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Apply with me to YC in the next 3 days and change the world
144 points by tempaccount987 on March 26, 2012 | hide | past | favorite | 72 comments
I'm throwing a hail mary here - because desperate times call for desperate measures.

I have an awesome prototype built that brings an emerging tech to the masses and I think has a good shot at changing the world. YC has expressed interest (got to the interview as solo applicant in the last batch but decided to defer without a co-founder). This idea won't be fresh forever (there are others starting to look into it) so I want to move on this asap with the right team. But there is one thing holding me back from knocking this out of the park: I have yet to find the right co-founder.

For the past year I've met with 1 or 2 people a week, either by phone or coffee, and despite some close calls that person hasn't turned up yet. But I believe they are out there, and I'm hoping they are reading HN tonight.

Getting a "shotgun wedding" is really not ideal, but if you are the the right person then I don't care how we meet. I'm going to improve my chances of finding you any way I can.

So what is the idea?

Credit card fees are too high. In the next five years merchants are going to start moving away from paying 2.5% plus 30 cents per transaction when fast secure alternatives become available. They're going to (at first) offer them at checkout alongside traditional credit card options, and then eventually start incentivising consumers to make the switch. If Amazon has a 5% margin on a $100 text book they aren't going to give $2.00 of their $5 to Visa/MC forever.

The same thing is going to happen in mobile. Your phone is going to become your wallet, and I don't think 30 year old credit card technology is going to be powering this new ewallet when someone goes to buy a cup of coffee in 10 years. All solutions today are carrying along the legacy baggage of credit cards.

So what will this solution be? It's going to be a digital currency, like bitcoin or some derivative of it, running in the cloud with a solid api to build an ecosystem around it. It's going to spring up organically in developing countries first I think, or places without stable currencies. If you think bitcoin sucks, this isn't really the right place to get into a flame war on it. I'm making a long term bet here and when it's more clear in five years or things have evolved it will be too late to jump on this, so whoever is going to win this needs to start now. Digital currencies show some early promise but are way too difficult to use for normal people (or are proprietary and controlled by one company like facebook credits). To me this is an opportunity, and I'm in a position to start laying the groundwork for this new platform.

Here are some screenshots of the prototype: http://imgur.com/a/KSKOt It has basic send/receive functionality but is still super early stage.

In a few words, this is paypal for bitcoin. The killer app will be in disrupting transaction fees that are a tax on every transaction in our economy.

Who do I want to meet?

You must be technical, have a passion for this space, and have insane work ethic. This is going to be super fucking hard, but the payoff is that we have a non-zero chance of really changing the world in big way. This isn't another photo sharing app. Let me just stress again that you must be a deeply technical builder (I am one too). There is no room for idea people at this stage. I'm happy to share more of my background if we get in touch. (Edit: I added some of my background below).

If interested please send an email to applytoycwithmeandchangethewor@gmail.com And include (1) something awesome you've built (2) why you would be right for this and (3) a phone number and how late I can call you.

Even if you aren't the right person, please upvote this and help us meet. This post could literally form a company in the next three days.

What dmix said. Why are you using a throwaway account?

A co-founder relationship is very important, and my willingness to join you on this venture has less to do with your idea and more to do with you. Specifically:

- Who are you, and what have you done?

- What is your professional and personal experience, and what does it bring to the table in a general sense of running a startup, and in a specific sense, this idea of yours.

- Why you? I need to be able to trust my co-founder pretty much absolutely and unquestionably. What is your character and who can vouch for it?

Funnily enough, your idea and the fact that you have a prototype is a fairly minor signal compared to the above.

The irony is he's using a throwaway even though his identity is not concealed. If you visit the website address in the screenshots, click "help" and then take the name listed and google it you have a full profile on the guy...

It's a good point - I added some details under dmix's comment. Thanks!

It may be a throwaway because his employer doesn't yet know about this. I've had something I posted here (about maybe looking for a new job) come up at work. It actually led to a good conversation with my boss, but that isn't a preordained outcome.

