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Bootstrapping Your Startup: Do You Really Need Early Investment?

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Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#11

Post by jnardiello »

onion2k wrote: post #8
cookiecaper wrote: post #6

Earlier quoted context omitted.

Many investors are not very kind to founders with families and mortgages. YC itself is a horrible deal for anyone that's not a college dropout. Move out to SF for 3 months, leaving wife, kids, and property behind to fend for themselves, shack up in a tiny apartment with a co-founder, and get paid nothing for $20k and 5-7% of your company ? That's alright man, pg can keep focusing on his college dropouts (of both sexe…

A few months on a very low wage (that is what the $20k is for..), away from your friends and family, living in a tiny apartment is nothing compared to working on something you feel exceptionally passionate about. Chances are you'll never find that problem. Most people don't. Those problems are rare, and solutions to them rarer still. But that's fine. If you have a business idea that you're keen on but don't want to g…

Only someone who doesn't have family could say: "A few months on a very low wage (that is what the $20k is for..), away from your friends and family, living in a tiny apartment is nothing compared to working on something you feel exceptionally passionate about."

Do you have small children? If so, can you try to imagine how difficult could be to miss the first words or first steps of your baby? Can you imagine what could mean to simply drop everything on the shoulder of your wife? Your comment is so superficial.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#12

Post by juanitod »

troels wrote: post #4

I suppose it depends on who you are. If you have a family and a mortgage, the answer may be yes.

These are the wrong assessments.

You should rather say: "I suppose it depends on your type of business. If you are a B2C and you need lot of traction before charging customers, the answer may be yes."

Family and Mortgage should not affect your choice for bootstrapping.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#13

Post by cookiecaper »

onion2k wrote: post #8
cookiecaper wrote: post #6

Earlier quoted context omitted.

Many investors are not very kind to founders with families and mortgages. YC itself is a horrible deal for anyone that's not a college dropout. Move out to SF for 3 months, leaving wife, kids, and property behind to fend for themselves, shack up in a tiny apartment with a co-founder, and get paid nothing for $20k and 5-7% of your company ? That's alright man, pg can keep focusing on his college dropouts (of both sexe…

A few months on a very low wage (that is what the $20k is for..), away from your friends and family, living in a tiny apartment is nothing compared to working on something you feel exceptionally passionate about. Chances are you'll never find that problem. Most people don't. Those problems are rare, and solutions to them rarer still. But that's fine. If you have a business idea that you're keen on but don't want to g…

There's nothing wrong with other people getting rich off your success, as long as the ratios of wealth are commensurate with the value provided. This is very rarely the case in typical investment scenarios.

I have less respect for the man that lives to introduce the greatest SaaS platform ever built than I have for the man that lives to see that his home and family is well provided for.

Most grown-ups making grown-up wages can easily infuse 20k into their own businesses. Persons with that passion typically exercise a modicum of discipline and save up for a while before they decide to live on a shoestring. They don't need YC's help to do that, it happens among entrepreneurs the world over every day. And they get to keep 100% of their companies, and even get to continue living in their own houses!

Like I said, if you have no permanent responsibilities and no dependents and think it'd be cool to live in an apartment in SF on $200/wk for a while, be my guest, that's totally fine with me if that's what you want to do. But it's simply not realistic for any adult with permanent responsibilities, no matter how passionate they are. If such a person allowed his "passion" to override his obligations to provide, there'd be a good abandonment case against him. This kind of irresponsibility is simply not allowed when you're an adult with dependents.

Please do not attempt to twist this into "anyone who isn't willing to abandon his responsibilities is just not a passionate founder!" That's typical investor FUD and it's not constructive. It's an absurd ad-hominem.

Perhaps the problem is that we have not all become as morally decrepit as the investors that would claim we lack passion merely because we seek first to care for our wives and children. I'd say the man who provides for his family while bootstrapping a business all on his own has a good deal more passion, in more important areas, than the man who abandons his dependents to pretend like he's 21 again and live off pizza and ramen in a SF loft on a one-in-a-million shot while his family is left without his emotional, physical, and financial support.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#14

Post by argonaut »

cookiecaper wrote: post #6
troels wrote: post #4

I suppose it depends on who you are. If you have a family and a mortgage, the answer may be yes.

