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Tips for Startup Companies (2006)

98 points by vinutheraj 17y ago

angstrom 17y ago
"Your competitors can probably get a home equity loan at 6 percent on their McMansions. How much cheaper can your cost of capital possibly be?" Oh sweet blast from the past.
donniefitz2 17y ago
I read a lot of articles on startups, and the take away is usually a few small nuggets of value. I think this is first article I have read in a while that has a lot of value. It was good. Read it.
- ojbyrne 17y ago
  Philip's writings were definitely ahead of their time. He changed my life. "It is because these guys were the best programmers who understood the problems of their customers." sums it up.
ShardPhoenix 17y ago
The bit about preferring hypothetical questions over past achievements in interviews sounds dubious to me. The current practice seems to be "behavioral" questions like "tell me about a time you had to deal with <specific type of problem x>, and how you personally contributed to solving it", the idea apparently being that what someone claims (or imagines) they would do in a given situation is a much weaker indicator of their realistic future behaviour than what they actually did in that situation in the past. In other words, actions speak louder than words. However, this is different than simply letting someone brag in general terms about some project they were a part of - the more specific nature of the questioning allows you to get at what the person's real contribution was. I haven't seen the actual research though (I think behavioral interviewing at least claims to be based on research evidence).
- vinutheraj 17y ago
  That works when your aim is to find out the behaviour of character of a person, which is not the aim of a technical interview question. Basically the aim of the technical question is to find out how the person thinks and how creative a solution he works out, and how his thinking process works, not to find out his behavioral characteristics. So it doesn't depend whether if it is an actual situation the candidate has gone through or if it is a hypothetical situation. In the case of a candidate applying for a first job for instance, this is a pretty good way of questioning I think !
smanek 17y ago
A less obvious approach is to insist that the venture capitalists buy some of your common shares at the time of the investment. There are a lot of venture capitalists and not too many good companies. If your company is attractive, you can probably find a firm that will agree to put $10 million into the company and, say, $3 million into your pocket. Then if the enterprise stumbles and ends up being sold for, say, $9 million, you won't feel like a total idiot. Is this still the case? Are VCs willing to do deals like this (especially early on, say in a Series A round)?
BerislavLopac 17y ago
I'm curious about the participation rights -- is there any chance to avoid this altogether? Basically, this means that all that the company gets from the VC is a loan, in return for a part of the company. I'm still far from needing a VC, but at the moment I don't see myself allowing this clause.

98 points by vinutheraj 17y ago

"Your competitors can probably get a home equity loan at 6 percent on their McMansions. How much cheaper can your cost of capital possibly be?" Oh sweet blast from the past.

donniefitz2 17y ago

I read a lot of articles on startups, and the take away is usually a few small nuggets of value. I think this is first article I have read in a while that has a lot of value. It was good. Read it.

ojbyrne 17y ago
Philip's writings were definitely ahead of their time. He changed my life. "It is because these guys were the best programmers who understood the problems of their customers." sums it up.

ShardPhoenix 17y ago

The bit about preferring hypothetical questions over past achievements in interviews sounds dubious to me. The current practice seems to be "behavioral" questions like "tell me about a time you had to deal with <specific type of problem x>, and how you personally contributed to solving it", the idea apparently being that what someone claims (or imagines) they would do in a given situation is a much weaker indicator of their realistic future behaviour than what they actually did in that situation in the past. In other words, actions speak louder than words. However, this is different than simply letting someone brag in general terms about some project they were a part of - the more specific nature of the questioning allows you to get at what the person's real contribution was. I haven't seen the actual research though (I think behavioral interviewing at least claims to be based on research evidence).

vinutheraj 17y ago
That works when your aim is to find out the behaviour of character of a person, which is not the aim of a technical interview question. Basically the aim of the technical question is to find out how the person thinks and how creative a solution he works out, and how his thinking process works, not to find out his behavioral characteristics. So it doesn't depend whether if it is an actual situation the candidate has gone through or if it is a hypothetical situation. In the case of a candidate applying for a first job for instance, this is a pretty good way of questioning I think !

smanek 17y ago

A less obvious approach is to insist that the venture capitalists buy some of your common shares at the time of the investment. There are a lot of venture capitalists and not too many good companies. If your company is attractive, you can probably find a firm that will agree to put $10 million into the company and, say, $3 million into your pocket. Then if the enterprise stumbles and ends up being sold for, say, $9 million, you won't feel like a total idiot. Is this still the case? Are VCs willing to do deals like this (especially early on, say in a Series A round)?

BerislavLopac 17y ago

I'm curious about the participation rights -- is there any chance to avoid this altogether? Basically, this means that all that the company gets from the VC is a loan, in return for a part of the company. I'm still far from needing a VC, but at the moment I don't see myself allowing this clause.