Ask HN: I just thought of a startup, got funding and now I am stuck...
59 comments
You're very different from most "idea guys" as you've done something others haven't: you've proven you can raise funding. Take the funding.
Now, be ready to do something difficult: if you want somebody to stick around, you'll need to make them an owner. You've done one part, raise the money, but now you need somebody who can implement this. As such, be willing to offer them over 50% of your equity (what they're doing is more valuable than what you've done, honestly) and make them an actual co-founder. Let them make complete technology choices, even if he says the application will be written in Erlang and Haskell. Give them input equal to yours when it comes to product direction, not "I come up with all the ideas, you implement them". Anything less, and they're an employee and not a founder.
That's very important: you will not get a top notch employees unless a) you have technical founders b) you can pay them above market rate and give a significant equity chunk c) challenge them in a way that grows their technical skill.
Take a look at a successful engineer at a top-notch Silicon Valley company: they have a job with brand name recognition, they do something they love (a _very_ important motivating factor for an engineer: they will not stop working on say garbage collection algorithms and start working on "GroupON for X" for a paycheck), they have a technical manager, they're earning above market rate (with performance based bonuses), they have stock which may not be a significant percentage but is 100% certain to be worth something.
The money you have isn't sufficient to pay an engineer a market rate salary. The problem you're solving is likely not very technical. The upside potential is likely unknown and it's almost certain than an employee will see very little in the case of a typical exit. The only kind of employee you can hire in this case is somebody who can't get a stable job elsewhere: you'll be giving him legitimate experience to put on his resume in return for his work. That isn't a bad deal if you can accurately identify potential (and if you are unable to give them more responsibility and a higher salary in a year, ready for them to leave as soon as get find something else) or have enough money to hire and fire many times (with "trial periods" and the like), but this isn't your case. You can't identify potential, you can't afford to try and fail until you luck upon somebody with potential.
What you need is another founder, who can insert the critical technology DNA, re-state your problem as one technology can be (intelligently) applied to and who has the same stake as you in the company. This person can also identify further talent (including the kind of talent you will need: engineers who have great potential, but are green and need _any_ kind of experience; they need experienced hackers to mentor them).
Where do you find this person? Problem is that you can't, unless you already know them. That's why companies like YC are very fuzzy about founders who have known each other and have a strong bond. Is there an engineer you've worked with (in a business role) who the company has pulled all stops (before) to keep, but who secretly yearns to have more of say in the product (and not just do what a product manager tells him)? Is there a classmate from college who absolutely wowed you? Is there an engineer you hear great things from your unknown-quality engineer friends? That's the person you want.
Again, I'd also like to state this isn't just about the money, other than the fact you've been able to raise funding has set you aside from most "idea" guys (to whom my general response would consist of a crude ASCII drawing). Just having money, doesn't mean you can get great talent: you must be ready to offer is challenge, responsibility and product ownership (and that means giving up a large part of your mental and monetary stake in the startup). Expect most people you reach out to to reject you (but I'd imagine you are ready for this and have experienced this plenty in the process of raising funding).
Now, be ready to do something difficult: if you want somebody to stick around, you'll need to make them an owner. You've done one part, raise the money, but now you need somebody who can implement this. As such, be willing to offer them over 50% of your equity (what they're doing is more valuable than what you've done, honestly) and make them an actual co-founder. Let them make complete technology choices, even if he says the application will be written in Erlang and Haskell. Give them input equal to yours when it comes to product direction, not "I come up with all the ideas, you implement them". Anything less, and they're an employee and not a founder.
That's very important: you will not get a top notch employees unless a) you have technical founders b) you can pay them above market rate and give a significant equity chunk c) challenge them in a way that grows their technical skill.
Take a look at a successful engineer at a top-notch Silicon Valley company: they have a job with brand name recognition, they do something they love (a _very_ important motivating factor for an engineer: they will not stop working on say garbage collection algorithms and start working on "GroupON for X" for a paycheck), they have a technical manager, they're earning above market rate (with performance based bonuses), they have stock which may not be a significant percentage but is 100% certain to be worth something.
