
How To: Spend your investors’ money - jnoller
http://stu.mp/2011/05/howto-spend-your-investors-money.html
======
softw2
My question is, how do you get $500,000 for a feature you can get by clicking
"Show Search Options" in Gmail? I do get the bigger picture but I don't see
how to monetize it or prevent Google from mimicking it a 1000% better if it
gets popular.

~~~
BenjaminCoe
At this point we're not just a tool for searching attachments in Gmail. We
support Yahoo Mail, Twitter, and Facebook as well. We also plan to branch into
other services, e.g., general IMAP. We let you pull together these various
accounts into one simple, visualized, central index.

The philosophy of "why build something, because company x, with infinite
money, will just build it better" I think is a flawed one.

~~~
runT1ME
>The philosophy of "why build something, because company x, with infinite
money, will just build it better" I think is a flawed one.

Fascinating quote, but do you think you can articulate why it is flawed? Was
it something your investors asked you?

I think the hardest question to answer for a lot of startups is "what happens
if [company X with infinite money] decides to copy you"?

My first instinct might be to say I'm one of the top ten or twenty people in
the world who are capable of writing the code for my product (however arrogant
that might sound), but even if that's true, that still leaves nine or so
others that Infinite Money Company could recruit to compete.

Is truly the only good answer being the very absolute best in the field, or
are there other good answers?

~~~
BenjaminCoe
I think there is a very real danger of competition eating your lunch, but you
can't let it frighten you too much, or let it stop you from executing on a
good idea. It has been my experience that large companies sometimes lose their
ability to rapidly iterate on a product. Maybe it's not even in their best
interests -- if you have a killer product like Gmail, there's not a strong
motivation to stray too far from the course. It leaves room for companies to
take those risks, and find out where there is room for innovation.

------
frederickcook
What is the investor expectation on runway for a seed round like
attachments.me did? 12-18 months?

------
shafqat
Very helpful benchmarks. Anyone know why there should be a premium per
employee for a platform as a service company? Why is PaaS any different from
any other startup with regards to a per employee burn rate?

~~~
JoachimSchipper
The article says:

> The thinking here is that SaaS/PaaS companies require more infrastructure,
> better/higher quality infrastructure, more bandwidth, and more
> senior/seasoned engineers.

------
crcastle
I love stuff like this. It's like answering a question to which everyone wants
to know the answer but is too ashamed or overly confident to ask.

It would be interesting to know the variance in responses. I know this wasn't
meant to imply statistical significance, but I'm just curious what these
results would be with a larger and more random sample.

------
EGreg
We hire overseas, so we get by on around $6,000 per month per employee.

~~~
anon330
I'm employee #1 at a Canadian startup, and they get by paying me about 3300
per month, before tax. Based on my asking-around, this doesn't seem to be out
of the ordinary for the area.

~~~
jonknee
That's only one portion of the costs. Besides the associated taxes and
insurance they have to pay rent/utilities, purchase equipment, etc etc. The
quoted figure was total expenses / employees, not employee compensation.

~~~
tlrobinson
The figure I've heard is 1.25-1.5x base salary.

~~~
jonknee
That sounds right for direct staffing costs (health insurance isn't cheap!),
but low if you mean counting in all the other stuff. I suppose it depends on
the business--someone like Dropbox spends a lot more on servers than say
Groupon.

~~~
tlrobinson
Right, that's for the incremental cost of each employee: taxes, benefits,
equipment (for the individuals, not servers), office space. It's useful for
calculating how much a new employee will cost you.

~~~
bigiain
I've always used a rule-of-thumb of a 100% overhead rate for employees - it's
a spectacularly easy number to work with mentally, and its right to well
within acceptable error bounds an awful lot of the time.

If I'm paying you $90k, I'll expect to incur an additional $90k in costs
resulting from employing you.

