
Exploding Offers Suck - lalwanivikas
http://blog.ycombinator.com/exploding-offers-suck
======
malgorithms
A dear friend and excellent negotiator told me that when he gets any kind of
short-term exploding offer, the first thing he does is verbally reject the
deadline. And the second thing he does is ignore the deadline and offer
feedback only after it has passed.

I've seen him employ this many times in practice and it has always worked out.
I don't want to be responsible for anyone losing a deal, but remember: when
someone offers you an exploding offer, it's because they really, really want
you to take it. If anything, it should be a sign there's (a) more time to be
had, and (b) plenty of room on the terms.

Any deadline claim has to be concrete and believable. The start of the YC
program is a good example.

~~~
tieTYT
> when someone offers you an exploding offer, it's because they really, really
> want you to take it.

Couldn't it be because they've got a lot on their plate and after a certain
period of time they want to free up their brain cycles and stop wondering if
you're going to accept that deal?

Couldn't it be that you're barely preferred and making the deadline shows them
that you're excited about the offer? Missing the deadline shows that you're
not excited and they'll know to go with the second best candidate?

FWIW, I'm relating this to exploding job offers as I have no direct VC
experience.

~~~
wycats
Whenever I've offered an exploding offer in the past, it's because I had
several candidates: an extremely strong candidate and several strong but
somewhat weaker candidates. In general, all of the candidates have a limited
timeframe to make a decision, and there's a risk of losing _all_ candidates if
I waited for an indefinite time on the strongest candidate.

In other words, candidates sometimes also need an answer within a certain
timeframe (often for very legitimate reasons; a job change can often be a
life-changing event) and that means that there are some real time-limits
across all of the candidates (in both directions).

~~~
edmccard
>Whenever I've offered an exploding offer in the past, it's because I had
several candidates: an extremely strong candidate and several strong but
somewhat weaker candidates.

If you had several candidates of equal ability, would you still use an
exploding offer? Otherwise, it seems to be less about "giving candidates an
answer within a certain timeframe" and more about putting pressure on the
candidate you really want.

>there's a risk of losing all candidates if I waited for an indefinite time on
the strongest candidate.

Is there nothing in between an exploding short-term offer and an indefinite
open-ended offer?

~~~
sliverstorm
_If you had several candidates of equal ability, would you still use an
exploding offer?_

I would think you would. If you have 10 candidates but only want to hire 1,
you can only issue one offer at a time regardless the fact that all 10 are
equally qualified. While the first candidate would love to have all the time
in the world to contemplate the offer, the employer and the other 9 candidates
who are waiting in line don't want that.

~~~
edmccard
>the other 9 candidates who are waiting in line don't want that [to wait for
the first candidate to contemplate the offer]

If any of them have other offers, they might appreciate _some_ extra time to
decide between them.

EDIT: Nevermind the previous bit--I was still thinking in the context of
multiple simultaneous offers, which I guess is not a thing.

And if not, then if the first choice turns it down, you make an exploding
offer to the second (to be fair to the next 8), and again to the third (to be
fair to the next 7), etc. Is there ever a situation where an exploding offer
is not in everyone's best interest?

~~~
morgante
> And if not, then if the first choice turns it down, you make an exploding
> offer to the second (to be fair to the next 8), and again to the third (to
> be fair to the next 7), etc. Is there ever a situation where an exploding
> offer is not in everyone's best interest?

