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How do I found a company without YCombinator seed money or SF move?
9 points by amdbcg on Jan 3, 2021 | hide | past | favorite | 18 comments
I live in Denver, CO. I get most of my tech news from YCombinator and like the comments. I want to start a scalable company. I have little domain knowledge other than registering a company in my state, freelancing , and paying taxes as a business.

it looks like YCombinator is for seed funding, and its a turnkey solution that may or may not work, but its a major dependency, and so is moving to San Francisco.

Bootstrapping my company would make an efficient small POC/MVP of a business, but scaling is harder without investors.

I'm just scouting at this point. Suggestions/beneficial critiques would be helpful. Thank you.




You've been a victim of a bunch of buzzwords that cornered you in a dark mental alley and beat you to a pulp. This post puts the horse before the flip-flops. You first must snap out of it if you want to materialize things in the real world.

Do you know someone who has a problem you can solve for a profit? Do you know of problems you can solve and now have to find someone who has these problems?

When I say "someone", I mean "organizations" because I'm biased to selling to enterprise through a company, as this has been good for us. Here's a mini blueprint for that if you want: https://twitter.com/jugurthahadjar/status/131066829330549965...


That's a cool way of looking at it. I do know of problems. they are everywhere, from capitalization and grammar issues to dropping problems and frustrating peeps.

Thank you for setting this in a way that is understandable for next steps.

I already solved someone's problem- Open Source Blender made it impossible to key groups (containers) and so I programmed a workaround for someone as a $15 bet that I could, and made a GUI for it - he used it and thanked me, but it was kinda lame doing it for 15 bucks - I don't know how to ask for gobs of money.

I also setup someone's server (minecraft , gitea, docker compose, etc) for $30/hr - because I didn't think he could pay full rate ($66/hr) I got a few hundred on that.

I saw what FAANG's employee's make and it's ridiculous - 1.2 million after 9 years ? I want to drink from that firehose, but depending on a FAANG for an amount like that seems like a massively corruptible dependency - similar to how Google is being charged for Sherman monopoly practices.

The world as I see it is kinda acting dumb. I cannot fix all the problems I see, only the ones that directly matter to me and are within my scope to fix. I can point them out and document for other people to notice. And yeah, if my outlook is skewed due to context, correction/more context is welcomed. Thanks for caring about my issue, and providing context on a twitter that has, what appears on first glance to have good business advice - I wish it was in markdown on github so it would be easier to reference.


>Open Source Blender made it impossible to key groups (containers) and so I programmed a workaround for someone as a $15 bet that I could, and made a GUI for it - he used it and thanked me, but it was kinda lame doing it for 15 bucks

Not at all. You sold something for $15, which is more than $0 and a proof in a way that you can produce something of value to someone and sell it. Can you sell that again?

How irritating is that problem for those who have it? How expensive is it, as in, how much time and money are those who have this problem losing? How much would they stand to make in time and money? How frequently do they have that problem: is it only once in a while, regularly, or multiple times per day? Is it time of a highly skilled / expensive role or profile? Meaning: is it time of someone paid $$$/hour or $/hour?

>I don't know how to ask for gobs of money.

You have conversations in which you ask for gobs of money and keep your lips closed.

>I also setup someone's server (minecraft , gitea, docker compose, etc) for $30/hr - because I didn't think he could pay full rate ($66/hr) I got a few hundred on that.

You can't really know if you don't ask. I remember when I was in college listing my rate for a service that was 15x what others were charging. I was called by art galleries, jewelry stores, and companies to solve that problem.

One person could buy your "server setup" service because they don't know how to do it. Another person would buy it even though they know very well how to do it, but they wouldn't be doing something that is more valuable than $66 [either an activity that generates more, or napping, or anything], or that they "dislike setting servers up more than they like having $66", or that's just a distraction for them.


"but scaling is harder without investors"

Walk before you can run. Forget about Scaling right now. Forget about it. Did I say forget about it yet ? Unless you have a past track record or a very rich dad/uncle. Even then, forget about it.

So yea, Bootstrap. It is easy these days to bootstrap a software company if you can code. Focus on getting your first 10 customers. Period. Do everything manually. Learn to sell. Don't automate. Learn from it and keep trying to figure out Product/Market Fit. Can you definitely answer what your Ideal Client Profile (ICP) is yet ? Once you have figured that out, you can then think about scaling. This generally doesn't happen until at least 10K MRR or more in my humble opinion.


I can't remember if I talked about peeps with money, but they don't really relate to my problems - I have enough to get by and care for needs of those closest to me and that's all that matters at the end of the day.

Next steps are 10 customers, you got it chief. I can have that by the end of February. Putting the Software-Developer-Estimation-Error in play, I'll have that count by Christmas next year.

Manually. Got it. Learn to sell -- > How/docs would be appreciated

Don't Automate: Agreed, the human element is nice and makes me feel like I'm heard and understood.

