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The Equity Equation

paulgraham.com

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Re: The Equity Equation

#71

Post by gibsonf1 »

dhouston wrote: post #33
cperciva wrote: post #29

Earlier quoted context omitted.

That is my startup idea. I don't want to take this thread even more off-topic (if that's even possible), but please feel free to contact me at the address in that first post to explain why you think it is a bad idea.

we're in a similar space -- http://www.getdropbox.com (and part of the yc summer 07 program) basically, sync and backup done right (but for windows and os x). i had the same frustrations as you with existing solutions. let me know if it's something you're interested in, or if you want to chat about it sometime. drew (at getdropbox.com)

Will your service offer a full server backup, or just selected files?

Re: The Equity Equation

#72

Post by create_account »

cperciva wrote: post #65
pg wrote: post #54

Earlier quoted context omitted.

Actually not. That's why I was careful to speak of the effect of trading equity on the "average outcome" rather than e.g. "average valuation at liquidity." What I'm literally saying is, does the trade improve your odds of getting what you want? That subsumes both your risk aversion and your utility function for money.

Your math is still wrong, because of the non-linear utility of money. If I give up 6% of my company, it costs me 6% of any MONEY I might end up getting, but it doesn't cost me 6% of the UTILITY. If I have a utility-of-money function of sqrt($), you don't have to increase my chance of success by 6.4%; it's enough if you increase my chance of success by 3.2%.

Since you're good at math and know something about finance, why not just get a job at a hedge fund?

You'll get rich, and you won't get heckled by a bunch of startup founders.

Re: The Equity Equation

#73

Post by euccastro »

abstractbill wrote: post #18
johnrob wrote: post #8

A smart company would give 6% equity to YC just for the advice and publicity. The cash is the least valuable part of the equation. 5k per person can be saved up in a number of months, even for relatively low salaries if you are stingy.

I'd honestly be surprised at this point if nobody has offered to pay YC to take equity in a startup.

I'd be more surprised if that ever worked. Sounds clueless and suplicating at best, insulting otherwise.

Re: The Equity Equation

#74

Post by create_account »

abstractbill wrote: post #18
johnrob wrote: post #8

A smart company would give 6% equity to YC just for the advice and publicity. The cash is the least valuable part of the equation. 5k per person can be saved up in a number of months, even for relatively low salaries if you are stingy.

I'd honestly be surprised at this point if nobody has offered to pay YC to take equity in a startup.

Are you asking if YC charges potential investors to attend their demo days?

Interesting if they did... part of YC's function is to introduce follow-on investors to their startups, but I've never thought about their charging investors for that privilege.

Who says there's no business model in the Web 2.0 world?

Re: The Equity Equation

#75

Post by euccastro »

euccastro wrote: post #43
cperciva wrote: post #30

Earlier quoted context omitted.

Again you're right, and I'm sorry about the attitude. Over the past year I've started to get rather defensive when people have suggested that I'm wasting my time on this project...

Were these people questioning your ability to pull off the technical challenges? If they were questioning the business potential of the idea, your impressive credentials in math and programming are besides the point.

Whoever downmodded: I'm interested in your counterpoint. Please reply here or privately at the address in my profile. TIA!

Re: The Equity Equation

#76

Post by create_account »

nostrademons wrote: post #45
abstractbill wrote: post #18

Earlier quoted context omitted.

I'd honestly be surprised at this point if nobody has offered to pay YC to take equity in a startup.

Am trying to remember if I did that after I was rejected from SFP2005...I know that I offered them free equity in exchange for advice and the ability to come to the YC dinners, but I can't remember if I offered cash. Probably not, as I was poor at the time. My offer was ignored, BTW.

Not surprising... the benefit of getting accepted is getting face time for advice and networking with potential investors at their dinners, etc., not the funding.

If they said yes to that, there'd be no need to apply, we'll all just show up at Graham's house every day.

Re: The Equity Equation

#77

Post by euccastro »

create_account wrote: post #74
abstractbill wrote: post #18

Earlier quoted context omitted.

I'd honestly be surprised at this point if nobody has offered to pay YC to take equity in a startup.

Are you asking if YC charges potential investors to attend their demo days? Interesting if they did... part of YC's function is to introduce follow-on investors to their startups, but I've never thought about their charging investors for that privilege. Who says there's no business model in the Web 2.0 world?

You're kidding, right? :)

Re: The Equity Equation

#78

Post by pg »

pg wrote: post #69
ordersup wrote: post #60

Earlier quoted context omitted.

I can't help but laugh at the audacity of another tech-related investment firm commenting like that. He is trying to persuade people that YC is just writing cheques.

I'm never sure whether such people are clueless or deliberately misleading. I'm inclined to give most the benefit of the doubt and say clueless. When you change the model for something, it takes people a long time to get what you're doing. I remember from web-based software.

Maybe this is not so innocent as I thought. Apparently Seth Levine is the partner of Brad Feld, the founder of Techstars:

http://www.foundrygroup.com/team.php

What a slimy move. It won't make any difference in the long run though.

Re: The Equity Equation

#79

Post by gibsonf1 »

cperciva wrote: post #29
menloparkbum wrote: post #24

Earlier quoted context omitted.

Well, I hope your startup idea isn't this: http://www.daemonology.net/blog/2006-09-13-encrypted-backup.... This post also shows a phenomenal misunderstanding of what it takes to create a successful software startup: http://www.daemonology.net/blog/2007-06-21-think-before-codi...

That is my startup idea. I don't want to take this thread even more off-topic (if that's even possible), but please feel free to contact me at the address in that first post to explain why you think it is a bad idea.

I just read more about your security strategy - and that is definitely something people really want - reliable and secure data backup. Good luck.

Re: The Equity Equation

#80

Post by abstractbill »

euccastro wrote: post #73
abstractbill wrote: post #18

Earlier quoted context omitted.

I'd honestly be surprised at this point if nobody has offered to pay YC to take equity in a startup.

I'd be more surprised if that ever worked. Sounds clueless and suplicating at best, insulting otherwise.

Yes, of course I don't think it would work - I'd just be surprised if nobody has tried it.
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