Ask HN: Hosting for equity?

#1

Post by da288 » Sat, Nov 13, 2010, 5:34 PM UTC

Hi,

I have a fully working web startup that I want to launch - the cost will be primarily image hosting and while I'm reaching out to Angel Investors (London is getting better but still pretty tough), I was wondering how reasonable an equity for hosting offer would be. I presume most major startups have extra capacity left over after setting aside excess to take up variable demand slack. Do you think this is a feasible model... it would be a different way to value the company, but I can see it as a win-win for the hosting providers. Any thoughts? Thanks.

Re: Ask HN: Hosting for equity?

#2

Post by patio11 » Sat, Nov 13, 2010, 5:55 PM UTC

This question strikes me as similar to giving away equity for office supplies. I suppose, theoretically speaking, one could come up with a way to structure a deal with Staples such that you bought your copy paper with equity... but why. Image hosting is a cheap, commodity service like office paper. Go raid your coffee tin, that should suffice for several months.

Re: Ask HN: Hosting for equity?

#3

Post by dan_manges » Sat, Nov 13, 2010, 5:57 PM UTC

What about cash for equity and then use the cash to pay for hosting?

Re: Ask HN: Hosting for equity?

#4

Post by steveklabnik » Sat, Nov 13, 2010, 5:59 PM UTC

patio11 wrote: post #2

This question strikes me as similar to giving away equity for office supplies. I suppose, theoretically speaking, one could come up with a way to structure a deal with Staples such that you bought your copy paper with equity... but why . Image hosting is a cheap, commodity service like office paper. Go raid your coffee tin, that should suffice for several months.

Especially if the primary need is image hosting. S3's 14 cents/gigabyte isn't cheap enough?

Re: Ask HN: Hosting for equity?

#5

Post by ari_ » Sat, Nov 13, 2010, 6:13 PM UTC

Note: A Fully working web startup that you want to launch is not a fully working web startup.

What about S3 or a bunch of VPSes to test the idea and then go to the Investors with a working startup?

Re: Ask HN: Hosting for equity?

#6

Post by pmjordan » Sat, Nov 13, 2010, 6:29 PM UTC

dan_manges wrote: post #3

What about cash for equity and then use the cash to pay for hosting?

I think "I'm reaching out to Angel Investors" is intended to mean he/she's trying but thus far hasn't been able to raise money.

Re: Ask HN: Hosting for equity?

#7

Post by pmjordan » Sat, Nov 13, 2010, 6:31 PM UTC

steveklabnik wrote: post #4

patio11 wrote: post #2

This question strikes me as similar to giving away equity for office supplies. I suppose, theoretically speaking, one could come up with a way to structure a deal with Staples such that you bought your copy paper with equity... but why . Image hosting is a cheap, commodity service like office paper. Go raid your coffee tin, that should suffice for several months.

Especially if the primary need is image hosting. S3's 14 cents/gigabyte isn't cheap enough?

And if for some reason Amazon isn't suitable, you can get dedicated servers seriously cheaply these days too, e.g.

http://www.hetzner.de/en/hosting/produktmatrix/rootserver-pr...

(no affiliation, I'm just a happy customer)

Re: Ask HN: Hosting for equity?

#8

Post by fleitz » Sat, Nov 13, 2010, 6:34 PM UTC

Sure, send over the business plan, I'll look it over and it if looks profitable I'll let you use my S3 account for 50% of the company.

Re: Ask HN: Hosting for equity?

#9

Post by dstein » Sat, Nov 13, 2010, 7:04 PM UTC

Never give away equity (future profit) for a utility. You should have learned this in Parker Brother's Monopoly.

Re: Ask HN: Hosting for equity?

#10

Post by da288 » Sun, Nov 14, 2010, 4:33 AM UTC

fleitz wrote: post #8

Sure, send over the business plan, I'll look it over and it if looks profitable I'll let you use my S3 account for 50% of the company.

Thanks, but sarcasm aside, I was going on the premise of a far smaller share (<5%) for an innovative technology. I can see what everyone is saying though, seems like a bad idea. I'll just keep trying to flog it to investors.