Entrepreneur Hotels, Y Combinator, and Dead VCs(socialentrepreneurship.change.org)
socialentrepreneurship.change.org
Entrepreneur Hotels, Y Combinator, and Dead VCs
http://socialentrepreneurship.change.org/blog/view/entrepreneur_hotels_y-combinator_and_dead_vcs
5 comments
I think this is a really great point, and probably the thing that I am least sure about. Maybe there's an opportunity that's less about actually development time and more consulting for web strategy? Another thing that nonprofits desperately need...
i think this is a double-sided issue. some people need the focus. some people need the distraction.
if i were in this situation, i would need the distraction, even if it were just using the exact same skills on another application. gives me a break, clears my mind of the woes of the "real" project, and sometimes allows me to take different mental paths to solve a problem i was having difficulty with.
to follow your metaphor, an overfull balloon or a balloon that is fully expanded for too long will burst.
if i were in this situation, i would need the distraction, even if it were just using the exact same skills on another application. gives me a break, clears my mind of the woes of the "real" project, and sometimes allows me to take different mental paths to solve a problem i was having difficulty with.
to follow your metaphor, an overfull balloon or a balloon that is fully expanded for too long will burst.
Consider: "ramen profitability" is only OK as long as you're OK with living on ramen.
The essential thing to understand about ramen profitability is that it's a way to hack fund-raising. It's not the goal of the company. It need not even come from the source the company's ultimate profits. All it means is getting enough revenue fairly early that you're not at the mercy of investors.
Sure. A great thing. You read the articles here, right? They propose ramen profitability, along with a dorm-style living space, as a lifestyle choice.
Although I'm still highly motivated and that doesn't feel like it's changed, at some point in my life I just sort of... ran out of the ability to grind through with a low standard of living. Not at exactly 27, more like 25, but close enough. I have friends who are the same age and can still do this, which is embarrassing and makes me feel like a horrible selfish person.
I might be able to do it in a genuine emergency, it's just that living a low lifestyle feels like a much larger imposition and a much huger mental drain than it did at say age 22.
I wonder if it's hardwired brain change, or was it something more cognitive - something I thought?
YCers beware, your ability to run on ramen may be an age-limited resource, use it while you're young.
I might be able to do it in a genuine emergency, it's just that living a low lifestyle feels like a much larger imposition and a much huger mental drain than it did at say age 22.
I wonder if it's hardwired brain change, or was it something more cognitive - something I thought?
YCers beware, your ability to run on ramen may be an age-limited resource, use it while you're young.
It's not easy. I did it for 7 years out of college, slowly raising my salary from minimum wage to not much above minimum wage. Overall my standard of living wasn't horrible though, I had an old used car, lived in an old mansion with 5 friends ($1500 a month, heat included!), and was in a 'southwest airlines' city so the cost of living was quite cheap. (i.e. A slice of pizza and a soda was $1)
Difficult? At times
Amazing experience? You betcha
Difficult? At times
Amazing experience? You betcha
You feel that way because you're worth more than a couple cups of ramen. Nobody wants to be a sucker.
In my experience they're not related. Robert Morris and I both retained the ability to live like grad students till well into our thirties.
I think women may be a factor. Also exposure to living well. But above all, perhaps, fatigue.
I think women may be a factor. Also exposure to living well. But above all, perhaps, fatigue.
Why yes, I did run out of ability to run on ramen around the same time I got my first girlfriend - but the causation of the correlation was reversed, that is, I ran out of ability to live without a girlfriend, which up until that point I'd been doing effortlessly.
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I wouldn't feel bad. I'm only 24 but this is the way I feel about certain types of travel. I've spent the last 6 years going at the drop of a hat to everywhere from Syria to Uganda to where ever to work on projects and am getting close to the edge, for sure. Its very natural
This may not be the intention of the "hotel" being discussed in the article, but it seems to be there are people who would like to setup sweatshop style outfits and dub them "incubators" or "entrepreneur hotels" - but in reality, they'd like to push motivated (but young and naive) kids to work long hours, for little pay and (unlike a true start-up) for no equity (which would turn to a lump-sum payment in case of a liquidity event or a dividend being issued).
This isn't too dissimilar with what big companies do with "college hires" (which is sometimes reasonable, as all they have to work with are college transcripts and a general idea of intelligence), except (much like MLM schemes) such an outfit would be able to attach a bunch of feel-good self-help messages around it ("you're being an entrepreneur, you're changing the world, you're taking a risk and not working for a Big Dumb Ugly Corporation").
