
Ask HN: How to start a startup in Amsterdam? - mcv
I have been approached for a startup. The idea isn&#x27;t mine, but I think it&#x27;s good. It solves a problem that some big organizations with money have, and it approaches the solution from the perspective of their users. I like it and want to work on it. There are multiple ways we could get money for this, and he&#x27;s already working on some of them. He&#x27;s already put a lot of work into this on his own.<p>The Ideas Guy pulled my CV from LinkedIn and (for whatever reason) decided that I was the perfect partner with whom to start a startup. We didn&#x27;t know each other before, but he seems nice and reliable, in his 50s (I&#x27;m in my 40s). He also wants to get someone for finance&#x2F;back office and then found the company with the three of us. I&#x27;m not sure we need a dedicated finance&#x2F;back office person at the start, but what do I know?<p>The past couple of years, I worked as a freelancer. This feels like a logical next step. I have a family, but my wife has a good job, and I saved up enough money that I can afford a pay cut. Hopefully the equity will make up for it, but I think I can also afford the risk.<p>So what do I need to pay attention to? How do I determine what a reasonable amount of equity is? What legalities do we need to get arranged? Should I get my own lawyer? How do I determine whether I&#x27;m good enough and whether he&#x27;s good enough? How do I select a software team? How do I plan this? (My past couple of jobs were with big, slow moving organizations. A startup needs to move a lot faster than that, I assume.) Can 40- and 50-somethings run a startup and still be in bed in time and take the kids to school? How do I make sure I pick the right technology stack? (I&#x27;m leaning towards Angular+Scala&#x2F;Finatra, though I have no Finatra and little Scala experience yet. Is that wise?) Are there any Dutch subsidies or VCs we should know about?<p>What other things am I missing?
======
hemdrup
That is a lot of questions. \- Could you find that one or two bottleneck
questions that could solve your problem?

Secondly i am from Europe and Amsterdam was properly the only place in Europe
i wanted to start one. It.s such a fantastic and crazy place. Amsterdam has
momentum, craziness, but filling you with joy every day..

If you believe in the mission take the jump!

~~~
mcv
I'm at a very early stage. I'm having my second meeting with the Ideas Guy
today. I don't have any bottlenecks yet, but I want to be prepared when we get
there.

Basically, I want to have the biggest chance that we succeed, and I don't want
to be screwed out of my share if we do succeed. I think the Ideas Guy is
reliable, but I barely know him, and I'd rather be safe than sorry. Especially
if we get more people on board.

------
DrNuke
Numbers game, uh? I would be aware: tinderisation of business relationships is
as bad as realising after a couple of weeks that the marriage is not going to
work. Have agreements and timeplan in writing and arrange a plan B to cover
your a*se.

~~~
mcv
A timeplan in writing? I have no idea how much time this is going to take.
He's rather optimistic about it, in my opinion. It's really something we need
to try in order to figure it out.

------
brudgers
Lot's of random advice from the internet. None particularly unique to
Amsterdam.

 _So what do I need to pay attention to?_

1\. Product Execution. Putting something in front of potential customers and
getting feedback and iterating repeatedly and rapidly.

2\. Business Execution. Proven legal documents including vesting schedules.

 _How do I determine what a reasonable amount of equity is?_

IMO, equity should be evenly split between cofounders. Google Joel Spolsky's
essay. If someone puts up cash, treat it as a loan to the company not for
equity.

 _What legalities do we need to get arranged?_

Proven articles of incorporation.

 _Should I get my own lawyer?_

Avoid people you don't trust. The only lawyering should be to create the
corporate entity. If everyone is lawyering up and hard ball negotiating at the
outset, no. Just walk away. It won't get better. Even equity avoids lawyering
up.

 _How do I determine whether I 'm good enough and whether he's good enough?_

Track record. I'd look long and hard at the specifics of what an "idea person"
really brings. Particularly experience with software products and a real world
understanding of development processes. Cold calling developers off of
Linkedin is not a good sign. Wanting a third person to perform back office
operations for two people is not a good sign. Not being confident to learn and
manage finance is not a good sign.

 _How do I select a software team?_

Until there is proven product-market fit, you don't. Then slowly and carefully
from your rollodex and those of the people in it.

 _How do I plan this? (My past couple of jobs were with big, slow moving
organizations. A startup needs to move a lot faster than that, I assume.)_

If it's really a startup, i.e. a company organized and focused on growth and
providing returns to investors via increases to the value of equity rather
than cash flows, it's not something that gets planned beyond grabbing the
tiger tail and hanging on.

 _Can 40- and 50-somethings run a startup and still be in bed in time and take
the kids to school?_

Maybe. I suspect it depends on luck and the individuals and their situations.
But if those things are core values, then don't give up on them.

