If you're technical and you think you've got enough hustle to start a company, you can run at an arbitrary standard of living for a long time as a 1099 contractor.
I'm past arguing that YC isn't worth it because the money is too small and getting funded is a bad trajectory[1]; the program has clearly been a huge win for a lot of people. But you can execute the 37signals playbook after attending YC. Just go, launch, and then consult.
If you have a 3-person team with a strong dev that has a short runway, that dev should have no trouble picking up 1-2 month projects to keep himself going with the company. It is so straightforward to do this, the money is so good, and the commitments are so flexible that I'm led to question the "you should make as little as possible" advice.
Why burn your family out? There's no points for effort, only for execution.
Without turning this into "37signals vs. Y Combinator", let's just say there are pros and cons to each approach.
One of the cons of contracting is can be really hard to divide your attention in a startup. If there is any possible way you can devote 100% of your attention to a startup, then by all means, do it. I'm 10x more productive when I put 100% of my time into a startup instead of 50%. 10x, not 2x. Just my experience.
On the other hand, contracting is a great backup plan. It kept Zencoder alive in the early days, and we still do some video-related consulting work to reduce our burn and compliment our encoding service.
Contracting is very distracting. But it's distracting in a different way than a full-time job. And I think it's game-changing for lean startups in a way that may moot some of the concern about concentration.
First, contracting requires hustle just like moving a product does. It's an investment decision (of time, rather than money) in a way that a 9-5 job can't be. It involves company building and has knock-on effects (recruiting, applications for IP) that can help the product business. And it is flexible.
And this whole notion that you need unbreakable concentration to start a company seems like an extension of the idea that there's a runway, launch, and hockey-stick curve to all product businesses. But those things that yo' liable to read in de blog posts, they ain't necessarily so. Particularly if you have a functioning consulting engine.
I'm less familiar with direct-to-consumer products than most people on HN are; I sell to businesses. The overlap between selling services to companies and selling products to companies is significant. Maybe you should consider something businesses want, so you have options besides getting shot out of the VC cannon.
I do B2C stuff like many here. If you are planning on using SEO or AdWords as channels, there will be long stretches where your ability to improve is rate-limited by Google loving, and you can literally acquire that while deceased. (Don't die! But understand that whatever you are spinning your wheels on isn't improving rankings if it isn't winning links.)
Not really, because I haven't mastered that. But if you're trying to build a startup in the (say) server monitoring space, a great bootstrapping approach would be to do a bunch of server monitoring contracts and keep the IP (which isn't too hard if you say you're using "prior inventions").
Recent events in my personal life have led me to believe you can get "dumb money" with reasonable terms in NYC. So if you just need the dough, it's no problem these days... any idea and founders with a pulse will do. Get in on it while it lasts...
The biggest problem with getting money isn't getting the money; it's what strings are attached to the money.
People think this is an abstraction. My VC-funded company hired a CEO (who I like) who decided our A-round-funded company was optimally positioned to go head-to-head with Akamai. I saw a board at another company wage a guerilla war against its management team. The threat here is not abstract.
That is why I added in "reasonable terms."
The terms I've in deals lately seen have been very favorable for the founders. Not as loose as an angel round but much better than I've seen for similar deals in the past. As John Dahl hints, a lot of the deals are convertible debt deals.
I only mention this because from my immediate perspective it seems easier to raise $100-$500K in NYC than it does to raise $10K from Y Combinator. Which is the better deal? I couldn't tell you.
Angel funding, on the other hand, generally comes without strings. If you take $1M of convertible debt, you don't have to give up a board seat, special rights, etc. If you do it right, you get some runway and some awesome advisors. That's it.
Pros and cons, of course, but VC funding (especially when the VC gets to set the terms) is a world apart from angel funding.
Isn't that no-strings angel funding predicated on the idea that there's going to be either a round of financing or an exit?