Many investors are not very kind to founders with families and mortgages. YC itself is a horrible deal for anyone that's not a college dropout. Move out to SF for 3 months, leaving wife, kids, and property behind to fend for themselves, shack up in a tiny apartment with a co-founder, and get paid nothing for $20k and 5-7% of your company ? That's alright man, pg can keep focusing on his college dropouts (of both sexe…

I'm not sure if you don't know what you're talking about or if you're just exaggerating for the sake of argument.

1. Most YC founders are not college dropouts. Quite a few are in every batch of YC, but nowhere near 20%.

2. YC isn't in SF. And most YC companies don't stay in SF during YC. Lots of companies stay in Mountain View, Palo Alto, Menlo Park, etc where you can rent out a 4-6 bedroom with your co-founder(s). Housing is even cheaper in other areas like Sunnyvale, Santa Clara, and San Jose, where you can potentially have a house to yourself.

3. If you expect to get paid for starting a startup, then obviously starting a startup is not for you. By definition there's nobody there to pay you except yourself. By definition you are exchanging equity for salary.

4. YC gives you $100k: $20k directly and $80k in convertible notes (well, SAFEs now) at the best possible terms (you'd never see elsewhere). The additional value of YC is that as long as you build a product with some users, you have an extremely high chance (not guaranteed) of raising 1M+ at a 5M+ valuation. Other companies that don't raise can go on to raise more convertible notes. In fact, going through YC is one way of guaranteeing that you don't end up being offered a sucker's deal.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#15

Post by sytelus »

troels wrote: post #4

I suppose it depends on who you are. If you have a family and a mortgage, the answer may be yes.

I would argue exact opposite. If you have family and mortgage, you most definitely don't want to go seek funding unless you are willing to lower living standards for your family. Funding will almost always come with significant cut on your income.

So if you do have family and mortgage, the best route for you is a long slow crawl. This means, you do your regular job and then burn midnight oil to do a single person startup. With 2X more determination as well as 4X longer time than typical startup, you might find yourself in a year or two with a product that is compelling and convincing. By this time lots of risks had been absorbed by you and VC/Angels would be far more in favor for the terms that allows you to continue your income levels.

Larry Ellison started Oracle pretty much this way and so many other founders who started out later in life with lots of financial obligations hanging on their heads.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#16

Post by argonaut »

sytelus wrote: post #15
troels wrote: post #4

I suppose it depends on who you are. If you have a family and a mortgage, the answer may be yes.

I would argue exact opposite. If you have family and mortgage, you most definitely don't want to go seek funding unless you are willing to lower living standards for your family. Funding will almost always come with significant cut on your income. So if you do have family and mortgage, the best route for you is a long slow crawl. This means, you do your regular job and then burn midnight oil to do a single person sta…

Why do you think that's the opposite? Nothing is stopping you from paying yourself a six-figure salary after taking investment.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#17

Post by argonaut »

jnardiello wrote: post #11
onion2k wrote: post #8

Earlier quoted context omitted.

A few months on a very low wage (that is what the $20k is for..), away from your friends and family, living in a tiny apartment is nothing compared to working on something you feel exceptionally passionate about. Chances are you'll never find that problem. Most people don't. Those problems are rare, and solutions to them rarer still. But that's fine. If you have a business idea that you're keen on but don't want to g…

Only someone who doesn't have family could say: "A few months on a very low wage (that is what the $20k is for..), away from your friends and family, living in a tiny apartment is nothing compared to working on something you feel exceptionally passionate about." Do you have small children? If so, can you try to imagine how difficult could be to miss the first words or first steps of your baby? Can you imagine what co…

Why do we always have to assume we're talking about small children? If that's a concern, wait until your children grow up to be teenagers before you leave for 3 months for YC.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#18

Post by cookiecaper »

argonaut wrote: post #14
cookiecaper wrote: post #6

Earlier quoted context omitted.

