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Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

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Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#121
post #59

Earlier quoted context omitted.

I can counter that with a real world example. I've done a startup that succeeded and got a pretty neat product out (which btw. included FPGA programming, hardware, mobile technology, and web technology - not exactly easy stuff..) and we had contractors do everything. No hackers aboard. And it worked. So it can be done.

I get the feeling that there's an exception to almost every startup rule. In my personal experience, I've never seen outsourcing work well, or really work at all. The first startup I worked at spent $300k to setup an office in China, paying their developers about $10-15k/year. It would've been a great deal, except that the China office produced nothing and sucked up the complete time of both the CTO and chief scienti…

I see your point, and I think that I'm probably one of the few people that have seen it from both sides - allow me to explain:

The startup I talked about above was some years ago, and I had no idea how to program anything. It worked out because we were extremely persistent, and simply didn't take no for an answer. A year ago I thought that it might be a good idea to actually learn to hack, and so I set about learning it. Now I'm doing a web-based startup and I have to admit that programming it yourself, and knowing what the heck you're talking about gives a number of advantages:

1) your dependance on external partners is minimised

2) you can see what features are trivial to do, which are hard, and which are just impossible.

3) your product becomes better because it is what you want, not someone elses interpretation of what you want.

4) you don't need a lot of capital, just a lot of time.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#122
i think you should contact PrototypeInvest (http://www.prototypeinvest.com/default.aspx) - they are like VC but instead of giving you money they will develop your application (against equity) - now because you have source code it should not take much of a time for them to develop a prototype for a reasonable amount of equity. This option will save you time, money and energy. If you decide to try them then write a review about them over here as more people like you can use them (if they are good). - GOOD LUCK.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#123
post #90

Ok, so this is what happens to startups, step two survive. The first thing you need to do is get her to either sign a non-compete, sign away the company, or make you an offer to buy out her shares. Something legal might be necessary. If she is willing to sign a non-compete, and finish the project that is what you want, else, options 2 and 3 are on the table. Next you need to finish your project. http://uservoice.com/…

"You have developed most of the idea, and now you just need to round the corners, this is a perfect job for someone that just wants a pay check."

I'm not sure this is the case. It sounds like the "it's nearly done" is based on the developer's word, and there isn't actually anything demoable right now. If that's true, and given that it's taken her 12 months to finish a Django website, I think it's a good bet that all her existing code is unusable and will have to be thrown out. If you understand Django, it should not take you a year to finish a website; more likely, the dev doesn't understand Django and doesn't really have anything working.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#124
post #35

Earlier quoted context omitted.

If you are a paying your developer a market value salary, you are basically paying to have your idea developed. Unless you were paying the developer very little, or nothing, that is when equity should be used as payment 35% is a LOT with $6900/m

You're much better off paying that 35% equity along with a full salary than giving her 6% (or worse, 1%). Think about it this way: she is building your product. She can either put in high effort or low effort. If you give her 35%, there's a good chance she'll put in high effort, you'll both succeed, and your 65% is actually worth something. If you give her 6%, there's a good chance she'll put in low effort, you'll fa…

nostrademons

I paid the 35% equity 8 months ago, only to have her quit when the going got tough.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#125

Holy crap - you're paying her $83K, plus gave her equity, in TULSA ?!?!? That's not exactly a high cost area. If you have $190K and you've paid close to $100K to her (14 months) just to get a proof of concept, I'd say you're in trouble. If she's drawing a handsome salary, won't put any of her own money in, and won't take a pay cut, she can't be that confident in the value of the equity. Sounds like you got milked. I…

"This Django girl"?

It was either that or "the developer that took a royal salary and equity, then extorted more equity, then quit leaving our hero high and dry, broke, with an incomplete alpha, after taking one year to not finish developing a proof of concept." I was trying to be nice.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#126

Earlier quoted context omitted.

I don't think anyone is saying that she (the dev) didn't use her leverage to her advantage. We all recognize that it was the OP's fault to give her that leverage in the first place. However in business, relationships and "karma" - for lack of a better term - are really what things are about. There are times when you should be looking at maximizing your position, and there are other times when you should be looking to…

I'm speculating here, but I'm guessing that when she took the job, she thought "Sure, this'll be a cinch. I get a full salary, and if it works out, a nice bonus." Then it turned out the job was much harder than she expected, she saw the founder with 94% doing basically nothing, and said "Dude, if I'm going to slave away with this code for months, I should get founder-level shares. Otherwise, I could just do what you'…

nostrademons, please re-read the original post.