The ideal scenario would be if it were socially acceptable to rescind
offers—thus making the exploding offer unnecessary. An employer could make
offers to everyone they're interested in, see who accepts, and then stay with
them (essentially, allow parallel analysis on both sides). Instead, candidates
can have multiple simultaneous offers while companies can only make offers
sequentially. Hence the exploding offers.

~~~
judk
A rescindable offer worse than a deadline, because the deadline is
unpredictable.

------
DanBlake
It is pretty clear to see whats going on:

It is without question that most people applying to incubators apply to a few
of them, in case they don't get into the (obviously) best one, YC.

Its my guess that some of the less exciting incubators give these exploding
term sheets to make the founder think:

"Damn, I got into Incubator X but I have to say yes in 48 hours. I wonder if I
will get accepted into YC also when answers go out in 2 weeks. Should I risk
walking away with nothing, or just take the offer I have now..."

Would not be surprised to see more incubators doing this anyways, with or
without exploding term sheets. They will likely just move up the dates their
sessions start (and the date you need to say yes by), to make sure its before
YC answers go out.

On the same hand, I am not sure what you expect other incubators to do. YC is
hands down the most prestigious incubator to get into and everyone knows that.
So, you have a bunch of other incubators that have to think scrappy to get
people into their programs. These guys don't just want YC's cast-offs, after
all.

If YC was to start doing rolling acceptances for a start date, it would solve
the issue of other people doing exploding term sheets. If I apply to YC today
for the winter batch and can interview and get a yes in a few weeks, then the
motivation for other incubators to do this behavior is gone.

YC partners need to realize they are the cause of other incubators giving out
exploding term sheets. I know YC likes to make a event of doing all the
interviews/acceptances on one day, but it would certainly be much more
entrepreneur friendly to have it be rolling admissions. The start dates for
sessions can still remain the same of course.

~~~
carbocation
> These guys dont just want YC's cast-offs, after all.

That is thoughtfully provocative. I have literally zero evidence to go from,
but I suspect that Y Combinator is like Harvard or Yale: they could get rid of
the group that they actually admit and go for the next tier, then achieve
similar outcomes. (In other words: there are so many strong applicants that
they can't take them all.)

This is just to say that even taking YC's cast-offs could be perfectly
acceptable. YC is dominant for now, but it's not hard to imagine a world in
which there are a few accelerators which are true YC peers (just like Harvard,
Yale, Princeton, and Stanford are variously preferred by different people with
real differences in preference).

~~~
DanBlake
Im sure a ton of the companies who apply to YC and dont get in are still Grade
A. But you have to trust YC knows what they are doing, and the A+++ companies
will be picked over before they hit second or third tier.

You have to remember that investing in companies is a lottery game. Most
angels/vc's profits are made on that 1 in a million company with a 1000x
return.

If YC wants access to truly the best companies, they need to institute a
rolling admissions. Otherwise, these scrappy second tier incubators will get
lucky a few times when a nervous founder takes a bird in the hand over two in
the bush. The policy only hurts YC itself.

~~~
mikedmiked
> 1 in a million company with a 1000x return

Sounds like a terrible expected ROI ;)

~~~
kyteland
Not if you can selectively winnow through and take the 100 best. Then it's a
guaranteed home run.

------
nihaar
When my co-founders and I were applying to accelerators in 2008, we had been
accepted into a Philadelphia based accelerator called DreamIt shortly before
our YC interviews. Not knowing if we would get into YC, we accepted with
DreamIt as it was an exploding offer. A few weeks later we found that we got
accepted by YC. After deliberating it for sometime, we went back to the
DreamIt team and told them that we wished to rescind our acceptance. This
started a shitstorm with the DreamIt team as they seemed to take this very
personally. It was the first year of doing the accelerator and they went as
far as threatening to take legal action. Not knowing what to do, we turned to
PG and Jessica for help, a bit hesitantly, as we were afraid of what they
would say. PG expressed his extreme disappointment with how DreamIt had
reacted to this and was supportive of our situation. He send them an email
telling them to back off and that this was not an acceptable way to be
treating founders.

Just one anecdote out of many of how YC has gone to many lengths to protect
founders.

Since that experience, I've realized that it really doesn't do accelerators
any good to introduce these conditions in their funding offers. It creates a
bad reputation amongst founders in the increasingly competitive field of
accelerators. And founders ultimately need to pick based on what they think
will have the most impact to their business. Compete on benefits you can offer
to founders, not legalese.

