Comment by flipbrad | Hacker News Reader

Comment by flipbrad | Hacker News Reader

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that's an easy comment to make that very much fits the zeitgeist, but some sort of cynicism is required. If we're wrong on this, and 'build it and the money will come' strategies fail, then we're definitely setting ourselves up for a boom+bust that's going to be painful for all.

The cynicism is that, in addition to suiting startups that haven't got the intellectual capital required to think about a sustainable business strategy as they head into business, it also very much suits YC's approach (see below), which might explain why, as a meme, it's so pervasive!

The YC-like approach could be caricatured as 'shotgun' - throw a load of startups at a wall (boost their launch) and see what sticks (in terms of adoption); but if the rest, which don't show immediate adoption, get neglected by YC-like investors-mentor hybrids too soon, they won't pick up the transferable business skills that would serve them for a lifetime. Putting your hands into a launch-focused incubator is risky, from the startup's perspective.

YC, as first on the scene, has many 'value-added' factors (mainly PR-based) that make this risk worth taking; but copycats don't deliver these (e.g. a great network, great reputation with potential series A investors, media rep, etc). In that light, copycats may actually be more beneficial to the startup scene if they alter their strategy relative to YC to deliver different value-addeds, as Seedcamp does. Probably not worth pooh-pooing them without thinking a bit further, just in case we are letting a damaging meme spread too far without challenge.

The key is to make sure both launch-drive and business training/mentorship are provided in equal amounts - the order in which they come can be debated, and is the nub of the seedcamp vs. YC debate; but let's make sure the complexity of what YC offers comes across - it's not just launch drive and that's not the only important thing in seed stage investment. Long term, that could be very damaging for YC copycats that don't have as clear an idea of what's needed

"that's an easy comment to make that very much fits the zeitgeist" .. "'build it and the money will come' strategies fail"

Hold on - the point I'm making was not the cliche "build it and they [customers, users, investors] will come. The point is that in the very specific micro-seed stage of companies, which is what YC/Seedcamp are dealing with, the first thing you need to spend time on is the product/core business idea. If you work on this, you'll have something tangible at the end of the 3 months, that you can then show people to get to the next stage.

If you don't build something (doesn't have to be a launched, fully funcitoning, customer-ready product) then how can you expect to achieve anything more than more seed funding, this time having demonstrated that you may not deliver in time?

"The YC-like approach could be caricatured as 'shotgun'"

Curious metaphor, but yes, this is the point. Find out as soon as possible what's going to work, and avoid wasting time on stuff that doesn't. If what a team does first doesn't work, they've learnt a whole lot about what to do same/differently with the next idea.

"but copycats don't deliver these [value added factors]"

Yup - correct. This is the big problem. But notice that the things that e.g. Seedcamp lacks are things that have been earned by YC over time, mostly down to previous success. You can't solve these problems by organising more theoretical lectures for the teams.

"The key is to make sure both launch-drive and business training/mentorship are provided in equal amounts"

No. This is the whole point. Having received micro-seed-funding, you need to get somewhere, fast.

Seed funding like YC/Seedcamp is about raising enough money to get to a stage where you can raise a proper angel round/series A. Spending 50% of your time "learning business" will definately benefit you as you go though life, but won't give you any deliverables to make your company succeed in the short term.

Either decide you want to learn business, and then study that before starting a company and getting funding, or concentrate on building your product and then learn about business by doing it for real once you have a real-life case study to work with.

i agree with your point that it's v. important for the team to have the necessary transferable business skills early on. a group of introvert hackers who lack them could easily fail, even if they've built a relatively good product.

nevertheless, my impression of YC is that even with an 80%+ focus on product, there's still time to pick up some good business knowledge reading blogs and speaking to the YC alumni who most certainly have strong business skills amongst them.

in addition to this, surely the job of the seed investors (which can usually be attracted by a YC company who build a good product) is to give more of a commercial focus, and help the founders hire the right 'biz/marketing guys' later on?

however, my experience of most of the 'hacker' founders on YC is that they've got more business skills than almost all of the young entrepreneurs i know in the UK!

Sorry, missed this and couldn't let it go.. :)

"Putting your hands into a launch-focused incubator is risky, from the startup's perspective."

This risk is what...that you might launch?

that you might be becoming a good product manager and developed, but not a good businessman. likewise, that the product is great but totally unsustainable without an artificial support machine. Too many of those around, and the web sphere risks another bubble and burst, causing outright misery and a swing of the pendulum too far the other way (impossible to find even seed money, let alone serious investment, even if you DO have a sensible, sustainable business)

Seed funding schemes (YC, Seedcamp) are not about training people per-se. They're not about making people become good product managers or good businesspeople. (although obviously people on these schemes are going to require some of these skills going in, and hopefully improve them along the way)

If you want to become a good product manager, you have to build something, watch how people use it, and adapt it to reflect your findings. Iterate. To do this, you need to "launch" in some form - and get users.

If you want to become a good businessperson, you can take an idea/product and go with it for real. But if you have no product, you're playing with an empty hand - you can't tell what people's reactions to it will be, you can't demo it to investors, there's too many unknowns. Enter the idea of spending 3 months building a v1. For this you need an engineering team (could be just you, or one other person). This engineering team needs to eat for that 3 months - enter the idea of micro-seed-funding-whatever you want to call it.

A product that comes out of this process that is great but unsustainable will die because of lack of money, or get further funding. Any "bubble" would be caused by later-stage investors investing in unworkable businesses. A company that has used a small amount of early funding to build a demo/v1 is going to be much easier to understand by subsequent investors, hence micro-seed funding arguably helps to avoid bubble-syndrome, not cause it.

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