Should you really get funding? • Hacker News Board

Re: Should you really get funding?

#21

Post by davidw » Mon, Mar 26, 2007, 8:10 PM UTC

BitGeek wrote: post #20

davidw wrote: post #12

Earlier quoted context omitted.

"It would be cheaper to pay a highly networked individual a fee for making introductions " Do you really think a bootstrapping company could pay someone like PG what his time is worth? Letting him invest is a way of paying him, but it's even better because he doesn't collect unless you'r successful. I'm not convinced being funded is necessary either, just that you have to weigh the advantages and disadvantages, and d…

You answered your own question, and I'm not talking about YC anyway. I'm talking about VCs, and in particular the strings that come with them. My purpose is to point out the disadvantages, because the assumption seems to be that its always a good thing to get VC funds.

I've seen a number of articles here about how to "go it alone" and why it's better, although maybe I notice them more because that's pretty much the only avenue open to me, so I keep an eye out for it.

Re: Should you really get funding?

#22

Post by staunch » Tue, Mar 27, 2007, 12:44 AM UTC

BitGeek wrote: post #19

staunch wrote: post #16

Earlier quoted context omitted.

Google didn't take time doing anything. They spent millions on building out datacenters and on bandwidth. The big thing that separates them from the Netscape story is that they're apparently smarter and managed to create a financially successful company. Its quite conceivable that lesser men would have given us Netscape #2. "You cannot predict the future- you cannot predict the level of success you will have in advan…

Paul and I are describing the same scenario... and that incentive only exists when it looks like there's a possibility for the one in a million payoff. Otherwise Liquidation Preferences mean that even a successful sell results in no return to the founders. "But being forced to try things more quickly than you might otherwise may help you discover problems and their solutions before others do, like a fast forward butt…

"I could write code sitting here with a loaded gun on a timer, pointed at my head."

In most startups the proposition is metaphorically identical: succeed before money runs out or die. The kind of intense pressure that exists in all of the competitive startups I've seen. It's a marathon race, not a stroll through the park.

The founders motivation is ownership and the potential payout that ownership provides. If you take so much investment that you can't sell your company for enough to profit from it then you may as well close up shop (which happens frequently).

Re: Should you really get funding?

#23

Post by BitGeek » Tue, Mar 27, 2007, 9:57 PM UTC

staunch wrote: post #22

BitGeek wrote: post #19

Earlier quoted context omitted.

Paul and I are describing the same scenario... and that incentive only exists when it looks like there's a possibility for the one in a million payoff. Otherwise Liquidation Preferences mean that even a successful sell results in no return to the founders. "But being forced to try things more quickly than you might otherwise may help you discover problems and their solutions before others do, like a fast forward butt…

"I could write code sitting here with a loaded gun on a timer, pointed at my head." In most startups the proposition is metaphorically identical: succeed before money runs out or die. The kind of intense pressure that exists in all of the competitive startups I've seen. It's a marathon race, not a stroll through the park. The founders motivation is ownership and the potential payout that ownership provides. If you ta…

You're arguing that reducing your chances for success is the only way to succeed. You presume that if you aren't about to die, then you must be lazy. You presume that the only model is unprofitability until someone either buys you or you get shut down.

You presume that reducing the number of scenarios by which a founder will become wealthy somehow motivates the founders more.

You say business should be shut down if they don't fit in the model you describe.

This is a very narrow view. Its also a very polarized view-- it seems to be the perspective that either you're trying to be the next youtube or you're opening a farm.

There really is quite a spectrum between them... and far more high tech successes are not youtube type situations. That's an extreme rarity.

You're locked into a mentality that causes you to repeat this perspective, and you don't seem to be responding to what I'm saying, and I just don't see things that way.

So, I don't see much point in continuing this thread.

Good luck if you decide to start a company!