Kirsty Nathoo spends the second half of the day describing the basics of corporate setup. She goes over all of the associated paperwork, the YC investment, the YCVC notes, and advice on what to spend money on. It was a fast, expert primer on corporate law, corporate finance, startup financing, benefits, payroll, and more.
Can anyone recommend a good book on VC finance? It's hard to find anything that goes into much depth on the web.
* In order to think through this, Dan and I walked around the same block in Mountain View several hundred times
Don't. If your startup is trying to sell to small businesses, stop asking the business owners on Castro St. They already have more pitches than the VCs on Sand Hill road. They are bombarded with half-baked ideas on how to get more customers, make more money from existing customers, etc.
Long distance calls have been free for a while now: call some other state with no startup culture and pitch to those business owners. They'll be both more receptive and more representative of the overall business population.
Sorry for my lack of clarity here. We weren't pitching customers in Mountain View, we were just walking around a block a few hundred times -- talking and thinking with each other.
I think it might be interesting to see some stats on Prototype Day. Or, at least, what factors contributed to high votes and whether or not those votes had any correlation to the Demo Day and performance of the company beyond YC.
What I'm trying to get at is - YC obviously sees some kind of value in Prototype Day, so what is the value and can others replicate that value in some other way?
Prototype Day is a chance to practice your pitch in front of your peers. For most people, it's also the first chance to see what impacts an audience, especially after they've just sat through 20 presentations. (This is helpful both for pitching investors in general, and for demo day specifically.)
You can replicate a lot of the value by getting a group of serious founders together and having them spend a day or half a day pitching to each other, with feedback. If you can get a mentor experienced with the process to give you feedback, even better.
That makes sense to me. What did Zachary mean when he wrote, "The partners tell you not to prepare"? I understood that to mean you don't have to have a pitch ready for Prototype Day yet.
It was also an opportunity to actually see what everyone is working on. At that point in our batch, we had yet to really meet everyone and understand what they were working on. You get to know those you socialize with early on, or those in your group office hours....
That was a great article - very insightful. A question though : Is it possible to get into YC without having an actual working product? That is with just a general idea for a product that you want to build?
The impression I got by reading all the stuff in the tech press, is that almost no one will fund just an idea - even seed funding - you do need to have a working product, and traction and customers, etc.
The other question is : Is it possible to get into YC if you are much older than your mid-twenties or early thirties? I know it is theoretically possible - but are there any YC founders in their forties or even fifties?
Just having an idea is tough. Having a market for that idea, with some interest is better.
When we did YC, I was 36. I wasn't the oldest, but it was close. There have been founders in their 40's and even 50's (as far as I know - could be even more).
The problem with older founders... your needs are different (financial burdens, children etc) which makes it more difficult to succeed. As a "kid" you are much more likely to live with 6 other people eating ramen and coding 18 hrs a day.
I have been an entrepreneur my entire life and I have the exact opposite view.
There are tons of problems more common with younger founders, like...
1. Lack of wealth. Funding is glamorous but it sucks to not be able to move forward without convincing someone else to give you money.
2. Lack of industry knowledge. Disrupting a market is hard when you have no first hand experience in it.
3. Lack of relationships. You're more likely to know more people who can help your business, and who will trust and recommend you, as you age.
4. Limited perspective. It's easier to avoid common mistakes once you've already made them.
5. Lack of credibility. Tech startups are a supposedly a young mans game but if you're not doing a consumer internet venture and are selling to businesses you might run into concerns about your credibility. A lot of people will hesitate to buy a service from a 22 year old.
On the other hand some of the assumptions you make about older founders aren't accurate. I'm in my mid 30s, don't have kids and am in a much stronger financial position (6 figures cash in the bank from years of consulting, fiance with 6 figure job) than I was when I was in my 20s. That enables me to invest in my business without having to go begging for investment. If you choose to have a family and run up an expensive lifestyle there's nothing wrong with that but not everyone 30+ has 3 kids, 2 BMW leases and a $800,000 mortgage.