The money you have isn't sufficient to pay an engineer a market rate salary. The problem you're solving is likely not very technical. The upside potential is likely unknown and it's almost certain than an employee will see very little in the case of a typical exit. The only kind of employee you can hire in this case is somebody who can't get a stable job elsewhere: you'll be giving him legitimate experience to put on his resume in return for his work. That isn't a bad deal if you can accurately identify potential (and if you are unable to give them more responsibility and a higher salary in a year, ready for them to leave as soon as get find something else) or have enough money to hire and fire many times (with "trial periods" and the like), but this isn't your case. You can't identify potential, you can't afford to try and fail until you luck upon somebody with potential.
What you need is another founder, who can insert the critical technology DNA, re-state your problem as one technology can be (intelligently) applied to and who has the same stake as you in the company. This person can also identify further talent (including the kind of talent you will need: engineers who have great potential, but are green and need _any_ kind of experience; they need experienced hackers to mentor them).
Where do you find this person? Problem is that you can't, unless you already know them. That's why companies like YC are very fuzzy about founders who have known each other and have a strong bond. Is there an engineer you've worked with (in a business role) who the company has pulled all stops (before) to keep, but who secretly yearns to have more of say in the product (and not just do what a product manager tells him)? Is there a classmate from college who absolutely wowed you? Is there an engineer you hear great things from your unknown-quality engineer friends? That's the person you want.
Again, I'd also like to state this isn't just about the money, other than the fact you've been able to raise funding has set you aside from most "idea" guys (to whom my general response would consist of a crude ASCII drawing). Just having money, doesn't mean you can get great talent: you must be ready to offer is challenge, responsibility and product ownership (and that means giving up a large part of your mental and monetary stake in the startup). Expect most people you reach out to to reject you (but I'd imagine you are ready for this and have experienced this plenty in the process of raising funding).
Thank you for your reply. I agree money is currently the easy part, the biggest issue is execution. The ideal is fools gold if I can't transform it from a pitch deck into a reality.
You gave me some really great ideas here about reaching out to other engineers that I have worked with and some siblings of friends with CS degrees and startup mentalities.
Cost structure is really low right now - I already have a succesfull Internet marketing business that is doing 500,000 per year with 2 USA full timers and 11 full time off shore resources.
This team took a long time to build over 3 years now with trips to India to work out some of the bugs. Right now, I just don't have the time for missteps or mistakes.
The problem that is being solved is "somewhat" technical, some social integration, some dollar tracking, some analytics tracking, fraud detection, recurring payments etc. But I am not trying to re-invent the world.
Basically I KNOW of the companies that do everything that I need, I just need to glue it all together and add some special sauce.
You gave me some really great ideas here about reaching out to other engineers that I have worked with and some siblings of friends with CS degrees and startup mentalities.
Cost structure is really low right now - I already have a succesfull Internet marketing business that is doing 500,000 per year with 2 USA full timers and 11 full time off shore resources.
This team took a long time to build over 3 years now with trips to India to work out some of the bugs. Right now, I just don't have the time for missteps or mistakes.
The problem that is being solved is "somewhat" technical, some social integration, some dollar tracking, some analytics tracking, fraud detection, recurring payments etc. But I am not trying to re-invent the world.
Basically I KNOW of the companies that do everything that I need, I just need to glue it all together and add some special sauce.
> You gave me some really great ideas here about reaching out to other engineers that I have worked with and some siblings of friends with CS degrees and startup mentalities.
Reach out to engineers you've worked with, the ones who already know what you can offer and the ones where you know what they can offer. As I said, make them a founder along with you. Even better, ask them who the best engineers they know are and then in turn ask their friends.
I'd avoid hiring younger siblings of non-technical friends. They need mentoring to reach their full potential (they have to learn how to use version control, how to write clean code, how to test code, how to deploy code to production -- even if they know the fundamentals; you can't teach them that); presence of this potential is something which you (or your non-technical friends) can't tell. College grades do not correlate with programming ability. They are the ones to hire once you already have somebody who can identify those with strong potential (and not those who want a higher salary and a nicer desk than what IBM or Microsoft will give them as a "college hire") and mentor them.
As a side note, when you talk to people, ask for advice on a specific technical problem, not "I am seeking technical co-founder".
Reach out to engineers you've worked with, the ones who already know what you can offer and the ones where you know what they can offer. As I said, make them a founder along with you. Even better, ask them who the best engineers they know are and then in turn ask their friends.
