answerly

Banking:

- We use silicon valley bank. They have a pretty horrendous online banking system (essentially a bunch of third party services cobbled together- we have like 4 different sets of login credentials). But, their bill pay system is good. They also are extremely responsive. We have a real account manager to help us with issues. They were also able to make intros to a number of financial/HR vendors that were used to working with startups, which was really helpful.

HR:

- Our lawyer provided all the boiler-plate hiring docs.

- Paychex (SVB intro) handles payroll processing, withholdings, etc for like $10 per employee per month.

- Melita Group (SVB intro) handles benefits administration. We only have basic medical coverage now, but they have the capacity to provide all sorts of enhanced benefits if we need them.

Expense Tracking:

- We use InDinero to track all of our expenses by category each month. They do a better job of categorizing expenses than the SVB system does and it saves us some accounting time.

Frogmetrics (YC S08) received investment from Founders Fund. Not sure if there are other examples.

The ongoing camaraderie and commiseration with batchmates is definitely one of the most underrated benefits of YC. Nice post, Daniel.

The answer probably depends on how much money you are trying to raise and from what type of investors.

If you need thousands to tens of thousands of dollars and have a rich uncle then the answer is probably yes.

If you need hundreds of thousands to millions of dollars and you want to raise from professional startup investors then the answer is probably no (Chris Sacca from Lowercase Capital says something like, "I invest in URLs not business plans").

There are exceptions of course.

Communication around a location/event is an existing behavior. People do this all the time at conferences, meetups, sporting events etc by using a Twitter hashtag, for example.

This seems like the natural evolution of that behavior.

There are companies that are off the record every in pretty much every YC batch. Attendees are asked to keep those companies "off the record".

YC doesn't require any NDA that I am aware of. I'd expect that the risk of being excluded from future demo day events if you disclosed off the record companies would be a better deterrent than an NDA in this case.

I think the two are pretty complimentary. I am aware of several YC companies that have used Angel List to help fill out the round that they raise following YC.

We were in the winter 2010 batch and I can't say enough good things about the people (both the YC team and the YC alumni network) and the program in general.

>But... this is really getting old. It seems like EVERY SINGLE YC startup is being featured on Techcrunch.

Being a YC funded company is notable in the same way that being funded by any top tier angel or VC would be. It is the same reason why every publicly launched company invested in by Chris Sacca, Jeff Clavier, Ron Conway, Dave McClure, etc is covered on TechCrunch and other tech blogs. TC also routinely covers companies coming out of Techstars and other well known early stage investment programs.

It may seem like YC gets more coverage, but I think it is roughly proportional to the number of companies that YC funds. YC has funded something like 60 companies in 2010.

>Why would someone pay for salaries and servers and then go to a VC later?

We did this exactly. The investment gave us capital to out-pace our organic growth once we had shown that the business had potential at a small scale.

There were two great benefits:

1) It forced us top figure out how to generate revenue from our business very early on.

2) Our valuation ended up being much higher than it would have been earlier in the company's lifecycle.

A pre-money valuation of 1m or 2m would imply that you are selling 33% or 20% of your company respectively in an equity financing.

At the level of investment you are talking about you may want to consider convertible debt rather than equity. Here is a good comparison of the two:

http://venturehacks.com/articles/debt-or-equity

Regarding control, things like board seats are negotiable and will largely depend on the type of investors you raise money from. Lots more on that topic here:

http://venturehacks.com/archives#board-of-directors

It sounds like you don't have any customers or revenue at this point. If you can get traction on one or both fronts before approaching investors you will likely increase both your chances of securing investment and your valuation.

Nielsen publishes a fair amount of ecommerce conversion data. For example: http://blog.nielsen.com/nielsenwire/consumer/nov-e-commerce-...

I'd suggest digging around in the archives there to see if you can find some newer stats.

Your verticals are pretty specific, so it may be tough to get exact numbers for those categories. Perhaps you can find data for verticals with similar average order sizes as the product categories you are targeting. That wouldn't be perfect but would probably be directionally correct.

