373 karma · joined March 25, 2007
Sure, it has sucked to when the founders were fighting... but its been years since I went out on my own.
Don't confuse confidence and passion for anger.
If you look at the empirical evidence, you will see that most successful companies are started by an individual. Now, of course, a successful company needs more than one person to be involved-- they need employees. And early employees can be very well rewarded and significant contributors to shaping the idea.
But leadership by consensus does not work, as anyone who has belonged to a high school club or organization knows. In a business environment, it is death- the founders never reach consensus and generally they constantly pull against each other, undermining each other and ultimately undermining the company.
Leadership by consensus is quite literally the absence of leadership.
When there is a leader, and that leader is capable, the company succeeds.
If you have a pair of people who work well together, then as you concede generally one of them will be the clear leader. Dividing the work and having each lead sections of the company is fine- if you know the person who you can do that with. But such people are generally quite rare.
Unfortunately, the advice that you must find a founder in order to start a company is bad advice-- in most cases this will lead to the company failing. There are, of course, examples of pairs of people who co-founded companies together and they are well known because they are the exception. But the vast majority of successful american enterprises are started by an individual with an idea and the dedication to pursue that idea.
Forming a company takes vision. It takes dedication and it takes certainty that there is something there- and opportunity to add value that has not already been seen and seized by other entities.
This is why leaders who start companies are far more likely to success than friends who decide to "do a startup" and "manage by consensus."
If you don't have a cofounder already- you shouldn't be looking for one. Hire some employees.
But you're far from screwed-- simply looking at the history of startups in America and you'll see that single men with vision are most often the ones who succeed.
Joel is like one of those infamous Lieutenants in Vietnam-- all book learning and zero experience getting people killed-- usually to get fragged by one of their own. Since fragging is uncommon in cubicle farms, Joel still lives.
A small tightly focused and really motivated team will out compete a group of employees funded by VC everytime.
And, if you look at it from the perspective of the opportunity value-- you will get more massive going it alone than going with VCs. Both because of the massive dilution of venture capital, and because of the significantly decreased chances of success.
Scaling should never be a problem-- you should outsource everyting but engineering and scalability should be the problem of your hosting provider. (or manufacturer, etc.) At the time that you really need to scale you will have plenty of money to pay for it. And because you outsourced this (something that is often harder to do in a VC backed business) you have people who are more capable working on it.
Course, I'm presuming we're talking about businesses that make something people want to pay for.
If you're building a youtube like business, then VC is the onyl way to go-- you're just gambling on some mebulous chance of profitability or getting acquired for having massive pageviews... and when gambling its always better to do so with someone elses money.
Sounds like you believe you need to spend it all before you make anything.. I think you've got it backwards. If someone wants to charge you $10k a month, find their competition and get the same service from them at a higher unit rate but paid for out of actual usage. Negotiate.
"Not to mention the market might be radically different by the time you even launch."
you're making an erronous assumption-- the VC treadmill has you betting the farm on the state of the market at some point in the future.
Building a viable business means that you are less dependant on the state of the market, not more.
One company I worked for was profitably doing consulting when we took VC funding. They insisted that we close that business to "focus" on the product... the result was, when all was said and done th company ended up selling for less than the consultancy was worth and the founders got a fraction of it -- because the VC business took most of the money due to their preferences. Venture Capital killed that business. Now a decade later, the market that company was in is a huge multi-billion dollar market... if they'd kept the consulting business and kept at it for another three years-- they would have been in it when it finally did take off.
Bottom line-- you can't be frugal when taking venture capital. Keeping a viable consultancy was percieved as a threat to the business-- even though it would have allowed us to hire more engineers on the commercial side. ITs almost as if VCs want you completely dependant on further funding from them. (Or they are just totaly incompetant at business.)
YC, Angel, Friends and Family, maybe even a couple million (to last several years)... but not VC funding.
VC funding is for people who would like to spend four years working like a dog for a %1 chance to get $10M in payoff...than the alternative of four years working like a dog for a %400 chance of getting a $1 million payoff.
The value of these two opprotunities are $100k for the VC route and $4M for the independant route.
But, like contestants on "Deal or no Deal" they don't do math and they go for the big score instead of the sure thing. You only hear about the people who get the big score- they go to conferences and they start investment funds. but for each of them there are 100 or mor equally talented people who went the VC route and are now employees somewhere because the VC killed their company.
The big difference is when you get on the VC treadmill, as pointed out, the only options viable to the VC is IPO and acquisition... and you'll be diluted all to hell. Worse, you'll hire too many people spend too much money and lower your chances of success.... because you're spending that money before you know it works. And you pay in equity for the priviledge of lowering your chances.
On the other hand, if you angel fund, you can quickly determine whether the business is viable, and if it isn't, you only spend a few months on it before trying another idea. In four years you should be able to try 16 businesses .... but likely you'll make $1M per year doing it. And at the end of it, if you've failed and you've got a business that's throwing off $400,000 in cash for you for profit (your share) you could stop working and live on that $400k. The 99 out of 100 times that your VC backed venture fails, you've got nothing to show for it. So, even if you "Fail" and have a business worth $4-$8M, you still win.