Also, there's no possible way that amazon pays the same terms as normal customers, is there?

I know the OP and he's the "real deal." Hard-working, friendly, insightful, and smart. I'd definitely start a company with him if I hadn't already started one last year. So if you've been thinking about starting a startup but don't have a co-founder, shoot him an e-mail!

+1 He definitely is the "real deal". Known this guy for years and he is all of the above + healthy and hearty. Much startup experience and independent projects. Working with him on this would be a true adventure for those who have the privilege.

I'm not currently looking to join a startup. But if I was I would rather have 5 paragraphs about who you are, why you are the right person for this problem and what you bring to the table... with 1-2 paragraphs about the idea. Team = more important than ideas.

It's a good point - I was trying to stay semi-anonymous.

For now I'll just say, I've built one startup previously to profitability and 20k users. Have also worked at 2 YC companies, one as employee #2 and the other in a role that is relevant to this idea. I have a masters in CS and studied economics undergrad.

What dmix & potatolicious said, plus:

- The killer app in this space is whether you have an answer to "Why can a startup displace the incumbents?" and "How are you going to get people using this?" The answer to the second must be understandable by my dry cleaner, who would not trust bitcoin even if it were issued by the US Treasury. The prototype at this stage is probably about as useful as PayPal's first prototype (which was for a different idea, IIRC). Edit: not hating on Bitcoin, just pointing out that success here will derive in part from expanding its use beyond the core early adopters.

- Work on your writing & proofing. It may seem petty, but you're aiming big so this stuff matters. People (cofounders included) will pay attention to sloppy writing at this stage, using it as a proxy for information they don't yet have about you. Plus, when my cofounder emails senior people at major banks, will I feel compelled to rewrite the emails? Temp accounts plus poor writing => no response.

Hope this helps, and good luck.

On that second item, writing & proofing: it might help to use a word-processor that includes a grammar-checker. Spell-check alone is not sufficient to catch things like

"It's killer app will be in" => should be "Its"

"Their going to (at first) offer them" => should be "They're"

"along side" => should be "alongside"

Thanks! Fixed some grammar items, you're right about that.

For your dry cleaner I would say: How much do you pay now per transaction for credit cards? Would you like to pay x instead?

They probably won't care or think about digital currency, but they might think "low fees". There is value even if only a few people use it at first. Obviously that is just the tip of the iceberg, but for anyone interested happy to talk more.

Thanks for the feedback.

I agree that credit cards are going to be displaced, but what is the rationale that the solution requires its own currency? Most transactions are very much within national (or European) boundaries.

I think companies like Venmo, Dwolla and Square (or even PayPal) are well-positioned to becoming credit card alternatives.

So: why Bitcoin/a separate currency?

I think Dwolla is a valid approach that is better in the short term (doesn't ask people to change as much) but is not as good in the long term. They are built on ACH which still takes 1-3 business days. The way I think of it is Credit card = fast and expensive, ACH = slow and cheap, digital currency = fast and cheap. So it's the speed of credit card at the price of ach. Also, ACH doesn't work internationally well so there is an opportunity there (Western Union, etc).

Sure, but look at the way Venmo/Square are approaching this problem.

Venmo: You have a venmo balance. Initially, money is brought in from a CC, but they just moved to Bank Accounts. Payments are fast because it's just venmo balance --> venmo balance most of the time.

Square: They control apps on the merchant (register, square) and the client (card case, now pay with square), rendering a physical credit card useless. At some point they connect to your bank account as well (or open their own bank).

I think having a niche currency is just another barrier to success. Not saying that you shouldn't proceed with this opportunity, but you're far from the only player in the space who realizes the magnitude of the opportunity and sees what the future looks like.

Also, the way Dwolla became well-known in the first place was by supporting Bitcoins.

Conceptually, I believe Bitcoins, or some derivative of them, will change the world. However, after writing a 25 page report on the legality of Bitcoins, I'm convinced the US government will view them as "domestic terrorism."

Yes, you read that correctly.

There are laws that state that anything that can be used to facilitate money laundering OR threaten the US economy is illegal.