Good luck!

It seems like a valuable service and has a built in revenue model in that users could pay a fee based on the actual savings that they realize. There are two questions/issues that come to mind:

1) How wold the negotiations be facilitated? My guess is that this would have to be actual human-to-human contact, which seems expensive. One way to keep the costs down may be to develop a filtering system that only accepts users with bills that have a high likelihood of being eligible for some discount. That way your resources would only be spent on the users most likely to generate revenue for you.

2) Do service providers like cell phone companies discuss account details with a third party who is not the account holder? It seems like the type of thing that a big company wouldn't want to allow for any number of reasons (i.e. privacy concerns, preventing an "agent" from negotiating on behalf of the user).

Some aspects of your idea are topically similar to BillShrink.com although they aren't doing any negotiating on behalf of individual users. They are doing quite well.

If you have an average cost of acquisition through other paid media channels then that may be a good starting point.

One good exercise is to try and determine the current value of the partner's inventory (emails, placement in publications, etc) that will be used to promote the co-brand. Your goal should be to structure the deal in such a way that you can meet or exceed the current value of that inventory for the partner and still be economically viable for you.

Also, you may want to think about developing a tiered structure that gives monetary incentive to the partner if they deliver higher volumes of leads/sales.

Hope this is helpful.

Its sounds like you already have a list of prospects, which is great. I'd take a day or two to determine if you can secure warm introductions from friends, acquaintances, advisors, etc into any of these target companies (LinkedIn is a stelar resource for finding these types of intros). If you can, then you should have a more receptive target which should help you gain some confidence in your own abilities prior to jumping right into the "cold calls".

Another technique that I've used with some success is to determine the target individual is within a company and try to find their preferred communication channel. For example, I've gotten some really great contacts by connecting with people first through Twitter or their blogs. I think this can sometimes cut through the noise of the 100 unsolicited calls they get in a day.

You may also want to try sorting your target list by those you think have the most strategic importance. Then, start calling from the bottom of that list (i.e. the folks who you believe have the least strategic importance) and work your way up. This will give you the opportunity to work out your pitch/confidence with some lower priority targets. I've seen some startups try to pitch their most important potential partners right out of the gate and have a bad experience because they haven't had a chance to refine their pitch yet.

As far as the message, being straight forward about what you want out of a meeting is definitely the way to go. Make sure that you also figure out what the benefit is for the potential target. For example, can you offer them some discount or free trial of your product in exchange for some feedback at this early stage. The actual benefit you can provide to them will obviously vary greatly depending on the type of product you are selling and the type of company you are selling to.

Hope this is helpful- good luck!

My best guess:

1)They negotiate free happy hour terms with the bar. The bar is probably happy to provide an hour of free drinks (its a promotional cost) in exchange for getting X number of drinkers in the door.

2) The arbitrage is on what % of the free drinkers will convert to paid drinkers. Notice that only well drinks and Bud is included in the free drink definition. So everything else is an upsell revenue opportunity for the bar. I am assuming the site gets some cut of the paid drinks (high margin product).

I think the easiest way to be successful in sales is to align yourself with a product/service/solution that you believe in and that provides value to the people who pay for it. This applies whether you are talking about a traditional sales role or more generally the idea of being better at "salesmanship".

Yelp paid contributors to get the ball rolling with their community:

http://www.businessweek.com/technology/content/dec2006/tc200...

But it sounds like your service is less like Yelp and more like uservoice.com or getsatisfaction.com for the small business market.

I am not an attorney, but I have negotiated both sides of freelance software agreements in the past.

Has the company you will be working with hired any freelancers/contractors in the past? If so, they may have an agreement they've used in the past. Starting with their agreement may save you some time because it will usually already include the stuff that is important to them so you know all that upfront.

