Hacker Newsnew | comments | show | ask | jobs | submit | cj's comments login

$130k is well above average for a pre-funded startup in SF - Where are they getting the cash to pay you? Are they profitable?

0.2% sounds a bit low.

IMO it's not a bad starting point for a negotiation. If you're expecting something significantly higher, it might makes sense to look at later stage companies (or a company like Google or Facebook if you want to maximize your earning potential)

-----


Personally I don't mind when people showcase their work on HN (although I agree the landing page is a bit overloaded on marketing speak).

Perhaps it'd fit in better as a Show HN.

-----


Perhaps but I don't think the author is the one that submitted it.

-----


Correct, I didn't submit it. I hadn't planned on it either, but when it hits the front page, you sort of have to pay attention and go with it.

-----


I'm sure it was from a fan of your podcast or Micropreneur Academy. You have delivered so much quality free content over the years I have no problem with a pure sales link to your book on HN.

-----


Position: Full stack engineer (Backbone / Node.js)

Location: SF

Company: Localize.js (https://localizejs.com/). We're a fast growing, engineering-focussed company building tools to simplify website localization and translation. We're redefining how companies localize web applications.

You'll have control over large parts of our product and can meaningfully impact our direction. You'll receive a huge equity grant alongside of a competitive salary with full benefits.

Apply: Email jobs@localizejs.com

________

We're looking for engineers who really shine in two or more of these areas:

— Experience with our stack (Node.js, Backbone.js, MongoDB, Redis, AWS, Handlebars, Less)

— Familiar with native browser APIs (ability to interact with DOM w/o jQuery)

— Understanding of MVC patterns

— Basic UI design skills

— Experience with early stage companies or building products from the ground up

— Interested or experienced in marketing, distribution, sales;

— Fast learner, autonomous, inquisitive, analytical

-----


I did YC in 2012 and am in Techstars NYC currently with a new company.

YC's reputation is probably 2x stronger than Techstars, but that doesn't directly translate to a 2x higher value-add.

Both programs are a lot different and will jumpstart your company. They've both been 100% worth it.

Note: Techstars programs between cities can be dramatically different (different people running each city), so I can only speak for Techstars NYC.

-----


Position: Full stack engineer (Backbone / Node.js)

Location: SF / NYC (will help w/ relocation)

Company: Localize.js (https://localizejs.com/). We're a fast growing, engineering-focussed company building tools to simplify website localization and translation. We're redefining how companies localize web applications.

You'll have control over large parts of our product and can meaningfully impact our direction. You'll receive a huge equity grant alongside of a competitive salary with full benefits.

Apply: Email jobs@localizejs.com

________

We're looking for engineers who really shine in two or more of these areas:

— Experience with our stack (Node.js, Backbone.js, MongoDB, Redis, AWS, Handlebars, Less)

— Familiar with native browser APIs (ability to interact with DOM w/o jQuery)

— Understanding of MVC patterns

— Basic UI design skills

— Experience with early stage companies or building products from the ground up

— Interested or experienced in marketing, distribution, sales

— Fast learner, autonomous, inquisitive, analytical

-----


Funny enough, there's a YC-funded company that does exactly that: https://www.clerky.com

The list of customers on their homepage is mostly YC companies.

-----


I was aware of clerky, but in all honesty I thought they were not operating any longer. Having clicked the link you posted, I am very impressed with the changes they have made in web design and product presentation/description.

-----


Coworker of the OP here. To elaborate a bit:

> How do I tell my clients that I only do meetings on Thursdays?

I generally do 10-15 customer meetings per week. When I get a meeting request, I ask if they're available on the following Tuesday or Thursday with a 90% hit rate. Meetings are almost always not urgent, so fitting them into Tues and Thurs, instead of spreading them randomly througout the week, has worked really well for me.

> How in the world does [doing 1 thing per day] work? [...] surely your goal should be actually doing a reasonable amount of things

In the context of software development, doing a large number of things usually doesn't push the product forward as much as doing 1 big 2-4 hour project.

Personally I still have 30+ things on my TODO list at any given time, but I try to center my days around getting one "big" thing done, and fill the rest of the day with smaller day-to-day tasks.