~~~
lquist
So basically you made an agreement with one set of investors and then went
back on your word because another, "better" set of investors wanted to put
money in? Maybe it's just me, but this doesn't reflect that well on you.

~~~
compare
The effectiveness of the relationship between investors and startups in SV is
built on upon being upstanding and not being overly manipulative.
Founder/Investor agreements that are born from the manipulation of
unexperienced founders always should be EXPECTED to turn out badly.

There's a child-like expectation that once the deal is signed or agreement is
made that it's over. It never is, that's just the beginning. If you're
expecting that everything is finalized as soon as an agreement is made,
regardless of the conditions, then you're simply bad at business and taking
risks that you haven't yet realized.

(Of course this isn't true in Europe. They love taking contracts extremely
literally, and their economies suffer enormously for it.)

------
seats
I'm an MD for Techstars and I completely agree. This is the approach we've
always taken for the programs that I've run, (Techstars Cloud and the Austin
TS program).

In several cases, just as a consequence of the calendar, the timing of when
we've given offers out can create tension for a company, particularly if it
lands in between the YC interview notification and the actual YC interview.
When it's come up in the past I've aways encouraged founders to notify YC and
see if they can either take the interview early or if our timeline permits, to
let them take their YC interview knowing that they have a standing offer from
me regardless.

I've had some people mention to me that this is merely bolstering these
companies' applications to YC, but I don't view it that way and regardless of
which program they end up in, it's the right thing to do imo. It's actually
worked out quite well and I'm happy with the companies that chose Techstars in
those scenarios over YC, and also completely happy for the companies that
chose YC.

~~~
zaidf
I went through YC in '07\. But prior to getting into YC, I got into Techstars'
very first class. David was a total class act in letting me go through the YC
interview process before making a decision and completely understanding when I
decided to go with YC. Although I went with YC(and would do so again), that
one experience left a positive impression in my mind of TS.

------
ivankirigin
Is this a change for YC? YC previously required getting an answer the day
you're accepted because "you have all the information". So this is an update
to allow people time to decide, right?

I always found the justification of having all the information a bit self
centered. Founders have all the information... about YC, but not about other
options.

That said, as a YC alum, I think you should almost certainly say yes if
accepted.

~~~
sama
only in the early years of YC did we require an answer right away.

as much time as the founders want has been the unofficial policy for awhile,
but i thought it was time to share it.

~~~
diminish
I think it's a good opportunity for YC to improve the acceptance process. Why
don't you review the applications in a FIFO basis and give an immediate green
light to invitations? If they are ready for an interview why not have weekly
interviews till the deadline? Clearly the waiting isn't founder-friendly
neither..

~~~
jacquesm
At a guess because that would eliminate the largest advantage the classes
system gives: batch acceptance gives YC the opportunity to evaluate all the
potentials against the backdrop of every other entry. If they start accepting
along the line then they're going to disadvantage themselves because there is
only a limited number of slots for interviews. So by sorting them in
decreasing order they operate more efficiently.

------
calpaterson
Cool change of policy. Brian Chesky says in this video that Y Combinator gave
AirBNB an exploding offer back in 2009:

[http://youtu.be/6yPfxcqEXhE?t=53m6s](http://youtu.be/6yPfxcqEXhE?t=53m6s)

~~~
sanjayparekh
When I was reading this I thought to myself "wait, didn't YC have exploding
offers before"? Glad you dug this up. It was widely known back then that PG
viewed it as a "intelligence test" if you didn't accept on the spot. If you
didn't, he didn't want you. So I guess now the tide has turned.