Don't get me wrong though, I'm one of the most active Bitcoin fans I know, I think the concept is unbelievable. I just wanted you to know that there might be some additional legal barriers as you can gain traction.

Stay hungry, stay foolish.

Can you link to the paper? Happy to read it. My thoughts/plan in general though: basically do what facebook credits did. Get licensed as a money transmitter, collect info on all users to comply with AML and know your customer laws. It's a pain, and expensive but doable and there is precedent for it (Paypal blazed this trail as well). Then there will be a PR battle where you win hearts and minds by highlighting the benefit to small business owners.

Bitcoin Paper:


Due note that the paper was written in April of 2011. However, this shouldn't change any aspects of the legal analysis.

If you have any more questions, or just want to talk, let me know!

Good thing there are 200+ other countries in the world.

How many of these countries have laws relating to financial intelligence that will make a completely anonymous form of currency illegal to implement? Large companies simply won't be allowed to accept a large quantities of money from anonymous people - it's too perfect for money laundering and parent has a very good point here. Perhaps there's a real opportunity here to start architecting "non-anonymous bitcoin" so government's needs for financial intelligence is appeased.

That being said, there there's still monetary policy to consider. In South Africa, for instance, I suspect Bitcoin would face legal challenges given the strict monetary regulations imposed by the Reserve Bank. Somebody earlier in the thread mentioned MPESA - a mobile payments solution in Kenya, which is also available in South Africa. MPESA grew quickly but growth has a ceiling because it cannot be used for business-to-business transactions, or even for a very class number of business-to-consumer transactions, as the transaction volume limit imposed by the Reserve Bank in these sorts of schemes makes it feasible only for individuals to use.

I hate conspiracy theories as much as the next guy, but there are a few basic principles I follow:

1) When people are making money off of something, they protect that method of making money, and evolve if necessary.

2) There are intricacies to our currency that might not seem immediately obvious. People depend on the discreet nature of physical currency - it controls the entire world of corruption (a lot of movies like to use diamonds as black market currency, but in reality its too difficult to rule out man-made diamonds these days, or to quickly evaluate the worth of a lot of diamonds). Corruption does not occur solely among gangsters, but all manner of people - from the most prolific bankers to the most "reputable" politicians. Digital currency can too easily be traced.

3) The government has made little effort to create its own digital currency, despite the fact that it would save tax payers billions, negating the need for the IRS, Mint, and reduce the need for the FBI and Secret Service (which monitors counterfeiting among other things)...and the corruption associated with physical currency. You might encounter more red tape and inertia than you anticipate -- if not now then when Visa lobbies its favorite candidate to create laws that work against you.

4) Third world countries are not a great target for digital currency IMHO, unless they have prevalent technology and understanding of it.

> 4) Third world countries are not a great target for digital currency IMHO, unless they have prevalent technology and understanding of it.

I live in Somaliland. The top telecom company here, Telesom, has a mobile money transfer service here called Zaad. Basically, people setup a Zaad account at their local Telesom office and exchange their physical currency for credit in their Zaad account.

They then buy stuff at shops or send money to folks right from their mobile phone using a USSD interface. The USSD interface works like this:

1. Dial *888# 2. A prompt appears on your mobile phone. The prompts could be a menu, a request for a password or whatever 3. The user clicks reply (a context menu appears on the phone) and types in a reply. 4. Go to no. 2 until the transaction is complete.

Zaad has exploded in growth in the 2 or 3 years it's been around and has freaked out a lot of other businesses here who suddenly got a scary new popular competitor. The best part of Zaad is that you don't need a smartphone or internet connectivity to use it. Literally any mobile phone works with it. Even an old-school Nokia 3310.

Telesom isn't the first country to come up with this idea. If I'm not mistaken, the first company was a Kenyan company called Safaricom and their product is called M-Pesa. It has 6 million subscribers using it.

Imagine 6 million folks sending transactions and getting a tiny cut out of every transaction. M-Pesa is huge.

Very informative post, thanks for sharing.

