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Further boilerplate reduction: https://gist.github.com/patio11/b472ccb2df3e1fcce78c I was going crazy with all the sit-ups to hook actions/stores together prior to this.

Charge more. Your rates need to have credit risk built into them. Unless I miss my guess, they don't, and they're at a discount to market to boot.

How are you sourcing "They're going under"? If it is true, you won't be able to collect -- if the bank account is bare then it is bare, and there is no reason to expect the founders to backstop this invoice for you.

If you're simply being fobbed off, then the usual escalation options are a) restate demand for immediate payment via certified mail and b) lawyer sends them a nastygram.

But either way, charge more.


I second "raise your rates". I'm 90% sure you are significantly undercharging because a) you live in NYC b) you are getting work for SF companies, and one that's YC c) you care a lot about a $8,000 debt.

Double your existing rate immediately and don't look back!


For reference, I'd kick myself for undercharging if I billed that much for a week, and correspondingly consider it "annoying but not business-critical" if I had trouble collecting it. Charge more.

Your rates should not be pinned to a lowball bid for an annual salary for a newly minted CS student. You're assuming far more risk, and hang around just long enough to deliver major value and get out, rather than being just productive enough that it's not worthwhile to hire someone to replace you.

You need to operate like a business that is delivering a high-value service in exchange for a reasonable fee. And you should probably narrow down your offering & marketing to the point that you have very few direct competitors, and practically none once you account for location and availability.


It was noted at both Mizuho and the exchange by actual humans, all of whom made the decision that they lacked personal authority to overrule the trader. The report by the regulator later was frosting when noting this, AFAIK.

Wow, again! I don't know what their system looks like, but it doesn't seem to me that it should require a lot of authority to bounce the trade back to the trader for a second confirmation -- or maybe send it to a second trader in case the first one has a hangover or something.

I had to stop and think about what actually happens when someone posts an order like that, well outside the current bid/ask. What price(s) does it get filled at? Apparently -- if it works the same in Japan as here -- each bid already in the book would execute at its existing price, despite the fact that the asking price on the new order is far below that. You might think that they would execute at the average of the two prices, but that doesn't seem to be the case, from what I've managed to dig up. An example like this suggests to me that an even better choice would be the geometric mean. But the difference would matter only when someone had screwed up very badly.


Yup, orders that are placed well outside the bid/ask just fill every order in the order book until they are filled. It's commonly called sweeping the market and happens on 1-2 ticks (price levels) around the best bid/ask pretty commonly throughout the day depending on the product. Limit order books are actually really fun things to model and the rules around different exchanges books are quite neat.

The problem with disallowing your trader from ripping through a lot of the levels of an order book is that it can be a risk reducing move and what you intend to do sometimes. This trade is a clear fat finger but there are times when you will want to sweep the book to get hedged.

For instance, let's say your desk just got slammed with a ton of risk on an OTC (over the counter) option trade. You can immediately alleviate a lot of that risk (while paying through the nose) by selling 2000 contracts or 5 price levels of the ES (SP500 future). You can immediately place that order and get it filled and be hedged. If there were multiple points of human intervention required then you might lose a substantial amount of money. 2k contracts on the ES is $25,000 a tick. If word leaks that people are going to need to start hedging big then it could easily move 10 or 20 ticks away from you while waiting for your risk management team to approve your trade as not a fat finger.

Generally it's cheaper to just fire error prone traders. Heh, and anyone that is about to execute a 2k contract option trade generally has their hedge order queued up and ready to send to the market as soon as they hear the other side agree to their price.


Ah, very interesting. I had wondered how option writers managed their risk. I wonder how often this is the cause of the spikes I see on charts.

If word leaks that people are going to need to start hedging big then it could easily move 10 or 20 ticks away from you while waiting for your risk management team to approve your trade as not a fat finger.

That's why I would expect it to be done in software. Yes, I understand that software can be buggy, and hard-and-fast rules sometimes need to be bent, but I would still expect it to be cheaper overall. But I haven't actually worked in the business, so this is just my $.02 :-)


Heh it's options writers or buyers (just options market makers in general). A lot of stuff is electronically traded but there are still some very large orders with huge deltas that are put up on telephone calls.

And yeah it makes sense to have an extra prompt pop up if it's an order over X contracts or Y ticks from the market. And I've seen a lot of systems set up like that.

A lot of times traders will just punch the "OK" box and do their trade though.

That's of course if traders are manually hedging their portfolio/trade. A lot of times they just set their portfolio to auto-hedge based on certain parameters (ie at Z deltas or we've moved C ticks in a time period).


Yes. Minomonsters is one example of several.

Post Sarbanes-Oxley, it never makes sense to IPO, ever.