That all said, I'm very much against exploding offers. The person offering the
deal may have a reason to do so but you should resist the urge to rush to a
decision.

~~~
geebee
Here's the write up from the pg's essay site.

[http://www.paulgraham.com/frinterview.html](http://www.paulgraham.com/frinterview.html)

~~~
dmoney
The relevant bit:

 _F|R: I read that when you call Y Combinator winners, the founders have only
five minutes to accept. ( "If people turn us down," he says, "as far as we're
concerned they've failed an IQ test.") Have startups turned you down? Are
there any that have turned Y Combinator down and still gone on to succeed with
a liquidity event?

Graham: You're confusing two separate things. The reason people are supposed
to decide quickly whether or not to accept is that they already know
everything except the percent we'll ask for. They've already seen the deal
terms, and they already know as much as they're going to know about YC before
actually working with us. So they should already know when we call what
percentage they'd be ok with. Since all they have to do is subtract one
integer from another, five minutes should be enough.

The "IQ test" quote refers not to how fast they have to decide, but the amount
of equity we usually ask for. In the median case it's 6%. If we take 6%, we
have to improve a startup's outcome by 6.4% for them to end up net ahead.
That's a ridiculously low bar. So the IQ test is whether they grasp that.

There was one startup that turned us down because they received an acquisition
offer during the weekend when we did interviews. It was a pretty good offer.
I'd have taken it in their position, and they did. But other than that I don't
know of anyone who turned us down and went on to succeed. There have only been
about three others who turned us down. _

------
JOnAgain
It's a little different for a lot of other accelerators. YC takes batches of,
what? like 40 companies or so in a batch? Most other accelerators are smaller
with class sizes around 10. If YC is shooting for 40, and gets 37, it's maybe
not a huge deal (8% under target). You could even make 42 or 44 offers and
plan for a certain acceptance rate, end up with 44 probably isn't the end of
the world (110% capacity).

If another is shooting for 10 and gets 7, that's a 30% drop which is probably
enough to mess with the economics of the accelerator. Similarly, if they make
12 offers planning for a certain acceptance rate and end up with all 12,
they're at 120% capacity, which also might be enough to mess with the
economics.

I still think exploding offers suck, but YC is in a much stronger position to
be relaxed about them than others.

~~~
sroussey
I agree. Also, it is not like they house the people, which is more complicated
that office hours. In this case, they are talking a negative about YC and
spinning it into a positive.

------
chrisbennet
In general, if someone wants me to agree to something "big" immediately, I
figure that they don't want me to have time to consider it carefully.

If you don't want me to think about something, I figure you know I would
probably decide against your offer (if I _did_ think about it).

~~~
serve_yay
I agree, but exploding offers tend to explode sometime after "immediately".
i.e., the deadline can be enough time to think everything through and do your
due diligence. Still an exploding offer.

------
Grae
While I agree with the points made in this post, it's important to note that
the strategy of condemning offers with a short term plays in the favor of YC
and other established/larger accelerators and to the detriment of
newer/smaller accelerators.

As others have noted, there may be compelling reasons to require an offer be
accepted on a short timeline or not at all. In fact, as raised elsewhere in
this thread, YC itself used to require acceptance the same day the offer was
made.

From an entrepreneur's perspective, given two offers at equivalent valuations
and terms it's rational to take the offer at the more established accelerator
(e.g. YC) over a less well known one. It's also less important for large
accelerators to allocate each open position in each cohort, and thus easier
for larger accelerators (e.g. YC) to tolerate losing a few deals last minute.

Again, I agree with the points made in the post, but it's important to note
that making longer term offers the norm plays in YC's favor.

------
jusben1369
I'm sure Sam's heart is in the right place but I'm not sure I agree with him
here:

"Exploding offers suck. Founders should be able to choose the investor they
want to work with, not have to make a decision based on time pressure."

and investors should be able to choose the founders they want to work with.
And accelerators are the one's who make it all about the calendar. So they
inject the notion of time and deadlines (YCSpring12 etc)

"where an accelerator tries to force a company to make a decision about a
funding offer before the company has a chance to finish talking to other
accelerators."

The risk here is that sounds like sour grapes.