For anybody who'd like to get a feel for how well the existing players in this market are executing, take a look at Zaad's site: http://www.zaad.net/

If you think that's bad, try removing the www in the address. It just hits a GoDaddy parked page.

Also, take a look at this site: http://hadhwanaag.com. It's the most popular news website in Somaliland. I'm pretty sure someone can make a pretty penny just by setting up a nice themeforest-based theme for many of the country's websites.

The hard part will be convincing them their website looks atrocious.

Without commenting on your first 3 points, I'd argue that a 3rd world country could potentially be an excellent place to gain mass adoption.

In the U.S. we have credit cards and fixed addresses to mail bills. There's probably a billion people who don't have this. There is absolutely an opportunity in 3rd world countries to leapfrog credit card systems, which for a variety of reasons don't work in these environments.

There's a mobile phone currency company in Kenya called MPesa which is currently processing 20% of the countries GDP! There's simply no way you could get that adoption in the U.S. that fast, since you'd have to displace VISA, Mastercard, and debit cards...no easy feat.

So OP is working on a hard problem, but its doable.

IIRC, M-Pesa was launched by the dominant mobile phone carrier in Kenya. Its not exactly a model that a typical lean-startup even has an ice cube's chance in hell of success with.

Just to clarify, I dont think that its impossible for a lean-startup to be successful in mobile payments, but I doubt that they can do that just by emulating m-pesa.

That is (genuinely) a great point, but I would ask what this mobile currency is based on - the country's currency? Is it mined like bitcoin? Processing payments via mobile phone bills is a different beast than creating a new currency, IMHO...but then again, maybe I am not understanding these companies correctly. :)

you may not have heard of m-pesa - which arose out of people being able to transfer mobile minutes and then became a fully fledge mobile currency in it's own right.. as xtrumanx says (below) m-pesa is huge. you might also note that this has already happened ;-)

That is very interesting. Is there some way I can start developing apps for the M-Pesa ecosystem? Mind pointing me in the right direction? :)

sure is (interesting). unfortunately I don't know enough about it beyond just suggesting you google m-pesa and go from there.. ;_)

Third world countries are great targets. In India (if you can still call it 3rd world) one of the largest mobile phone provider has come up with digital money that you can send to any other phone number. And most people own a mobile phone even if they have not seen a credit card in their life.


I don't think alternative currencies have a long-term future. The only reason they exist now is because people and governments in most countries are quite ignorant about technology. Once they become more widely used, they will start causing a whole lot of problems* and will be banned by governments.

The real solutions, in my opinion, have to use real currencies or they will face a severe risk of death by regulation.

* Use for illegal activities.

* Problems with controlling capital flow across national borders.

* Problems with estimating money supply in an economic system etc.

There is a precedent for doing it legally, Paypal, Facebook Credits, etc are all digital currencies. They do it by getting licensed as a money transmitter and complying with all AML and know your customer laws. It's an expensive and long process but people are able to do it. Not sure I fully understand the last two bullets. In general I think you're right that this startup will have larger legal challenges/costs than most but building something that is 100% above board and shows you're making a good faith effort to comply/do the right thing buys you a lot of good will. You want to be YouTube, not MegaUpload.

Paypal is more of a wallet service that works with real currency. Even then it's quite heavily regulated in India, where I live. I'm not sure about other developing nations. FB credits have extremely limited use as far as I know, so it's not much of a threat. Another non state-issued currency is food coupons (like sodexo). As long as the new currency cannot be universally used, it's of no concern to the authorities.

You cannot, for example, pay some shady person for a handgun with FB credits or food coupons. From what I can tell, your currency will make that possible. If this transaction happens with a regular bank account (through creditcard or bank transfer), the bank will be able to point the police to the person involved. Will you also be able to do this? The price for reliably collecting, holding, updating such information is quite high.

I'm pretty sure that storing an audit of your transactions is a legal requirement for any financial services company. It's a compliance no-brainer.

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Did you invest in Bitcoin when it was $21, and want to bring that price back up?