In the case that the company doesn't have a preferred agreement, here is a pretty straightforward work-for-hire agreement template that is well annotated and may be helpful:

www.jian.com/software/Contracts/Work-for-Hire-Website-Development.pdf

Things get more complicated if you actually want to retain IP rights (i.e. be able to sell the product you are building to other companies as you mention) since your contract will need to clearly lay out who owns what. I would definitely consider consulting an attorney if that is a route you would like to go down.

Here is the RIAA's position:

"Online piracy is the unauthorized uploading of a copyrighted sound recording and making it available to the public, or downloading a sound recording from an Internet site, even if the recording isn't resold. Online piracy can now also include certain uses of "streaming" technologies from the Internet. Because of the nature of the theft, the damage is not always easy to calculate but not hard to envision."

Source: http://www.riaa.com/physicalpiracy.php?content_selector=pira...

I used to run a big affiliate network and have about 10 years experience in lead generation.

Can't think of any great published resources off the top of my head, but here is some general advice:

1) Make contact with a real person at the networks you source your lead generation offers from (you mentioned network in your post, so I assume that is your plan). Many people just sign up for a commission junction, linkshare, etc. account and never actually talk or exchange emails with a real person. The benefit of contacting someone is that they can typically pay you more right out of the gate if you ask. Also, these network reps are used to seeing very low quality sites. So, if you have a high quality web app they will typically get excited about the opportunity to partner with you. This is obviously good for your revenue prospects. Bypassing the networks altogether and trying to go advertiser direct is even better, since you are cutting out the middle man in most cases. But, this isn't always possible with limited resources, etc.

2) Lead gen works best when it is heavily integrated and niche focused. Try to find offers that solve a problem related to why people use your web app in the first place.

3) Let the metrics be your guide. Test lots of different lead gen offers, offer placement in your app flow etc.

Feel free to contact me if you have any specific questions I can help out with. My email is in my profile.

It might make sense to be open with the client about your motives and try to get them to help you determine what type of information related to the relationship they are comfortable with you sharing with potential investors. You run the risk that they tell you not to disclose anything at all, but knowing that upfront is probably better than disclosing too much without their knowledge/approval.

Just terrible news and so unfortunate that it has to play out this way. I can't imagine how difficult it must be to have to deal with a (seemingly) serious medical issue and have to justify every related move to the public.

Don't know much about this competition, but from a quick review it looks like a great opportunity for the right early stage startups/hackers. Only about 90 total entries with a week until the deadline, so seems like decent odds.

I have dealt with these type of folks before and DMCA threats mean very little to them. What hurts them is getting de-listed/penalized in search engines, particularly Google. I would suggest reporting to Google's web spam team. You can access the Google web spam form through Google webmaster tools.

The usefulness is arguable, but I wouldn't classify this as spam. Each app is slightly differentiated since its tied to a different name even though the functionality is essentially identical.

I hadn't really thought of this before, but I guess I am actually the fourth generation of entrepreneurs in my family. Great-grandparents on either side owned their own businesses and both grandpas were entrepreneurs in different fields. My dad was an attorney, but started his own firm with a co-founder right out of law school that he ran for over 30 years.

Plain text in the body of an email is my preference since it makes the content easily searchable in my inbox.

I prefer to use "Internet company" instead of startup as in:

"I run an Internet company that does XYZ for consumers/businesses".

Startup means something specific within the technology community that I think is potentially lost on those outside of it.

It will likely depend on the nature of the app, the targeted end user and the type of data that would be stored within the app.

Many businesses of all sizes are very comfortable with SaaS thanks to apps like Saleforce.com. Also, it sounds like you would prefer developing for the web anyway. So, that may be your answer right there.

Great idea- this is an excellent niche that will probably do quite well for you.

A few things:

1) It would be great if I could choose multiple models to compare right out of the gate versus having to navigate to each page. This may already be possible and I just missed it.

2) More review content would be helpful. Users really react well to reviews from both experts and other consumers. The links to the Amazon ratings are great, but it would be nice to have easy access to more. Also, seems like a great opportunity for you to layer over some proprietary content. This can be your own editorial content or the ability for users to post their own reviews or both. It will make the site seem more authoritative.

Good stuff!