"after we make you an offer, we’ll give you until the beginning of our program
to decide (though most companies accept quickly, because you can’t start
having office hours with us and participating in other ways until you accept).
We ask companies to be transparent with us about needing more time--we won't
rescind our offer. It’s usually about 45 days from interview to the start of
the batch."

\- We use "soft" deadlines. You don't get access to important resources until
you say yes. And yes look we have 45 days from interview to the start of the
batch (there's that pesky calendar coming into play)

"We encourage all other accelerators to join us on this. It should be an easy
yes. Exploding offers are the wrong thing for founders, and an accelerator
that does the wrong thing for founders will not last long."

\- We're the pre-eminent accelerator and other accelerators should play by the
same rules as that way we'll stay the pre-eminent accelerator!

"And founders should think very hard about joining an accelerator that puts
forth a short-fuse offer."

Once again makes me feel like they're losing out to this tactic and it's
hurting. And a bit of FUD?

Are you creating startups that have to go out and compete in a very
competitive world? Seems like insulating them from making important business
decisions is a little counter intuitive.

Again, I'm sure Sam's motives are pure. This is a little tin can ear to me and
whiny.

------
far33d
This is true for ALL exploding offers. Not just accelerators or investment
term sheets, but for employment as well.

~~~
Qantourisc
Indeed exploding offers for me is like: "Lets double, triple check this, this
is fishy."

------
clamprecht
It seems like the other accelerators are doing this so they don't end up with
only YC-rejects. Since YC is probably considered the top accelerator, it's
also better for YC to have other accelerators not give exploding offers.
Because then the few companies that would have accepted the exploding offers
AND also would have gotten into YC, can now actually go to YC instead of
accepting an exploding offer. If I missed something, I'm sure you'll point it
out ;)

------
mathattack
A couple observations...

1 - If you're good enough to be accepted by one incubator, you have an
incubator-worthy idea and team. If they go away, another will arrive.

2 - The person forcing your hand is trying to use their temporary leverage
over you until you have leverage over them. It sets the tone of the
relationship on leverage.

3 - That said, people with lower acceptance rates (whether it's accelerators,
colleges, etc) have to play yield games. Harvard yields ~80% of admits so they
can wait their time because they are confident of admits, and it won't impact
their capacity. Amherst accepts ~40%, so they have to play the waiting-list
game. The 2nd tier accelerators have to play waiting list games, and that's
what drives this behavior. 48 hours is unreasonable, but a few weeks isn't.
(Or having a formalized waiting list too)

------
kordless
I accepted an exploding offer. It was a harbinger to a larger detonation.

There's a simple way of looking at this type of behavior: If someone is
willing to go negative on you at the beginning (evidenced by 'denying' you an
investment because you didn't take it when _they_ wanted you to take it) then
you should assume they will be willing to go negative on something else of a
similar or greater magnitude at a later date.

~~~
pmarca
Yep.

------
typpo
This seems like a step forward. Exploding offers are generally unpleasant,
usually a power play from the side that has less to lose.

It's also common practice for companies to extend exploding offers to new
hires. Replace "accelerators" with "companies" and "founders" with "hires" and
you get a very similar argument for not forcing people to take a job until
they've completed their own decisionmaking process (this ultimately benefits
the company as well, in my opinion).

~~~
nilsimsa
I've used it for new hires. Helps get quick closure on those whose decision is
right on the edge. Also you get to know how strong an interest they have. But
if they ask for more time, I usually give it. They just have to be confident
enough to ask.

------
rickdale
This is a tactic I see used on the micro level on Shark Tank where usually
Mark Cuban will be like "25 second shot clock, you gotta decide right now."
Being a Shark Tank and Dragons Den addict (both Canada and UK versions) I can
say the greatest difference between the US version and the others is this
tactic. I have never seen any of the Canadian or UK investors do anything
remotely similar. Usually they are more impressed by companies that take the
time to think about the offers. Just an observation.

