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Exploding Offers Suck

blog.ycombinator.com

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Re: Exploding Offers Suck

#121

Post by lquist »

nihaar wrote: post #83

When my co-founders and I were applying to accelerators in 2008, we had been accepted into a Philadelphia based accelerator called DreamIt shortly before our YC interviews. Not knowing if we would get into YC, we accepted with DreamIt as it was an exploding offer. A few weeks later we found that we got accepted by YC. After deliberating it for sometime, we went back to the DreamIt team and told them that we wished to…

So basically you made an agreement with one set of investors and then went back on your word because another, "better" set of investors wanted to put money in? Maybe it's just me, but this doesn't reflect that well on you.

Re: Exploding Offers Suck

#122

Post by compare »

nihaar wrote: post #83

When my co-founders and I were applying to accelerators in 2008, we had been accepted into a Philadelphia based accelerator called DreamIt shortly before our YC interviews. Not knowing if we would get into YC, we accepted with DreamIt as it was an exploding offer. A few weeks later we found that we got accepted by YC. After deliberating it for sometime, we went back to the DreamIt team and told them that we wished to…

So many accelerators behave wildly unprofessionally and inappropriately for the space that they're in.

Perhaps all that's needed is more high-visibility guidelines like what YC is doing now. Perhaps we need better platform for evaluating investors from the founders perspective, instead of networks that really only care about evaluating startups.

Either way, the situation seems to be getting worse, with the continued explosion of accelerator programs around the world. I hope we find an effective solution.

Re: Exploding Offers Suck

#123

Post by compare »

lquist wrote: post #121
nihaar wrote: post #83

When my co-founders and I were applying to accelerators in 2008, we had been accepted into a Philadelphia based accelerator called DreamIt shortly before our YC interviews. Not knowing if we would get into YC, we accepted with DreamIt as it was an exploding offer. A few weeks later we found that we got accepted by YC. After deliberating it for sometime, we went back to the DreamIt team and told them that we wished to…

So basically you made an agreement with one set of investors and then went back on your word because another, "better" set of investors wanted to put money in? Maybe it's just me, but this doesn't reflect that well on you.

The effectiveness of the relationship between investors and startups in SV is built on upon being upstanding and not being overly manipulative. Founder/Investor agreements that are born from the manipulation of unexperienced founders always should be EXPECTED to turn out badly.

There's a child-like expectation that once the deal is signed or agreement is made that it's over. It never is, that's just the beginning. If you're expecting that everything is finalized as soon as an agreement is made, regardless of the conditions, then you're simply bad at business and taking risks that you haven't yet realized.

(Of course this isn't true in Europe. They love taking contracts extremely literally, and their economies suffer enormously for it.)

Re: Exploding Offers Suck

#124

Post by photojosh »

27182818284 wrote: post #112
nostrademons wrote: post #108

Earlier quoted context omitted.

Car dealers have sales targets for each month. If they hit the target, they usually get a big bonus from the manufacturer. I've gotten a dealer to sell me a car under dealer price by e-mailing every car dealer in the area on the 29th of the month, saying I was looking to buy a (specific model of a) car immediately. All you have to do is find the one dealer who is 1-2 cars away from hitting their bonus target. It is r…

For those curious, This American Life did a whole podcast on the end-of-month car sales thing. It was quite fascinating and really does exist. One of the more interesting points in the entire thing came in the first minute where they point out that things like the end-of-month sales impact the entire US economy because it has to do with auto sales, and GM and steel working and etc follow up the chain. Weird to think…

Anyone know if this is true for other countries? Specifically Australia? I'm in the market for a new car... and not too fussy about what I get.

Re: Exploding Offers Suck

#125

Post by pbiggar »

lquist wrote: post #121
nihaar wrote: post #83

When my co-founders and I were applying to accelerators in 2008, we had been accepted into a Philadelphia based accelerator called DreamIt shortly before our YC interviews. Not knowing if we would get into YC, we accepted with DreamIt as it was an exploding offer. A few weeks later we found that we got accepted by YC. After deliberating it for sometime, we went back to the DreamIt team and told them that we wished to…

So basically you made an agreement with one set of investors and then went back on your word because another, "better" set of investors wanted to put money in? Maybe it's just me, but this doesn't reflect that well on you.

I disagree. If an offer is accepted under duress, can you really expect someone to hold up their side of the bargain?