Paypal had enormous problems with fraud that almost killed them (and did kill their competitors).

I think Bitcoin is awesome, but it offers users no protection - it's more of a cash replacement than a credit card replacement. This is something that might end up being difficult to handle (something to make sure users will understand).

I like the idea, mainly because its such a big domain and a hard problem. I don't feel however that you should find a cofounder this way. Since this is such a tough domain to begin with, meeting someone and then starting a business together within days is setting yourself up for failure. The idea of changing the world is cool, and may be able to bind people together for the immediate short term, but what happens when you hit the really bad lows in the startup? You haven't known each other for very long, and may split. That being said, I'm sure you have already thought about that, and are ready for that risk. If you are, then god speed and I really do hope you can change the world.

Transferring bitcoin funds is already easy with the GUI. Sure a wrapper around it might make it slightly more user friendly but it's trivially easy to implement. Not to mention the fact that Bitcoin is illegal in most developed countries.

It is? How so would that be?

IMO You're better off applying on your own and stating your intention to find a cofounder.

YC does occasionally accept sole-founders who plan to find someone else, as far as I know (I may be wrong) they've never accepted a team which was put together by strangers for the purpose of YC.

YC places a huge emphasis on team (over everything else in the application) and team dynamics play an important part in that. They need to know the team won't fall apart when under pressure as that's one of the main reasons startups fail. If you pair up with someone you've never worked with, then neither you or YC have any indication how the team dynamics will work.

Why are you trying to recruit someone just like you (technical)? You might want to consider looking for someone more on the business dev side, or someone with mad banking knowledge/security chops.

One thing people sometimes don't realize about financial services apps is it is not just the quality of the app that matters, it's how they deal with fraud (chargebacks). This alone destroy most early starters. PayPal succeeded where others failed because they started out trying to solve the problem of online fraud and then pivoted to become an e-wallet.

I don't think you've properly thought this through. Many people have, and there's a reason we still have the system we have today:

How do you handle chargebacks? What about fraud? If you don't properly protect your users, you're not really providing a good service, and you need to make the rules incredibly clear for your merchants, they aren't going to work with you.

How are merchants supposed to respond to the volatility of bitcoin? For a currency that sees semi-wild (compared to standard FOREX) swings in value, they could be waffling between the red and the black on a daily basis. There's no value in holding bitcoins when there are better currencies out there.

Where do you make money? Transactionally? On a flat-fee basis? In loaning out the cash? The problem with banking is that the fractional reserve system has created a risk environment such that you can't make money unless you're leveraging your reserves for lending, and that's an incredibly complex system on its own. The big banks make money because they are vastly huge. How would you move into that scene? Is the intent to be acquired? How do you leverage startup inertia to compete against a company doing hundreds or thousands of times the volume in a day than you'd hope to see in a month?

Just a few questions. Many people have given this particular problem a lot of thought, and none of them have been able to make it work as of yet.

Sometimes thinking this much about why not to do something keeps you away accomplishing things in life. I am sure when Amazon started in 1994, if they had to worry about all the problems associating with selling things online, they wouldn't start. If Google had to worry about how to make money from a search engine in beginning, they wouldn't be here. Assume that problem you going to face in future will have solutions and just start your idea.

Not fond of the idea and I just did not get inspired nor saw its potential.

For next batch, I applied as lone founder with no-idea, if you did not get in, seems like I might have similar fate.

Correct me if I'm wrong but doesn't this just boil down to writing a bitcoin client web app (and/or mobile app)? So you are betting the house on bitcoin becoming popular.

I agree with potatolicious and dmix. Also, what's the difference between "Bitbank", Paypal, Stripe, etc. What makes this idea unique?

Paypal, Stripe, Square etc all use credit cards which cost 2.x% plus 30 cents. Bitbank uses a digital currency with low or no fees. It's more competing with Visa/Mastercard than with Paypal, Stripe, etc. Those companies could become partners actually if they decided to support it as another payment method.

But from my POV (consumer), I get a 30 day float (assuming I pay my bills on time). Whats in it for me to not use a credit card?

