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Lecture 1 – How to Start a Startup [video]

startupclass.samaltman.com

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Re: Lecture 1 – How to Start a Startup [video]

#101

Post by prostoalex »

7Figures2Commas wrote: post #92
prostoalex wrote: post #85

Earlier quoted context omitted.

> As an example of this, consider that Facebook had sold shares at a $15 billion valuation just three years after the company was founded. That is not the entire story. Microsoft invested $240 million in exchange for certain number of shares (constituting 1.6% of total Facebook shares issued) at the time plus a 3-year exclusive right to sell banner ads on Facebook through Microsoft AdCenter. The $15 billion valuation…

Companies cannot grant equity to employees at below fair market value without creating adverse tax consequences for those employees. Transactions like the Microsoft investment absolutely factor into the determination of fair market value. Bottom line: just three years after its founding, Facebook had a very significant valuation.

You are correct on the bottom line, I was just pointing out that mainstream media's definition of valuation = number of all stocks * the price per share of the latest transaction, no matter what preferred dividends, liquidation preferences or special side deals are thrown in to close that deal.

Re: Lecture 1 – How to Start a Startup [video]

#102

Post by prostoalex »

7Figures2Commas wrote: post #98
prostoalex wrote: post #87

Earlier quoted context omitted.

> even employees who joined the company as late as the end of 2010 were underwater That is not correct usage of the term. According to external report, Facebook stopped issuing stock options to employees as of 2007. People joining in 2010 would be receiving RSUs, whose "strike price" is $0. While the monetary value of the shares at IPO was different than the value they imagined, they would not be underwater (having a…

I was not privy to when Facebook started granting RSUs instead of options. My use of the term "underwater" was based on what was reported. Still, this is a red herring. The fundamental point of my comment was that in the past couple of years, every single person here had the ability to purchase Facebook shares on terms just as favorable if not more favorable than many Facebook employees without having to spend a sing…

> every single person here had the ability to purchase Facebook shares on terms just as favorable if not more favorable than many Facebook employees

But RSUs are not purchased, they are gifted. So having an opportunity to purchase 10,000 shares of FB at low-low 2012 prices is still expensive compared to a gift of 10,000 shares vesting over 4 years.

I pulled the 10,000 number out of a hat, but I'm not too far off - here's a question from 2011 http://www.quora.com/Is-110-000-and-15000-RSUs-a-good-starti... numbers were probably more attractive at earlier years.

Re: Lecture 1 – How to Start a Startup [video]

#104

Post by McDoku »

scobar wrote: post #37
mladenkovacevic wrote: post #25

Earlier quoted context omitted.

I agree. It strikes me as a very inefficient use of an enterpeneur's time who wants to launch a business to first watch a series of 20 lectures about all aspects of starting a business. Just start doing it, and whenever you get stuck or need feedback ask someone whose expertise you trust for advice on a particular issue you're dealing with at that moment.

Perhaps it's not the most efficient use of an entrepreneur's time, and I agree that it definitely doesn't have to be the first step. Working on an idea helps you learn fast, but there was so much I didn't know at first (I still have a lot to learn). I am so grateful that resources like this exist, and I expect this one by YC to have a higher density of quality info in the time spent watching lectures.

“Principles and rules are intended to provide a thinking man with a frame of reference.” -- Karl von Clausewitz

Re: Lecture 1 – How to Start a Startup [video]

#105

Post by bcjordan »

To temper some of the nit picks, just wanted to say this lecture felt insightful and fun to watch. I hope YC continues this trend of investing effort in shareable advice content in the spirit of pg's essays.

This is the first time a lot of the YC flavor of startup how-to material has been presented in a lecture video format[1]. I suspect much of the long-term audience of these lectures wouldn't have come across pg's essays, Blake Masters' Peter Thiel startup notes or Dustin Moskovitz's excellent Medium posts before. Maybe some lecture watchers were allergic to long-form articles, or maybe some would rather receive a weekly email with videos. Myself, I consume this sort of material on my walk to work, either text-to-speeching essays or listening to lectures. The video lecture format was especially fun, I watched it full screen on the TV while eating an enchilada and poking my fiancee about points she might find relevant to her side project. How often do you get to consume this sort of content like that?

Having read pg's essays[2], I still had a number of "aha!" moments from Sam's slides and hearing his presentation. And hearing Dustin describe in his low-key tone why you should be employee 1,000 at an obviously successful startup rather than start your own, and backing it up with charts and photo-jokes about the elephant in the room was just entertaining. Seeing "this is how we'll teach you to do this thing. Here's an expert on why not to do this thing." is not always the type of juxtaposition you get with standalone online essays.

Looking forward to the next lecture. I'd say it's well worth the time and opportunity cost of putting this all together, so thanks all involved.

[1]: Yes, some Lean Startup™ and Principles of Entrepreneurship™ flavored material has been presented in lecture format before, but not YC™ lensed AFAIK.

[2]: Okay, I skipped the early seemingly pure-Lisp-focused ones. Though like Zen and the Art of Motorcycle Maintenance isn't about a long motorcycle trip, and maybe pg's Lisp essays are not really all about writing Lisp?

Re: Lecture 1 – How to Start a Startup [video]

#108

Post by 7Figures2Commas »

prostoalex wrote: post #102
7Figures2Commas wrote: post #98

Earlier quoted context omitted.

I was not privy to when Facebook started granting RSUs instead of options. My use of the term "underwater" was based on what was reported. Still, this is a red herring. The fundamental point of my comment was that in the past couple of years, every single person here had the ability to purchase Facebook shares on terms just as favorable if not more favorable than many Facebook employees without having to spend a sing…

> every single person here had the ability to purchase Facebook shares on terms just as favorable if not more favorable than many Facebook employees But RSUs are not purchased, they are gifted. So having an opportunity to purchase 10,000 shares of FB at low-low 2012 prices is still expensive compared to a gift of 10,000 shares vesting over 4 years. I pulled the 10,000 number out of a hat, but I'm not too far off - he…

RSUs are not "gifted." They are a part of one's compensation package, and you have to work for them.

Consider this scenario: a company offers me 10,000 RSUs when its shares are valued at $50/share. When the company goes public the value of the shares soon drops to $20/share. What I thought was worth $500,000 is now worth just $200,000 (pre-tax). That's a huge difference. Had the company's shares been valued at $20 the time I was offered a position, I might have negotiated for more of them.

Now, to be fair, maybe salary plus $200,000 is still the best compensation package (and overall outcome) available to me, but that doesn't mean that it was risk-free or cost-free.

As for the cost of purchasing 10,000 shares of Facebook stock outright, yes this is expensive. But you can easily establish a meaningful leveraged position through the use of options if you have the conviction. Also, keep in mind that this is precisely what employees do when they fail to sell their shares when they first have the chance. A Facebook employee who has $500,000 in newly-vested shares that can be sold, but who doesn't sell, is in effect purchasing $500,000 in Facebook shares in the hopes that they will rise in price. If they fall in price, his or her loss is still very much a loss, even if it looks less painful because the shares were purchased with labor instead of cash.

Re: Lecture 1 – How to Start a Startup [video]

#110

Post by bobbles »

philipDS wrote: post #27

I made some notes while watching/listening. Might include minor errors or misinterpretation on my side 4 critical parts: Idea, Team, Product, Execution 1. Idea -> Good startups take about 10 years -> Startup should feel like an important mission -> Hardest part coming up with great ideas: best look terriblea t the beginning (e.g. search engine, social networks limited to college students without money, a way to stay…

FYI Bret Taylor, with one T in Bret
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