An equivalent is that you shouldn't expect someone to follow through on a decision they didn't buy into.

Re: Exploding Offers Suck

#126

Post by ganeumann »

larrys wrote: post #62
tptacek wrote: post #54

Earlier quoted context omitted.

Deliberately waiting until the offer ostensibly expires seems like an advanced technique, but simply disregarding the time frame seems pretty safe. Exploding offers are incredibly weak; they're a way of slapping your negotiating floor on the table before your counterparty says a word. There's something to be said for the idea that losing a seed funding deal to term explosion is a dodged bullet, too.

"but simply disregarding the time frame seems pretty safe" All depends. Once again you could be right but I could also argue under the theory that "once you make a sale you close and get your ass out of dodge". Because things can and do change. Keep in mind that an open offer not taken can be withdrawn. Or new information can come up which makes it less attractive or gives someone a reason to change their mind. I off…

In your case there's an excellent chance the deal wouldn't have gone through even if you had agreed to their initial offer. The something that happened would have happened anyway, and a firm like Se____a would probably not worry too much about retracting an offer (assuming it was a term sheet or a signed-but-not-closed contract with a MAE out.)

Re: Exploding Offers Suck

#127

Post by Grae »

While I agree with the points made in this post, it's important to note that the strategy of condemning offers with a short term plays in the favor of YC and other established/larger accelerators and to the detriment of newer/smaller accelerators.

As others have noted, there may be compelling reasons to require an offer be accepted on a short timeline or not at all. In fact, as raised elsewhere in this thread, YC itself used to require acceptance the same day the offer was made.

From an entrepreneur's perspective, given two offers at equivalent valuations and terms it's rational to take the offer at the more established accelerator (e.g. YC) over a less well known one. It's also less important for large accelerators to allocate each open position in each cohort, and thus easier for larger accelerators (e.g. YC) to tolerate losing a few deals last minute.

Again, I agree with the points made in the post, but it's important to note that making longer term offers the norm plays in YC's favor.

Re: Exploding Offers Suck

#128

Post by justinlloyd »

photojosh wrote: post #124
27182818284 wrote: post #112

Earlier quoted context omitted.

For those curious, This American Life did a whole podcast on the end-of-month car sales thing. It was quite fascinating and really does exist. One of the more interesting points in the entire thing came in the first minute where they point out that things like the end-of-month sales impact the entire US economy because it has to do with auto sales, and GM and steel working and etc follow up the chain. Weird to think…

Anyone know if this is true for other countries? Specifically Australia? I'm in the market for a new car... and not too fussy about what I get.

It used to work wonderfully in the UK each year, around August or September, that the registration letter would change. Telephone a bunch of dealerships (in the days prior to email) and tell them you wanted to buy a very specific make and model and the current year which only has a week or two left before the registration letter increments. I don't know if it still works because I haven't owned a car in the UK in over 20 years.

But every car dealership in ever country has sales quotas to meet. You just have to find out when they are.

Re: Exploding Offers Suck

#129

Post by mrfusion »

morgante wrote: post #102
mrfusion wrote: post #66

Earlier quoted context omitted.

Thanks. Also wondering: should more senior people be offended by exploding offers. Architects, team leads, etc?

> Thanks. Also wondering: should more senior people be offended by exploding offers. Architects, team leads, etc? If anything, they should be less offended. Companies are often simultaneously hiring multiple junior developers, so it's less necessary to make purely sequential offers. Technical leads, on the other hand, are typically hired for a specific need. Given their cost, companies rarely are hiring multiple lead…

I don't see a CEO or even vp being given two days to decide. I think senior programmers have earned at least a little professional courtesy, no?

Re: Exploding Offers Suck

#130

Post by dmourati »

fecak wrote: post #85
dmourati wrote: post #75

Earlier quoted context omitted.

Mine was two days (Friday-Sunday). First last and only time I'd seen that hence my reaction.

There could be some highly specific situations where a two day exploding offer could be necessary for the business. That in itself doesn't make the offer unacceptable, and that also doesn't necessarily warrant a 'steer clear' warning for readers without more context. I wouldn't judge this company based on a single known two day exploding offer without further details.

I would and I do judge on this single episode. In my opinion, this type of behavior is abusive.

I can understand why a recruiter might take the company's side.

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