I have no problems with angel funding (I'm really not all that familiar with it; no company I've been involved with has taken "angel money"), but I do have concerns about any company model that puts first-time founders on a burn-rate runway. There are less perilous ways to build a business.
Isn't that no-strings angel funding predicated on the idea that there's going to be either a round of financing or an exit?
Really depends on the investor. Some angels explicitly want you to go Series A -> Series B -> $100M -> IPO. Others explicitly want to help founders start cool companies. Some are basically mini-VCs, and others are really founder-friendly. So it's just important for a startup to have the right angels, whichever direction you go.
If you put 100% into your startup you'll get 100% out. If you're constantly chasing the dollars/pounds/euros/crores then your startup is under constant pressure to become a side project.
What things like YC do is give you the opportunity to make the idea your full time job with full attention. The money isn't necessarily great but the network is. The alternative is that you raise the money elsewhere and do without the network. If the benefits of that network outweigh the potential later costs of Ycombinator, I'd say do YCombinator. If you need the money and YC is where it's at, do YC. If not, find out how much burn you'd need for a year and go contracting to save up the cash. You can normally get enough money contracting in a year for a further two of frugal living or one for several frugal folk. If you can't get traction there, then you have a problem that YC might not be able to solve.
You can put 20% into a startup and get 10000% out.
Real life is not like an inspirational half time locker room speech. A lot of these companies you see putting 100% in, I see setting themselves up for failure by betting their lives on a plan that only works if they grab the rope, jump over the scorpion, and hop on exactly the right sequence of crocodile mouths. They don't have to do that. DHH just had Zonda commission a supercar for him. Did he put 100% in during 37signals first year?[1]
> You can put 20% into a startup and get 10000% out.
Really? I don't know anyone who does anything with 20% focus and effort put in and gets 10000% out. Then again, maybe we're talking cross-purposes as to what gets put in or taken out.
As for DHH, he wasn't at 37signals until 2003, so I'm not quite sure where you're coming from with that. I'm not even sure DHH is a good example as it wasn't like he came in as a partner (at least AFAIK, but please correct me if I'm wrong), so clearly he had to put some effort in in order to become one.
I think he means that the outcome is not required to be proportional to the input. I have a couple examples of my own that I can use to demonstrate.
The business that pays my rent took me the better part of a week to build and launch 3 years ago. I've gone literally months without opening the project in an IDE, marketing it, or thinking about it beyond answering an email or two. And the profits keep rolling in.
Some years back I was part of a 6 man dev team at a 20 person startup, burning through 60 hour weeks and $8M in funding to build the mother of all SaaS products, which over the course of its life brought in roughly the same amount of revenue as the product mentioned above.
So, as the grandparent said, there's no reason to expect that effort and outcome are coupled in any way.
You think everyone who's ever had a "fuck you money" exit put 100% focus into their company?
I don't care to argue about DHH's position at 37signals. He's the one who said he built Basecamp as a part-time project. He has me at "custom Zonda supercar".
I'm in my 30's and I feel I have one huge advantage over numerous 20-somethings: ability to do short term contract work, and fund the startup that way. This is assuming :
a) you have enough networking/experience to land sufficient paid contract work fairly easily
b) your short term contract (3-6 months) can provide you just enough income to keep you going for the rest of the year.
Sure, I certainly don't have the careless energy level as I had in my 20's, and have a lot more responsibility, but the ability to work smarter, having a better eye for what may or may not work through experience, and identifying the right people to hang out with surely makes up for the shortcomings.
Last, but this is huge for me personally, is the feeling of 'this is my last chance' that's ever more so prevalent now than in my 20's, where I always knew I had some leeway years left as an excuse to not put in 100%.
Certainly not, but the idea behind contracting is that you make enough to fund yourself, and therefore not require YC money in the first place. Most YC amounts are around the $20k range, which you can easily make with a few months of contracting.
