That's not a startup, it's a Gmail feature. Amazes me what gets financing nowadays...
See part 8, and in particular the third paragraph:
http://www.paulgraham.com/really.html
It makes me wince for HN to see so many people upvoting the parent. It's not just the meanness of it; it's that it's both mean and wrong. Surely at this point everyone is at least familiar with the strategy of launching something minimal and then expanding it. And yet here is a startup doing exactly the right thing, and they have a mob jeering at them.
Unless they're solving crazy hard problems, a lot of engineering types are just going to be underwhelmed. Add in a lot of early success and that quickly turns to cynicism and frustration.
That is a really good point but part of the entrepreneur bit is unlearning to a degree - tempering if you like - and thinking how can I convert technology into something users want. I see ample evidence of pure technologists viewing ideas without this frame of mind. Entrepreneurship is the union of the hacker mindset of building things and an eye on the business of selling - "make things that people want ... and will buy".
It is obviously true, but it still takes a while getting used to :)
That's the extent of my evaluation. And that's also why I'm not an entrepreneur. :)
There's a definite mismatch between the valuation function I (and a lot of us, I think) use and what the market uses which is addressed by the YC's of the world.
But the bottom line is I don't think pg should misconstrue the confusion (and sometimes frustration) as malice.
I fell in love with Rapportive the moment I installed it, but probably because I'm a regular blogger and glutton for info about people.
I had no idea it had 10k users in 24 hours, that's Facebook like numbers.
What I'm most surprised at is that they went into YCombinator after such amazing traction and gave up equity for such a small cash offering. The could have had any angel round they wanted with that type of fire. That's a big compliment to YC, but a strange business move for a new company.
Did they give up less equity for the 20k?
It is cool and useful though, so lets certainly not belittle that.
This problem seems to permeate our culture these days, from the Internet to politics to road rage. It seems to result from a combination of a highly competitive society that has adopted the trash talking mental games of sports and anger at the traffic/opposite sex/government/corporations/world/whatever people are angry about. Trash talking is fashionable and being mad is the new black.
The consequence is a crowding out of thoughtful, rational thinking about things, to the detriment of all of society. If anyone could give such a topic the treatment it deserves, it would be PG.
What kind of money Ramen? ~ http://paulgraham.com/ramenprofitable.html a steady stream of income & control offered by PRCM ~ http://www.paulgraham.com/prcmc.html or by making the technology and product so good, Google has no option but to buy the company?
I highly suggest any other HN'ers that haven't done so check out the post.
It's just that I remember a time when starting a business meant creating a product, finding a market and people in that market willing to pay for your product.
I completely fail to see any of that in your case. But maybe building a feature for an existing product of a company in the idea of selling to that company IS a viable business model.
And maybe I am getting old...
We do have plans for features that we think people will be happy to charge for. Right now, we're not ready to talk too much about those features, but we think there is real pain we can remove.
We feel validated by the fact that people love the features we have right now so much that many have asked if they can pay for them.
Free is a strategy. We'll let you know how it works out :)
Having said that though, what you have right now is a "nice to have" and it excites everyone for the soft value it adds. But I wonder if the current product can pass the Penny Gap. I know you don't think its meant to, but I am really not sure if the current users will be the ones who would pay for whatever it is that you will build in the future. Xobni is a good example of it. Dropbox on the other end is a great example of a free strategy that sold users on the same product that they expected users would pay for. Basically with a strategy where you acquire a lot of free users thinking they will pay for what they have not seen as yet, can be a dangerous one.
These days just getting people to even try out your product is a major accomplishment. Sure, they haven't built a successful company yet, but for the capital expenditure they've made so far they are way ahead of the curve. What's the point of having a clear plan about how you will make money if it ultimately fails like most startups? You are going to need to pivot anyway, so the focus on users over revenue is totally a reasonable strategy. Even beyond the getting bought exit, the value of an audience is tremendous. Look at how 37signals transitioned from a dime-a-dozen agency to a very profitable company based largely on it's blog reach within the target market.
1. If at every point you're taking what you believe to be approximately right decisions, given all the information you have at that time, then you can ban regrets from your mind. This is a good frame of mind to be in: you can focus on the future. The corollary is to arm yourself with information. For more on this, and more besides, see: http://bhorowitz.com/2010/05/30/how-andreessen-horowitz-eval...
2. Although we face a lot of negativity, it comes only in a few limited forms. Any negative statement, such as "your business will fail because Google will crush you like the tiny ants you are", should only have an impact the first time you hear it. You then decide what you think of the statement, and unless later information convinces you otherwise, your mind should be made. No regrets.
3. I consciously try not to emotionally react to situations. I also try to smile :)
I am curious to know if you are using Rapleaf to get social profiles or if you are doing it yourself (which is tough/only partially possible). If you are using Rapleaf, aren't you loosing money with every lookup?
User indifference is a much, much greater danger for startups than competitors, big or small. So we advise startups to focus on that. What's going to kill you is the Back button, not Google.
Even if the sub-20k investment doesn't pan out, YC is going to get good press and goodwill out of this. Other YC companies will absorb some of the buzz around any YC success.
The above all increases Rapportive's chance to flip the company even if only under the Greater fool theory.
Consider all the posts made to HN by users mourning the loss of Etherpad, for instance... and look back at them in light of what's happened. Google fashioned the technology into a proof of concept called "Wave," shipped it, started to build a user base, then - oh, look, a bicycle. I wonder if it's one of the new carbon-fiber Cannondales?
Basically, Google has a severe case of corporate ADD, just like any number of organizations who have failed to capitalize on assets they already owned. Believe me, entrepreneurs can eat very well from Google's table scraps.
Congratulations and good luck!
It's sad that these "it's a feature" comments keep getting voted up.
A real world example I've seen: A potential clients emails you, the system checks if they know any of your colleagues or friends, pull up data on the client's company (company news, figures, creditworthiness, etc.), finds common interests, etc. With the extra information instantaneously to hand, your chances of converting the prospect to a client go up by an order of magnitude.
That kind of functionality can be worth a fortune. But at the moment it's only large enterprise companies that can build it, making it affordable to small to mid-size companies seems a pretty solid business plan. I think Rapportive in going the more "generic" route (api, etc.) are going to steal etacts thunder and the marketplace. It's a brilliant idea.
I'm sure that if Facebook hadn't bought Divvyshot but had instead tried to replicate the feature set on their own that the company would still be in existence though maybe working on a different product.
The investment would still have been worthwhile in terms of YC - perhaps even more so because the founders had shown the ability to identify an opportunity and actually built it.