You know how some people pay with credit card simply to get the airline miles or 1% cash back?

Who pays that? The merchant. (Well, the merchant adds it to the price that everyone pays, but I digress).

Now given the option. Pay $100 with your credit card or pay $98 if paying with bitcoin, which are you going to choose.

Stripe and PayPal both are at 2.99% + $0.30, Square is at a flat 2.75%. So giving the customer the 2% discount for paying with bitcoin still yields the merchant more than had the customer paid with a credit or (signature-based) debit card transaction.

But, almost no one seems to offer a discount for cash - which they pay 0% on and they don't have to wait to collect from the credit card companies.

There are so many of these alternative payments systems available nowadays, but none seem to really offer any benefits (or protection or increased warranties) to me over a credit card to change my personal purchasing behavior.

Merchants incur expenses dealing with cash as well, so accepting $0.98 worth of bitcoin might be equivalent to accepting $1.00 in cash and coin after the hassle of dealing with cash in factored in.

It will be some time before we see bitcoin used at retail, point of sale. But it really solves problems for online purchases -- for the merchant. And maybe that's where the the sweet spot is. If you want what the merchant sells and the merchant wants bitcoin (for the reasons you state -- protection from fraudulent customer chargebacks), you won't be given the opportunity to use your credit card.

I'm gonna call it right now: bad idea. It's not about efficiency, it's about convenience. Plus, what makes you think you math is right? Square only takes 2.75%, and also Amazon is a high-volume, low-margin exception. The long tail is low-volume high-margin, and I doubt you will convince people to radically change payment systems for a lousy 3% savings.

I have a friend of mine who would be a good fit. He is working on a product in the exact same space as you and he has a EU license to act as a payment provider. He's also the kind of person who wants to change the world.

Email me at allhailarnold@gmail.com and I will introduce you to him.

I would also suggest not to make it sound like a job interview. At the moment you have an idea and not much else. If you want to find a cofounder then you need to be the one showing people why they should choose to go with you not the other way around.

Although I'm only slightly interested (don't really have too good of a work ethic :)), I think this is a really interesting space that has plenty of room for innovation. Hope you kill it!

Boy. This is the 60000 dollar question isn't it? Who wants to be my partner? Good luck. I really hope you find them. Taking on the credit card industry is going to be awesome!

a little unfair to tack this response on to this particular post, but it reminds me (again) how much time people spend on the outward appearance of apps around alternative currency without addressing the part that's actually hard.. how do you give an alternative currency real value?

>how do you give an alternative currency real value?

I'd start by looking at how they implemented the Real in Brazil. They managed to convince an entire country to trust and use an, at the time, completely fictitious currency. There's an excellent article about it, which unfortunately I can't find.

The trick was to get people to start thinking of prices in terms of Reals, while continuing to use the original currency. If you can accomplish that, you've given your currency value.

There's an excellent article about it, which unfortunately I can't find.


HN Discussion: http://news.ycombinator.com/item?id=1757716

>how do you give an alternative currency real value?

That's not your job. People either will, or they won't.

i agree that the value will come from things external to you - i.e. the best you can do is set up the conditions or rules of the interaction in such a way that they are conducive to them creating or assigning that value - but simply ignoring one of the most important factors in determining whether people would actually use your product as 'not your job' .. i dunno.. doesn't sound like a smart strategy

I love all the "aren't the current players going to win this war" posts. That's a HUGE advantage for you: everybody is going to underestimate you and your possible impact.... until it's too late. This isn't a sure bet, not by a long shot, but it's got a good chance of being something as impactful as Square has the potential to be, and that's a big fucking deal y'all.

Because bitcoin worked out so well. Have fun with that, dude.

There are many hard startup problems (autonomous robotics, craigslist competitors) which have had people crash upon the rocks in pursuit them. Does that automatically make them stupid to try? Bitcoin's failures don't mean all non-state issued digital currencies will fail.

Yes but he's actually using bitcoin, not trying to come up with another digital currency.

No thanks. I'd rather sell sugared water.

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