fbFund and Y Combinator | Hacker News Reader

fbFund and Y Combinator

blog.luckycal.com

18 pointssanj28 comments

I feel the same way about Y Combinator. People like me are self-excluded because of our current life parameters/priorities, most notably family. I also completely understand why it is set up the way it is, but nevertheless I have a hunch that there are significant missed opportunities on both sides (i.e., good investments passed up and good startups less successful because of it).

Additionally, some of the structure seems more geared towards first time entrepreneurs. In the case of a more experienced entrepreneur, it would seem that a more relaxed structure might be acceptable (and in some cases even appropriate). I don't need to get more material about the legal aspects of how companies work, for example. But I'm sure I would benefit from focused conversations about my product offerings.

The 'first timer' argument is interesting. I have been around this rink once before as well, so certain things elements would, at first blush, seem less applicable.

But having been to Startup School, I found that I was wrong. Playing the game once is much better than not having played at all. But you're negotiating with people (ie, investors and VCs) who play the game once a month/week/day! Any leg up that inequality is valuable.

I also don't think that you should discount the timed element: having only 3 months can focus you like nothing else, first timer or not.

One thing YCombinator is exceptional at is grooming a company for VC investment. If you think you even might want a venture funded company, YC can tell you all the ins and outs. I'm sure that even third or fourth time entrepreneurs could use some information about how things are done in the silicon valley investment community. It's more than just how to fill out the paperwork (though they excel at teaching that as well)

The fbFund has the same goals as well. In particular, the backers led us through the steps of getting all of our paperwork in order so that we would "be ready" for VC investment. It was, effectively, a requirement of the grant.

I have a hunch that there are significant missed opportunities on both sides

I don't think it could be any other way, though. The investment is only about 5% of what YC does. The other 95% is stuff that has to happen face-to-face.

We did once try letting a startup not move. By Demo Day they were way behind the others, and they didn't survive much past it.

Even if one were to be comfortable moving (or lived in the area already), I think one of the problems for would-be YC entreprenuers with families and/or mortgage payments is that the average $5K base + $5K/partner investment comes in below an acceptable threshold for minimum income over the course of 3 months.

Now clearly you're running a business and not a charity, and you've arrived at the investment amount for certain reasons. But I do wonder what sort of opportunities and business ideas might arise if a group similar to YC were to offer, say, $10K-$15K per founder for the period.

I think not a lot, actually. From what we hear from founders, the moving part seems to be the big problem for people with families, not the money part.

The money would have made a difference to me.

But if they increased the amount of money significantly, they'd more than likely have to increase the amount of equity and decrease the amount of investments. This would really take away from what YC does.

If we take pg's 95% literally and define YC's current contribution to a startup as 100%, then if they give 3x as much money their contribution to the startup becomes 110% of what they contribute now. So they would demand 10% more equity.

You're right that we wouldn't take too much more equity. (In fact, the last time we increased the amount we invested, we didn't ask for any more equity.) But if we invested more per startup we'd tend to become more conservative. We'd think twice about investing in some of the riskier projects, and that's the last thing we'd want.

Same here. It's the difference between quitting my day job and not quitting. For the summer program I wouldn't have to move. I would move for the winter program if I could make it work financially. Housing a family of 5 is probably expensive in S.F. Plus we want a good Montessori school nearby.

I keep posting about this, but cambridge has an excellent public montessori elementary school (prek - 8).

My problem is the single mom thing. I have a bunch of ideas (and they are all BRILLIANT!) & a great co-founder, but I need to have inexpensive health insurance, and I don't have a life partner willing to pick up any slack. In order to afford the rent on our one bedroom & work crazy hours on a y combinator start-up, I need to save a few thousand dollars. I'll be mid-30s by the time I feel comfortable applying, but that's ok. Last summer I met a founder in his 30s, and it didn't seem to be a problem for him.

In the meantime, it's nights & weekends, which can also be fun if you like your project.

I wonder if travel would work. If I did the math correct, there are about 10 weekly dinners + demo day. With a bit of planning, that's only about $4-5k of travel per founder. I'm assuming here that there's only air travel costs and that founders can find places to stay for free while they're in town.

It may be that there is much more face-to-face time that happens because people are co-located, but I didn't the impression that the founders all work in one large room or anything similar.

Even traveling to SF or Cambridge for 2-3 days a week is something that I think people would be willing to do. I can even imagine looking forward to the time away from the family!

YC doesn't only happen at the dinners. To start with there are a lot more official YC things than just the dinners. Plus the founders all tend to become friends and hang out with and/or help one another.

I definitely agree having been through it. It wouldn't be worth doing very much without the moving.

I don't see family as much of an excuse. Can you really not get away for three months? It's not that long.

Of course anyone can get away for three months. I, however, simply don't want to leave my family for that long. I completely understand that some, perhaps many/most people, wouldn't give it a second thought. But that is just not how I choose to live my life at this point in time. I think it is a very personal question.

Also, I don't see why it is so black or white. A couple nights a week is more on the line for me, and that still seems like a significant amount of face-to-face time. When you add to that online community tools (which I presume exist), I would guess a dedicated person could go along way into complete integration into the group.

"I don't see family as much of an excuse."

For me, it's not an excuse, it is a reason. And I can't think of a better one.

On the raw happiness scale, my family has a better ROI than anything else I've done. Including founding three startups.

I agree. To join YC in summer '07, I moved with my wife and a set of two-year-old twins to Cambridge from Vancouver for four months.

We had great memories of Cambridge and thought it was worth it.

Not all families can just pick up and move for four months without significant consequences, e.g. the loss of spouse's job.

But many families can get by with one of the parents being out of town for the better part of three months.

Once is not a large sample size. I'm sure there are plenty of cases where it would be relatively clear that with high probability they wouldn't be behind by Demo Day. For example, startups that already have been working for a while, already have a significant demo or even beta, but still need help on positioning and tweaking their product. Just set the bar higher for these startups.

Also, as someone else pointed out, travel is an option. It could be more than just the dinners, e.g. perhaps three days (two nights) a week.

Finally, I didn't mean to suggest that the opportunity missed is solely an investment opportunity. I meant more generally the opportunity to develop great startups to their full potential, which might otherwise not do so. In my case, I don't need the money at all.

Hiya!

I've been reading HN for a long time. I'm happy to answer questions about the f8 conference and the fbFund process.

I'll be on and off today, but will keep up with the conversation as best I can.

Thanks! This has a lot of interest to me as well since I'm also not prepared to structure my life around a YC session.

I have some interest in a venture to build an app that would be specifically used for promoting products. Half product, half consultancy. Are there any fbFund recipients doing anything similar or unusual like that, or are they all building straight-ahead apps?

Taking a look at the recipients,

http://developers.facebook.com/fbFund.php?tab=recipients

there are definitely some which are 'infrastructure' rather than "apps":

HotBerry: Frameworks and mechanics allowing users to generate own casual games on Facebook (e.g., Pinball construction set). Watch Screencast

J2Play: A social gaming platform for pc, mobile, and web game developers.

However, the details announced about the next iteration of the fund may preclude these sorts of entrants. The issue is that while the finalists will chosen by the fbFund committee, the winners will be chosen by Facebook's users. I think it would be hard to "sell" a non-app to them, unless you had compelling instances what the app could do.

Finalists still get 25K or something, right?

Correct. But I imagine the bias will be towards apps that the users will be interested in. You want a tight race.

I suspect the bias will be more on finding apps that better their platform. but we'll see..

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