Why I turned down $500K and shut down my startup • Hacker News Board

Re: Why I turned down $500K and shut down my startup

#131

Post by nickbauman » Thu, Jun 09, 2016, 3:03 PM UTC

tedmiston wrote: post #117

nickbauman wrote: post #113

Earlier quoted context omitted.

This idea is key, regardless of what the dictionary definition of startup is. A startup cannot merely be a profitable business. If that were true many more startups would be still running today. But if you take investment of 10 million and you're positive cashflow of, say, 200,000 in your first year with a projection of 1 million / yr in 10 years, you will be shut down and sold off: Investors want AT LEAST a 2x retur…

Perhaps a confusing example, since that startup isn't profitable during its lifecycle anyway.

yeah not a great timeline comparison, but the idea is a Nx growth translates to Nx return on investment at some point.

Re: Why I turned down $500K and shut down my startup

#132

Post by SFJulie » Thu, Jun 09, 2016, 3:10 PM UTC

timoth3y wrote: post #88

SFJulie wrote: post #73

Earlier quoted context omitted.

Hi tim, nice reading. It put balm in my heart. Well, I thought I was crazy some times in my life (when I pulled the plug of my own company) for putting my life and my sanity on par with money. I was getting broken, I had a constant flow of ... 70+ /hrs job paid 35 hrs a week and even though I had customers but I was chaining more and more burn-in on burn-out. I was seeing my benefits diminish and my life sucked out.…

Thank you. I'm glad it meant something to you. TO tell the truth I was a mess the first week after deciding to shut down. No matter how many ways I could "prove" to my self I was doing the right thing, it still felt horrible. I'm better now, and this discussion on HN -- even those who disagree with me -- really helps.

Lucky you, I pulled the plug a little to late, and now I pay a dear price.

Risk aversion is NOT bad. For 1 success they are hundreds of failures. Even though I accepted the game, it retrospectively feels like going for business is signing a pact with the devil. Either you win, and it is okay, or you lose and damages are doubled since your are marked with the seal of failure.

We live in a time where people want heroes and success stories, not reasonable persons that are boringly facing uncertainty.

When you take a risk of winning, you also take a risk of losing.

My epitaph will tell: "Si l'échec est la meilleure manière d'apprendre alors de mon vivant, j'ai vaincu Karpov et Kasparov".

Re: Why I turned down $500K and shut down my startup

#133

Post by sparkzilla » Thu, Jun 09, 2016, 3:12 PM UTC

tptacek wrote: post #112

sparkzilla wrote: post #82

Earlier quoted context omitted.

Here's one Y Combinator founder who spoke out about the continual push to pivot. https://backchannel.com/how-i-f-ed-up-in-ycombinator-35a19e7... >The last few weeks of the program are a bit of a blur. My morale plummeted, and my stress skyrocketed. I dreaded going to the weekly dinners, where I would have to talk to my cohort and confirm that no, we hadn’t found an idea yet and yes, we were still super excited about…

I read that story and the author's own comments on HN, and they do not support the argument that YC "forced" them to pivot. If anything, they barely knew what they were in YC for in the first place.

Actually, that's my point. They were accepted and told that their product was no good straight away, thus forcing them to pivot. So why were they accepted with a poor product, when other applicants who had stronger ideas were turned away?

A selection process that supposedly values the skills of the people over the combination of skills and product will lead to people like this guy not knowing why they were selected, and not being able to handle pivoting. It's something YC should stop doing before it causes real damage.

Re: Why I turned down $500K and shut down my startup

#134

Post by akamaozu » Thu, Jun 09, 2016, 3:17 PM UTC

rkwz wrote: post #126

> About 35% of our users continued to use the system at least three times per week after completing registration. OT, but curious, how is it possible to get this kind of engagement data? Querying DB to get number of logins per week? But that doesn't mean that they're "using" the system. Google Analytics? I'm not aware of any such GA feature Third party analytics? Surveys?

Multiple ways.

Using just your database, you can store records when users complete certain actions.

Eg. When a contract is uploaded, modified, when new people are invited to collaborate over it ...

That way you simply query for user actions over a period.

I use Google Analytics to do the same thing via events. Fire events when actions take place, review the data in your dashboard.

Re: Why I turned down $500K and shut down my startup

#135

Post by ghrifter » Thu, Jun 09, 2016, 3:18 PM UTC

throwanem wrote: post #120

camillomiller wrote: post #79

Earlier quoted context omitted.

Really? Quoting Paul Graham as you would quote the Gospel? I agree with the comment above, that's the definition of startup according to PG, not THE definition. Especially not a definition carved in stone you can quote to justify a false dichotomy. What about innovation? It's not true that innovation comes only from growth. Geez I don't even think it's true all other startup features come from growth. This is what a…

> Quoting Paul Graham as you would quote the Gospel? Welcome to Hacker News.

Next up is praising Javascript as the end-all-tool for everything. The hammer for all the jobs!

Re: Why I turned down $500K and shut down my startup

#136

Post by sparkzilla » Thu, Jun 09, 2016, 3:20 PM UTC

corry wrote: post #119

sparkzilla wrote: post #82

Earlier quoted context omitted.

Here's one Y Combinator founder who spoke out about the continual push to pivot. https://backchannel.com/how-i-f-ed-up-in-ycombinator-35a19e7... >The last few weeks of the program are a bit of a blur. My morale plummeted, and my stress skyrocketed. I dreaded going to the weekly dinners, where I would have to talk to my cohort and confirm that no, we hadn’t found an idea yet and yes, we were still super excited about…

Really hard to read the article and conclude that "YC forced them to pivot". Sounds like things weren't working and YC was honest with them. From the same article: > We went back to PG, and he told us to stop worrying about Demo Day. With the right idea, we’d be working on the company for the next five-plus years. It was foolish to sacrifice the quality of the company to optimize for the next five weeks." Seems like…

The key point is "With the right idea"

They were told their original idea wouldn't work, and they were put in a highly stressful situation of having to come up with a new idea under a short deadline, with high expectations. It doesn't matter if PG was nice about it, there was an enormous amount of pressure put on them to do something to be worthy of their position, pushed along with the implied message that that's what founders do - they can make magic from thin air, instantly. The cult of the founder. It's no surprise that this made him stressed and unhappy. I wonder how many people have been through the same situation, with YC and beyond, but will not speak out.

Re: Why I turned down $500K and shut down my startup

#137

Post by tptacek » Thu, Jun 09, 2016, 3:26 PM UTC

sparkzilla wrote: post #133

tptacek wrote: post #112

Earlier quoted context omitted.

I read that story and the author's own comments on HN, and they do not support the argument that YC "forced" them to pivot. If anything, they barely knew what they were in YC for in the first place.

Actually, that's my point. They were accepted and told that their product was no good straight away, thus forcing them to pivot. So why were they accepted with a poor product, when other applicants who had stronger ideas were turned away? A selection process that supposedly values the skills of the people over the combination of skills and product will lead to people like this guy not knowing why they were selected,…

You keep saying they were forced to pivot as if you might convince by sheer repetition. They made the choice. They surely didn't have to. For that matter, if they wanted to drop out, they could have.

Your argument seems tendentious.

Re: Why I turned down $500K and shut down my startup

#138

Post by emcrazyone » Thu, Jun 09, 2016, 3:33 PM UTC

onion2k wrote: post #59

capkutay wrote: post #38

"I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life." That's the key quote in the article. It's a fair decision from his standpoint but I wonder if saying that will lead investors to…

If the situation were really "take the money and do 70+ hours a week for a year" versus "shut down the business" then I'd agree, but that's a false dichotomy. You can run a startup putting in far less time than that; putting in long hours is a choice. You can bring in a team or outsource the parts you don't like. It makes it harder to succee but it's an option. You could (depending on lots of caveats) simply hand the…

"outsource the parts you don't like" This doesn't work from my personal experience and others seem to agree. Myself been apart of a few startups learned you never outsource your core competency and doing so is usually suicide no matter how good you think you are at managing.

It's easy to see when you realize your goals and your outsourcing entity have different objectives which are at odds with one another.

Re: Why I turned down $500K and shut down my startup

#139

Post by drumdance » Thu, Jun 09, 2016, 3:45 PM UTC

cft wrote: post #54

timoth3y wrote: post #49

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did.…

When PayPal started, they were beaming money between PDAs. Then after a while when their curves were no good, they noticed that some confused users thought that their Confinity website that described how to beam money, was actually the place itself to transfer money to others. Then they pivoted. Then this new product was not viral. Then they started paying $10 when you open the account.

They had already raised $4 million for the PDA idea. Or rather, the MVP. The $4 million was famously beamed into their account via PDA.

Re: Why I turned down $500K and shut down my startup

#140

Post by dharma1 » Thu, Jun 09, 2016, 3:59 PM UTC

If you don't believe in what you're doing then I think it could have been a mistake to take the money and carry on.

If the team and investors believed in the product, perhaps you could have asked if some of the current team were willing to take it on, and make it work. You could have retained a bit of equity for the year and the hard work you put in so far without having to commit any longer yourself.