~~~
vxNsr
Just a point about Shark Tank and similar shows: the actual meeting is a lot
longer than the ~6 minutes that they show you. Some go on for hours, and they
just cut to the interesting bits, so that 30 sec shot clock thing is often
just theatrics, they've been discussing things for a while and know before
whether they're gonna say yes.

~~~
maxbrown
I learned this recently, the most interesting part of which was that the
founders stand silent in front of the investors for at least a few minutes
while the lighting and sounds and such are set.

I wonder, don't you think the shot clock offer is real even though they've
been talking longer than we've seen?

~~~
vxNsr
It might be kinda real, but I think it's a lot easier to see coming and
prepare for than the show implies. I've only watched the last two seasons of
shark tank, but from what I remember the offer always seems to come out of
left field, Mark doesn't appear interested and then he suddenly makes an
offer. I don't think it's usually like that, but it makes for some great
television.

------
govindkabra31
A good alternative for YC to consider is to change to a 'continuous' mode..
where you incubate companies on 1st Tue of every month. The companies in a
batch are already in variety of stages, some just starting with an idea, some
with some market validation done, some may even have raised $500K round
before.

This is very much unlike a college or a vocational class, where all
participants are in more or less same stage.

------
rjf1331
I agree with the concept for the most part, but have a few gripes.

First, the desk space argument is very real. Y Combinator takes 60+ companies
and has no real space constraints since they do not offer office space. Other
accelerators take far fewer companies and do have office space, so they need
to know ahead of time 1) that their batch will be full and 2) that each
company has passed their own due diligence process.

Also, as with term sheets, founders can take their offer from one accelerator
and shop it to others. It's happened before (with people I know), who take an
offer from one accelerator and use it to trigger FOMO from the other.

Couldn't an accelerator just position it's start date before Y Combinator's
decision date, and therefore not need an exploding offer but have the same
effect?

Exploding offers should be reasonable, and I'm not against being fair to
founders. But doesn't democratizing this essentially involve accelerators
colluding to have the same offer/acceptance date?

------
ISL
Academic here: Doesn't this post state that the offer has a 45-day duration?

Are offers that "explode" only a few days in duration?

~~~
malgorithms
The distinction is this: "exploding" typically refers to a very short period
of time, designed to prevent shopping the deal, extensive legal review or
advice, or exploring other options. A legitimate deadline for an offer
wouldn't be called exploding if it spans many weeks and lets a participant
fully understand it.

------
beat
I used an exploding offer effectively _once_. I was buying a house in 2002,
during the crazy bull market on housing. Houses in the neighborhoods we were
shopping regularly went for more than list, with competing bids. We finally
found a house, at the very top of our price range, and put an offer in for it
just a few hours after it first listed - for list price. The seller's agent
was furious! She really wanted to drag it out to the weekend and get a bidding
war, which we absolutely could not afford. But what were they going to do...
turn down a list price offer? Why not just sell it at a higher price, then?

We still have that house, 12 years later. It's finally worth what we paid for
it again. Sigh.

------
mathattack
It's not the same as job interview exploding offers, but the thought process
behind it is the same.

[http://www.joelonsoftware.com/items/2008/11/26.html](http://www.joelonsoftware.com/items/2008/11/26.html)

------
dmourati
I got an exploding offer for employment and came to the same conclusion. The
company is called Loyal3: [https://www.loyal3.com/](https://www.loyal3.com/)

Steer clear of them.

"Senator? You can have my answer now, if you like."

~~~
fecak
Employment offers tend to be exploding because a company has a single need and
doesn't want to lose every candidate because they are waiting for their top
choice.

Almost every offer of every kind 'explodes' at some point. It's the duration
until the explosion that varies. I'm sure YC will make you reapply for future
consideration, just as companies can not be expected to honor your employment
offer if you defer for a year.

~~~
mrfusion
What's a normal period for exploding employment offers? Is 2 days a lot or a
little?

