Ask YC: Expectations and Reality (Startups) • Hacker News Board

Re: Ask YC: Expectations and Reality (Startups)

#11

Post by drusenko » Mon, Dec 24, 2007, 6:46 AM UTC

edw519 wrote: post #8

3 ways to maintain 100% control and 100% equity: - borrow (credit cards, 2nd mortgage, family & friends) - consulting gigs - paying customers In spite of all the talk about finance rounds, you CAN bootstrap and succeed. A little slower, a little surer. It's a tradeoff. How fast you want to grow vs. how much you want to control. Your call.

It's also a sure-fire way to fail. One thing nobody ever mentions about raising money: You're aligning your interests with some pretty powerful people. The fact is, nobody really wants you to succeed -- everybody is trying to make it themselves, too. But once you get investors, you get growth capital, advice, and a powerful ally, who knows people. The power of having other people who really want your business to succeed to can't be understated. It's:

- Good advice (with the right investor).

- Someone with connections who is constantly talking about you and trying to do good things for you.

- Another person you are accountable to (failure isn't just your own, that's too easy).

It all boils down to the type of business you are trying to make. If you'd be happy pulling in 200k of revenues after building a company for 2 years and being barely profitable with 2 full-time employees and other misc costs, then you might be able to bootstrap, maybe. If you're trying to grow a business fast, or grow a huge business, it's just not going to work.

Re: Ask YC: Expectations and Reality (Startups)

#12

Post by downer » Mon, Dec 24, 2007, 10:28 AM UTC

downer wrote: post #7

brk wrote: post #6

Earlier quoted context omitted.

Unless you have bona-fide, proven successes (plural), you'll probably end up losing ultimate control at some point, and it will probably be the best thing for everyone involved. Why do you need to maintain control? Greed? Paranoia? The idea is too complex for others to understand? (note: none of these are good reasons ;) ) As a leader, you should always strive to ensure that you can be replaced, and that the company…

> Why do you need to maintain control? Greed? Paranoia? The idea is too complex for others to understand? (note: none of these are good reasons ;) ) Note that maintaining control is different from hoarding all the money. The people who understand it best should be in control, regardless of how much equity they give to investors. This is not just in the early stages -- look at Steve Jobs calling the shots at Apple. >…

And even then, sometimes you still need Steve Jobs.

Re: Ask YC: Expectations and Reality (Startups)

#13

Post by edw519 » Mon, Dec 24, 2007, 1:41 PM UTC

drusenko wrote: post #11

edw519 wrote: post #8

3 ways to maintain 100% control and 100% equity: - borrow (credit cards, 2nd mortgage, family & friends) - consulting gigs - paying customers In spite of all the talk about finance rounds, you CAN bootstrap and succeed. A little slower, a little surer. It's a tradeoff. How fast you want to grow vs. how much you want to control. Your call.

It's also a sure-fire way to fail. One thing nobody ever mentions about raising money: You're aligning your interests with some pretty powerful people. The fact is, nobody really wants you to succeed -- everybody is trying to make it themselves, too. But once you get investors, you get growth capital, advice, and a powerful ally, who knows people. The power of having other people who really want your business to succ…

"It's also a sure-fire way to fail."

7 million small business owners may disagree with you.

I do agree with the rest of your post. Nothing like having the many resources of well connected investors on your side.

Still, given the choice of having an investor or a customer on my side, I'd choose the customer every time.

I stand by my original post: Want control? Borrow. Want growth? Share.

Re: Ask YC: Expectations and Reality (Startups)

#14

Post by theyoungceo » Mon, Dec 24, 2007, 4:17 PM UTC

This is as thorny a discussion as which language is the best one. And the ultimate answer is in the same vein: it depends, but the decision should always be driven by the customer. My company had revenue from month 2 and won a $100K business plan because of value we brought to customers. I still looked into raising money, but at the end of the day I reminded myself what I had always thought: I don't need to raise money, and changes that would make existing customers less pleased were on the way if I did. The company is growing fast and customers love it because we concentrated on them and ignored the startup hoopla when it conflicted with bringing value to customers. Ultimately, you should raise money if you think it is in your _customers'_ best interests.

Re: Ask YC: Expectations and Reality (Startups)

#15

Post by js440 » Thu, Dec 27, 2007, 6:56 AM UTC

0. Sorry I haven't replied Christmas came unexpectedly. 1. As always, the average level of the discussion here is far above average for the Internet. 2. Thank you for contributing your thoughts here. This is a deal-breaking issue for me and will determine whether or not I start a company or not. 3. It is not about greed, paranoia, or any malicious motivation. It's about doing something that's decently interesting to me, helpful to customers, and the necessary condition that you, knowing the most about the situation as a whole, should have ultimate control over the decisions that directly affect the user experience.