7Figures2Commas

> Yeah, another to way to put it is they aim for legitimacy so they can be the bitcoin counterparty of choice for Fortune 500s and wall street.

According to Coinbase, the total value of all Bitcoin is currently about $3.5 billion. This is a tiny, tiny market for "Fortune 500s and Wall Street" and is equivalent to the value of a single (smaller) mid-cap company. Even at its peak, the total value of all Bitcoin was only around $14 billion.

Daily Bitcoin transaction volume hasn't exceeded $100 million since July and has been as low as $33 million recently[1]. For comparison, daily volume in the FX markets exceeds $5 trillion.

Blockchain technology might be important but Bitcoin itself is about as interesting as the Burmese kyat or Gambian dalasi.

[1] https://blockchain.info/charts/estimated-transaction-volume-...

I never said they were. Frankly, the studies should motivate singles to make a concerted effort to get out and interact with people in real life.

> Women tend to care less about "looks" -- or, at least, care differently. I have seen studies that indicate that women are typically looking for "looks" that suggest career success more than hot bod.

From http://blog.okcupid.com/index.php/your-looks-and-online-dati...:

> As you can see from the gray line, women rate an incredible 80% of guys as worse-looking than medium. Very harsh.

> Paradoxically, it seems it’s women, not men, who have unrealistic standards for the “average” member of the opposite sex.

But there's also this:

> On the other hand, when it comes to actual messaging, women shift their expectations only just slightly ahead of the curve, which is a healthier pattern than guys’ pursuing the all-but-unattainable. But with the basic ratings so out-of-whack, the two curves together suggest some strange possibilities for the female thought process, the most salient of which is that the average-looking woman has convinced herself that the vast majority of males aren’t good enough for her, but she then goes right out and messages them anyway.

Perhaps this speaks to your "differently" point, but it's still amusing (or disturbing depending on one's relationship status) that online daters appear to generally be so disconnected from reality.

This really isn't shocking though. The biggest problem with online dating is that it gives people the false impression they have unlimited options. The perfect person (handsome/gorgeous, educated, fun, wealthy, emotionally available, etc.) who will put your past dates to shame could always join tomorrow. This dynamic leads to people becoming incredibly picky[1], so the bar for what constitutes "attractive", "educated", "wealthy", etc. is for many always rising beyond what will ever realistically be available to them.

[1] http://www.psychologicalscience.org/pdf/PSPI-online_dating-p...

As it relates to lending, banks absolutely have a lot to worry about. But so too do many of the alternative lenders that are stealing their business.

Many of these lenders are products of the 2008 economic crash and they have thrived because of the interest rate environment coupled with a period of historically low defaults. When the next downturn arrives, we'll see how the portfolios of the balance sheet lenders fare.

The alternative lenders in the business of securitizing loans avoid the biggest risks balance sheet lenders have to deal with, but to generate revenue, they have a never-ending need to originate more loans that they can package and sell to investors. When interest rates rise, or the economy sours, that could get more difficult. A lot more difficult.

Alternative lenders are here to stay, but a "wipeout" for banks would take a long time to occur, if it occurs at all. The alternative lenders are going to have their own problems to deal with soon enough.

> People with genuine talent in the industry have extremely little to worry about...

This is probably true in just about any industry. But you're ignoring the fact that most people employed in tech don't have the kind of "genuine talent" to which you refer.

There are a lot of average/mediocre developers (who are not "no-talent temporary programmers") making six-figures building and maintaining run-of-the-mill CRUD apps at venture-backed startups who at some point are not going to be able to hop to another six figure job when their startup runs out of cash.

This.

It's also worth mentioning that labor markets change. A lot of people working in Silicon Valley today weren't around after the first crash so they can't imagine how an engineer making six figures today with seemingly unlimited opportunities can find himself or herself making $0 tomorrow with seemingly few opportunities. But it has happened, can happen and will happen again at some point.

I had a family member who nearly died from end-stage liver disease caused by Hepatitis C. He received a life-saving liver transplant with probably only days left to live.

From the article:

There’s a drug called Sovaldi that works astonishingly well to cure people with the liver disease Hepatitis C. The rub? It costs $1,000 per day for all 12 weeks of treatment.

12 x 7 x $1,000 = $84,000

I saw the bill for my family member's liver transplant. The total cost for the transplant was over $500,000 and that doesn't include the pre-transplant and post-transplant treatments and hospitalizations. At $84,000 for a cure, Sovaldi is an absolute bargain.

Of course, not everybody has $84,000. That's why we have insurance. Unfortunately, the payers in this article, state Medicaid programs, are in many cases heading down a path to insolvency. That's the bigger issue.