~~~
fecak
In my experience two days is low. 5-10 days is more common, and most companies
are fairly willing to negotiate beyond that given some circumstances. It's not
common to see candidates rejected if they try to accept an offer after it
explodes.

~~~
mrfusion
Thanks. Also wondering: should more senior people be offended by exploding
offers. Architects, team leads, etc?

~~~
fecak
I'm not sure anyone 'should' be offended by an exploding offer. There are lots
of potential factors at play. You only see people talking about exploding
offers of employment when the window is relatively small - no one bats an eye
when given 45 days to accept a job offer, as that should give plenty of time
to find other competitive offers. It's those 3-5 day figures where candidates
tend to think they smell a rat.

No one wants to be forced into a decision at gunpoint, which is essentially
what a short notice exploding offer becomes. Part of this is also dependent
upon the length of the interview process and how much detail is given. If you
interview with a company 10 times over a 6 week period, I don't think a short
window for acceptance is overly limiting for most candidates.

We often see candidates trying to expedite the offer process in order to
receive offers around the same time. Candidates are at their most advantageous
position when they hold multiple active job offers, and they have the
opportunity to leverage them off each other (I'm not suggesting this tactic).
Yet when companies try to expedite the acceptance process, suddenly we feel
that there is something dubious at play. Candidates want companies to make
quick (and positive) hiring decisions, yet want to take their time to maximize
their ability to shop for offers.

More senior talent is less of a commodity than an entry-level candidate, so
you might expect more junior level candidates will see exploding offers more
often than senior candidates. Senior talent can also leverage their experience
a bit more in order to get windows increased if necessary.

I don't think they should be offended as much as they should be curious as to
why the company employs such tactics (assuming again that the window is
short).

~~~
bcbrown
> We often see candidates trying to expedite the offer process in order to
> receive offers around the same time.

As a candidate, what would be the best tactics to achieve that objective? Say
I have 6-8 candidate employers, from mature startup to enterprise in size, and
I'm moderately senior. My approach would be to do the phone screens with them
all, and narrow it down to about 4 companies to interview with in person, then
do that all in a single week, planning on accepting somewhere at the end of
the next week.

~~~
fecak
To maximize the chances of offers coming in around the same time, I generally
suggest that candidates stagger applications as a first tactic. Generally
speaking, we expect smaller companies or firms with lower levels of
bureaucracy (not always the case) to move quicker, so one should apply to
those last since they can usually be more agile.

Once in the interview process, you can try to expedite some interview
processes while slowing down others. So you might ask one company to push an
interview up and another to push an interview back. Once an offer is about to
be presented, asking questions can help delay a bit as well - you could ask
all your questions at once in an email if you want a speedy reply, and you
could ask questions in a live meeting or call (that requires scheduling) if
you want to buy yourself a few days.

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jacquesm
It's simple: if you're being pressured just say 'no'. There is no upside to
negotiations under pressure, only downsides. Likely the pressure is there
because if you thought about it long enough you'd refuse the deal anyway, so
you might as well refuse it right off the bat and tell the counterparty the
time-limit is what caused you to refuse.