I don't have enough domain knowledge to know what ICP is in detail, but I know that I want to create things that help me and help those directly around me - VFX, developers, people who want to code but cannot yet, managers that want to streamline process, but cannot because current process and detail knots prevent them, Architects who want to make changes, but are ignored, and best practices not followed due to neglect of being heard and understood.

Ah, next sentence says I don't need to worry about it until its big ... and previous sentence above says Walk before you can run...

Okay, well, thanks for your context/ advice. I appreciate you taking the time to comment on something that I've been thinking about for awhile, but never really doing because I haven't had context or domain knowledge and every time I tried to look it up I got firehosed and overwhelmed with TMI. Thanks for lessening my scope to a high level (level 1) rather than directing me back to detail level (level 4) info I need a business degree and hours to describe https://c4model.com/


First, you don't need to have a company initially. A company, like any other asset, is a first and foremost a liability (time/money/focus). You can legally perform almost any work as a sole trader with your personal name in most jurisdictions. Do that first. There is no legal reason you can't later assign the IP/assets to a company, when that makes sense.

Second, realise that you may fail and that the journey may take far longer than you hope. Therefore, make sure you have adequate resources. If you are highly motivated, it can be a good move to maintain another income while you work on the idea. If you are lucky enough to have a supporting partner, friend or family member that may similarly help. That way there is a lot less stress as you are unlikely to run dry.

Also keep in mind there are numerous viable sources non-equity based financing. These include commercial bank loans and trade financing (accessible once you are cashflow positive, but if you do this you probably want to register a company ASAP), vendor financing (deferred payment plans on anything you buy for the business from the seller), non-secured loans (credit cards, etc.), crowd funding, etc. All have their drawbacks, but none are ultimately as expensive as equity based financing (the worst option) if you do eventually reach scale.


Getting funded through YCombinator is not a major dependency, nor is moving to San Francisco. There are benefits to both, but they are by no means required.

Don't worry about premature optimization and how you are going to scale your business with or without investors. Build that MVP and see if you're building something worthwhile. If you are and can demonstrate that people are actually interested you shouldn't have a hard time finding someone interested in investing.

The most useful advice I can say is just start. Learn as you go.


Just start. Build MVP. Got it. Thanks :)


Y Combinator has a free library of educational resources:

https://www.ycombinator.com/library/

If you are ready to actually make a bit more commitment than that, Startup School is completely free and recommends videos/reading material and has some extra bits to it:

https://www.startupschool.org

Their current batch is 100 percent remote, so applying to YC doesn't currently require you to move to SF.


You've already ID'd the way forward: Bootstrapping.


found a checklist. Will assume Google is my friend unless otherwise noted: https://www.atomic-squirrel.net/startup-checklist/


That checklist strongly assumes you want to make yet another web site or phone app. I'm closely familiar with a few startups, 2 of which were in your area, and not one of them fit that checklist.

One started with mortgaging a house for money. The idea was to make and sell a weird magnet that would create unusually parallel field lines that could be electronically rotated. This could be used to characterize hard drive heads before cutting the wafer apart. The founders were an electrical engineer and a mechanical engineer. They were soon joined by a few other people to perform manual labor to assemble magnets. The plan was to sell these, for tens of thousands of dollars each, to companies that made the equipment for checking wafers. The deal didn't happen. Instead of giving up, they doubled down: make the entire piece of equipment, priced at hundreds of thousands of dollars, and sell it to hard drive companies. This meant more employees, creating a device the size of home refrigerator that could operate in a cleanroom. That worked. They got bought by an instrumentation company that was seeking to enter that line of business.

One started with spare cash on hand. The idea was to make accurate undetectable underwater rangefinders and datalinks. This too required electrical and mechanical engineering. SBIR contracts (see https://www.sbir.gov/ or https://en.wikipedia.org/wiki/Small_Business_Innovation_Rese... for that) provided some funding. SBIR is great; it helps you get your accounting in order. Roughly a decade later, this company is still running as a startup.

One started out of a university that was doing security research. SBIR contracts were important. The company split while still a startup, due to incompatible lines of business. One half continued on as a boring small company, now almost 20 years old. The other half grew with a doubling time of 20 months, ultimately to be purchased by a large defense contractor. It had a web page consisting of just an image and a phone number.

One that I'm less familiar with, much older than the others, built mower attachments for tractors. It got to hundreds of people and then was purchased.


That's the start , yes. What are my other options ?


(I guess I could google for a few hours to find out, help on this would also be appreciated)


I was thinking about the whole process. I could make a freelance software guild, but no one would want to join that (I wouldn't due to sketchiness/no-pay) ,maybe I could have a low retainer for developers to be on standby (like lawyers) and save a certain number of hours per month for when work floods in. Retaining developers would be a bit of fun -like a club of sorts or a guild. I'm not sure what the rates or sustaining would go (I'll pay you X money to do nothing until I need you). it would certainly build communication to an extent if it was a 2 week check in.


I think the prevailing advice in this thread will be to worry about finding the work, and only worry about finding developers once the "work floods in".


work is definitely out there. I don't like to be unprepared :\


https://www.builtincolorado.com/guides/accelerators-incubato... >> this looks promising




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