One of the commentators had an excellent and underrated point: "And thats the rub. Every lawyer, finance, and admin guy you run into at a VC firm will think they know your idea better than you, and worse yet, better than your intended customer.
Sure, they will give you funding, but along with that funding comes their screwed up way of thinking that no matter how much you, because they have money, or an mba, or a bar number, that qualifies them to tell you how much more they know than you."
Never met anyone associated with a VC (including Seqoia) who wasn't dumb money but thought they were smart money. (except Guy Kawasaki, who is smart enough to realize he's dumb. If you think you're smart, you aren't, if you think you're dumb, you're smart.)
I think its a very childish response to accuce me of being angry or jealous because I have a different opinion, tht is strongly held.
But its simply dishonest to put words in my mouth like that.
I have not made claims to be great, and I have not said my methods are superior to facebook... nor have I said anything derogatory about YC, especially when YC funds college age students-- I think the college age generation are the perfect candidates for the YC program.
Its really quite sad that you have demonstrated exactly the errors I am pointing out in facebook in your defense of them-- you have reacted in a narrow minded and judgemental way-- attacking me personally, rather than the position I have taken. This kind of political correctness is exactly what Facebook is doing when they don't hire people based on skills, but based on other factors such as age and, well, ideology.
Further irony comes from you attacking my skills when I have not relied on argument based on my "superior" skills, and further, what skills do you have? Not that they would be relevant-- but if you had sufficient skill you should be able to make a counter argument based on the state of the art and advanced techniques. In short, by attacking me, you show you do not understand the technology well enough to make a technological argument, ironic since technical skill is where you criticized me.
Even saying I'm jealous is a childish pathetic personal attack on my skills.
Anyway, for the past 20 days I've been off doing... and you'll notice I have no posts here in that time period. Meanwhile you have made 28 comments here in just the last 3 days.
How's your startup going?
What this has become-- since you have clearly stated that you judge applications based on how people act here-- is an ideological garden where people are judged based on how closely it is percieved that their statements are in line with the Party Line.
For instance, there are many ways you can fund a startup- credit cards or house equity being two that are more viable now that you don't need to raise millions. But because its percieved by your fans that "Venture Capital" is the only way to go, any suggestions to the contrary are met with derision. This is ironic given that you yourself have argued for venture capital being less important now days.
So, even your ideas are considered "trolling" in this forum ... because ideological purity is a good that you have put forth explicitly.
As for me, since you think I'm a troll, you should delete my account. I'll move along... its no fun when for every 4-5 people you engage in good conversation you get 3-4 people who attack you personally, and the site owner is one of them!
Look at the vitreol I've gotten for pointing out that in fact the winds have changed... people don't want to believe it.
10 years from now, when the US is no longer the dominant place for innovation--- the major growth in innovation elsewhere will have already occured. One would have missed the trend if they waited.
Plus, small startups should not waste money using the old models- they are the ones who can least afford it.
The really cool startups-- right now-- are relocating to former eastern republics. They are saving a lot of money and leveraging the fact that geography does not matter.
But all you'll here in this forum is "You must move to the bay area". Seattle-- not acceptable, even though its the third best place in the US for funding...
Its a totally narrow minded viewpoint, and the winds shifted. The winds shifted in 2000.
If I told you I was Tony Robbins and I was a multi-millionaire., would that sway you? I doubt it because, despite being someone who has been successful at business, he's likely not going to garner respect.
You should evaluated arguments-- technological or not-- on their logic, reason and scientific basis. And this is why those are the only kind of arguments I will make.
The counter arguments, however, tend to be naming "Authorities"... rathre than making logical or reasoned arguments.
You are still trying to make a fallacious argument from authority, and are attempting to insult me for not doing the same?
I'm making my points, and if you will notice, I'm generally rather generous with the person I'm disagreeing with. Unfortunately this is not sufficient, as simply having a differnet opinion is the problem here, and the result is that people make insinuations on the persons character because they have a differnet opinion-- as I called you on and as you have not yet withdrawn, despite being more conciliatory in this message.
Or put another way- the problem is people are offended at someone having a differnet opinion.
This is not an "emotionally charged" analogy, it is exatly correct. This is probably not apparent because people tend to ignore the cost of VC money.
"And judging by the quality of your writing, age is not what sets you apart."
Seems all you got is insults... great argument technique.
YC doesn't have liquidation preferences, and if it did, the multiple of $20k would be so small its not really relevant in this discussion.
Like Zuckerman saying only hire young people-- some of the people he'll exclude that way would have been an asset to the company, and some of the people he will hire because of that policy are going to be a drag.
I'm trying to make another point-- its very arrogant to assume that because this is the situation now, that this will always be the situation.
America used to be the manufacturer that supplied the world. That is no longer the case, and even 30 years ago if someone said that we would have a 100 billion dollar trade deficit with china come 2010, virtually nobody would believe you. IF a major public figure said that, then the newspapers would be full of editorials smugly decrying his foolishness.