In private insurance markets, most drug makers provide significant discounts to incentivize payers. These discounts often amount to 50% or more. So you can't address the issue of access to treatment without acknowledging that insurers, not drug makers, ultimately decide which patients have access.

Gilead has a program that provides Sovaldi free of charge to patients who are uninsured or have been denied treatment. For those who cannot obtain Sovaldi, there are a variety of other Hepatitis C treatments available, so it is unlikely that somebody with a need will go untreated, even if their payer won't give them access to the treatment they prefer or which may be most effective.

This is a much more complicated issue than the article here suggests, and it's easier to find a scapegoat than to honestly address the complexities of this market.

We should do the same thing for software development. If an entrepreneur can afford the full cost of a top development shop, then fine. If he or she has no money, the shop's hourly rate would be radically reduced by law and ideally paid through programs designed to promote new business creation.

See how this works?

> What matters is not the total amount of debt, but rather the cost of maintaining it.

Classic.

George Carlin knew what he was talking about.

https://www.youtube.com/watch?v=h6wOt2iXdc4

https://www.youtube.com/watch?v=u-ryuJDTpEc

Pure wisdom.

> In fact, Airbnb worked with economist Tom Davidoff of the University of British Columbia and found that Airbnb has affected the price of housing in SF by less than 1% either up or down.

Airbnb commissioned this economist[1]. That doesn't necessarily mean his conclusions aren't credible, but commissioned research that supports the agenda of the company that commissioned it should be subject to a higher level of scrutiny. Is there any independent research Altman can cite?

> Unfortunately, a lot of other people have problems paying their rent or mortgage. 75% of Airbnb hosts in San Francisco say that their income from Airbnb helps them stay in their homes, and 60% of the Airbnb income goes to rent/mortgage and other housing expenses. Making it harder to share your home in San Francisco may make it impossible for some of these hosts to afford to stay in their homes and in this city.

What about their neighbors? If I'm paying good money to rent an apartment or I shell out big bucks for a new condo, why should I be forced to live in a hotel-like environment because a neighbor decides to violate the lease or association CC&Rs/bylaws?

It doesn't matter how well-intentioned a host is. It's callous to have sympathy for hosts who are violating leases and condo association association CC&Rs/bylaws and no sympathy for the neighbors their selfish behavior negatively affects.

[1] http://blogs.wsj.com/developments/2015/03/30/airbnb-pushes-u...

The law absolutely matters in practice. Playing by the rules never guarantees that you won't be sued by a former employer, but contrary to what a lot of people here seem to believe, most employers don't make a habit of suing former employees for no reason when they have no evidence.

As I wrote, a lot of former employees who get caught up in these types of disputes make claims that they can't sustain through the discovery process because let's be honest: when you're working on a commercial side project that you're excited about, it's difficult to at some point not do some work (however minor) on it during working hours or using the resources of your employer.

Finally, if you take the time to read Smule's complaint against the Shred folks, you'll see that this isn't the case of an "aggressive" former employer. Smule presents a different version of events and appears to have some legitimate questions.

> A scenario I've seen play out multiple times:

The salient details your scenario omits:

1. A lot of employees create side projects related to their employer's business and/or R&D activities. These are not subject to 2870's protections.

2. A lot of employees make the mistake of working on the side project during work hours or using their employer's equipment. Most employees who get caught up in these types of disputes claim they didn't work on the side project during work hours or using the employer's equipment but far fewer can make it through discovery with such a claim intact. There really is no wiggle room on this and one slip up can spell doom.

> We saw this just the other day on HN.

Assuming you're referring to Shred, no, we didn't. The matter there does not relate to a side project, although you can be sure that Smule will use discovery to look for evidence that its former employees were working on their idea before they left its employ.

You can read the actual claims at http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APP....

> Best thing to do: no side projects.

This is the best advice as far as side projects with commercial ambition or potential are concerned.

The devil is in the details and it's worth reading the following text closely:

Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

(2) Result from any work performed by the employee for the employer.

2870 provides a lot of protection to employees who are very careful but a lot of employees are not careful enough to meet the criteria above.

Why even offer equity at all? If you're profitable and able to offer cash bonuses and raises, why not use alternative retention tools? Do you offer a 401(k) with generous company match? Do you have a profit sharing plan? Profit sharing into a 401(k) can be especially appealing.

While I obviously don't know anything about what your company does and what its financials look like, if I was a prospective employee, the fact that you're sub 10 employees at seven years in would lead me to conclude that you're not the kind of high-growth company for which 0.1 - 0.25% equity has any chance of translating to a really big payout. So why pretend? I'd find it far more appealing if your compensation package was realistic/honest about where you're at as a company.

