
Is Y Combinator right for your startup? - bhb
http://blog.pretheory.com/arch/000433.php
======
pg
Maybe it's time I finally explained the math of taking investment. You should
give up n% of your company iff (not a typo) what you'll get in return for it
will increase the value of the remaining (100 - n)% enough to put you net
ahead.

So in the case of YC, you should trade us 6% of your co if you think that the
money plus whatever else we add will increase your average outcome by 7%. (.94
x 1.07 > 1) Do we increase the average outcome of the startups we fund by 7%?
I think few would say we didn't. I'd guess we at least double the outcome for
the average startup.

~~~
onebeerdave
I wish TechCrunch commenters would read this.

~~~
staunch
The problem is that most people buy into "the pie fallacy", as PG called it.
An amazing number of people would honestly rather have 50% of $1 million than
10% of $100 million.

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Alex3917
All of the potential YC startups should get together and unionize to force
higher valuations and shorter working hours.

/irony

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danielha
The downsides to something like this is absolutely context-dependent. But the
reasons given in that post just aren't convincing. Going to Cambridge is not a
"disruption" given the milestone it represents in your startup's progress.
When you're a new founder with little to go in regards to beginning a company,
it's the ideal scenario. For my goals, I could not think of a better use of
time and energy than being involved in YC's program and working on my startup
full-time.

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Harj
putting a poor social scene as a con. amusing. that's a con if you're deciding
where to go on vacation. not whether to accept startup funding from yc.

~~~
jamiequint
I agree, if you seriously worry about a poor social life for 3 months or your
gf can't understand the opportunity the situation presents, its either time to
get more dedication or a new gf.

~~~
Leonidas
I admire your friend's dedication to his gf and you being a great friend in
understanding. However, you have to consider this: you're just starting out
now..once your startup is in its later phases, you will be MUCH busier. If the
gf can't understand now, would she understand later?

The gf 'issue' shouldn't be an 'issue' at all

~~~
bhb
Yeah, the social stuff and the girlfriend are not really top issues, but still
things we thought about. In fairness, my co-founder told me flat out that the
gf thing was not a huge issue for him, simply because, like you said, it's
going to be rough for them either way, and she understands we need to make
this work.

As for the social aspect, I'll admit it - I'd like to be able to occasionally
have some fun outside work. Do I think we're going to be partying every night
(either in Cambridge or Denver)? Hell, no. Would I like to have some good
friends around? Well, yeah. Is not having a group of friends available a con?
Yeah, it is. My life is both work and play. I have no illusions about the
ratio of those two while creating a startup, but I'd still like my limited
play time to be of high quality.

Plus, It's very unlikely it would be for only three months - if it were just
that, I'd wouldn't worry about it. But the reality is that if we move to
Cambridge, I we wouldn't be leaving unless we had a good reason.

In any case, thanks for the feedback...

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brett
I understand the timing thing. The Y Combinator schedule is rigid, it's not
always going to fit your situation perfectly. After that though, the rest of
the downsides listed just seem like quibbling compared to the list of upsides.

~~~
wastedbrains
I am one of the Pretheory Founders, and I agree the downsides are not that
strong. This is why we generally think Y Combinator is still a really good
move for us. Since we aren't sure if it is as large of benefit to our company
as it can be to others, we wanted to think about it, and start a discussion.
Seeing if any other founders would add potential positive or negative issues
that we haven't been evaluating.

I guess the biggest point is the benefits are far more than the money. The
advice is probably priceless, but if you feel your on a pretty good track with
momentum, is it worth the change up? Possibly having to move away from
established local relationships (banks, lawyers, advisers)...

Is there some angles we are missing when evaluating the decision?

~~~
brett
No, it's not anything you're missing, just your conclusion from the data
given. In my opinion, if we're talking about value here, the negatives listed
in that blog entry just don't stack up against the value add YC brings (e.g.,
as mentioned, connections, exposure, advice...).

That's not to say that YC is right for you. There are plenty of potential
reasons that YC is not a good fit and obviously plenty of ways to succeed
without them. Some of the negative points you bring up have a lot of bearing
on your lives as founders and probably should be considered. I'm just
skeptical that, were you accepted into the Summer Founders Program tomorrow,
it would be a sound business decision to turn YC down. Then again, maybe there
is something you know that I don't...

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danielha
It seems we're all coming to the same conclusion here:

If the social scene, the necessity of travel, and girlfriends is even thought
of as issues, perhaps this funding program really is _not_ for you. Perhaps,
even, it may prompt you to reconsider if starting a company at this point is
right for you. Pursuing a startup requires an extraordinary amount of
dedication and focus; the issues presented are not indicative of that.

------
paul
If Ben is serious about making his startup a success, then he should do his
best to get into YC. The "downsides" he lists are all excuses that suggest
he's not really that committed and isn't willing to go "all in".

It's also important to understand that the 6% that goes to YC will be diluted
by subsequent rounds of investment, and could easily end up as 1%-2% by the
time they cash out.

~~~
bhb
I hope I didn't come across as not willing to go "all in." I certainly didn't
intend that. My intent was to outline the issues we considered, with the hope
that others might find it useful and even suggest variables we hadn't
considered.

At this point, I really couldn't back out if this startup even if I wanted to
(and I have no desire to): I quit my job, spent a ton of money to move, and
told everyone I know about my plans. As Dharmesh Shah of onstartups would say,
I'm emotionally committed, which is more significant than my financial
commitment (He has a good post about this at
<http://onstartups.com/home/tabid/3339/bid/1204/Startup-Founders-The-Involved-
vs-The-Committed.aspx> ).

As dfranke pointed out, we have more options than only accepting YC funding or
not accepting. The real question is whether it makes more sense for us to keep
going with money we have in Denver and find angel funding on our own, or move
and take YC funding in a few months.

~~~
paul
How many angels and VCs do you personally know? How many other startup
founders do you regularly meet with there in Denver?

People who already have a lot of startup connections and experience probably
don't need YC, but I don't get the impression that you are one of those
people.

~~~
bhb
That's a good point. We don't have a strong network of angels, VCs, and other
founders here in Denver. That's definitely a huge plus of the YC experience. I
do wonder if we could build a network that would be good enough in the next
few months, since we have a few good contacts and Denver/Boulder is pretty
good for that type of stuff (admittedly, not as good as Cambridge or the Bay
Area).

Again, not knocking YC, just weighing our options.

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dawie
It sounds like you guys are already on your way. I guess in 6 month's time you
can join YC if you need. I have always wondered if you could join YC at a
later stage. When your company is already up and running

~~~
jl
Yes, a bunch of startups in the winter funding cycle were already up and
running.

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domp
I found the girlfriend and location issues to be the biggest challenge for
submitting. Luckily my partners gf lives close, I can't score a girl and we
both live in Massachusetts. Works out perfect!

