
YC and Founders Pledge - dwaxe
http://blog.ycombinator.com/yc-and-founders-pledge
======
cperciva
I'd like to encourage founders who are participating in this to consider
directing at least some of their pledges to support open source software. I
don't think there are _any_ YC companies which would have existed if it hadn't
been for a large amount of open source software; if you want to maximize the
impact of your donations, helping the projects which build tools the next
generation of startups will rely on is a pretty good way to go.

(At Tarsnap, I mostly fund the FreeBSD Foundation and other BSD-related
organizations, but that's primarily because those are the groups whose work I
am most familiar with and can judge most effectively. There are plenty of
other organizations doing great work with open source software which can
benefit from funding; but of course I'd love to see everybody here supporting
the FreeBSD Foundation too.)

~~~
lifeisstillgood
I would similarly like to encourage founders to build a ethos of "giving back
to the community" in their day to day companies. Even if the start up does not
set the world (and stock market) on fire, the accumulated talent and energy
would be of immense use in hack-a-days, in food shelters and of course in open
source projects and conferences

We want your money tomorrow, of course, but just in case you don't make any,
we will take your time and energy today :-)

~~~
cperciva
Right. And at Tarsnap I do exactly that -- but Tarsnap is designed to be
profitable. For startups which lose money hand over fist, it may be hard to
justify making such contributions until after they're acquired.

~~~
lifeisstillgood
I am going to backtrack wildly here - I did not mean to imply your (very
large) OSS contributions had not happened. I think your track record speaks
for itself.

On reflection I was speaking from a worry that the majority of companies I
have worked for did not / refused to allow OSS contributions, and that a lot
of engineering talent was squandered on proprietary work of dubious value.

Fixing that seems like it would unleash enormous value across the economy /
society.

As such startups are perhaps less relevant to the solution, but startups can
be the sexy blueprints of the future, copied by others, so it might help.

~~~
cperciva
Don't worry, I think I understood what you meant. I was just offering a
possible explanation of why some startups might be better positioned to
contribute later rather than right now.

For example, I don't think I saw any code contributions from WhatsApp to
FreeBSD, and I know Tarsnap donated more to the FreeBSD Foundation than
WhatsApp did pre-acquisition -- but when they were acquired and Jan Koum
suddenly had money available, he made the largest donation the Foundation ever
received.

So, if you can contribute now, great; if not, well, keep doing what you're
doing, and if you're lucky enough to have a big exit hopefully you'll remember
us at that point.

~~~
lifeisstillgood
I'm glad to hear about the BSD donation.

And, I guess the status quo is ok, it's just we live in societies built off
investments in open science and open standards and yet we privatise the value
this created as if the prior foundations were just a natural phenomenon

<lament over>

~~~
cperciva
This is approaching the crux of the GPL vs BSD philosophical divide, actually.
Some people say "you used my work and made money from it? You should share",
while others (myself included) say "you used my work and made money from it?
Awesome, great to know that you managed to make something people wanted out of
it".

------
SandersAK
I think this is a neat idea but I wish they would explain this in a simple
sentence on their site instead of all the mumbojumbo.

Something like

This is a Donor-Advised Fund that is completely free to participate in. Donor-
Advised Funds are the best way to give when you have a major liquidity event
because: Reason 1 Reason 2 Reason 3

Join a community of people who want to do the same. This is useful for you
because: Reason 1 Reason 2 Reason 3

~~~
mkagenius
> Donor-Advised Fund

This sounds more like mumbojumbo to me

~~~
loeg
It's a common way to claim tax benefit now, but control (to some extent)
giving in the future. E.g.,

* [https://www.vanguardcharitable.org/](https://www.vanguardcharitable.org/)