By the way, coding 18 hours per day is not the way to succeed. Any entrepreneur coding 18 hours per day is doing it wrong.
The problem with older founders... often their needs are different (financial burdens, children etc), though they also often have more life and career experience, which make for a different set of challenges to success.
> The problem with older founders... your needs are different (financial burdens, children etc) which makes it more difficult to succeed.
This is an interesting point and one that I've seen multiple people bring up over time on HN. Often as first hand feedback from the person with a family. Financial obligations are more. No doubt. When I started my first company I lived off of a few hundred dollars a month (personally) and put everything else into the company.
And your point about "eating ramen" is too true.
In my experience, founding a company in my 20's, early 30's and doing one again in my late 30's is that finding a big opportunity is equally hard at any age. I don't see that getting any easier. However, what I do differently now is that that I'm infinitely more disciplined. I talk to customers earlier, I spend less time on building a prototype (6 weeks to 12 weeks max), and am willing to kill an idea as soon as I realize that its not going to get me to my goal.
What I'd be interested in seeing are stats on the success of 30+ founders who are on a 2nd/3rd startup vs. 1st time founders who are 30+. My guess is these two groups would diverge widely, but that's just a guess.
Importantly, I find some parts of starting a company much easier at this age.
First, and perhaps most importantly, my wife and I have committed to the startup lifestyle (not a lifestyle business per say, but to pursuing opportunities to grow our net worth). We openly discuss our goals. We have been together through 2 companies, so we know how much of a pain this one will be. We are in agreement that the costs of building a new company are worth the potential to take us to the next level financially. I find this is where many people think that starting a company after marriage is more difficult. However, I have seen that being married can lighten your load as a founder if you and your spouse agree on who will carry what load. One of my friend's had the same conversation with his wife. She's starting a company, and he's pulling a huge load at home. So the same advice works for both men and women.
In terms of distractions, I have way less of them now than when I was younger. Everyone I know is busy with family and kids, so there is little pressure to hang out and waste time.
This is totally personal experience/opinion, but kids have been a boon to my startup work. There's no way to explain it except to say that spending time with my daughters is calming. Stress be damned.
Maybe its just me, but I find the 20 year olds of today exceptionally capable. I am super impressed with how good the younger generations are. They are focused, motivated, capable. I find this beneficial both because I have now have experience, but there is an entire younger generation who are wonderful to speak with, learn from, and work with.
The financial aspects of starting a company now are a world easier. Without diving into detail, its a cake walk now. I don't starve. I know to expect losses on some ideas. I've had enough failures and some successes to know that sometimes ideas and companies fail, and sometimes they succeed.
In summary, your point is well taken. It's definitely different.
Interesting problem you are tackling, incidentally we are sort of trying to address a similar problem (simplified web development) at Crudzilla Software (www.crudzilla.com).
I am guessing you guys are in heavy development? because I didn't see how you go from using spreadsheets to using your solution (at least from the code samples). I am guessing people who use spreadsheets to build "apps" aren't typically in a position (skill-wise) to use JavaScript to do anything sophisticated.
Site note: We're definitely early alpha. So Exponential.io as it stands now is for early adopters who are ok with giving feedback to drive product features. Our target is to hit beta by April 30.
Most companies are accepted before their product works. But you sound like you haven't even started trying to build it yet. Start building something. Hacking together a crappy prototype always brings surprising insights.
Many founders are in their 40s and some are in their 50s.
I do have something - but it is not very far along. Was wondering how far along it needs to be - we just have a rough working wireframe and an early prototype, but no customers. The impression I got from the article is that they did not have any/many customers either. So how important is to already have actual paying customers and users.
We got into YC before we had any customer, so it is possible. But personally, I would recommend that you wait until you have your MVP first. You don't want to spend half of YC building you MVP, since partners can't really help you defining your vision. What they are really good at is helping you optimize it.