I'd avoid hiring younger siblings of non-technical friends. They need mentoring to reach their full potential (they have to learn how to use version control, how to write clean code, how to test code, how to deploy code to production -- even if they know the fundamentals; you can't teach them that); presence of this potential is something which you (or your non-technical friends) can't tell. College grades do not correlate with programming ability. They are the ones to hire once you already have somebody who can identify those with strong potential (and not those who want a higher salary and a nicer desk than what IBM or Microsoft will give them as a "college hire") and mentor them.
As a side note, when you talk to people, ask for advice on a specific technical problem, not "I am seeking technical co-founder".
6 month ago I have quit my job a product manager to provide the exact service you are seeking - I work with startups and individuals to design and build a first version of the product they need. I have a pool of local US developers that I work with, and do rapid functional prototyping myself. If you are serious, ping me info(at)popsolete.com
> ultra conservative revenue projections
HA HA HA based on what? It's an idea.
HA HA HA based on what? It's an idea.
So I have done some calling to people who would use the product and asked a simple question. If I could solve X for you, what would you be willing to pay for it?
And then asked how many of X can you use per month. Worked backwards from there.
And then asked how many of X can you use per month. Worked backwards from there.
And looked at the pricing models for the API services that I would be using for the Beta code from Twillio, to Braintree + a modicum of understanding how I "think" the application will get used.
Don't knock the power of ideas.
I have this awesome idea for a teleportation ray that will instantly transport me from one city to another. I even have a 15 page powerpoint presentation and I have 4 of my country club buddies who committed to putting up some cash after I got enough long island iced teas in them.
Now all I need is someone to build it for me.
I have this awesome idea for a teleportation ray that will instantly transport me from one city to another. I even have a 15 page powerpoint presentation and I have 4 of my country club buddies who committed to putting up some cash after I got enough long island iced teas in them.
Now all I need is someone to build it for me.
This is what I built on <10k investment budget, the rest was self-funded. The code to get in is 1234 http://beepl.com/jan if you want to have a look. Also, I am demoing this to an investor tomorrow. Any word of advice you can give me? Hoping to launch on March the 30rd..
If that doesn't go well, the backend is all programmed by me. And I am sort of a hacker that can program stuff. Maybe I can help with your idea?
When I saw the name "beepl" I thought it was a contraction of "beep"+"ppl" [people] - like signalling to people with a beep or something. Then I saw the little bees; perhaps it fits better my way? Was that intentional.
Twitter meets StackOverflow - Is that a reasonable summary?
Hope all goes well on 30th March for you.
Twitter meets StackOverflow - Is that a reasonable summary?
Hope all goes well on 30th March for you.
IMHO, you don't say "got funding" until you can clear a check.
If you have money but no brains, hire some brains. If you have brains but no money find a funder. You can't have both no money and no brains....
So I got the recommendation to contact:
www.hashrocket.com www.thoughtbot.com
And then attend my local Ruby meetup.
sdruby.org
I have called HR and TB and would be interested in getting additional suggestions.
Thanks
So I got the recommendation to contact:
www.hashrocket.com www.thoughtbot.com
And then attend my local Ruby meetup.
sdruby.org
I have called HR and TB and would be interested in getting additional suggestions.
Thanks
obvious scam
Find yourself someone who is really, really good at getting products built. Then work with them and trust them.
So where does one go to find a really really good product builder. And no, oDesk, elance, getafreelancer are not where I want to take this. Preference would be to get a 90-120 day plan, build it with some local USA developers and get this moving fast.
Is there a paddock of "Internet Guns for hire" that work on this and are proven?
Is there a paddock of "Internet Guns for hire" that work on this and are proven?
Not that I've ever heard of.
From my experience, your best bet is to find someone you trust that is a great programmer (even if they can't work for you), and have them vet candidates for you. The truth of the matter is that there is an amazing lack of correlation between people who seem (to non-techs) to know what they're talking about, and people who actually know what's going on.
From my experience, your best bet is to find someone you trust that is a great programmer (even if they can't work for you), and have them vet candidates for you. The truth of the matter is that there is an amazing lack of correlation between people who seem (to non-techs) to know what they're talking about, and people who actually know what's going on.
