Comment by startupfounder | Hacker News Reader

Comment by startupfounder | Hacker News Reader

This is going back to YC's roots and I love it!

If you are scrappy, $20k can get you extremely far at a cost that is "basically" zero (1.5% stake that only converts upon a liquidity event of $100M+ or IPO).

Remember, PG "...started Viaweb with $10k..."[0] in 1995 and "Julian got 10% of Viaweb" for that investment. Viaweb sold to Yahoo! for $49M[1]. The whole reason why YC exists is because PG got a $10k investment!

Back in 2005, pre YC, PG started the Summer Founders Program and invested $20k in each group. "Another of our hypotheses was that you can start a startup on less money than most people think. Other investors were surprised to hear the most we gave any group was $20,000. But we knew it was possible to start on that little because we started Viaweb on $10,000."[2]

The first version of Viaweb.[3]

I keep finding examples of the seeds of YC and they get me really excited. You can see a photo from 2005 from the SFP and YC's roots here[4]

[0] http://old.ycombinator.com/start.html

[1] https://en.wikipedia.org/wiki/Viaweb

[2] http://paulgraham.com/sfp.html

[3] http://web.archive.org/web/19961120231442/http://www.viaweb....

[4] http://ep.yimg.com/ty/cdn/paulgraham/sfptable.jpg

Or it's one-two months of consulting income post-tax for a single developer. Bootstrapping is incredibly easy nowadays.

Consulting on the side isn't bootstrapping. Bootstrapping is funding your business development with revenue from that business. Bootstrapping a startup, keep in mind that a startup is a business designed to grow very fast, is very, very difficult, requiring a certain kind of consumer-facing business model.

Consulting on the side is a time sink that takes resources away from your enterprise. That's all but incompatible with growing fast.

There are plenty of other kinds of businesses you can bootstrap. But startups are particularly hard, which is why so many of them rely on venture funding.

Many businesses will sell consulting services and a product, transitioning away from consulting if the product supplies regular income and is more time-effective to invest in.

That's still consulting on the side. It's just that now you have the whole business doing it. It brings in income but is ultimately just a distraction, because you don't want to be doing it for years.

?? Why not? If you can make money and help good people, what's the X-factor? Obviously I like investing in products, but I see it more as a way to keep utilization high without busywork.

Given, YC might not like it, but I bet they like the business going under a lot less.

I mean, if that's what you want to do, by all means. I'm not going to tell you how to live your life.

But it's not a startup.

> I bet they like the business going under a lot less.

You would be wrong. They would much rather see you shut down a company that fails to find traction and come up with a new idea and new team and get fresh funding than they would you tying yourself up for 10+ years in what they would term a lifestyle business. They didn't give you that money to sit on, they gave it to you to change the world.

I'm not sure if you've consulted on the side with a team that generates income. You get a team that can build and work together.

While helping customers solve problems in their industry, you are effectively paid to do market research to find the gaps and find a product need that the existing customers are willing to start paying for immediately.

The challenge can be is maintaining some sort of balance, but there is plenty to learn from in terms of market and product needs from consulting. I am a better product developer because of it.

What if you are not the consultant? Find a consultant, place him/her on a gig and charge the client a 20% markup. Place 5 consultants and you make 100% of a consultant salary with no time sink.

Unless you have some source of deal flow that they don't, why would a consultant work for you and take a 20% haircut to help you fund a company that they won't even get part of the upside for?

> with no time sink

I'd argue lessened time sink, not none. Still requires management, communication, etc. depending on the setup.

This is charmingly naive.

Why not find 10,000 consultants, make them manage each other, become rich like Zuckerberg instantly? With no "time sink"!

"How to draw an owl? Draw two circles; draw the rest of the damn owl" http://sethgodin.typepad.com/seths_blog/2014/01/how-to-draw-...

Some challenges:

- you are only as good as the people you find. Or, you are as weak as your weakest person.

- hiring in any specialized field, including consulting can be difficult to scale into a large product, because 10x consultants seem to know what they're worth (and make it) a lot more than 10x developers.

- the overhead in managing 5 other people to do things also can add up.

The positive? If you do find a few of these people, all at the same time in life, and all available and interested, you can have some pretty remarkable progress and profit, where part time consultants get more done than full time folks.

Who said anything about consulting on the side? You invented this. I merely said that coming up with 20k was pretty trivial as a developer, often can be done in a few months (which the YC application process probably would take longer tbh).

The value of Y Combinator IMO is entirely in social signaling, not the meager $$$ they give you.

Well, you also learn a lot. Being in SF around other people who work with startups every single day, a lot is going to rub off.

It's quite common among self-funded companies in our industry to start out providing professional services, and immediately plow that money back into developing their first product. When the product starts bringing in revenue, the consulting side of the business can be safely closed.

So I'd argue that consulting on the side is bootstrapping for many founders; it's just one of the many ways to weather those first few months of product development and sales. Another way is to be independently wealthy enough to keep the lights on until the product starts selling.

Others - like YC applicants - spend time looking for outside money. There is no universally right answer for every business.

AirBnb's founders selling cereal boxes is an oft-cited example of "bootstrapping." This is the same as "consulting".

Do whatever you can to survive: ie. bootstrapping.

Best part of that story:

> In the end, the pair remarkably sold more than $30,000 worth of themed cereal, nearly pulling themselves entirely out of debt. Chesky had to convince his mom at the time that he was still in the short-term rental business, and not running a cereal startup.

Full read - https://pando.com/2013/01/10/brian-chesky-i-lived-on-capn-mc...

As a lifelong bootstrapper, bootstrapping seems to be generally self-funded. Which involves seeding some money yourself, often from another source, because it involves going from 0 to 1 with as little resources as possible and using income to grow the business.

In the early stages of bootstrapping the only goal is to nail down what customers will pay for. Spending as little as possible to reach such a lightbulb is bootstrapping in my experience.

It's easy to get distracted with too much free time and funding on one's hands, especially in the hands of an inexperienced founder with little to no business experience.

Bootstrapping also necessarily doesn't need to grow fast. YC itself also says to start small and get the business down before focusing on growth.

Lots of businesses are self-funded and start as a freelance -> part time -> full time.

Here's an article about how 98% of Canadians fund their startups. It's pretty funny considering how we think it's 98% not this way based on the marketing of the 2%.

http://www.techvibes.com/blog/how-canadian-entrepreneurs-fin...

Sure, but the 20K is there probably just to ensure you can work a couple weeks on developing a very early prototype with some friends without having to work during that time, specially if you are fresh out of college. The real reason to do a program like this is probably still the advise and the connections with potential early stage investors in case you do decide to keep the company running for longer than a quarter (and you are not the rare company that can be profitable in a few months). Essentially, if you don't need much money right this moment but already know you want to go the traditional VC-funded company route and want access to that sort of environment and business/legal/etc advise, this program is lightweight/flexible way to do that.

Also, I don't know if there are any geographic restrictions to this program, but 20K could keep a 3-4 people company alive for a year or more in many parts of the world. And saving that much would be non-trivial in those places.

Very true. The one thing that might be missing from the money self-funded entirely is the network and advice.

Plus $20k with remote allowed can go waaaaaaay further than $20k and must be in SV.

There is also great talent everywhere who isn't always able to relocate. Not to mention locations where 20k can go extremely far, combined with great local talent. Looking forward to seeing if this program takes on more of an international flavor than perhaps originally anticipated.

Sounds great! Thumbs up for leading the way, YC.

Love it!

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