How did they have tons of signups before they had a product? Did they just have a "coming soon" (with these awesome features) landing page? Would that count as traction?
It's much different if you're a second time founder (you have sold acompany before) such as Zac's co-founder.
If you're a first time founder without significant traction, I think it's very unlikely to get into YC. I can imagine less than 5% of first time founders in the past few years that got into YC didn't have decent traction. Does anyone have numbers on that?
All those things are subjective to where you want to live, what you want to eat and what you want to do.
The events YC provides are free. Depending on where you live your rent will obviously vary (you can pay $5000/month for an SF apt, or you can share a place in Mountain View for $600/month).
Like Zac said... the $$ invested should more than cover your expenses for the 3 months. Of course, that money is for kicking off your company - not fine dining.
The guys over at http://startuphouse.com/ have short term stay options in the heart of SF (It's not publically stated, yet, but I think ~$35/night, so $1k/month). Might be a good option for people doing YC for a summer and want to keep things extra lean.
It saves a lot of time and stress to stay near YC in the south bay for the duration of the program (mountain view, sunnyvale, palo alto etc). Living in SF means you waste at least 2 hours every trip down to yc (usually 3 times a week or so).
I did an O-1 visa through my startup. Incorporate the startup first, then start the visa process it's quicker. You need a selection of press, articles/proof of your expertise as well as 12-18 letters of recommendation from well-known and respected people in your field
Depends on your visa. I ANAL etc, just spent a bit of time a while ago looking at the visa situation. Basically you will probably get away with a B-1 visa for your three month run very simply (electronic registration online and ~$15). It's a bit questionable as the work your doing could technically get you in hot water though deal signing and seminars are fine.
After those three months you will have to leave, you can come back on the same type of visa (though it is more likely you are breaching it) but you'll likely be asked more serious questions and if a border agent doesn't like you then you could be out of luck and barred from re-entry.
One of the key things to remember is the penalties for getting caught breaking any visa conditions could essentially get you barred from reentry for life.
So after that first three months you'll probably want a visa that line up with the fact that you're now effectively working in the US.
H-1B, which will require your startup to be up and running and look reputable and they are in short supply.
O, which will require you to show your a respected top of your field type person (i.e. articles written about you, speaking engagements).
E-1, your company must be non-us (which isn't ideal for YC) and a substantial volume (and over 50% of the international trade) of trade must occur in the US.
E-2, 50%+ of the business must be owned by investors in your country (you and your co-founders). Possibly your best bet but you'll need a substantial amount of your wealth (cash,IP (which might effect how you work for your company to set up IP transfer which might not be agreeable with other investors)) committed to the business (100K+) in a non-revocable fashion. Also if the business fails your visa is no longer valid. Risky but probably the most achievable in terms of startups (with regards to getting back in the country doing it quickly and with a high degree of certainty).
L-1 this will require you to have an office in your own country as well, you'll effectively transfer yourself between the two offices. Keep in mind that immigration aren't robots and you'll need to show your not just playing a shell game.
If your canadian(mexican too I believe) TN, basically with an offer of employment from a US company you can work there for 3 years. They'll need supporting details and you'd do well to have the company at a point were you can technically get fired to be credible (i.e. board of directors/you don't own 51% of the company).
Edit: Also visas have intent. i.e. Plan to immigrate or not. If you have a visa with no intent to immigrate and you look like you're planning to immigrate then you can be found to have broken your visa conditions and barred reentry/kicked out. So if you grab a work visa that does not have intent to stay then apply for a visa that only has intent to stay your current visa can be invalidated, you may have to wait until your current visa expire before applying for a more appropriate one.
The go to advice is find an imigration lawyer, they'll have a better idea than you or me on how to set this up.
There are also more options that may open up as your business grows but if you're at the point of considering them you are at the point were you'll have the resources and responsibility to get lawyers to do the majority of the leg work finding/explaining your options.
Can anyone recommend a good book on VC finance? It's hard to find anything that goes into much depth on the web.