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Comment by zaidf | Hacker News Reader

I'd go further and say that having nothing to lose is one of the biggest advantages for a start-up.

I remembering hearing a founder of an IPO biotech company say how he only started his company because he could not find a job. There was no other option. Doing something of his own was his last ditch effort to make a living.

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Who was the founder? Maybe I just don't understand the industry, but I always figured starting a biotech company was only really an option for the well-connected and well-funded. It seems really expensive.

It was a speaker at a panel at TieCON 2007.

I have no idea how he pulled it off. You are right, thinking biotech and startup makes it seem like it would require a lot of investment. At the same time, there are plenty of folks in desperate situations able to raise money and build a company. How they raise money etc. simply becomes a part of the detail when you are that desperate.

He may have had a well-connected cofounder. Or professor. I don't know.

It is certainly not impossible; I did it. It requires very specific circumstances to be able to bootstrap a biotech company. What's more common is probably what I call an East Coast style business: you write a business plan, then you go raise money to execute it.

If you have nothing to lose, that means you have "nothing". Having "nothing" probably doesn't give you enough resources to do anything at all, right? There are always opportunity costs anyway.

And... the article says paypal lost ~170 millions while "willing to invest millions of dollars to acquire new customers"

I wouldn't call it "nothing" ;)

Just because they recorded a loss of $170 million doesn't mean they consumed that much cash. Every account that they credited $5 to they had to record as a "loss." But how many people cashed out that money? Not many I bet, I bought something on Ebay with mine. Paypal essentially created a new currency that they pegged to the dollar. It didn't cost them any cash to "print" new money in people's accounts

I don't think it's a "loss". Every new account is an asset for them, and they paid 5 dollars to "buy" accounts without actually giving cash to account owners (as you mentioned). However, unless they have assets to cover this "deferred liability", that would be a fraud. And they had access to money to cover it. So it's not a case of desperate startup with no resources, I am afraid :)

Sure, every account is an asset but the assets in accounts have to be recorded as liabilities - that is why they had losses way in excess of the cash they raised. The point of the article is PayPal ran risks (violating banking laws, risking a run on their cash) an established company never could have.

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