If you have no other options then likely you already made a series of
mistakes. Exceptions exist but don't happen often enough to go and make a
series of qualifications here, adding pressure is similar to being
blackmailed, the only reasonable course is to refuse to play.

~~~
danshapiro
Actually, if you're being pressured, a better response is, "If you need an
answer now, it's going to have to be 'no', so I hope you can adjust your
schedule so we can consider your offer more fully."

Exploding offers are unfortunate and a significant negative data point about
the behavior of the organization but they are not the only data point. The
above answer will defuse the threat and give you the upper hand in the
negotiation so you can make the right decision for your team, whether it's
'yes' or 'no'. This is helpful for exploding offers in any circumstance -
jobs, M&A, etc.

As a side note, while short-horizon offers are terrible, it is reasonable to
have some expiration date. Techstars Seattle, for example, has 10 slots and
while they might be able to add an extra one or two, logistics don't allow for
the kind of flexibility that YC has[1]. I believe there's a good way for an
accelerator to handle this ethically:

1) Tell applicants when the decision date is when they apply (so they can plan
accordingly) rather than surprising it on them as a negotiating tactic

2) Provide all relevant information when they apply, so they can consider the
possibilities in advance, versus (for example) springing restrictions,
valuations, or fees on them when they get the offer

3) Allowing enough time between the acceptance and the notification for the
team to make a good decision - a week seems reasonable.

YC's behavior is exemplary here; their model and position in the industry lets
them be super-flexible. Other programs may not have the ability to be quite as
flexible but that doesn't mean they're unethical if they're thoughtful about
their implementation.

[1] My understanding as a mentor for the program - I don't have inside
knowledge

~~~
jacquesm
Good one, yes, that's even better.

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VarunMKhona
This is sensible and good for the entrepreneur. If its good for the
entrepreneur, its good for the prospective accelerator, its good for the
prospective investors and so on and so forth. The virtuous cycle is for real.
The issue is the not-so-famous accelerators bear the brunt because almost all
applicants are awaiting response from YC and not the other way around. If the
conclusion of this is you give you short-term exploding offer, the
accelerators have got it all wrong. Instead, the right perspective is that
they need to make their value prop as strong as a YC. Glass half-full/half-
empty, remember?

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teachingaway
There's a balance between "exploding" offers and hang-around-forever offers.
You don't want someone to come back 6 months later and say they're finally
ready to accept your offer.

Its not difficult to balance these factors. Just ask, "how long do you need to
consider this deal?" "Two weeks? Four weeks?" "If you need more time, just
give me a call."

------
jpetersonmn
Exploding offers make perfect sense in situations like this. Especially if
you're given 48 hours, that's plenty of time to accept/decline. And if it's
not enough time then you weren't ready to play ball yet anyway. If I'm making
someone an offer, I'm not giving them weeks to decide so that they can go shop
around for something better.

------
rdl
I'd feel a bit more ok with exploding offers for organizations where there are
a finite number of slots -- e.g. if an accelerator is very small and capital
or other resource constrained, or has a hardware lab and limit space, or
something like that. None of that applies to YC, of course.

------
jgalt212
Most exploding offers don't represent credible threats. That being said, if
someone jumped at one of my exploding offers, I'd definitely try to negotiate
a better price ex post facto given my read that the counterparty is so jumpy.

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MarkPNeyer
> It may be the best thing for accelerators to use time pressure to get
> founders to accept their offer, but it’s definitely not the best thing for
> founders.

isn't that 'not the best thing for accelerators' in the long run as well? if
you're using a strategy which is clearly not win-win, you're going to lose
_good_ deals to people who aren't doing that - so you'll get stuck with a
portfolio of companies run by founders not smart enough to see this for what
it is. enjoy, sucker!

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andykmaguire
Sam - This is standard fare not just for accelerators but VC term sheets as
well. Curious if you apply your logic in that case as well?

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kazinator
_> It may be the best thing for accelerators to use time pressure to get
founders to accept their offer, but it’s definitely not the best thing for
founders. _

Why should accelerators should do what is best for someone else, not
themselves?

The world is full of expiring offers of all kinds; they are everywhere. Rarely
does any kind of offer stand for as long as we would like. Expiry of offers is
the norm.

Also, Golden Rule: he who has the gold, sets the rules.

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lukasm
What if you accept the exploding offer and then break the contract or avoid to
sign it?

------
legohead
exploding offers call for exploding counter-offers

~~~
maxbrown
"You have 24 hours to give me more than 24 hours" ?

~~~
legohead
I agree to your terms but you get half equity.

------
the_cat_kittles
the solution: a centralized clearinghouse that uses the gale shapely deferred
acceptance algorithm

