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I did both times. The first time was a big risk because it was my first startup. I don't have advice on the best way to do it, but I can tell you this: If you'r

by smoody 18y ago

I did both times. The first time was a big risk because it was my first startup. I don't have advice on the best way to do it, but I can tell you this: If you're anything like me, then taking money from your friends and family will insure you keep the startup going no matter how bad things get. There's almost no greater motivator not to give up than taking money from your friends' savings accounts. I should have given up several times before we were acquired. I had to ask all the companies interested in acquiring us for a small amount of money if they were serious about entering into 'strategic relationship' discussions -- the money was used to keep the power on, the net connected, and to keep my team from being evicted from their apartments. Honestly, I would have shut the company down six months prior had it not been for the fact that some of my best friends had provided capital. It paid off financially, but took a big toll psychologically.

dannyr 18y ago
Thanks for the insight. What was the average amount of money you raised from your friends? What was the largest and the smallest?
- smoody 18y ago
  We didn't take anything too small because we were trying to keep the number of formal investors to a minimum. For smaller amounts, in the $1000 to $2000 range, I asked my friends to loan me the money. When friends of invested in a formal round, the sums were higher than that. I don't remember the exact numbers, but probably in the $5000 to $10,000 range -- and, at that, I only asked a few friends. Basically, I asked them to come up with an amount to where, if they lost it all, they wouldn't hate me. :-) But, remember, if you're going to keep everything clean from a legal perspective, anyone who invests who is not an employee has to be an "accredited investor." See: http://news.ycombinator.com/item?id=373366 http://news.ycombinator.com/item?id=373366
gruseom 18y ago
What are/were your startups? I find this and some of your other comments interesting and would like to hear more about your path.
- smoody 18y ago
  My first company was started back in 1996 and was acquired in 1998. It seems commonplace now, but we were the first company to create a service for web-based closed membership communities. The service we were developing had photo albums, calendaring, really advanced messaging boards, an app store, etc. The company (founded in Seattle) was called "Throw," but, most likely, you wouldn't have heard of it because it was acquired before we launched our service. We were one of the five on-stage companies at the Demo conference back in '98 and within days of being on-stage, after years of not being able to get anyone's attention, we (there were six of us) were suddenly being courted by both top-tier VCs and the top three search engines/portals at the time. We chose to be acquired by Excite.com (which is no longer the company that it was). Even though it was only two years from start to finish, it was a long psychological slog and the reason we made it through was because the team was 100% dedicated to our success no matter what the cost. One member of the team had over ten maxxed-out credit cards on the day we were acquired (I didn't find that out until afterwards -- no one ever complained about not getting paid). Before the Demo conference, I had to ask one of my very best friends for a substantial loan to keep the company afloat until the conference. He lent me the money without question. When we were acquired a couple of months later, I gave him double what I borrowed because, without that money, we would have shut down. There are dozens of war stories, but I won't bore you with the details. The second company, NeoMeo, was also acquired before it launched. I co-founded that company back in 2000 (in New York City). It was doing Xobni-type things, but revolved more around making sense of message content. Our service could do things like recognize dates in emails (expressed in various ways), recognize phone numbers, create photo albums from your inbox, etc. We eventually sold the company to Postini which was eventually acquired by Google (for cash), so my friends who made investments in that company also did okay from a return-on-investment perspective. What am I doing now? To be honest, I'm having issues locking onto a single idea. The fluid nature of the economy has given me pause and caused me to second-guess myself more often than I normally would. I have a few solid ideas but haven't committed to one of them yet. So, for now, I've become an architecture astronaut of sorts ( http://www.joelonsoftware.com/articles/fog0000000018.html http://www.joelonsoftware.com/articles/fog0000000018.html ) and I'm just enjoying the thing I love to do the most: designing and implementing an architecture to keep my skills sharp. For some reason, I'm reminded of the old joke which I will no-doubt butcher: Did you hear about the programmer who was found dead in the shower? He was holding a shampoo bottle that read "Wash. Rinse. Repeat."

by smoody 18y ago

dannyr 18y ago

Thanks for the insight. What was the average amount of money you raised from your friends? What was the largest and the smallest?

smoody 18y ago
We didn't take anything too small because we were trying to keep the number of formal investors to a minimum. For smaller amounts, in the $1000 to $2000 range, I asked my friends to loan me the money. When friends of invested in a formal round, the sums were higher than that. I don't remember the exact numbers, but probably in the $5000 to $10,000 range -- and, at that, I only asked a few friends. Basically, I asked them to come up with an amount to where, if they lost it all, they wouldn't hate me. :-) But, remember, if you're going to keep everything clean from a legal perspective, anyone who invests who is not an employee has to be an "accredited investor." See: http://news.ycombinator.com/item?id=373366 http://news.ycombinator.com/item?id=373366

gruseom 18y ago

What are/were your startups? I find this and some of your other comments interesting and would like to hear more about your path.

smoody 18y ago
My first company was started back in 1996 and was acquired in 1998. It seems commonplace now, but we were the first company to create a service for web-based closed membership communities. The service we were developing had photo albums, calendaring, really advanced messaging boards, an app store, etc. The company (founded in Seattle) was called "Throw," but, most likely, you wouldn't have heard of it because it was acquired before we launched our service. We were one of the five on-stage companies at the Demo conference back in '98 and within days of being on-stage, after years of not being able to get anyone's attention, we (there were six of us) were suddenly being courted by both top-tier VCs and the top three search engines/portals at the time. We chose to be acquired by Excite.com (which is no longer the company that it was). Even though it was only two years from start to finish, it was a long psychological slog and the reason we made it through was because the team was 100% dedicated to our success no matter what the cost. One member of the team had over ten maxxed-out credit cards on the day we were acquired (I didn't find that out until afterwards -- no one ever complained about not getting paid). Before the Demo conference, I had to ask one of my very best friends for a substantial loan to keep the company afloat until the conference. He lent me the money without question. When we were acquired a couple of months later, I gave him double what I borrowed because, without that money, we would have shut down. There are dozens of war stories, but I won't bore you with the details. The second company, NeoMeo, was also acquired before it launched. I co-founded that company back in 2000 (in New York City). It was doing Xobni-type things, but revolved more around making sense of message content. Our service could do things like recognize dates in emails (expressed in various ways), recognize phone numbers, create photo albums from your inbox, etc. We eventually sold the company to Postini which was eventually acquired by Google (for cash), so my friends who made investments in that company also did okay from a return-on-investment perspective. What am I doing now? To be honest, I'm having issues locking onto a single idea. The fluid nature of the economy has given me pause and caused me to second-guess myself more often than I normally would. I have a few solid ideas but haven't committed to one of them yet. So, for now, I've become an architecture astronaut of sorts ( http://www.joelonsoftware.com/articles/fog0000000018.html http://www.joelonsoftware.com/articles/fog0000000018.html ) and I'm just enjoying the thing I love to do the most: designing and implementing an architecture to keep my skills sharp. For some reason, I'm reminded of the old joke which I will no-doubt butcher: Did you hear about the programmer who was found dead in the shower? He was holding a shampoo bottle that read "Wash. Rinse. Repeat."