 _How do I make sure I pick the right technology stack?_

By focusing on it's immediate suitability for product execution as mentioned
above. If the startup is successful, the technology will change do to scale
and evolution of the product and everything will have to be rewritten and
rearchitected.

 _I 'm leaning towards Angular+Scala/Finatra, though I have no Finatra and
little Scala experience yet. Is that wise?)_

Absolutely not.

 _Are there any Dutch subsidies or VCs we should know about?_

The idea person should already have this on their plate and be working on it.

 _What other things am I missing?_

My gut is that there are elements of "getting a freelancer to build it for
free" in the proposal. How much of that exists can be approximated by the
degree of difficulty you would have building the product from right now
without the "idea guy" and "back office guy" being involved.

I just don't see what the "idea guy" is going to be doing to create value
while you're slinging code and the other person is handling the money and
emptying out the trash cans.

Good luck.

~~~
mcv
> Business Execution. Proven legal documents including vesting schedules.

That's the kind of thing I know almost nothing about. Is there an easy intro
for this? I suppose this is something that can vary a lot per country.

> equity should be evenly split between cofounders.

Is that fair in this particular case? I get the impression he's been working
on this idea for a couple of months already. He's been talking to a lot of
people, including some very relevant potential business partners. I think he
is already incorporated and/or has a holding company.

> The only lawyering should be to create the corporate entity. If everyone is
> lawyering up and hard ball negotiating at the outset, no. Just walk away.

Sounds like excellent advice.

> I'd look long and hard at the specifics of what an "idea person" really
> brings.

He's already been building a network of contacts, gathering relevant datasets,
and refining his ideas.

> Cold calling developers off of Linkedin is not a good sign.

I've addressed this with him. Apparently there are things in my CV that gave
him the impression I'd be perfect for this. And in some ways I think he's
correct, though there are also some aspects where I think he's a bit naive or
optimistic about what it involves in software development. Maybe our one on
one talks have convinced him that his impression was correct, but I suppose
it's also possible he has talks like this with a lot of people. I don't think
he's scamming this (he's put real work into this, has collected information on
what datasets he'd need and how much they cost, and his idea is good, so why
scam?), but I suppose it's important to be sure.

> Wanting a third person to perform back office operations for two people is
> not a good sign.

Maybe he's used to that from larger organizations. I don't quite see the need
for someone like that as a co-founder (though I'm not sure I'm even a co-
founder, considering he's apparently already incorporated), but he seems to
have found someone who has contacts with at least one successful startup, and
that could be useful experience if true.

> Until there is proven product-market fit, you don't.

How do you prove product-market fit? Without a functional product, you can't
test the market. I think the key element here is whether we can get subsidized
by the stakeholders. I think it should be possible to get a basic proof of
concept together on my own. With that, we could pitch to those stakeholders.
But to get beyond a proof of concept, I really need a dev team. There's way
too much work in this for a single developer.

> If it's really a startup, i.e. a company organized and focused on growth and
> providing returns to investors via increases to the value of equity rather
> than cash flows, it's not something that gets planned beyond grabbing the
> tiger tail and hanging on.

Is that the definition of a startup? I thought it was simply a new company
that starts small. I see plenty of opportunity for this to grow into a company
with its own cash flow. Just grabbing a tail and hanging on seems like a very
questionable plan.

> The idea person should already have this on their plate and be working on
> it.

He is, but he doesn't know everything. Though he says there are organizations
that can help with this, so I guess that's a better place to look.

> My gut is that there are elements of "getting a freelancer to build it for
> free" in the proposal.

He's very explicit about wanting to pay normal salaries, with part of it
replaced by equity. The downside of that is that it immediately puts a
(arbitrary) value on the equity.

> I just don't see what the "idea guy" is going to be doing to create value
> while you're slinging code and the other person is handling the money and
> emptying out the trash cans.

Contacts, get more money (subsidies, investors) and work with the team to
refine the features.

~~~
brudgers
Thanks for the additional information. My take:

\+ The idea person is trying to convince people to work on the cheap. The
difference between a freelancer/contractor/consultant and an entrepreneur is
that freelancer/contractor/consultants make money by doing the work.
Entrepreneurs make money by getting other people to do the work. The more work
an entrepreneur gets for less money the more money the entrepreneur makes. The
freelancer makes money in exactly the opposite way.

\+ I'm using "startup" in the narrow technical sense that someone in Silicon
Valley's startup ecosystem might. Out in the rest of the world, the success of
companies founded on that model has led to "startup" entering the common
lexicon as a synonym for "a new business" and people will apply "startup" to
restaurants and dry goods stores and an office of consultants billing time and
materials.