Many investors are not very kind to founders with families and mortgages. YC itself is a horrible deal for anyone that's not a college dropout. Move out to SF for 3 months, leaving wife, kids, and property behind to fend for themselves, shack up in a tiny apartment with a co-founder, and get paid nothing for $20k and 5-7% of your company ? That's alright man, pg can keep focusing on his college dropouts (of both sexe…

I'm not sure if you don't know what you're talking about or if you're just exaggerating for the sake of argument. 1. Most YC founders are not college dropouts. Quite a few are in every batch of YC, but nowhere near 20%. 2. YC isn't in SF. And most YC companies don't stay in SF during YC. Lots of companies stay in Mountain View, Palo Alto, Menlo Park, etc where you can rent out a 4-6 bedroom with your co-founder(s). H…

1. OK, we can expand it to "recent college graduates". The point is, YC is predominantly young adult males, aged in their early 20s, unlikely to have major external responsibilities.

2. As someone who's not from SV, everything in that area gets lumped into "SF" for me. My apologies if this is considered obtuse.

3. Isn't this kind of part of the point of seeking investment? Aren't you saying, "I can't do this all on my own, I need some help with the finances, and will cut you in if you'll hook me up"? Somehow I don't see that as the same thing as "please pay me a pittance". As I stated in another reply, if the founder could live on a pittance, the chances are he'd save up a little bit at his cushy corporate job and enter conservation mode with that, rather than seeking external funding.

4. I haven't looked for a few years, but I was not aware that YC offered an additional $100k in financial instruments. This is somewhat better, but I'm not sure how those instruments work in this specific case so I can't make a complete evaluation. As far as follow-on investments go, these all have their own separate terms, yes? Unless YC is officially brokering all of these, how can being a YC company prevent you from getting suckered by YC copycats?

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#19

Post by cookiecaper »

argonaut wrote: post #16
sytelus wrote: post #15

Earlier quoted context omitted.

I would argue exact opposite. If you have family and mortgage, you most definitely don't want to go seek funding unless you are willing to lower living standards for your family. Funding will almost always come with significant cut on your income. So if you do have family and mortgage, the best route for you is a long slow crawl. This means, you do your regular job and then burn midnight oil to do a single person sta…

Why do you think that's the opposite? Nothing is stopping you from paying yourself a six-figure salary after taking investment.

Many investors will do whatever they can to stop you. I've personally interacted with a few of them, who've instructed me that if I took their money, I should not "take anything more out of the company than what's required to eat, sleep, drink". Of course, their ultimate ability to enforce that may be questionable, but the guys 'round these parts are certainly not shy about their expectation that founders live on practically nothing.

Re: Bootstrapping Your Startup: Do You Really Need Early Investment?

#20

Post by sdesol »

argonaut wrote: post #14
cookiecaper wrote: post #6

Earlier quoted context omitted.

Many investors are not very kind to founders with families and mortgages. YC itself is a horrible deal for anyone that's not a college dropout. Move out to SF for 3 months, leaving wife, kids, and property behind to fend for themselves, shack up in a tiny apartment with a co-founder, and get paid nothing for $20k and 5-7% of your company ? That's alright man, pg can keep focusing on his college dropouts (of both sexe…

I'm not sure if you don't know what you're talking about or if you're just exaggerating for the sake of argument. 1. Most YC founders are not college dropouts. Quite a few are in every batch of YC, but nowhere near 20%. 2. YC isn't in SF. And most YC companies don't stay in SF during YC. Lots of companies stay in Mountain View, Palo Alto, Menlo Park, etc where you can rent out a 4-6 bedroom with your co-founder(s). H…

To be honest, I use to think YC would be a poor route to go, but having just dipped my feet into the marketing water, I would have to say it may be your best bet. Advertising and networking is a beast onto its own and there really is no bigger juggernaut for startup momentum than YC.

Like my professor use to say, owning 100% of nothing is nothing.

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