Let's go with, maybe, "Pre-SOX, you could reasonably IPO on revenue in the tens of millions with a valuation in the hundred of millions. SOX decisively removes that option. We now have economically viable alternatives to IPO, for high-growth tech companies, at valuations into minimally 'the tens of billions of dollars.' It may make sense to IPO if one is not a high-growth tech company or one desires a valuation higher than 'tens of billions of dollars.'" (Context: Uber is $25 ~ $50 billion, Microsoft is ~$375 billion.)

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The a16z deck posted a couple of days ago made a great point relating to this. In the past, an IPO would allow everyone to participate in the upside (e.g., 1000%+ growth of the Microsofts and Oracles). Now, the ones reaping the rewards are the private equity groups. By the time they unload companies on the public markets, most of the upside is gone.

https://a16z.com/2015/06/15/u-s-tech-funding-whats-going-on/

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Is YC incrementally losing it's value to startups with every class that starts (and grows)?

Would you rather have the deal that Airbnb got from YC or the deal that the next three kids with a gleam in their eye will get from YC?

Airbnb vintage YC deal: Here's $15k for 7% of your company. Also, welcome to the club! Nobody has heard of us, but we're still a club.

Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too!

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"You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing."

While I concede your greater point, you're really overstating this part of it.

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My ex-ante expectation of a YC company in the current class raising successfully conditional on them being a going concern as of Demo Day is > 95%. With regards to valuation, I was joking -- the discursive market for it was the "angels weep" wordplay but it belatedly occurs to me that for people whose primary association with the term "angel" is "angel investor" that is less obviously intended to be a joke than it is with the rest of us.

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To be fair, most of those benefits were there early on. Everyone in the industry definitely knew about YC already when I started (S07). All major angels/VCs were reachable through the network already. Valuations were good (for back then).

But the network effect does make the club worth more.

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> Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too!

Sigh.

YC has a lot of cachet and no doubt opens certain doors, but founders should never drink too much Kool-Aid. For all of the wonderful things YC provides, the success of YC startups basically follows the same power law distribution you see across the Valley and no founder should delude himself or herself that being part of a "club" guarantees success in today's market.

Just look at the experience of the founder of Dating Ring (YC Winter 2014)[1]:

And so we focused on growth. For a year, my cofounders and I worked 100-hour weeks, all major holidays and weekends. We gave up social lives and had one of the most impressive graphs at the crazy 78-company Demo Day YC hosted – 60% MoM revenue growth, with 25k in revenue for March.

We had more press and name recognition than any other company there, and my pitch was named as one of the top 8 by TechCrunch.

Out of the 500 investors there, only one invested.

[1] http://advice.datingring.com/fundraising-while-female/

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Read a little more carefully. He didn't say YC guarantees success, nor does he believe that. (I'm one of his cofounders, and this came up).

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You're correct that patio11 didn't say that but I think it's helpful to remind people that the power law still exists. It's really easy to fall into the trap of survivorship bias and I'm sure there are plenty of folks out there who would benefit from being reminded that "... no founder should delude himself or herself that being part of [YC] guarantees success ..."

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A denial worthy of a top flight attorney. He implied that by this paragraph:

"You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too!"

So we have:

"mortal lock"

"make angels weep"

"preferential access to every connection which matters"

"top tier VC firms"

"one free TC article".

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What an oddly noisome comment.

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Nice SAT word (I didn't learn that at the school that I attended).

You find being called a top flight attorney offensive?

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As a Level 15 message board arch-nerd, I love that word, because it's a sort of two-fer: it suggests "noisy", which is really what I'm getting at, but actually means "annoying" --- "noise" and "annoying" having apparently different roots.

I felt like my response was dispositive. I'm telling you straightforwardly that's not what he meant, and I have good reason to believe I'm right. Your rebuttal actually ignored the substance of my comment and instead launched into a tedious semantic tea-leaf-reading exercise.

"Noisome" seems like the right word. :)

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You only need 1 investor - so long as they have enough cash for your needs and fall under the "good/adds value" category. To me, that should equal a hurrah rather than a sigh.

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In a past life, I built a company with backing from a single investor. If you're going to go down the path of building a company that requires outside financing, you can never assume that a single investor has "enough cash" to meet your future needs.

Your investor could be a billionaire and there are still countless reasons he or she might not be able or willing to provide additional financing. Just a handful: legal problems, health problems, travel, divorce, death.

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You don't drink the kook-aid. You take advantage of every advantage.

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The problem is that many of the things founders assume to be advantages really aren't, or they're not as a significant as believed. In business generally, a lot of people overvalue and place too much emphasis on "advantages" that don't directly influence the metrics that matter, like sales, cost of customer acquisition, churn, etc.

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Being in the YC family is clearly a meaningful advantage for many/most startups.

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You're entitled to believe whatever you'd like, but if you want to make a convincing argument that being a part of YC is a meaningful advantage, you'll have to explain why, as I previously noted, the success of YC startups basically follows the same power law distribution you see across the Valley.