> It's a retention/bonus plan because there are means to liquidity via secondary markets even pre-IPO. Obviously the liquidity event is the ideal outcome, but there are still many ways for an employee to exit his/her position prior to that point, and the idea is that you ride the valuation curve up so that what is on paper a $20k annual "bonus" becomes a $60k annual bonus, for example.

Most early-stage startup employees can't get liquidity on secondary markets, either because there's no demand for their company's stock or they are subject to transfer restrictions.

When looking at the big picture, proponents of equity as an effective bonus/retention tool will have to explain why most vested options go unexercised.

> I make sure to make it clear that our offered restricted stock grants (that are between 0.1 - 0.25% at this point) are not replacements for compensation. They are instead bonus/retention plans that act as a bite of the apple if the company were to sell and they are still employed by us.

Your stock grants are not a bonus/retention plan simply because you believe your cash compensation is at or above market. Pre-IPO stock grants are a lottery ticket. Period.

Here's an exit scenario: your company sells for $50 million after four years[1]. Assuming no dilution and no liquidation preferences, an employee with 0.25% earns $125,000 pre-tax, the equivalent of a $31,250/year bonus that was never guaranteed and deferred for four years.

Why would you think this to be a strong driver of retention for in-demand employees with "realistic worldviews"? In today's market, your best employees can probably get 50-100% of that hypothetical annual bonus in real cash just by switching jobs.

[1] Your company isn't likely to have a liquidity event, but if it does exit, the value of the event is likely to be $50 million or under according to exit data in recent years.

> The fraud claim is fraudulent itself...

I don't even think you realize what you're saying at this point.

I empathize with you. I really do. For what it's worth, years ago, I had to fight to regain control of a company I had started that was "stolen" by a former business partner. I was a twenty-something with very little money in the bank and my counsel was a local attorney. I sued a multi-millionaire represented by one of the top 5 law firms in the world. I was able to get what I wanted largely because my attorney gave me good advice and I listened to it.

I'm sure this is an emotional time for you but I would strongly recommend that you retain an attorney you trust before you do or write anything else.

> If they even make it through the discovery process without going bankrupt, which is the explicit, admitted goal of their opponent.

No, it isn't. According to Business Insider, this is what was stated:

I'm fairly confident we will figure something out eventually, and this won't be a long-term problem. But I think they've got to face the music here. And we're going to have to figure that out unfortunately with a bunch of lawyers.

And here's the sad truth. You compare a 100-person company with 10, 30, 40 million dollars in the bank to a two-person startup. If it goes to litigation, if we're wrong, we'll win.

Right? We'll win. We'll put a giant law firm on it and we'll do all of the discovery and we'll do all the depositions and we'll win. And if we're right, we'll still win.

So it's not a great scenario. If you fork off a startup and there's IP overlap, it's just a big mess.

The Smule CEO doesn't at all suggest he's trying to put Shred out of business. Instead, he:

1. Seems to imply that a settlement is possible.

2. Laments the fact that this matter required legal action and that said legal action will put Shred's co-founders in a disadvantaged situation.

3. Acknowledges that this matter is the result of the fact that there seems to be some overlap between the kind of technology Smule creates and the kind of technology Shred creates.

Until Smule's claims are known in detail, it's premature to assume that Smule's action has no merit. Smule could be the good guy, or the bad guy. But lots of people here can't help but pick David over Goliath when very few meaningful facts are known.

> Are you insinuating that 2 employees quitting a company together and starting a company in the same "general space" is reasonable grounds for a lawsuit?

If a former employer has reason to believe that the employees misappropriated intellectual property or otherwise violated the terms of their employment agreements in doing so, it has every right to seek to enforce its agreements and protect its interests.

Like it or not, when employees leave to start a company in the same general space, claims of misappropriation are more likely.

> And that's to the shame of our legal system, and to the detriment of our country's economy.

How? If a source code comparison will not be dispositive of Smule's claims against Shred's co-founders, why would a court rely on a source code comparison?

From what I can see, nobody has produced the actual filings in this case, so we don't know the exact claims, but other comments indicate that Smule isn't just claiming Shred's co-founders stole source code.

> In our case, we did not develop anything Shred-related (ideas or otherwise) while we were employed at Smule. So invention assignment is not at issue, because we did not moonlight on Shred Video while employed by Smule.

Please recognize that assignment is likely an issue because Smule will almost certainly try to claim the opposite of what you're claiming. It doesn't mean that they will be able to prove their claims, but you should at least be aware of the fact that there are two sides to every legal dispute and both parties have the opportunity to make their case.

If this isn't matter isn't settled, the legal process provides the means to sort it all out and you'll have the opportunity to evaluate the evidence supporting Smule's claims as part of the discovery process.