The post-investment salary rule is something a lot of people trip over, but it's important. The rule is simple:
Pay yourself enough that you're not thinking about taking a part-time job to support yourself (and your family). You should be able to focus on the startup without financial distraction.
You don't need money to put into savings. You don't need a fancy car. You don't need fine dining. You're sacrificing now for the chance at big upside later. Every dollar you waste on yourself is hurting your chances of bigger success.
It's a matter of financial opinion I think - putting a percentage of your income, whatever that's a little or a lot, into your long-term savings should be a mandatory thing for most people - like food and shelter. It's money you never touch - it need not be a lot, but it's not something you should simply stop doing just because you're cutting corners - it's more important in the long run than people often give it credit for.
I was 38 when I started YC. I think that there are advantages to starting late, well enumerated in the linked blog post. I came to YC from Apple, which is about as stressful a "square job" as you're likely to find, and haven't really encountered anything in startup life that's worse than staring down a Jobs imposed deadline that you Just. Can't. Hit.
The startup I was working for until recently (building scientific hardware) was founded by a couple in their 70's. They basically sunk all of their retirement money into it. I can't say that it was the best financial move in the world, especially when the economy went south and you're trying to sell $1M+ pieces of equipment.
A friend of mine works for a government contractor software shop started by a nana in her later 60s. Except nana was an old-school Fortran programmer and knew her way around Visual Studio. The cuteness wears off within an instant of hearing her speak: she is just another systems architect robbed of all innocence by decades of requirement analysis and systems integration.
I also met another lady in her late 60s at George Mason university. We chatted up at the library checkout line, and I ended up getting lectured about mobile proof carrying code by someone in a christmas sweater, and bifocals left barely hanging on her nose. My 1337 credentials took a hit that day.
Come to think of it, they are in a similar position as the young kids: very little risk. What do they have to lose? They might not need that much money anymore.
I have no numbers in front of me, but I'm sure cost of living for over-65 is greater than for under-25, if only in terms of health care costs.
It's subtly worse than that however: the 22 year old can roll that experience into their resume and make themselves more attractive to future, traditional employers. Talk to any out-of-worker 60 year old, and you'll hear tales of woe about ageism and "too experienced".
Programmer. Smart and driven. Went to MIT or Stanford, or else skipped college altogether.
Am I the only one who sometimes feels like you might as well have skipped college if you didn't go to Stanford, MIT, or some other top school? Anything else seems to be considered Blub U., and Google and the other cool companies that you would like to work for don't hire from Blub U.
Maybe this is why so many hackers who didn't get into MIT or some other top school turn to entrepreneurship; degree or no degree, the job opportunities aren't so hot otherwise.
Am I the only one who sometimes feels like you might as well have skipped college if you didn't go to Stanford, MIT, or some other top school?
I don't think so. MIT or Stanford help a little (like 10% when raising money or looking for a job), but at the end of the day, the degree doesn't really matter. For some people, going to a state school or small college is the right path to take. For others, skipping school altogether is the right path. Go to college, or skip college, for other reasons.
I've applied Google for summer intern 2010. At that time, I was second year student and haven't taken any computer science courses. I've had a solid resume background (startup experiences/open source project/good university etc.) but I never get any feedback from Google regarding the internship. So I ended up to spend my summer in Facebook. It was a pleasant experience, and I would never consider to apply Google again.
Notice, it says he was employee #23. I think Google's standards have risen since then, and even if they make the odd exception here and there, betting on being such an exception seems questionable.
Why, I do believe my beloved alma mater has been slandered! I need to recruit Buchheit and Eric Meyer and the ghost of A.A. Michaelson and Donald freaking Knuth and come kick your butt! ;)
No, seriously: It doesn't matter. People manage to succeed with pitiful little CWRU degrees like my own. And, obviously, many of the most successful people in the industry never went to college at all.
I have heard the occasional rumor that Google is obsessed with academic credentials. If true, that is more of a problem for them than for you.