There is some shared structure between startups and normal businesses. One of
the things that isn't shared is the risk reward profile. A restaurant will
never have exponential growth in users or revenues. It will never have nominal
unit costs approaching zero.

\+ One of the features of a startup in the technical sense is a focus on the
growth in the value of equity creates a better alignment of interests among
investors and employee shareholders [in a startup in the technical sense,
founders are employees].

In the end and at the start, "paying normal salaries with part of it replaced
by equity" is not paying normal salaries. In a business structured to provide
regular cashflows to owners and investors, the controlling interests can [and
often do] reduce profits via paying themselves excellent salaries, leasing or
renting intellectual, real or personal property to the business, employing
family members, etc. All are legitimate business expenses and all are normal
business practices for businesses optimized around dividends and profits.

Please don't misunderstand me. There is nothing wrong with a cash-dividend
oriented model, or with going to work for someone else.

But I want to be clear that this does not look something clearly intended or
structured as the sort of startup one reads about on Hacker News. That means
that the sort of outcomes one reads about are less likely. It also means that
the class of investors the business will have access to will not have the sort
of objectives and operational values which are more common among VC's and the
terms upon which cash can be raised are likely to be far more heavy handed.

My advice:

Have expectations aligned with what the company and its organization and
control structure are likely to be rather than with what tends to be described
on the Hacker News front page.

Focus on understanding what the "ideas guy" expects for the organization and
control of the company.

Don't go into business with people you don't understand and trust 100%.

Programmers have unlimited access to projects someone wants built for free or
at a discount.

Programmers have a nearly unlimited access to people who have ideas that they
will let you build.

I like this essay: [https://sivers.org/multiply](https://sivers.org/multiply)

~~~
mcv
Thanks for your take. I don't think he's looking to convince people to work on
the cheap, though. Of course he doesn't want to give money away, but he's
clear he wants to pay both money and equity (I think he was talking options; I
have no idea what's a good idea or what's reasonable).

I get your point though that if everybody shares equally in the company,
everybody has their incentives aligned, and it doesn't matter much how you
balance money versus equity value, because everybody is in the same boat.

On whether this counts as startup or not: it's not a restaurant. It's
something that could scale globally and to billions of users. I think it adds
the most value to users in western Europe, and particularly cities like
Amsterdam, but it adds some value to everybody everywhere. It could get really
big, but we're happy with just being big in a couple of western European
countries.

What it isn't is the kind of startup that has no business model beyond
investors and getting bought by Facebook or Google. This could work as an
independent company. And if we can get the right subsidies, this could even
work without early investors dilluting our equity. He's also looking at
crowdfunding, because you can also build a community around this. I have my
doubts about whether that's a good idea (at least at an early stage), and he
seems to be coming around to my line of reasoning.

> One of the features of a startup in the technical sense is a focus on the
> growth in the value of equity creates a better alignment of interests among
> investors and employee shareholders [in a startup in the technical sense,
> founders are employees].

So how does that work? Do all employees get a similar amount of salary+equity?
It's possible he's doing exactly the thing you say, and I just don't
understand. He did propose starting at a valuation of € 1000, at something
like 100,000 shares of €0.10, which I didn't understand (my gut reaction would
be that I'd like to buy this company for that amount, because he's already
invested more into it than that), but maybe the point is that it grows as
everybody, including him, gets the same salary+equity. (Though I still wonder
if that's fair to him, considering how much time and money he's already put
into this.)

I think this is easily the point I understand the least about.

I don't see this as building someone else's idea for free. The worst that
could happen is that I might slightly less money working on someone that's
interesting and exciting, than I would working on something that's boring but
safe. And that's assuming the project fails.

I honestly have no idea what the salary would be. I personally feel like a
€100.000+ salary would be too much for a startup looking for its initial
funding, but on the other hand, my salary can't be that much lower than that
either; it's going to be in that order of magnitude anyway, so maybe I should
stop worrying that my salary might be a problem for a starting company.

The reasons I would want to do this with him are: * It's a good idea and I
think it will work * He put a lot of effort into it already and has contact
with relevant stakeholders * I think he's honest * It's an interesting thing
to work on, and it will be an educational experience even if it does
ultimately fail

~~~
brudgers
HN user jacqesm [Jacques Mattheij] might be worth chatting with:

[https://news.ycombinator.com/user?id=jacquesm](https://news.ycombinator.com/user?id=jacquesm)

~~~
Mz
His blog: [http://www.jacquesmattheij.com/](http://www.jacquesmattheij.com/)

In case it isn't obvious to the OP, the suggestion here is based (in part) on
the fact that Jacques Mattheij is also Dutch.

~~~
brudgers
That. And smart and experienced and well intentioned.

~~~
mcv
Thanks for the advice! I'll contact him.