-----


So you do meetings on Tuesday or Thursdays, and rather than doing one thing a day, in fact you do one big task a day and many small tasks. That's all fine and good, but 1) it's not really what the OP's post says, and 2) it's not really very revolutionary at all.

I'm glad it works for you guys, but I'm often irritated by these preachy posts which seem to say that developers should be treated as delicate flowers and suggest all manner of strategies to preserve their preferred ways of working, many of which, if you actually applied them to the real world, would result in clients saying, "Wow, these guys are hard to work with, can we please find someone else?"

-----


> So you do meetings on Tuesday or Thursdays, and rather than doing one thing a day, in fact you do one big task a day and many small tasks. That's all fine and good, but 1) it's not really what the OP's post says, and 2) it's not really very revolutionary at all.

I would go further than saying this isn't really very revolutionary, rather it describes a fairly normal working environment.

-----


Unfortunately, there are a lot of dysfunctional working environments out there, where this wouldn't be considered "normal".

Of course, in those environments, developers cannot say "no", they can either keep working under whatever unreasonable constraints they have, or quit. (I've found this a lot more common in companies where the main focus isn't software development)

I agree it's not very revolutionary, but I still find it useful to read about how other people organize their teams and how it works, and very especially what tools they use (Slack and a few others are on my to-try list).

-----


Appreciate your thoughts! Definitely agree the article doesn't apply to everyone in all cases.

As a company we really want to spend time sharing what we learn.

This is one of the first posts we've written, so we'll try to improve in the future :)

-----


Here's some more feedback, I cracked open the article, quickly identified it as one of the preachy posts he was referring to, and closed it without reading.

I too am tired of people discovering this "blog" thing.

-----


I've been told that customers actually respect companies that say "no" to them more than the ones that always say "yes" to everything (as long as the rationale is explained and reasonable).

-----


Just like you respect a romantic partner who is firm with you and has boundaries, more than you respect one who's a total doormat and lets you trample all over them.

-----


While this sounds nice to hear, I would actually like to see some hard evidence proving this. If you have any sources backing this comment up I would love to see it. I work in advertising and I would love to tell account execs this because they are notorious for not being able to say no.

-----


My only strategy to working is just to sit there and fucking work. It's not very difficult. You sort of just tell yourself you're going to do something and then you do it. Boom, saved this entire community a blog post.

-----


" many of which, if you actually applied them to the real world, would result in clients saying, "Wow, these guys are hard to work with, can we please find someone else?"

Exactly. Totally flies in the face of saying "how high" when someone says "jump".

Not only that but a similar attitude of some old timers in a business that I was in (right out of college) was what allowed me to get their clients.

We live in a world where people want instant gratification and answers to their questions. While there may be cases where timing doesn't matter when you are dealing with sales and closing deals and keeping away the competition I have always found the early bird gets the worm. And sometimes you get the deal just by showing up because the other party is to busy to service the account.

-----


So really, you don't just do meetings on Thursday, and you don't just do one thing a day.

-----


I started 2 companies through YC and Techstars and strongly disagree with this. Both were incredibly valuable and well worth the equity for us.

Edit: I didn't mean to say that all accelerators are worth it, but I disagree with the sweeping generalization that all accelerators are screwing their companies.

-----


Looks like you're based in the US. In the UK making sure you don't fritter away SEIS money is enormously important. Effectively you have an £150k allocation up to which investors can claim 50% relief in the form of income tax deductions (plus many other great things).

Whatever reason the accelerator is doing it for (whether good or bad for them) is bad for the company if it's losing some of it's allocation without seeing the money. A lot of early stage investors won't touch a non-SEIS deal.

Edit: Also for every YC/Techstars/500 there's a 100 "incubators" that overcharge and underdeliver.

-----


could you talk about your experiences with each and how different or similar they are?

-----


Don't do that. It's spreading the myth that these lower-tier accelerators are trying to do things the same way as the top-tier accelerators.

That is extremely not the case, too often. Many times it's the equivalent of used car salesman / real estate broker type sales people - who are good at selling themselves to people with money and love to squeeze the most out of negotiations just for fun, with no clue or regard for the tech startups. Wish I was exaggerating.