> It will take probably two years for the case to get fully adjudicated...

During which time many prospective investors, partners and customers won't want to touch you with a 10 foot pole.

> ...and the legal recourse for preventing frivolous lawsuits like this is insufficient.

To be honest, this doesn't look like a frivolous lawsuit, even if this goes to trial and is adjudicated in your favor.

Your post indicates that you and your co-founder quit your jobs at Smule to start Shred. In your post, you detail the differences between some of the technology behind Smule's products and your own, but it is clear that Smule and Shred are in the same general space as far as technology is concerned.

The intellectual property assignment agreements most employees sign cover inventions, processes, discoveries, etc. that are made or conceived of during their terms of employment. They often contain language referring to "the present or reasonably anticipated business" of the employer.

While none of this means you can't leave an employer to start a business in the same space, matters like this can be incredibly messy. If you believe that your defense will be successful because you can prove you didn't steal code outright, you are being incredibly naive. It's not that simple.

Correction for you:

I think this is a pretty clear failure of corporatism...

Think beyond yourself. In a team environment, there are times at which other team members will need to communicate with you to get their work done. If you're working on a different, arbitrary schedule, you can impede your team members.

If you want true flexibility and control over your schedule, the best option is to become a freelancer or consultant. But keep in mind that in many cases your clients will also have expectations around your schedule and availability.

An intellectually honest person could give serious consideration to your argument while also acknowledging the possibility that higher revenue to local government won't necessarily be used in ways the residents expect. Just look at the City of Bell scandal[1].

As it relates to your earlier comment "This scenario of yours is used to justify policies such as California’s Prop 13," you should consider that Prop 13, which amended the California constitution, was adopted overwhelmingly by voters in California in 1978. If Californians don't like it today, they can repeal or change it. That's how our system works.

Why haven't Californians done away with or amended Prop 13? Polls consistently show that the majority of Californians continue to support Prop 13's limits and interestingly, even proposals that would eliminate Prop 13's tax treatment for non-residential properties are losing steam[2].

[1] https://en.wikipedia.org/wiki/City_of_Bell_scandal

[1] http://www.latimes.com/local/political/la-me-ln-support-prop...

Despite the data quality issues, there are a number of companies that license CrunchBase's data and have built their own subscription services on top of it. One such company has a few hundred thousands of dollars a month in revenue and has raised millions of dollars in funding.

While most of the CrunchBase "repackagers" will tell you they add proprietary data, from what I have seen, most rely very heavily on the CrunchBase data and without it, would not have commercially viable services.

I think the point you're wanting/trying to make is that private market valuations are ridiculously high. But that's not YC's fault. It should enjoy this while it lasts, and hope that as many of its investments as possible get to liquidity before the music stops.

A more interesting observation is that two companies account for over half of the $65 billion. Airbnb's most recent valuation was reportedly $25 billion, and Dropbox's was reportedly $10 billion. These companies are not likely to go away overnight a la Homejoy, but their valuations are going to be hard to sustain. Dropbox in particular would be a very tough sell to the public markets at its private market valuation given its comp[1].

Making analysis even more difficult is that today's big money, late-stage deals have lots of strings attached, so these valuations are hard to assess without knowing all of the details.

Final comment: despite the constant suggestions to the contrary, YC's portfolio appears to live in the very same power law reality as most early-stage investment portfolios in Silicon Valley.

[1] https://www.cbinsights.com/blog/dropbox-valuation-bubble/

Please talk to somebody who works in finance. You will virtually never hear the term "market cap" used to describe the value of private companies. If you use this term in this context, it will be assumed that you don't know what you're talking about.

There's a reason Sam updated the language in his post...

> So say that I have given a quote as a consultant for $100k worth of development. They can only afford to pay $50k. They claim their seed round gave them a valuation of $10M, so therefore they offer 50k / 10M = 0.5% in equity in addition to the $50k cash. This is why the valuation matters - it is directly determining the amount of equity in the offer.

The valuation matters, of course, but if I was in your shoes, my biggest concern wouldn't be validation of the valuation:

1. A $10 million valuation is well above the median valuation for seed stage companies[1]. What's strange here is that the startup doesn't even have a technical team, so what was the justification for the valuation?

2. Despite the fact that this company was somehow apparently able to raise at a premium valuation, it apparently didn't raise enough to pay for the development that's needed. That implies it raised too little. Whatever the reason, that's a huge red flag.

In a scenario like this, I wouldn't consider equity to be at all attractive.

[1] http://www.theventurealley.com/series-seed-the-new-series-a/

So in your mind the only reason one should use accurate language would be to avoid the risk of civil or criminal litigation? Fascinating.