I've been asked to do this for a couple non-tech founder friends. All I really do is have a fairly casual 20-30 minute conversation with the job candidate about the state of whatever tech the product will be built in - "what's the quirkiest thing you've found in iOS?", "which backend platforms do you like? why that one instead of this one?", etc. Throw in a question about big O notation if you think this job requires some CS knowledge.
It's generally pretty easy to see who can walk the walk, without resorting to grilling candidates with trivia or detailed hypotheticals.
It's generally pretty easy to see who can walk the walk, without resorting to grilling candidates with trivia or detailed hypotheticals.
Now I know why I want to look completely incompetent!
But, seriously, I agree.
But, seriously, I agree.
Or look for a really good technical project manager with a proven track record of rapidly building a technical team and driving them to execute (I know, I know all you hackers are laughing at this post because 99% of the PMs you've worked with are crap and have zero understanding of technical issues - but if you can find that 1%, they can be invaluable).
Go on Github. Search for programmers in your area/using your technology. Check out their projects and send them introduction emails.
You could also look through Craigslist.
Definitely get them on the phone. Anyone that doesn't want to meet or talk to you isn't worth your time.
You could also look through Craigslist.
Definitely get them on the phone. Anyone that doesn't want to meet or talk to you isn't worth your time.
Thank you, I am located in California - now comes the part of the searching process and calling friends who are in Silicon Valley and ask for referrals
Usually, it's people you've worked with before and that want to work with you again. You call X, you say: quit your job, work with me on this.
Failing this (which might be the case), find that first person, give them equity, and they will find those people.
Failing this (which might be the case), find that first person, give them equity, and they will find those people.
I would be interested in contributing. Is there someway I can contact you to determine if my skills match what you are looking to build ?
Next 3 steps.
Network, hustle, hustle.
In that order.
Network, hustle, hustle.
In that order.
Thanks - networking is huge and I have a huge network. I just want to make sure that I am fishing in the right pond.
I would recommend using someone from that network who you trust, and can validate as a great engineer, to hire your first engineer. No offense, but although you can probably assess for business...(ality?), you need someone who knows what they're talking about to figure out if your potentials, well, have any.
Pull the trigger. Use the money to build a development team that you trust. And trust them with building your first version (MVP). Iterate from there.
1. You can outsource the prototype but if you're going to get funding, you should hire in-house moving forward aka local.
1a. Ask people you know for referrals of coders they trust. Hit up local networking events. Try to find people through yourself and others you know and trust before branching out to regular hiring ways.
2. Get a corporate attorney to help set up your company and the appropriate paperwork so whoever you hire, sign the right paperwork needed. This is important.
3. Build the prototype, and haul ass. Consider talking to an IP attorney but in all seriousness, $250k isn't much. If it's going to cost you a significant amount of money, perhaps hold off on the IP registration. Don't take my word on this though, consult a few different IP attornies for better advice on that.
1a. Ask people you know for referrals of coders they trust. Hit up local networking events. Try to find people through yourself and others you know and trust before branching out to regular hiring ways.
2. Get a corporate attorney to help set up your company and the appropriate paperwork so whoever you hire, sign the right paperwork needed. This is important.
3. Build the prototype, and haul ass. Consider talking to an IP attorney but in all seriousness, $250k isn't much. If it's going to cost you a significant amount of money, perhaps hold off on the IP registration. Don't take my word on this though, consult a few different IP attornies for better advice on that.
The biggest hurdle you have in front of you is finding someone to build it. Reach out to your network and see if anyone knows good people working in the technologies you need. Attend local meetups that revolve around these technologies. Visit coworking spaces an ask around. Hacker News may also be a good resource for that. Also, I'd be happy to recommend some folks to you (my email's in my profile).
No IP attorney. It's money wasted. If you're really doing something protectable, you can file a provisional patent up to a year after first public demo, and that gives you another year to file a real patent. You'll lose some international protection, but it's quite hard to stay internationally protected anyway. I am not a lawyer, please don't trust me.
If neither you nor the person who wants to join the company are developers, then I would pause until you've found one. 250k is not a lot of money to build anything non-trivial, and you'll burn through it unbelievably fast if there's not a founding member who is highly technical and can evaluate how good other technical employees are going to be. If you're paying salaries and other expenses, 250k keeps a team of 5 going for like 6 months. It usually takes 3 months to raise a follow-on round, which gives a team of 5 three months to build something exciting enough to raise follow-on investment. If it's you and one or two technical co-founders, you can run an awful lot longer. If you're just paying spartan living expenses, you can get it as low as 5k per person per month (in the valley).
If you take the money, chances are you'll fail. Are these experienced investors who can afford the loss? Are you okay with losing that money? If they can deal with it and you can deal with it, then I suggest you take it and stay very thrifty for a while while you figure out what's what. Get them to invest in you and the space, not in this particular product idea (since it will likely change and you want their support if that happens).
Personally, I'd take it. Money's great and you can get a lot done in a few months. But only if you're willing to commit. I spent 3 or 4 years working in a space I didn't care that much about because once you have a employees and investors, it's really hard to let go.
As for steps: 1) Figure out what you want 2) Find a badass developer cofounder 3) Take the money 4) Developer starts building product while you start securing first customers/users/partners, adjusting the product as you go based on your learning from talking to people
If neither you nor the person who wants to join the company are developers, then I would pause until you've found one. 250k is not a lot of money to build anything non-trivial, and you'll burn through it unbelievably fast if there's not a founding member who is highly technical and can evaluate how good other technical employees are going to be. If you're paying salaries and other expenses, 250k keeps a team of 5 going for like 6 months. It usually takes 3 months to raise a follow-on round, which gives a team of 5 three months to build something exciting enough to raise follow-on investment. If it's you and one or two technical co-founders, you can run an awful lot longer. If you're just paying spartan living expenses, you can get it as low as 5k per person per month (in the valley).
If you take the money, chances are you'll fail. Are these experienced investors who can afford the loss? Are you okay with losing that money? If they can deal with it and you can deal with it, then I suggest you take it and stay very thrifty for a while while you figure out what's what. Get them to invest in you and the space, not in this particular product idea (since it will likely change and you want their support if that happens).
Personally, I'd take it. Money's great and you can get a lot done in a few months. But only if you're willing to commit. I spent 3 or 4 years working in a space I didn't care that much about because once you have a employees and investors, it's really hard to let go.
As for steps: 1) Figure out what you want 2) Find a badass developer cofounder 3) Take the money 4) Developer starts building product while you start securing first customers/users/partners, adjusting the product as you go based on your learning from talking to people
>you can file a provisional patent up to a year after first public demo
Heed the caveat though - demonstration or use in public will be citable against an application elsewhere in the world. This is a good review of grace periods (from a European perspective but covering worldwide issues) -
http://www.ipr-helpdesk.org/documents/GracePeriodinventionLa...
Heed the caveat though - demonstration or use in public will be citable against an application elsewhere in the world. This is a good review of grace periods (from a European perspective but covering worldwide issues) -
http://www.ipr-helpdesk.org/documents/GracePeriodinventionLa...
You should definitely start building as soon as possible. The longer you wait the more time others are out there thinking of and/or building a competing product. Every week there is a post on HN about someone who thought of something and while they were thinking or building someone else launched. Getting to market first might be the guarantee success, it sure as hell helps.
Also, talk to a lawyer. If you are taking $250k from friends you need to have contracts/agreements in place. Don't take money on a handshake. One or both of you will get burned at some point.
I don't know if these friends are seasoned investors or just people with money but if they aren't familiar with the startup world make sure they know what they are getting into. They could lose all their money by the end of the week and they need to be prepared for that (make sure your agreements are in place before you start spending in case this happens).
With $250, I'd say you got about 4-6 months (assuming 4-6 engineers) of runway. That means you need to have a good prototype in 2-3 months and be ready to start pitching real investors. So I go back to my first point, start building.
Also, talk to a lawyer. If you are taking $250k from friends you need to have contracts/agreements in place. Don't take money on a handshake. One or both of you will get burned at some point.
I don't know if these friends are seasoned investors or just people with money but if they aren't familiar with the startup world make sure they know what they are getting into. They could lose all their money by the end of the week and they need to be prepared for that (make sure your agreements are in place before you start spending in case this happens).