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Competition to get "the next YC" deal is much greater now than it was back when "nobody has heard of us but we're still a club" but did provide value. [1]

If you don't get into the club and haven't passed the filter (which almost certainly has become more difficult) then you don't have anything.

[1] Also the resources are most certainly stretched much thinner than they were "back then". Even though there are more resources to tap.

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Are there any "uber for lawyers" services online

c.f. Lawdingo (YC 13), which is Uber for lawyers. No relation; never pulled the trigger on actually using it.

Incidentally, my last employment contract had a similar clause in it. After consulting with my bosses, who thought it was the usual boilerplate and didn't really expect a young engineer to have meaningful IP, we came up with a list which looked like:

1) Bingo Card Creator [the only IP I was really worried about] 2) Various contributions to the OSS projects listed in Appendix A [these days I'd literally just print a listing of all repos in Github] 3) Miscellaneous computer programs, inventions, and documents which exist on physical or electronic media as of $DATE and are impractical to list -- $COMPANY acknowledges this disclosure is adequately specific for its purposes

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I tried #3. Company lawyers requested that I change it as it was holding up an acquisition.

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As a card-carrying member of the Rails tribe, this makes excellent sense as an engineering decision for Parse, and broadly makes sense for many "build an API which serves massive volumes" tasks.

We're building a hybrid Rails/Golang app right now and it is, frankly, kicking my butt. Golang really excels at short, composable code, and when you write that you get a very nice deployment story (both in terms of hardware requirements and the actual mechanics of deployment -- compiled code, no dependency management, etc) and blistering speed relative to Ruby/Rails. Rails really excels at writing web apps. If you have never been exposed to writing a web app without a framework before and start trying it with Go, you will gain a new appreciation for how much stuff Rails (and the ecoystem) gets you for free, from session management to sensible dependency management to an ORM which actually works to ... that list, it gets long.

Also, and this is just personal comfort and having 50X more Rails experience than Go talking, but for a strings in strings out manipulation like you'll frequently be doing for web applications, I find Ruby more expressive and less painful to write.

Literally came up yesterday: https://gist.github.com/patio11/fe0abc1c18d09149e6c9

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A difference in idiom between Ruby and Golang: Golang does not want you to overload strings as data structures. Ruby is OK with that. In this case, you're using String#gsub as a setter for the port attribute of a URL masquerading as a string.

Idiomatic Golang could would parse the URL out of the string and not touch the string again. You can, of course, do the same thing in Ruby. But Ruby makes the string futzing so easy that it feels natural to switch ports that way.

On the other hand, you picked kind of a great example, because Golang's net/url is obtuse in this regard: it exposes the host, but not the port directly (you change the port by appending it to the host). And it provides SplitHostPort --- in case strings.SplitN is too tricky? --- but returns the port as a string, not an integer.

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I'm skeptical of Japan and Singapore where the same party always wins.

Singapore is a de-facto one party state where it is notable when an opposition party wins any seats whatsoever in the legislature. Three of Japan's last four prime ministers were from the Democratic Party of Japan, which is not the Liberal Democratic Party, which is the "same party" you're thinking of. The Japanese government, for all its numerous faults, runs hotly contested elections on a more-than-regular basis which can, and do, result in "voting the bums out."

Whether they have "democratic efficacy" is a bit more of an open question -- some observers of Japanese politics might opine that it is a rare, rare Japanese government where the legislature or prime minister exercise proximate control of the levers of sociopolitical power.

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A 1X liquidation preference on a $500m investment is only relevant if the price of Uber declines by 98.75%. If it is 2X, then only relevant if price of Uber declines by 97.5%.

[Edit: Wow was I not awake when I wrote this. Retracted but left up for posterity.]

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You are incorrect. Liquidation preference matters for ANY liquidation valuation less than the fundraising valuation.

Let's say a VC invests $500M into Uber at a $50B valuation (1% equity). If Uber gets acquired for sub-$50B, then the VC gets their $500M back despite their ownership percentage. As an example, if Uber were acquired for $25B, then the VC would get their $500M back rather than the equity value of their shares (1% of $25B => $250M). And if they had 2x liquidation preference, they'd earn $1B on a $25B liquidation.

This downside protection (sale of company for less than valuation at fundraise) is a key term on all priced rounds for this very reason. That's why these terms matter so much.

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Uber has raised almost 6B. It's very unlikely their valuation drops to a few hundred millions as they must still have a few billions cash. However it's not impossible to see it drops to the 10B level or less if the economy tanks or they fail to execute, leaving little to the common shares. If I were an early employee at Uber, I would've been looking for anyway to liquidate my shares :), even if it that means shorting the NASSAQ.

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> A 1X liquidation preference on a $500m investment is only relevant if the price of Uber declines by 98.75%. If it is 2X, then only relevant if price of Uber declines by 97.5%.

No, that's wrong. The investor loses nothing until the value declines to $500 million and then suffers linear losses afterward (i.e. if value is $100M then they lose $500-100=$400M).

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