FounderPool: A community for founders to share risk and diversify their equity • Hacker News Board

Re: FounderPool: A community for founders to share risk and diversify their equity

#151

Post by tonystubblebine » Wed, Jul 22, 2020, 1:35 AM UTC

m0zg wrote: post #145

tonystubblebine wrote: post #79

As you get older without an exit, you start to freak out a bit about your retirement. At least that was true for me. I'm 1000x better as an entrepreneur at age 42 than I was at age 27. But I'm also 100x more worried about some basic financial things like whether I will be able to retire, maintaining a mortgage, keep up financially with my spouse's career and her changing life expectations. And what helped stabilize m…

> A 0.1% equity stake in a startup that ends up hitting is life changing. For the vast majority of startups, "hitting" is $100-200M acquihire. 0.1% of that is only 200K. If you can get in on something like Beyond Meat, sure, but that's the kind of a company which won't be a part of something like this. Speaking from the other end of this spectrum, BTW, my risk tolerance is higher now than it's ever been. I don't have…

Before Series B, I don't think people really know what's going to hit. And even then it's iffy. Beyond Meat was not a foregone conclusion when I got shares. And the way I got shares was actually through a pool that produced one acquihire, two zombies and this one IPO. We all shared an interest in each other (although different structure than this company).

So, to go back in time, if instead of having half the company or whatever, I could have 47% and trade that 3% away for 0.1% stakes in 30 other companies (also knowing I had 30 people with an equity interest in my success), I would do that in a heart beat as long as those companies had been filtered at all.

Re: FounderPool: A community for founders to share risk and diversify their equity

#152

Post by bigiain » Wed, Jul 22, 2020, 1:38 AM UTC

philsnow wrote: post #86

Negitivefrags wrote: post #83

Earlier quoted context omitted.

Founders really shouldn’t get a salary, or if they do, only the minimum to live. Founders getting any more than just what they need to live incentivises people to raise money for personal gain rather than raising money to build a company. It also really blurs the line between founders and employees. How can a founder justify taking a salary at the same or even higher level than an employee while also having a huge sh…

Founders getting only the bare minimum to survive seems like a good way to exclude certain classes of people -- those without any assets to fall back on, those with families, to name a couple -- from becoming successful founders.

"only the bare minimum to survive" as founder doesn't need to be interpreted as "only just above the poverty line" or "minimum wage".

There's a good argument to say it includes enough money for things like: comfortable bay area rent, ability to replace essential equipment (like lost/stolen/damaged dev-grade laptops) immediately, enough discretionary income to order in Ubereats dinner instead of stopping work to cook whenever in the zone.

The "bare minimum" for a founder to succeed probably rightfully means "enough money showing up every month that they can realistically not ever have to worry about any short/medium term bills/expenses/timesaving-expenditure". You shouldn't be saving for a house deposit or leasing a Lambo on a founders salary, but you also need to not be wondering where tomorrows dinner is coming from or how you're going to cover next month's rent.

"Ramen profitable" should be a choice to eat ramen because it's quick and you can get back to hacking in 4 minutes, not because you've spent the afternoon working out your food budget for the next 3 weeks comes out to $1.27 per meal if you're going to have enough money to not become homeless at the end of the month.

Re: FounderPool: A community for founders to share risk and diversify their equity

#153

Post by dehrmann » Wed, Jul 22, 2020, 1:39 AM UTC

nmfisher wrote: post #146

A few months' back, someone on Twitter criticized a similar platform, calling it an outright scam. I said that was totally unfair, and that it's one thing to call it a bad deal (which really depends on the percentage given up and the quality of the companies in the pool), it's another thing to call it a scam. That prompted the "pro-VC crowd" to start calling me stupid and naive - "startups need cash, not equity", "if…

> Unsurprising, given the pool makes founders less reliant on them

How? The startup still need VCs for funding.

If I were a VC, one gripe would be that it might hurt a founder's motivation. At 1% of a founder's equity, it's not so much that they're not working to make the next big thing, but in the back of their mind, they know they might get $1M for it. My other concern is that this almost freerides on the VC model. It's a way for a founder to get the benefits of being an LP, but without the fee structure.

Re: FounderPool: A community for founders to share risk and diversify their equity

#154

Post by dehrmann » Wed, Jul 22, 2020, 1:42 AM UTC

DevX101 wrote: post #126

My two cents: I think this is a fantastic idea and I've wanted to see something like this for years. That said, this is one of those things where unfortunately the reputation of the persons behind FounderPool matter a lot to me, and other founders. Yet there's no info on the site about who's running this. Founders are making a massive gamble putting their companies into this novel legal arrangement and I'd want to se…

I've wanted to see something like this for underlings, but when people actually see what the EV is of working at a startup, they might not be so happy. Part of the draw of startups is the gamble, and this takes away from that.

Re: FounderPool: A community for founders to share risk and diversify their equity

#155

Post by sitkack » Wed, Jul 22, 2020, 1:42 AM UTC

nmfisher wrote: post #146

A few months' back, someone on Twitter criticized a similar platform, calling it an outright scam. I said that was totally unfair, and that it's one thing to call it a bad deal (which really depends on the percentage given up and the quality of the companies in the pool), it's another thing to call it a scam. That prompted the "pro-VC crowd" to start calling me stupid and naive - "startups need cash, not equity", "if…

VCs also want you to join their club after the exit. I would wager that someone to joins this cabal is less likely to become a VC, and if they do, they will have a much different model.