* [https://www.fidelitycharitable.org/](https://www.fidelitycharitable.org/)

~~~
ernestipark
These are great avenues for any employee that receives equity to 1. maximize
their tax savings, 2. give to charities they care about (in the US). Any stock
that's held for over a year that qualifies for long term capital gains can be
transferred to a DAF like with Vanguard or Fidelity and you won't be taxed on
it at all. Especially if you have a set budget for giving to charities this is
a great way to maximize your dollar and extend your budget.

------
BinaryIdiot
I understand giving to charity is great and all but what about employees 10,
35, 97? So someone works hard at a start-up but they weren't among the first
dozen or so to join then they likely get next to nothing from an exit. So how
about, instead of a pledge to give to charity, founders pledge to give more
equity to later employees so only a small handful are not the only ones to
profit.

Everyone takes a risk joining a start-up. Many times employees use the equity
as part of their compensation (right or wrong many do this). If you're joining
a start-up that has taken this pledge then you know going in you're likely not
going to get as much as another start-up.

I don't know this just feels like a way to neuter the company making it less
attractive to future employees. How about, instead of counting our chickens
before they hatch, we get founders who had a big exit to donate money to
charity?

~~~
pb
I know that "employees get screwed" is the hn conventional wisdom, but it's
generally false. If a startup is huge success, there will be many wealthy
employees. Companies like Google and Facebook created thousands of
millionaires. Uber and Airbnb will likely do the same. Of course if the
company exits for less than money raised, then yes, common will likely not be
worth much, but that's the risk of startup equity.

~~~
kobeya
Most successful startups aren't huge successes.

~~~
pb
Most startups aren't successful period. If you're the 100th employee at a
startup that sells for $30M, then no, you're not going to make a lot from that
exit.

The economics of startups are such that the vast majority of the returns for
both investors and employees are from the big successes, so if you're looking
for $$, that's where you need to be.

------
morgante
I really commend YC for supporting this. If my startup ever succeeds, I
definitely have a duty to give back to the world which has given me incredibly
luck (and benefits).

I just took the pledge and realized it would be nice to have a sliding scale
based on exit size.

If I have a relatively small exit (<$10M), I would prefer to donate
substantially less (maybe 10%) but for a larger exit I would scale up closer
to 50%. Obviously I can still donate more if I want to, but it would be nice
to pre-commit.

Also, it would be nice to include an option for employees.

------
avivo
This is amazing. However, what we need even more is a pledge for e.g.
_responsible disruption_.

So companies could devote say 1% of their resources to modeling their effect
on the world and compensating for (or designing away) the negative
externalities they unintentionally impose. I know that is a much harder
problem though, and I hope lessons from Founders Pledge can be applied toward
it.

Kudos to the team for putting this together though — it's a great initiative.

~~~
tlb
This is an interesting idea. Are there good examples you could point to of
analyses of externalities of a company? Other than an oil, or chemical
company.

For a pure software company, is the answer ever much different than the amount
of electricity they use?

~~~
avivo
Definitely. Here's a small sample.

Craigslist unintentionally decimated newspaper revenue from classifieds.
[http://www.forbes.com/sites/jeffbercovici/2013/08/14/sorry-c...](http://www.forbes.com/sites/jeffbercovici/2013/08/14/sorry-
craig-study-finds-craigslist-cost-newspapers-5-billion)

Twitter unintentionally created opportunities for crazy levels of harassment
that bleeds dangerously into the offline world.
[https://www.buzzfeed.com/charliewarzel/a-honeypot-for-
asshol...](https://www.buzzfeed.com/charliewarzel/a-honeypot-for-assholes-
inside-twitters-10-year-failure-to-s)

Facebook unintentionally created an industry of hyperpartisan factless
discourse that may be fueling demagoguery worldwide.
[http://www.nytimes.com/2016/08/28/magazine/inside-
facebooks-...](http://www.nytimes.com/2016/08/28/magazine/inside-facebooks-
totally-insane-unintentionally-gigantic-hyperpartisan-political-media-
machine.html)

That's just off the top of my head, without getting into companies like Uber &
AirBnB, or ad targeters, etc.

All of these companies provide incredible value, and I mostly prefer to live
in a world with them than without them. But it would be great to see more
effort put toward mitigation of their unintentional excesses (and to their
credit, all three are trying at least a little in various ways).

