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The New Deal

blog.ycombinator.com

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Re: The New Deal

#101

Post by zmitri »

Patrick_Devine wrote: post #92
zmitri wrote: post #82

Earlier quoted context omitted.

17K for 7% isn't as raw a deal as you think when you realize that at an "acceptance" into YC essentially doubles your valuation to most seed investors.

Absolutely. Being vetted by YC certainly won't hurt your company, but it's still tough though when you've dumped $100k-$200k of your own money plus your time and energy (which is not insignificant when you're an engineer in the Silicon Valley), and you're giving up that amount of equity.

Depends on what you're trying to achieve I think. I worked on my own stuff for 3 years before doing YC and it was well worth it. My thoughts after going through the program:

If you have no product and no track record, it's definitely worth it.

If you have something working, but growth isn't amazing, it's a risk because there's a chance you don't get the absolute most out of demo day due to timing -- so one might feel what you describe. That said if you blow up later, I'm sure they will do a fantastic job of getting you to the people you'd want to meet with - eg. Homejoy.

But if you come into YC with good growth (like doubling in size every month) it is without a doubt one of the smartest things you can do. You will probably never have as much leverage as you get while going through YC.

Re: The New Deal

#102

Post by gomox »

espitia wrote: post #85

It would be great to see this annotated on RapGenius in order to learn all the terminology and how investment like these work.

Here you go: http://news.rapgenius.com/Sam-altman-the-new-deal-annotated

Feel free to comment (it's not very intensive in terms of VC deal terminology, but I wanted to give RG a spin).

Re: The New Deal

#103

Post by [deleted] »

tptacek wrote: post #77
logicallee wrote: post #73

Earlier quoted context omitted.

You're simply empirically wrong [about the 'amount' of money that represents, whether it is large enough to make a substantial difference], and your anchors[1] are not only irrelevant and misleading in an early-stage context, but extremely toxic.[2] What was Google's first check in the amount of? $100K. It was a ton of money. As Wikipedia points out, "The first funding for Google as a company was secured in August 19…

Your comment is very emphatic, but you didn't rebut either of my points: * 120k will barely pay the fully loaded cost of a single engineer * A good freelancer can generate 120k above living expenses in a year Your response was "the fully loaded cost of an engineer is irrelevant". That's a weird argument, given that the cost of engineers dominates the expenses of early-stage startups.

[deleted]

Re: The New Deal

#104

Post by richardjordan »

diziet wrote: post #68
ebabchick wrote: post #43

How can Teespring afford / justify giving every non-profit $50k?

They are a company with real revenue that's growing and they think the publicity will sort of make up for it, so they don't end up losing too much on it. If yc does 5 nonprofits per batch, $500k is not a lot of money.

Exactly right. It's great to see a company which is growing fast, generating real revenue and quietly establishing itself as one of the most exciting startups in the valley, giving back like this.

Note to founders - this is the kind of thing you can do when your startup makes money!

Re: The New Deal

#105

Post by omarhegazy »

sanj wrote: post #2

Getting accepted into YC immediately values your company at $1.7M.

Pretty insignificant. You can't spend that money. No one can.

; YC, financially, is enough money for you to live in the Bay Area to work on your company for a fixed time in which you're expected to grow and acquire more capital and a probability assessment on your potential future value.

Keywords, 'potential' and 'future'.

You can't up and sell your company for $1.7M, Sam Altman can't, no one can because no one would buy it because YC isn't saying "You are now in possession of, and operating something, that is worth $1.7M to the world." At such an early stage, all they're really saying is, "There is a probability that your company will be worth $1.7M, and the probability is high enough such that we're willing to put our money where our mouths are."

Re: The New Deal

#106

Post by tomasien »

chaseadam17 wrote: post #95

A lot of companies talk about changing the world, but Teespring really puts their money where their mouth is. Not only have they been quietly supporting us (Watsi) since the beginning, but to commit $50k to every YC non-profit is truly incredible. Teespring is setting the standard for the next generation of startups, and we're proud to call you guys our friends.

Agreed it's amazing - are they getting anything in return? I'm not asking this in a skeptical way, I just mean do the non-profits run tee-springs or are they just donating money?

Either way, bravo!

Re: The New Deal

#107

Post by [deleted] »

newsum wrote: post #80
tptacek wrote: post #60

Earlier quoted context omitted.

Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.

Exactly. move into your mother's house. become a 1099 contractor at $100/hr+. save, save, and save. a year later there's your bootstrap funds + credit cards, excess of 100K. Outsource design/dev if necessary, launch it, raise a large seed round/series A, valuation 4m+ You don't have to give away anything. be an entrepreneur.

[deleted]

Re: The New Deal

#108

Post by ricardobeat »

newsum wrote: post #80
tptacek wrote: post #60

Earlier quoted context omitted.

Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.

Exactly. move into your mother's house. become a 1099 contractor at $100/hr+. save, save, and save. a year later there's your bootstrap funds + credit cards, excess of 100K. Outsource design/dev if necessary, launch it, raise a large seed round/series A, valuation 4m+ You don't have to give away anything. be an entrepreneur.

And do that before you have kids.

Re: The New Deal

#109

Post by tptacek »

[deleted] wrote: post #107
newsum wrote: post #80

Earlier quoted context omitted.

Exactly. move into your mother's house. become a 1099 contractor at $100/hr+. save, save, and save. a year later there's your bootstrap funds + credit cards, excess of 100K. Outsource design/dev if necessary, launch it, raise a large seed round/series A, valuation 4m+ You don't have to give away anything. be an entrepreneur.

[deleted]

I'm confused. What part of working for a year and saving up $100k ruins your chances of starting a company? Am I reading too much between the lines, or do I also need long hair and a full beard like Wozniak?

37signals started that way, for what it's worth. Not by living with their parents, of course; by bootstrapping a consultancy.

PlentyOfFish started that way.

Braintree started that way.

Come to think of it, so did Github.

And didn't Mailchimp bootstrap, too?

I think maybe the impedance mismatch here is that you assume I'm saying companies need to raise more than 120k to start. They don't, if they start out profitable. But that's not the normal YC startup strategy: those companies depend on the ability to run for a year, maybe many years, before generating profits. Against that strategy, 120k is not very meaningful. Which is why 'pg and now 'sama are always at pains to point out that people shouldn't apply "for the money".

Re: The New Deal

#110

Post by tptacek »

[deleted] wrote: post #103
tptacek wrote: post #77

Earlier quoted context omitted.

Your comment is very emphatic, but you didn't rebut either of my points: * 120k will barely pay the fully loaded cost of a single engineer * A good freelancer can generate 120k above living expenses in a year Your response was "the fully loaded cost of an engineer is irrelevant". That's a weird argument, given that the cost of engineers dominates the expenses of early-stage startups.

[deleted]

Huh? 120k isn't enough to pay a developer (fully loaded, including expenses). I'm not sure what the cost of the Hyperloop has to do with this.
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