With $250, I'd say you got about 4-6 months (assuming 4-6 engineers) of runway. That means you need to have a good prototype in 2-3 months and be ready to start pitching real investors. So I go back to my first point, start building.
What the fuck? You have all these people ready to throw money at you but you have no idea how to execute? How does that happen.
Proven track record of making other businesses work. Just not a software startup.
"Insider trading isn't illegal in Brazil."
Yes it is... don't state things like this with no knowledge.
I and am Born in Brazil and here it's definetly against the law, the thing here is that it takes forever to arrest them... but they go to jails anyway.
Was he perhaps trying to say that "if you're a US citizen in Brazil [with a heap of money] then you won't be extradited to the US on a charge of insider trading in the US exchanges".
Is there anything else from "The Social Network" that isn't true? Just kidding, but the parent comment was a Zuck quote -- I think in real life in an IM that someone saved.
I think HN is being trolled.
There is the possibility that this is a real post, given how insane and bubbleicious the whole mobile/social space has gotten, but I highly doubt it.
The account is 3 days old.
There is the possibility that this is a real post, given how insane and bubbleicious the whole mobile/social space has gotten, but I highly doubt it.
The account is 3 days old.
Agree the account is new - this is what happens when you go from /. to digg to reddit and then have your brother point you to HN over the years.
I assure you there is nothing trolling here, I have been a successful entrepreneur who sold two businesses for over 1.2 million in the past 5 years. One of these was an ISP / web hosting provider and the other an IT support company for SMB's running windows. A long time member of Vistage international and a supporter of Open Source initiatives for years. Just not a programmer, but I can spot the bullshit.
I have hired / fired over 60 people during my career and the largest company I ran had 15 employees and 1.2 million in revenue.
I assure you there is nothing trolling here, I have been a successful entrepreneur who sold two businesses for over 1.2 million in the past 5 years. One of these was an ISP / web hosting provider and the other an IT support company for SMB's running windows. A long time member of Vistage international and a supporter of Open Source initiatives for years. Just not a programmer, but I can spot the bullshit.
I have hired / fired over 60 people during my career and the largest company I ran had 15 employees and 1.2 million in revenue.
If anything, this post further reinforces the notion of trolling. If this was true, then your original post makes even less sense.
Knowing how to configure Apache and configure Exchange server is a far cry from I need to build a SaaS webapp.
Knowing how to configure Apache and configure Exchange server is a far cry from I need to build a SaaS webapp.
You claim you have run multiple companies, hired/fired 60 people, you claim to have multiple investors committed. And now you ask HN for how to hire a programmer?
May I suggest to leverage your contacts/advisor network instead, which you surely have built during your previous endeavours?
You claim you have run multiple companies, hired/fired 60 people, you claim to have multiple investors committed. And now you ask HN for how to hire a programmer?
May I suggest to leverage your contacts/advisor network instead, which you surely have built during your previous endeavours?
I think what he is getting at is if you have all of this experience and presumably have built up a solid network (especially if you have people emailing you money) then you shouldn't sound as clueless as you do.
My guess is your idea is technically infeasible and you should find a trusted technical source to review your idea with before you start accepting money from friends.
My guess is your idea is technically infeasible and you should find a trusted technical source to review your idea with before you start accepting money from friends.
Yeah. I think you're right.
The app ties telephony in with a smart phone application and does some super cool practical lookups. I have spoken to four people that I have known in my previous companies (not related, but trusted) and from the feedback that I am getting this could be a billion dollar concept.
I have build a Keynote pitch deck, and a demo of the app using keynotopia as well as a functional design spec for the site, 15 pages of a business plan and proforma expenses, ultra concervative revenue projections and the 3rd party integrations.
I have also built out the entire site as a balsamic screen by screen representation with each part of the process mapped out.
My HUGE issue - of the 4 people that I have spoken to 3 of them have sent written letters of financial commitment to support the app and the 4th wants to signon as employee number one.
I have "raised" just over $250,000 if I pull the trigger I have the money - but there is a lingering issue.....
My problem is that I am an idea guy, I love technology but I would have no idea of how to actually take it from concept to beta and from beta to production.
I am stuck, what are my next steps?
Questions in my head:
IP attorney? Where do I find programming talent? What order do I do things? How do I validate the concept?
I need super guidance or even just the next 3 steps.
Thank you,