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1,298 karma · joined November 2, 2008
Email me at joe@inboundscore.com
http://www.businessinsider.com/top-100-google-advertisers-by...
That second link pre-dates Bing's launch, I believe. You'll see Yahoo and Ask.com in the top 15. Much of the top 20 are product, travel or local search engines.
Maybe. There have been a lot of innovations in the consumer Internet business that have enabled the successes of businesses like diapers.com...
1) Internet adoption rate is 2-3x higher now than it was in 1998. Companies like Pets.com weren't just building their own brands, but also educating everyday people about the Internet.
2) There were no self-serve distribution channels like SEM or affiliate marketings that had any scale. Google was founded the same year as Pets.com and Adwords didn't surface for a few years after that. The only ads you could buy were CPM banners, integrated sponsorship deals (AOL bankrupted several companies with these types of deals) and offline media like TV commercials. Additionally, media buys were a lot less accountable. I was selling online ads at this time and some of my clients weren't even tracking registrations by source let alone sales on their website.
3) Businesses like Amazon and Zappos have helped create a completely different model for logistics that simply didn't exist 10-12 years ago. There is a reason that Pets.com had to spend tens to hundreds of millions on infrastructure for warehouses, etc.
"Remember that an equity grant is typically for the next 4 years of work (hence 4 years of vesting)."
It is obviously a total bummer that his dad lost $100k in the process. But, he tries to make it sound like he was tricked out of his pension or something. This was a very high risk investment where the most likely outcome would be a total loss.
Good luck with your startup. I hope everything works out for the best.
Thats a pretty big leap from my initial suggestion of asking one of your existing LinkedIn contacts to introduce you to one of their existing LinkedIn contacts that may be able to help you out.
You've got some good food for thought and advice from others throughout this thread. I'd suggest taking a time out, coming back and reading through the 30ish posts here with as objective an eye as possible.
The good news is that entrepreneurs typically really like helping out other entrepreneurs with advice and connections when they can. But, entrepreneurs also tend to very, very busy running their startups. So, leaving it up to someone else to take the initiative in order to secure the outcome you want may not be the best course of action.
I just looked up your LinkedIn profile and you have a contact that is connected to 5 entrepreneurs that I happen to also know who have raised seed funding. Have you tried reaching out to that person to get intros to those entrepreneurs (4 of which have raised money in the last 3-6 months)?
We were lucky enough to be accepted to YC a couple batches ago. It took us about 2 months of constant pitching and investor wrangling to close our seed round after demo day.
It is great that the original post brought you some initial visibility. It is not clear to me that you have done much to proactively capitalize on that.
YC was/is certainly an amazing experience for us.
"The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.52 billion in the third quarter of 2010. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website..."
So, primarily adsense but also likely includes the other methods of distribution you referenced.
I know it seems like a big gamble room your current vantage point, but it really isn't. You are an entrepreneurial developer in a tech economy where that skill set is at a premium (at least in startup hubs like the bay area). It seems like the worst case scenario is that you end up getting a job at another startup if your projects don't work out.
Good luck!
There is a YC event in NYC next week, in fact: http://alexisohanian.com/ask-y-combinator-anything-yc-qa-ses...
If I believed that there was a longer term value to the equity that could make up for the shortfall in cash compensation, maybe.
But, the specific case you've laid out leads me to believe that there isn't significant growth potential in this business. Am I interpreting that wrong?
That is the point. If your employee leaves before they have vested their shares they don't get to keep them.
>but it's still very likely a company death, if someone with 50% of the company leaves.
No, not necessarily. Founders of successful companies leave after several years of service all the time (happened recently with Xobni, for example).
>Do you have a link where I can read up on what profit sharing means and how that differs from equity? I do not know these things.
There are lots of resources if you just do a quick Google search. The basic idea is that your employees would get a % of profits you generate in a given year rather than equity.
>If you could get a job on the open market that paid $130K in salary and benefits, would you instead work for some crazy guy for $30K cash plus another twenty grand in equity?
No. Not because I wouldn't want to work for equity (I have done that before) but because there doesn't be a clear path to liquidity of those options. You've described this as a lifestyle business which typical means no imminent source of liquidity for shareholders. This is why I suggested exploring a profit sharing structure.
If you are saying that this is a business that can't support livable compensation for employees for the foreseeable future, then I think there are bigger issues though.
Sorry if I am not fully understanding what you are getting at.
It is increasingly common for founders to have vesting schedules to prevent this exact issue. If the founders have a four year vesting schedule and one founder bails after year one, then they forfeit the un-vested equity.
>Now, each time they go out for another round of funding, their old investors are diluted by the new shares created to sell to new investors.
Yes and no. It depends on the valuation. A previous investor's absolute ownership percentage may decrease in subsequent funding rounds. But, if the valuation increase outpaces the rate of dilution the previous investor winds up ahead. For example, Peter Thiel's ownership in Facebook has been diluted in subsequent funding rounds but the value of his investment has increased many times over based off of the increased valuations.
>My thought is that every 6-12 months or so, we simulate another round of funding.
This sounds overly complicated. Rather than the equity gymnastics, why not implement a profit sharing program for your employees? This seems more appropriate anyway since it sounds like you are focused on running this as a lifestyle business for the long haul.
If you are set on providing equity, then why not just create a standard employee option pool (i.e. carve out 10-20% of shares outstanding to allocate employees)? With four year vesting you take very little risk.
That said, you can calculate a rough monthly burn rate by adding together the estimated monthly salaries of the employees you referenced in your post and increase that number by 130-150%. This roughly accounts for all the operating expenses. If you need guidance on salaries try checking out resources like salary.com.
You'd probably want at least 18 months of cash in the bank. This gives you a year to execute and six months to focus on sustainable profitability and/or additional later stage financing.
So, monthly burn rate x target number of months of cash in the bank is your target financing amount.
Hope this helps.