The one thing I would suggest is do you need 500k to start a startup? I would suggest the number is closer to 1/10th of that to survive for a year, at least as an Internet startup.
You need $50k to live for a year? Where are you living?
People often forget about how many of their costs don't exist if they're not earning income: Obviously you don't have to pay income taxes any more, but also the cost of commuting disappears, and the cost of food might drop dramatically (depending on where you would eat lunch if you had a paying job).
I'd say that YC's $5k + $5k/person funding formula is about right -- $5k is likely to cover startup costs for a company (at least, for the sort of companies YC funds), and $5k should be more than enough to live off of for 3 months.
In this thread, we've been led from 500K/yr to 50K/yr to 20k/yr (5k for 3 months) and now back to 50K. I think most everybody has loans, credit card debt, and a mortgage. But if you're sufficiently young enough and want to have a startup in the next 5 years, don't get a mortgage, get a normal job to pay off the student loans and credit card debt, and save up some money.
I seriously doubt pg actually expects people to do YCombinator with $0 saved up and tons of debt and live on 5k for 3 months. Or worse, with an illness or surgery that needs to be done. Get all that out of the way, pay off your loans and credit card debt, and save up some money by working corporate. Plus you'll have experience, good references, friends, and maybe good contacts from working at a company.
I used to think I was old when I turned 21 and 22, but if you're 25 or 30 when you start a startup, that's fine! But before you work at corporate, make sure you do your own startup with customers and everything in college so when you're hired, you're respected and management wants to hear what you're saying, rather than HR placing you in a "trainee" program like two high school acquintances my age will be at the same company for the next two years. That gives you credibility from your coworkers, experience leading your own project from your startups, and a degree you've been able to pay for. Maybe you could even get a Master's degree in Business or Computer Science that the company will pay for while you work.
This means you won't be a "millionnaire by the time you're age 25" like everybody our age who's heard of Bill Gates during the late 90's has wished for, but getting out of debt by the time you're in mid-twenties is the new "being a millionnaire", with the cost of everything these days.
Is that what the kids are aiming for these days? Back when I was in high school the goal was "millionaire by the time you're age 30". Oh how times change.
I don't think they think it's enough, but it isn't really about the money. You get in the right mindset when you start asking yourself, "well, how little can I live on?"
That is the right question to ask. People will made due -- not all the money needs to come from YC. Personal savings, credit cards, friends & family (both money and spare bedrooms), etc. make up the difference.
And I can't count the number of startups that have at least one other expense than just their cost of living. It's often not just code and coffee that makes a company.
And rounds of funding can take months to close, so it is more like $5K for 7 months, not 3.
Sure -- I'm a bit skeptical about the YC model of providing funding for only 3 months, too. My point was more that for someone accustomed to an undergrad or grad budget (which is probably most people here), $20k for a year is far more reasonable than $50k.
$20k? Just after my student loans, that leaves me only $6000 for the year to divide up for food, rent, health related, transportation... Even if I move back to Eastern Europe, there's no way.
Interesting. I had brought up the issue of student debt as being one significant impediment to startups happening at the pace that pg had predicted they would.
Some student loan programs have minimum payments enforced after the interest-free period, similar to some credit card payments. So, I would not assume that the payment is entirely interest.
Actually, it's "only" a little over $100k from 4 years of school. The problem is that it's become a b*tch to get loans under 10% without a co-signer. I couldn't...
You need $50k to live for a year? Where are you living?
People often forget about how many of their costs don't exist if they're not earning income: Obviously you don't have to pay income taxes any more, but also the cost of commuting disappears, and the cost of food might drop dramatically (depending on where you would eat lunch if you had a paying job).
I'd say that YC's $5k + $5k/person funding formula is about right -- $5k is likely to cover startup costs for a company (at least, for the sort of companies YC funds), and $5k should be more than enough to live off of for 3 months.