------
brhsiao
I wish Founders Pledge wouldn't break scrolling or include gratuitous,
contentless animations. I also learned far more about what they do from Sam's
blog post than from their website.

~~~
web007
I can't view any of the individual donors on Chrome. I scroll to the section,
see the top of a couple heads, and as I keep going down the page it reverse-
scrolls a white bar and it's all gone.

What is this style of page? I see it everywhere, most egregiously Medium,
where the title and some enormous graphic take up the first full screen and I
have to scroll just to get to the content. I can't imagine it converts well,
but I also can't imagine so many people using it if it doesn't.

------
joneil
Really similar to [http://pledge1percent.org/](http://pledge1percent.org/)
(with Marc Benioff of Salesforce and Scott Farquhar of Atlassian backing it).

As well as pledging a percentage of your equity, they're also pushing making
room to donate 1% of your product and free up 1% of your employee's time to
put towards good causes, so that it's part of the culture not just a happy
side-effect of a possible exit.

------
protomyth
Out of curiosity why are religious charities banned?
[https://founderspledge.com/faq](https://founderspledge.com/faq)

~~~
dennisgorelik
"The only restrictions are that the charity can’t be political or religious."

That adds quite a bias to the whole "YC and Founders Pledge" idea.

------
33a
Why not donate it to your employees?

~~~
pjscott
If I had to make a list of people whose lives would be most improved by some
extra money, engineers in Silicon Valley would probably not be at the very top
of the page.

------
colinsidoti
I really like the idea of a pledge for founders but worry about the particular
features available here.

The biggest red flag for me is that Founder's Pledge is touted as "completely
free," but makes no mention of investment options being available for your
assets.

So, while it may not be deducting an administrative fee, keeping your
charitable assets with them is akin to leaving your 401(k) assets in cash,
which will normally result in you having less funds to donate than if you had
used a traditional Donor Advised Fund.

Unless a founder plans on distributing all of their charitable assets
immediately (which I believe is atypical), I hope Founder's Pledge discloses
that it may be in their best interest to transfer their funds to a Fidelity
Charitable or Schwab Charitable DAF where assets can grow.

------
mathattack
My (limited) understanding is it can be tax-advantageous for founders to give
equity rather than cash. They can avoid capital gains taxes. So if a founder
will give, best to do it this way. One can say they should be generous to
their employees, but at some point they will still have wealth to spread
around. And if you're giving it to charity, you might as well do it this way.

Similarly, when Warren Buffett and Bill Gates give their fortunes away, they
do it via stock.

------
avivo
I haven't figured out a way to find the actual text of the agreement(s). Does
anyone have it?

When I explored doing something like this in the past (a binding pledge via
3rd party under US law), one issue brought up by lawyers was that there needs
to be some "consideration" [http://www.nolo.com/legal-
encyclopedia/consideration-every-c...](http://www.nolo.com/legal-
encyclopedia/consideration-every-contract-needs-33361.html) ; I'm curious how
they worked around that.

~~~
imbenclifford
Once you click "I'm ready to make this official" in the signing flow, you'll
see the full legal document pre-filled with your information before you sign
anything. The consideration is access to our post-deployment resources,
recognition on our website and invitations to our events.

~~~
avivo
Hmmm. Well, I just got to that point in the flow. It first required giving all
your personal information (I put in fake stuff; also FYI the email went to my
spam folder on gmail). There was no obvious way I could see to save the actual
contract and show it to a lawyer before submission. I could only copy the
image files of the text! I understand that you are working across multiple
jurisdictions (so different templates), and using a 3rd party signing service,
but I'm curious if there are plans to improve this. Let me know if you want UX
etc. support for that; am happy to help!

Thanks for clarification re. consideration. (similar to what I considered for
my binding pledge project, though yours is better!)

~~~
imbenclifford
Thanks for the feedback - noted. In the meantime, can you send me an email
(ben@founderspledge.com) and I'll email you the document as a pdf?

------
foobarqux
Are the donors creating a legally binding obligation when they sign up?

~~~
imbenclifford
That's right - every founder involved has signed a legally binding contract.
Ben, FP.

~~~
codingdave
What is the consideration?

EDIT: Actually, I just saw the "English" version of the contract. The fact
that you can give the contribution to charities other than what were selected
would be a deal-killer in my mind, even through that scenario is unlikely to
actually occur. I did not see consideration laid out clearly. It seems to say
that your providing the service IS the consideration, but that feels weak to
me. It feels to me like you are saying "If you give us X% of your assets, we
provide the resources to let you, and use your name on our site to market it!"

Obviously, you have plenty of people who did not agree with me. And I applaud
the spirit of it all. It just seems like the details need work.

------
callmeed
I think Hampton Creek has had enough scandals that I'd avoid mentioning them
for testimonial/social proof reasons.

------
trevyn
Are we to take away from this that founder charitable giving is more important
than employee equity compensation in YC's eyes? Wouldn't make me want to work
at a YC company.

~~~
mkagenius
> charitable giving is more important than employee equity compensation

You are probably assuming that employees are definitely under compensated..
what about the case when founder owns only 5% and still wants to donate a
part..

~~~
BinaryIdiot
> You are probably assuming that employees are definitely under compensated..

Seems like that would be pretty typical. Start-up companies, especially YC
start-ups, pay under the average for engineers. At least that's been my
experience shopping around for a job. So I would expect them to all be under
compensated.

------
hamhamed
This is a good initiative. Muslims like me have to already give out a fifth
(%20) of their earnings every year called Khums
[https://en.wikipedia.org/wiki/Khums](https://en.wikipedia.org/wiki/Khums)

We also believe from numerous Hadith's that the money comes back in double for
those that give. As they say, you can't take with your palms closed.

~~~
loeg
Islam has lots of very different (from a Western perspective) personal finance
rules. Just two examples:

* Lending with interest is forbidden (which also rules out investment in traditional bonds)

* Zakat is a mandatory _annual 2.5% wealth tax_

As you might imagine, the latter makes it very difficult to retire without
some sort of pension system.

[https://en.wikipedia.org/wiki/Islamic_banking_and_finance](https://en.wikipedia.org/wiki/Islamic_banking_and_finance)

[https://en.wikipedia.org/wiki/Zakat](https://en.wikipedia.org/wiki/Zakat)

~~~
icebraining
Planet Money did a story on a small US bank whose owner was convinced to start
offering Islamic-compatible financial products:
[http://www.npr.org/2016/05/12/477758545/michigan-bank-
discov...](http://www.npr.org/2016/05/12/477758545/michigan-bank-discovers-
the-need-for-islamic-finance-products)

~~~
loeg
Yeah.

> There are banks in the Muslim world that have thought about this, and one
> thing you can do is replace interest with something like a rent payment. The
> customer, the person who wants to buy the house, doesn't own it right away.
> Instead, the bank buys the house and puts it in a legal entity called a
> trust. Then, the customer makes monthly payments for, say, 30 years. Each
> month, they own a little bit more of that trust until, finally, the house is
> all theirs.

So that's pretty much a conventional mortgage, except you don't own it
immediately. So it's not a loan because you only own the portion you've paid
for, I guess.

> Now, not all Muslim scholars are OK with this. Some say this is just
> interest by another name. It's a religious loophole.

------
gfosco
There wasn't anything stopping founders from donating to charity before, or
from claiming they will in the future, so what does this accomplish other than
putting a procedure in place for shameless virtue signaling?

Giving to charity is powerful. Talking about giving to charity or telling
people you will conditionally give to charity in the future, is transparently
self-serving.

~~~
loeg
Reducing the friction in donating a complicated asset is useful.

------
perfmode
"The best way to do good in the world is not to be a philanthropist. It’s to
be a good capitalist. The need to 'give back' is generally chiefly a sign that
people took too much to begin with."

[https://www.youtube.com/watch?v=mTAE5m3ZO2E](https://www.youtube.com/watch?v=mTAE5m3ZO2E)

~~~
icebraining
On the other hand:
[https://en.wikipedia.org/wiki/Effective_altruism](https://en.wikipedia.org/wiki/Effective_altruism)

If you can convince your well-off customers to give you an extra $10, which
you will then give to the poor(er), why not do so?

The video implies the $10 are necessarily earned by harmful behavior, but
that's just demagogy.