I wasn't bashing CW, just pointing out that it was easier to get hired at Google in the early days than it is now, and picking out early hires who didn't go to Stanford isn't really representative of their current hiring practices and isn't something you should count on happening to you.
> I think Google's standards have risen since [...]
... since hiring the guy that went on to create Gmail!
Yes, this reminds me of what tends to happen as companies get larger: they add more processes and "standards" and management and therefore increasingly lose out on the kinds of opportunities and people they used to be able to get.
Granted, Google stands out as seeming to do pretty well fighting against it, staying fairly "agile" for it's size and age. But if your company reaches the point where it cares more about what university you attended rather than your intellectual qualities and accomplishments, you're heading in a bad direction.
Good question. My guess: age helps put other accomplishments in context. "Worked at Google for 6 years" means different things if you're 35 than if you're 21.
Thank you for sharing this. I'm 31 too, and currently working on my YC application. In my case, I'm even more focused on making things work because I have a mortgage to pay and a family to support. A lean burn rate is one of the means to this end.
I was in Japan, brought my wife and two kids with me, am 35 and am a single founder. Ha! Didn't need a visa though, but there are ways of making work if you do.
It's possible for sure, but definitely tough. My family came with me, but we were only together on the weekends. Without a doubt it was one of the hardest, most stretching, and most valuable experiences of my life.
If you hope to focus on the work as often as you can, I would recommend not bringing the kids. It can be done but boundaries need to be in place for your spouse/kids and your co-founders.
Y Combinator is strictly for college kids. The restriction is based not on age, but on money. Older people are implicitly excluded because they can't afford to give up their income to pursue a startup. Wife, kids and a mortgage cost money.
As a result, I think the Y Combinator startup market is only a fraction of what it could be, if older founders could be included. I imagine there would be so many more and different ideas than what we currently see.
I think a Y Combinator-like incubator, that provides enough funding for older founders, would thrive. If funding was in the range of say 70K to 90K per founder, many more companies could be started. And really, that's still not a lot of money for the VC/Angel/Incubator industry. It wouldn't take too many hits to make a profit for the funders with these numbers.
Despite what the original post says, Y Combinator is implicitly intended for college-age kids. And that's fine. But think of how many more opportunities there could be for both Y Combinator and founders, if the funding available could support older people.
Funny story: I was looking for a domain name for my blog. I have a Taoism/Zen theme, so I registered a few names in that genre (like "The Tao of Code").
As I was looking around, I tried ZenCoder. I was annoyed to see that it was already in use, but I quickly forgot about it. A few months later, I started reading about them in Tech Crunch and on HN!
I'm in a similar boat. I'm 31, married, with no kids so far. I quit my job to pursue a startup. It's good timing for me.
To be a successful founder, I don't think that it makes a lot of difference how old you are, but it does make a significant different where you are in life. I think this manifests itself most if you're trying to find a co-founder.
Most founders in their early 20s have very little in the way of assets or obligations to speak of. This makes finding a compatible co-founder in the same age group much easier. Everyone starts out in a similar situation.
On the other hand, founders in their 30s have had a lot more time to complicate their situation (for better or worse): kids, marriage, mortgage, and money. Finding a co-founder is more difficult, since accommodating both potential founders can be more difficult. There's more to accommodate.
In my social circles, there tend to be more complicated situations than simple ones.
I'm past arguing that YC isn't worth it because the money is too small and getting funded is a bad trajectory[1]; the program has clearly been a huge win for a lot of people. But you can execute the 37signals playbook after attending YC. Just go, launch, and then consult.
If you have a 3-person team with a strong dev that has a short runway, that dev should have no trouble picking up 1-2 month projects to keep himself going with the company. It is so straightforward to do this, the money is so good, and the commitments are so flexible that I'm led to question the "you should make as little as possible" advice.
Why burn your family out? There's no points for effort, only for execution.
I'm 34, for what it's worth.
[1] I still believe both those things, though.