I never had 94%

I was eventually ok with giving up founder level share, but expected founder level commitment. This is where the gap lies.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#127
Okay. Let's take stock. From what I understand...

Your Resources:

* A partially complete web app, for patients with chronic conditions; helps them manage their problems & has some social network features.

* Feedback from your alpha testing.

* 45% equity in the company (with the ability to recover the extra 29%), which owns all of the IP.

* A limited amount of time before you must seek means to support yourself.

Your Goals:

* Develop your web app to a beta-worthy release.

* Get funds to develop to a point where you can charge, or maintain it long enough to exit.

Your Obstacles:

* Your user-interface isn't presentable enough to for your app to go public.

* Without a developer, you have no means to improve the front-end of your app, or implement new features.

* You have no funding left, very little personal money, and debt.

What I think your plan should be:

1) Ask yourself if you truly believe that your app can be satisfactorily profitable. Ask yourself if you're willing to work hard over the next 2 years (at least) to make it happen.

2) Reduce your expenses as much as possible. You said your monthly outgoing is $2,000. If I can live on $800/month in Boston, you can reduce your expenses to at least $1k to $1.5k. This pushes back your horizon for total cash failure.

3) Increase your income, even if it's just a short-term influx of cash. Whether it's through another loan, selling non-essential assets, or fully-booking half a month with temporary gigs.

4) Learn to code, and instead of continuing development, modify your user-interface to a level where you can release to users. Forget about advanced features. Basic functionality in a working interface, with the promise of advanced functionality, can get enough signups to take you to the next step.

5) Offset costs, and/or get to profitability. You haven't shared your business model; if it's offering the app as a white-label service to institutions, focus on getting your first customers once you have the basic functionality in a working interface. A modest amount of users, however dispersed, should be enough to at least demonstrate interest, and get them to license it from you on a trial basis.

If you're intending to monetize it through users directly, charging isn't feasible until you're offering advanced functionality, and advertising isn't feasible until you have a ton of users. But affiliate sales can generate income with even a modest number of users, and it's likely that the nature of their conditions makes them likely consumers for specialized products, possibly that are highly profitable.

6) Focus development on rapid iteration. Prioritize your feature list by simplicity and usefulness, and either split your attention between adding small, useful features one at a time while working on the larger improvements, or outsource development of the small stuff(one at a time, so you build relationships and can measure quality) and focus solely on the larger improvements.

7) After the three to six months the above should take you, take stock again and consider if you want to get another co-founder (if there are some really large improvements that need to be made that are out of your coding league completely), and/or seek more funding.

8) Let us know how it goes!

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#128
Have you considered dissolving the company (with her signature), transferring the IP to a new company and then starting fresh with a 50/50 co-founder?

If you can sell another hacker on your idea, they may take it to the next stage (prototype finished) for no up front cost beyond the equity.

Re: Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

#129
post #121

Earlier quoted context omitted.

I get the feeling that there's an exception to almost every startup rule. In my personal experience, I've never seen outsourcing work well, or really work at all. The first startup I worked at spent $300k to setup an office in China, paying their developers about $10-15k/year. It would've been a great deal, except that the China office produced nothing and sucked up the complete time of both the CTO and chief scienti…

I see your point, and I think that I'm probably one of the few people that have seen it from both sides - allow me to explain: The startup I talked about above was some years ago, and I had no idea how to program anything. It worked out because we were extremely persistent, and simply didn't take no for an answer. A year ago I thought that it might be a good idea to actually learn to hack, and so I set about learning…

For people that do try to outsource, the crucial question to ask yourself is "What do I bring to the table that a hacker might need?" I chose to partner with a non-technical friend (who ended up quitting, but at least he gave me full ownership of the startup), because this friend was adept at dealing with people and had connections to several possible angel investors. These are aspects of the startup experience that terrify me, and so I was more than happy to let him deal with them.

For your experience, persistence and not taking no are both really important to startups and very difficult for many technical people. So you added some value that a hacker couldn't get by just going off and doing the same thing on his own.

In the startup I mentioned above, the founders were all technical people and didn't really add anything of business value besides that. They were outsourcing because it was cheap and out of a misguided assumption that they needed a big team (and probably because they were spending Other People's Money). They would've been far better off writing the product themselves.

I don't know enough about drinko to know what s/he brings to the table, but unless it's a lot of sales connections to potential customers, it'll be hard for a good programmer to justify spending time on her project vs. all the other projects out there.

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