-----


500 Startups does this too. From their website:

"We invest $100k in exchange for 7%, and charge a $25K program fee for a net $75K investment."

Not quite sure why some accelerators do this.

-----


My understanding is that it is largely an accounting optimization.

Their explanation: http://www.quora.com/What-is-500-Startups-business-model

Important to understand: they've got one brand but two entities, the investment fund and the accelerator. The accelerator is designed to take in $X per year in revenue and pay out $X in expenses, for a net profit of zero or slightly negative. (Having more than slightly negative is tax inefficient. You get to book the implicit tax value of the loss as a carryforward asset but you would have no way to ultimately realize it since the accelerator is designed in this model to never actually make significant amounts of money.)

"But isn't it equivalent if you just give them $75k." No, not equivalent. This manages to teleport revenue through time from the eventual carry into the present, pays for present cash expenses, and gives that revenue favorable tax treatment.

How exactly it's favorable tax treatment is a great question for a tax lawyer. Here's my layman's understanding: you can deduct expenses from capital gains prior to taxing them but they have to have a certain level of connection with the gains, and it is possible that "general administrative expenses of our operation" don't have that level of connection. Shuffling those expenses into the accelerator makes them clearly deductible against the accelerator's ordinary income, since the accelerator looks like any money-comes-in-money-goes-out IT business. The program fee is clearly revenue. Their rent is clearly an expense. If revenues equal expenses than their revenues are taxed at, effectively, 0%.

"Tax optimization on $25k doesn't make sense" would be a sensible objection until you remember that 500 Startups operates at industrial scale and that this is suddenly $3 million in revenue a year.

n.b. 500 Startups would, eventually, pay whatever the normal capital gains taxes are on the carry (and/or ordinary income tax if the law is ever changed to make it less favorable), in accordance with the standard treatment of investments under US tax law. It's not an avoidance strategy, it is a temporal optimization strategy.

Edit to add: Above explanation is purely "My best understanding of the matter as someone who had no hand in putting this together." based on my inexpert understanding of standard US principles of taxation and their public statements about it.

-----


There is an added item at play here: the equity stake and future pro-rate amounts are based on invested capital, so for $75k you can get 100k (or more) in pro-rata.

(The more comes from the fact that a lot of times this is convertible note with a discount, and the discount also provides a bump in pro-rata rights. See http://www.bothsidesofthetable.com/2014/10/12/the-authoritat...)

So this isnt just tax optimization, but investment/equity optimization as well. That said, smart founders should probably value their involvement in the accelerator as an valuation multiplier: if it isnt, they shouldnt join one.

-----


The incubator could avoid profitability equally well by not charging startups at all. So capital structure and tax incentives are irrelevant in that sense, leaving the question of why startups are being charged more than 8000 USD EACH MONTH in fees and whether they are getting a good deal.

I personally consider it deceptive for any incubator to ask a participant to pay for things the incubator positions as free support (i.e. use of "our" office space). And it is perfectly valid to call out any business as predatory when its behavior seems purposefully structured to confuse customers about how much they are paying and what they get for it.

-----


If you invest $100k in exchange for $25k services purchased, you now have $25k revenue. If your business is valued at a price/sales ratio of 20, your business is now worth $500k.

-----


> If your business is valued at a price/sales ratio of 20

How is that multiple even close to right? Everyone I've ever talked to says 5-10 is more realistic, and the push-back you get grows exponentially as you approach 10.

-----


It depends on what kind of bubble you're in, and how negligent your investors are regarding due diligence. Obviously, if you invest $100k in a business in exchange for $25k services rendered, that isn't $25k of "real" revenue.

During the 1999 .com bubble, Yahoo (iirc) and some other companies invested in startups, in exchange for an agreement to purchase their services. That let the corporation pad its revenue, inflate its earnings, and with an already-high P/E ratio, gullible investors bought.

-----


Really great post, definitely required reading for anyone who has raised a seed round.

I've personally seen a few startups affected by this. The bar for raising a Series A round is a lot higher than a lot of seed-stage founders think it is.

If you've raised a seed round, talk to your investors / mentors ASAP and figure out what metrics you need to hit in order to raise a strong A round.

-----

More

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact

Search: