

The City of Founders Without Hackers - MediaSquirrel
http://www.metamorphblog.com/2010/05/founders-without-hackers.html

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wdewind
"The problem is, most people in NYC don't understand the value of stock
options."

The problem is actually the number of times people have been burned. Most of
the really good, senior level tech talent has been through the blender the
first time around. Options always seem to get screwed up somehow, and once
someone has put in 70 hour weeks with the idea that their equity will blow up
one day, it becomes quite a challenge to do that again as anything but a
founder (which a lot of people really don't have the desire to do). Combine
that with the amount of finance (read: under educated) money in the investment
pool, and the people who bring it (ex-bankers) and their relationship to
hackers, the value of equity is really usually quite shitty.

edit: one other point:

Many of the graduates who don't know about the startup scene actually wont be
qualified to work in it (those who are into it will mostly be qualified and
are a small minority). Generally speaking, you need to really be able to pull
your weight in an early stage startup. This is not something most people who
have not been hacking on side projects (or working at startups as an intern
etc.) for the last 4 years are generally capable of doing. You really need to
have had some "real work" experience, and after 4 years of coursework and
coffee/xerox internships unfortunately a lot of these kids just don't. We all
want to believe the myth of the college kid startup genius, but the simple
fact is it usually takes a few years before someone is really capable of the
work required in a startup. By that point they already have the golden
handcuffs.

So I'm not sure it's as simple as academia and startups don't talk, there is a
real reason startups aren't recruiting from NYU and Columbia undergrads.

~~~
kmak
It is also probably true that, in a risk sense, there are many more attractive
options, considering that cost of living in NYC is not cheap at all.

Also, there are plenty of other startups in the finance sector, though perhaps
not in the HN sense, that pays relatively well off the bat, with high upside.

People did the math, that's all.

------
tibbon
I'm in Boston and we have a slightly similar problem. There are a ton of non-
technical cofounders out there, but it is rather difficult to find good
developer/technical founder/engineer.

I should clarify that, finding a good developer isn't hard. Yet finding one
that is available, willing to work for equity and interested in what you're
doing is rather difficult.

Let's break those down:

\- Available: Good developers have often been snapped up already. Its rather
like dating, in that you generally have to find people between things. Top
grade developers will probably already have something lined up before they
quit another gig, making that gap effectively zero. You need to convince
someone that you know is already on the way out that your startup will be
better than whatever they are already doing.

-Cash/Equity: I see people talk all the time about the value of equity. Honestly, it generally isn't worth the paper it is written on from what I've seen. There is a huge chance that you'll work on it for a few months and little will come of it. Yes, you could start the next Google/Twitter/Facebook, but it is unlikely.

Equity does not pay the bills. You're talking about people in NYC here. They
might have a 2K/month studio apartment in SoHo. You probably won't be doing
much for founders salaries even on an angel round, so suddenly this looks to
be a really long time without cash flow if you're talking equity only. For
people in their 20's that haven't already been through a successfully exited
startup and don't have a nest egg (or trust fund) this isn't possible.

They understand the value of risk and stock, but knowing the value of it and
being able to realistically quit your job/graduate and work without a paycheck
is really hard. If the value was there, then the investment capital would be
there. The concept of value is there, but not the value.

\- Selling the idea: At this stage, you're generally selling an idea of an
idea. 95% of the time when people talk to me about some startup they are doing
I'm thinking, "This will never work", "I know 6 people doing the same thing
and they are a year ahead of you" or "Where is the money?".

Rare is it that someone has an idea like GroupOn that is an instant, 'duh'
moment and you think you'd want to be instantly part of and owning a large
portion of. I'm not going to work for a company (and take mainly equity) that
I don't believe in.

All of this creates an impression of a bottleneck of developers and technical
talent in a city. Throw in Google and a few other large companies (and
academia) that can and will pay for top level talent and things really start
looking dry.

But here's the thing, <i>I don't think there is a lack of technical
talent</i>. Rather there is a lack of top level non-technical co-founders out
there will killer ideas, vision, experience, connections and fund raising
ability. What are they bringing to the table if not those things? While an
early stage startup can run with technical talent only, it can run without a
'biz guy' just fine while things get off the ground.

<b>So what to do as a non-technical co-founder?</b>

\- Get technical! A little over a year ago few hard programming skills. Then I
started picking up Ruby stuff on the side. I'll never be a top level engineer,
but through pain and blundering I can get the job done and get something
mocked up in a reasonable amount of time to show that there's something more
than just an idea. This also gives me the ability to make better decisions as
a business person and understand the rest of the company

\- Get money! Paying people gets stuff done. If your ideas are so killer, you
can surely raise 50K or so to get them done. I've had friends (in NY) raise
50K to start things that would never scale or go big like PR firms. They did
this through networking and knowing the right people. Its a big city with a
lot of money floating around. Find it and pay to get your base level prototype
made. Developers will blow you off if you're waving your hands and talking
about an idea, but if you say you'll pay $125/hr to have a prototype made,
then they listen.

\- Have better ideas and bring more to the table: There are a few non-
technical people that I'd follow anywhere and its because they do have
consistently great vision and ideas. Show people that you can lead and
followthrough. One of my good friends Tim Hwang can't code at all (AFAIK), but
I've seen him execute with the Awesome Foundation, ROFLcon and the Web Ecology
Project. I know that if he gets a great idea, that he will hold up his end. Do
things like this and you'll have no problem finding developers and technical
co-founders.

~~~
s-phi-nl
BTW, you can get italics by surrounding your text with asterisks (*).

~~~
tibbon
Thanks. I posted this same comment to the OP's blog, and the formatting was
left over from there. Thanks much. I'll edit that now.

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stewiecat
There are some good engineering schools in the NYC area that could supply the
talent they need (Cooper Union, Stevens Tech, Rutgers, RPI, etc.). The problem
is most grads don't know about the startups. I went to Stevens ('02) and at
the senior career fair it was all banks, gov't agencies, military contractors,
and telecoms. There's a lot of (well-paying) competition in NYC that's
competing over a well-indebted population of engineering grads.

~~~
sili
That's a good point. In Poly, vast majority of CS undergrads that were looking
for jobs did it through Monster and in-school job fairs. I don't remember
seeing any startups or small companies being represented at these, they were
filled with large banks and military contractors. I think there needs to be a
better outreach to local schools by the start up community for new engineers
to know what is available to them.

------
shanedanger
you know what's similarly painful in nyc? apartment hunting. they eased that
pain with brokers, and now at least you can find a place, even though it costs
you a bit more.

someone needs to become a "broker" for engineers. find startups the talent
they're looking for in exchange for x% of that talent's
salary/equity/whatever.

~~~
joubert
I found my apt 5 years ago by simply walking into the (on-site) leasing
offices of a few high rises downtown. After seeing 4 apts I had found my home,
and have been in it since. No broker fees.

~~~
tibbon
Apartment finding, moving, etc (practically anything) in NYC can be easy
provided you've got the money to make it happen. It can be the hardest, or
easiest city in the world to live in.

Yet if you've got no more than $1200/month to spend on rent- good luck with
that.

------
lsemel
Engineers won't want to work in startups (especially in NY where
rent=2500+1000*num_bedrooms) until they see a lot of other engineers getting
rich due to having worked in startups. People follow incentives and respond to
stories of others' success. In NY thus far, these success stories are rare.

------
look_lookatme
I don't think many NYC founders are looking for a technical co-founder. So if
not a co-founder, then a highly rewarded developer, right? Nope, I don't think
many of them are looking to part of with significant amounts of equity in
their ideas unless you are an investor giving them money. Basically I think a
large number of NYC founders are mostly idea-men that undervalue the role of
strong technical employees, much less co-founders. It's probably culturally
endemic to business in NYC and I think there is a gulf between to the two
camps because of it.

The OP goes on to look to academia for a solution... in reality I think the
business side should be looking at themselves for a solution, and that would
involve giving up the goods.

------
tewks
The author has ignored the fact that most companies founded or run by by non-
technical people don't usually do that well. (citation needed) At the very
least, a company run by a non-technical person is oftentimes not a terribly
exciting prospect for a hacker.

~~~
nir
It's not really a lack of dev talent in NYC, rather a surplus of founders.

There are many committed and hardworking founders in NYC, but there's also an
NYC phenomenon of the startup-as-country-club, where people with spare
cash/time go into start ups mostly for the social aspect.

~~~
lsemel
Agreed - there are loads of former banker types, or rich wives of financiers,
who decide starting a startup is cool, and go try to hire an engineer for 2%
equity and treat them poorly. Their "startups" are often some kind of online
magazine where the main technical challenge is themeing Drupal.

------
ivankirigin
I went to NYU. If I were back in NYC, I'd start a meetup just for startups and
student hackers to meet. The NYTechMeetup is becomming an institution - any
students reading this in NYC should regularly attend.

~~~
eugenejen
I also went to NYU. But I did a series of startups from 1.0 to 2.0. I just
have weird feeling once in a while when I in NYTechMeetup, not so much techies
but full of business people.

~~~
YuriNiyazov
Same here - NYU; co-founder of two failed startups; a few jobs - now am in SF
and haven't really looked back.

------
pw0ncakes
Two words: real estate.

Silicon Valley became disgustingly expensive _after_ building substantial
momentum in technology, gaining enough strength that entrepreneurs would live
there _in spite of_ the quality-of-life/cost-of-living problems.

New York needs something short of a miracle to become a startup hub. It's not
"golden handcuffs" that keep people in the banks. It's the fact that the cost
of rent for what would pass as an average apartment in most of the country is
more than the median American's after-tax income.

Also, although finance is contracting, it's not quants who represent the bulk
of the layoffs, but floor traders and M&A types. These people are useless to a
startup, unless that startup wants to target the financial industry (which has
sufficient resources to develop NIH syndrome, so good luck). Quants are
generally being kept.

~~~
mtalantikite
Rents are definitely artificially high here. I think it goes beyond the demand
for space, and is largely due to the fact that brokers completely own the
marketplace and have an incentive to price as high as possible (they take
8-12% commissions). Renters don't have a good way to understand real market
prices.

Back to the topic of lack of engineers, I've always thought it'd be a good
idea for multiple companies/hackers to get a large space together and share
talent to work on lots of ideas simultaneously. It'd go beyond a co-
working/incubator style space, and would be a way for young companies to
offset the risk of early stage hiring.

Right now in NYC we need lots of companies with good sized exits for the
future health of the eco-system, sharing our talent with each other is
probably a good way to get to that point.

