

Ask YC: Expectations and Reality (Startups) - js440


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js440
Long time listener, first time caller. Sorry that I didn't put the Ask YC
(didn't know if it added it automatically or not).

I finally found a few potential cofounders, quit my job, and started working
obsessively on my ideas. I'll have a demo in a few weeks and I need to make a
decision about whether or not I actually want to go through with this.

My main concern is with the funding/stock/control issue. Ignorant or not, I
(and the other founder hackers) need to have complete control over things from
top to bottom. I am certainly open to suggestions & advice from a board, but
the decisions ultimately have to rest with me.

In your experience, has this been an issue? Is this an unrealistic
expectation?

~~~
brk
Unless you have bona-fide, proven successes (plural), you'll probably end up
losing ultimate control at some point, and it will probably be the best thing
for everyone involved.

Why do you _need_ to maintain control? Greed? Paranoia? The idea is too
complex for others to understand? (note: none of these are good reasons ;) )

As a leader, you should always strive to ensure that you can be replaced, and
that the company can and would continue without you. This is often a big
hurdle for many entrepreneurs to wrap their head around, but it is almost
always critical to the success of the company.

In the beginning, the founders maintain full control simply because they are
the only ones that fully understand the idea and market. Over time, you need
to do less innovation, and more operation of the business. Founders rarely
make good full-time CEOs, and "professional CEOs" rarely make good founders,
but they both play their part in the on-going success of the company.

~~~
downer
_ > Why do you need to maintain control? Greed? Paranoia? The idea is too
complex for others to understand? (note: none of these are good reasons ;) ) _

Note that maintaining _control_ is different from hoarding all the money. The
people who understand it best _should_ be in control, regardless of how much
equity they give to investors. This is not just in the early stages -- look at
Steve Jobs calling the shots at Apple.

 _ > As a leader, you should always strive to ensure that you can be replaced,
and that the company can and would continue without you._

That's just not how startups work, at ALL. Losing a founder basically dooms a
startup.

It only applies much later on, when the company has a huge bankroll and a life
of its own.

~~~
downer
And even then, sometimes you still need Steve Jobs.

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theyoungceo
This is as thorny a discussion as which language is the best one. And the
ultimate answer is in the same vein: it depends, but the decision should
always be driven by the customer. My company had revenue from month 2 and won
a $100K business plan because of value we brought to customers. I still looked
into raising money, but at the end of the day I reminded myself what I had
always thought: I don't need to raise money, and changes that would make
existing customers less pleased were on the way if I did. The company is
growing fast and customers love it because we concentrated on them and ignored
the startup hoopla when it conflicted with bringing value to customers.
Ultimately, you should raise money if you think it is in your _customers'_
best interests.

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js440
0\. Sorry I haven't replied Christmas came unexpectedly. 1\. As always, the
average level of the discussion here is far above average for the Internet.
2\. Thank you for contributing your thoughts here. This is a deal-breaking
issue for me and will determine whether or not I start a company or not. 3\.
It is not about greed, paranoia, or any malicious motivation. It's about doing
something that's decently interesting to me, helpful to customers, and the
necessary condition that you, knowing the most about the situation as a whole,
should have ultimate control over the decisions that directly affect the user
experience.

------
edw519
3 ways to maintain 100% control and 100% equity:

\- borrow (credit cards, 2nd mortgage, family & friends)

\- consulting gigs

\- paying customers

In spite of all the talk about finance rounds, you CAN bootstrap and succeed.
A little slower, a little surer.

It's a tradeoff. How fast you want to grow vs. how much you want to control.
Your call.

~~~
drusenko
It's also a sure-fire way to fail. One thing nobody ever mentions about
raising money: You're aligning your interests with some pretty powerful
people. The fact is, nobody really wants you to succeed -- everybody is trying
to make it themselves, too. But once you get investors, you get growth
capital, advice, and a powerful ally, who knows people. The power of having
other people who really want your business to succeed to can't be understated.
It's:

\- Good advice (with the right investor).

\- Someone with connections who is constantly talking about you and trying to
do good things for you.

\- Another person you are accountable to (failure isn't just your own, that's
too easy).

It all boils down to the type of business you are trying to make. If you'd be
happy pulling in 200k of revenues after building a company for 2 years and
being barely profitable with 2 full-time employees and other misc costs, then
you might be able to bootstrap, maybe. If you're trying to grow a business
fast, or grow a huge business, it's just not going to work.

~~~
edw519
"It's also a sure-fire way to fail."

7 million small business owners may disagree with you.

I do agree with the rest of your post. Nothing like having the many resources
of well connected investors on your side.

Still, given the choice of having an investor or a customer on my side, I'd
choose the customer every time.

I stand by my original post: Want control? Borrow. Want growth? Share.