Re: FounderPool: A community for founders to share risk and diversify their equity

#156

Post by bigiain » Wed, Jul 22, 2020, 1:50 AM UTC

geoburke wrote: post #91

Negitivefrags wrote: post #83

Earlier quoted context omitted.

Founders really shouldn’t get a salary, or if they do, only the minimum to live. Founders getting any more than just what they need to live incentivises people to raise money for personal gain rather than raising money to build a company. It also really blurs the line between founders and employees. How can a founder justify taking a salary at the same or even higher level than an employee while also having a huge sh…

There are obviously two schools of thought here, but IMO a founder who is at least financially comfortable will make better long term decisions and take actions influenced less by personal stress.

I think there's two important timeframes to consider here.

You need to be "financially comfortable" for the 1/3/12 month foreseeable future to be able to fully focus on your startup.

I'm a lot less convinced that being 10+ year financially comfortable is necessarily a desirable trait for a founder. Knowledge that their future financial freedom is 100% dependant on the success of their startup is possibly a stronger driver of "better long term decisions" than someone in a position to think "it doesn't matter too much - even if this fails I have a contingency plan"...

(And I say that as someone who was once part of a team that rejected an acquisition offer that would've meant a half million payout to me, because we believed at the time we were going to be worth at least 10 times that within a year. And we were wrong. But I still stand by that decision at the time and would make it again in the same circumstances...)

Re: FounderPool: A community for founders to share risk and diversify their equity

#157

Post by geoburke » Wed, Jul 22, 2020, 2:18 AM UTC

azorychta wrote: post #148

supernova87a wrote: post #144

One danger I see is that unlike an insurance company, which does a serious amount of due diligence and selection of the risks it takes on, this company/idea completely leaves it up to the founders/"investors" (however you wish to call it) to make judgement calls about their own and other people's risk, without much pooled knowledge or history. I doubt founders are very good at that. When an insurance company sells a…

Village Capital has been testing out the model of having peer-selected investment for ten years now-- https://vilcap.com/entrepreneurs/peer-selected-investment

Not only that, Erik has done a good job cheerleading the concept of risk pooling for founders: https://twitter.com/eriktorenberg/status/1123331923466522624

Re: FounderPool: A community for founders to share risk and diversify their equity

#158

Post by geoburke » Wed, Jul 22, 2020, 2:24 AM UTC

supernova87a wrote: post #144

One danger I see is that unlike an insurance company, which does a serious amount of due diligence and selection of the risks it takes on, this company/idea completely leaves it up to the founders/"investors" (however you wish to call it) to make judgement calls about their own and other people's risk, without much pooled knowledge or history. I doubt founders are very good at that. When an insurance company sells a…

These are great points. Someone else addressed much of it but one thing to add is founders can actually sniff out each others' BS, sometimes better than career VCs. Seems to be common knowledge in SV that builders make the best investors: https://www.fastcompany.com/90266921/alexis-ohanian-on-why-f...

Re: FounderPool: A community for founders to share risk and diversify their equity

#159

Post by geoburke » Wed, Jul 22, 2020, 2:33 AM UTC

m0zg wrote: post #145

tonystubblebine wrote: post #79

As you get older without an exit, you start to freak out a bit about your retirement. At least that was true for me. I'm 1000x better as an entrepreneur at age 42 than I was at age 27. But I'm also 100x more worried about some basic financial things like whether I will be able to retire, maintaining a mortgage, keep up financially with my spouse's career and her changing life expectations. And what helped stabilize m…

> A 0.1% equity stake in a startup that ends up hitting is life changing. For the vast majority of startups, "hitting" is $100-200M acquihire. 0.1% of that is only 200K. If you can get in on something like Beyond Meat, sure, but that's the kind of a company which won't be a part of something like this. Speaking from the other end of this spectrum, BTW, my risk tolerance is higher now than it's ever been. I don't have…

Much of our research has been with founders at YC & 500 (cohorts who represent the Beyond Meats of the world). The majority we spoke to, including the breakout unicorns, stated they would have have participated in equity pooling with their batchmates during the batch. We also learned the darlings of their batch were often not the breakout successes, and later upstaged by others in the batch.

Re: FounderPool: A community for founders to share risk and diversify their equity

#160

Post by gnicholas » Wed, Jul 22, 2020, 2:34 AM UTC

tqi wrote: post #123

gnicholas wrote: post #71

Earlier quoted context omitted.

Interestingly, pedestrian injuries went up significantly after seatbelt laws, for the reason you note/deride.

That doesn't sound right... seatbelt laws forced people who otherwise would have felt confident enough to drive without it to wear one. Low confidence drivers always had the option to wear one at any time. From only study I could find on the subject [1]: "We distinguish, following the literature, between fatalities among car occupants, who may be directly affected by using seat belts, and fatalities among nonoccupant…

A more recent study seems to indicate otherwise. I have no idea which study is better designed.

https://ideas.repec.org/a/eee/trapol/v44y2015icp58-64.html