math. Having just quit my job, I found that health care is cheaper than you'd think. COBRA ensures that you are covered for 18 months under your existing plan. I can't think of any other benefit I'm missing. It seems to give a warm and fuzzy sense of security to a lot of people.
    - fallentimes 18y ago
      COBRA was super expensive for me (over $250 a month) luckily we qualified for this young adults program in MA which is ~$130 per month. In the west coast, you can find even better deals. Obviously, this is a much bigger issue if you have a wife and kids.
    - menloparkbum 18y ago
      If you are in any sort of accident, the insurance pays for itself. I had an allergic reaction while uninsured, and it cost me $3700. An old roommate was in a bicycle accident while uninsured, and the bill was close to $18,000. COBRA is a pretty bad deal though. Mine was almost $250. You can get a good Blue Cross plan for that much, or a simple disaster plan for much less.