I think its in error to assume that there is something fundamental about the US (and especially about one particular US city) that gives it superiority in the area of innovation. Yes, culture helps, but the whole of america has the american culture, not just san francisco.
And many countries in the world are starting to get capitalism-- this is no longer the exclusive domain of america.
So, I submit that the future great centers of technological boom are going to be in asia, possibly the middle east, and possible former eastern europe.
The end of the Tang dynasty in america happened about 20 years ago, and we are well into the Liao-- it takes time for the effect to be readily apparent to everyone.
But the cultural revolution has happened and we lost. America is descendant. (China may not be ascendant in anything other than manufacturing- they are still a strong regime and their government has not losened its grip yet.)
Increasingly, innovation will happen outside of the US. This is already the case with consumer electronics.
Software is only 10 or 20 years away.
Thus, either you are a hypocrite, or I am being asked to stop because I have an opinion that (apparently) disagrees with yours.
Further irony comes in the fact that you made this comment in response to me pointing out that the discussion was beind directed towards becoming personal by the person who responded to me, and stating that I wasn't going to go that direction.
Finally, both calling me a troll or stating I'm a "very angry person" are personal attacks.
Communities tend to follow the lead of their ostensible leader-- and you have just communicated to everyone that personal attacks are OK.
Ironically, I don't find much that I dislike about Paul Graham. But the cult of PG is another matter.
If you read my posts you will find that I always provide an alternative solution and generally argue for why it is a better solution. Dont' get VC funding- you don't need it, you can lease the infrastrcture you need, and use open source tools. I even quoted PG saying essentialyl the same thing-- yet this position is the number one thing that people argue with me about here.
I do find it curious that the primary argument made against me is the fallacy of authority: "But people who are clearly more experienced and successful than you seem to disagree."
I am not making any arguments based on my success, and you certainly don't know my level of success or lack of it. But you sure seem to think you do.
":and yet they seem to think YC is an amazing opportunity that they would have loved to have when starting out."
The thing that most makes this community cult-like is the constant reliance of repeated ideology. The third time you hear the same "Argument" you start to wonder if everyone isn't reading from the same textbook. (And this text book seems to be full of appeals to authority.)
And the worst thing is that there's an ideology here!
Why does it have to be combative? Why does anyone who provies a different opinion need to be attacked or percieved as attacking?
You start off by impunging my motives... but I am more tame than Paul Graham is. Do you question the motives of his essays simply because he's not tame? Again, colored perception.
"clearly more experienced and successful than you"
You know, I think that's the core of it-- Paul had a mild success, and he's written a lot of opinionated articles. The cult of personality is therefore one that worships success... I haven't bragged about my success, I've argued without appeal to authority. But that carries less weight, doesn't it?
It really needs to be dissipated.
Its definately much worse than it was 10 years ago.
Companies are starting to get proud of the fact that they are incompetant at interviewing-- because they think someone "failing" their process means they have a high bar... but the reality is, they let in clueless people with trendy skills and exclued the people who had a clue.
And thene the clueless interview based on trends and the company becomes yahoo (or facebook- they are heading for a fall.)
What do I mean by clueless trendy people? I expect that if I interviewed at facebook, and told them in the interview that I thought unit tests were a waste of time, I wouldn't get hired.
The reality is, I know unit tests are a waste of time, and I know abetter way to develop software. But unit tests are the trend (a trend created by pointy haired idiot non-programmers, believe it or not) and now the clueless will exclude the superior based on this-- and be smug in doing so.
I guess this is the natural way of things-- popular music devolves from mozart to britney spears.
Making it personal in debate is never a good strategy... further, on multiple occassions you misconstrued or misrepresnted the points I was making... so I'm not going to respond to that either.
Let me ask you this- - you're buying a car. You're going to use this car to deliver papers and make some money delivering pizza on the side. You're going to build a little business here that's worth 10 times the value of the car after a year or two.
Do you go to the bank who gives you %100 of the purchase price of the car in exchange for %9 interest each year? Or do you go to the local loan shark who charges you ("to stay competitive, of course") %30-%40 of the value of the loan, plus-- if you decide to sell the car-- 4 times the value of the loan at liquidation?
YC says you go to the loan shark and pay %400 for your money.
Slashdot "Trolls" say "that's way too much"... and you think they are engaging in bad math?!?!
Ian Clarke invented freenet... the most successful peer-to-peer privacy network.
And whether his businesses have been successful or not (I don't know, but I know you don't) he's been more successful than the members of this community. He has far more users than reddit, for instance.
Its amazing that every disagreement or criticism of YC is met with the "you're a failure" or "you're jealous" or "you're bitter" response.
Never a response on the point.
This is what has me increasingly believing that YC is a cult of personality-- its adherents don't make arguments, they repreat mantra. Their motivation is not intellectual honesty-- but defense of their idol.
Please, prove me wrong!
These are the classic comebacks of kids. Is this community made up of college students? Is that the problem?