This isn't too dissimilar with what big companies do with "college hires" (which is sometimes reasonable, as all they have to work with are college transcripts and a general idea of intelligence), except (much like MLM schemes) such an outfit would be able to attach a bunch of feel-good self-help messages around it ("you're being an entrepreneur, you're changing the world, you're taking a risk and not working for a Big Dumb Ugly Corporation").
Ramen profitability is OK if you're OK with living on ramen... or if it's a passive income stream which can support you while you go off and do other things.
Conceded, but will YC fund a team that plans on being a side project? Didn't think so.
Of course not -- because YC is built around the idea of companies raising VC and reaching liquidity so that the YC principals can exit in a cash position. As soon as you take outside investment, "ramen profitable" isn't good enough even if you're happy living on ramen -- because even if you are, your investors aren't.
But not everybody fits into that model. I think most bootstrappers would love to build a company which provides them with a passive revenue stream.
But not everybody fits into that model. I think most bootstrappers would love to build a company which provides them with a passive revenue stream.
Ok, Colin, this is an article about whether the YC model is feasible given the collapse of the Web 2.0 VC model. =)
There's also the question of your confidence in your relationship with potential investors. Even a company that achieves "Ramen Profitability" is probably going to need expansion capital at some point, but if their "runway" is infinite because they know they can at least get by with their revenue stream, it puts them in a much better postition to find the right type of investment on the right type of terms.
My point is that the "infinite ramen profitibility runway" is a fallacy, since no competent developer has an infinite tolerance for living on ramen.
Sure, but if you have housing covered, work from a shared space like we're talking about, $3,000 a month aint a bad living for just food and bills...
More importantly though, you're right - its about extra space and better control not infinite space.
More importantly though, you're right - its about extra space and better control not infinite space.
So this works until you're about 27.
I'm just saying: the existence of shared hacker spaces doesn't make YC more viable if VC collapses, and you have to account for the fact that many people (most people?) will pay attention to money when it's a 3x-5x difference.
It's also not that easy to get to the point where a business is making you 40-50k/yr, even though that number sounds low.
I'm just saying: the existence of shared hacker spaces doesn't make YC more viable if VC collapses, and you have to account for the fact that many people (most people?) will pay attention to money when it's a 3x-5x difference.
It's also not that easy to get to the point where a business is making you 40-50k/yr, even though that number sounds low.
Just because you are in your mid-30s and have a family doesn't mean you can't be thrifty. That's a lifestyle choice. Nobody has forced anyone to buy a $750,000 house in the valley and drive 3 SUVs.
If your family understood your dreams and was willing to support your ambitions and was ultimately willing to eat Ramen, anyone could make use of this model.
If your family understood your dreams and was willing to support your ambitions and was ultimately willing to eat Ramen, anyone could make use of this model.
I guarantee you that being in your mid-30s with a family precludes you from living in a "Hacker Hotel" on $3000 a month. Way to exclude the middle.
amen. kids are expensive, especially without that fat health insurance package from a real job.
i don't assume we shouldn't exclude the middle, except that's where a wealth of experience and wisdom comes from.
i don't assume we shouldn't exclude the middle, except that's where a wealth of experience and wisdom comes from.
there isn't anything magical about the Ramen profitability point... However - you;'ve been gorwing revenue/profits up until that point - customers wont magically stop appearing as you hit it - so you're likely to go past just living on ramen.
I think you're both right - this is a big if. The other thing that's important is that this is dependent on being a company that sells a service - rather than something that's looking to build a big community before it monetizes. That's another big if.
I worked at a branch of "The Hub" for a short while and it wasn't very good. The idea was great but it lacked any sense of community. I guess you need to build the community first then put it in a building.
Communities need anchors, the one guy who's going to e-mail everyone to come out every week, or those two guys who've been friends forever and are going to be there if no one shows up.
That's interesting feedback - I've heard good things but only talked to people in a few specific hubs.
It's likely to vary branch to branch. I would recommend Pervasive Media Studio Bristol as an alternative in this case. I've yet to check out either London branch.
As an aside does anyone know of good London co-working spaces?
As an aside does anyone know of good London co-working spaces?
"Oops! A server error has occured."
Bandwidth killed by YC? Anyone have a copy or cache?
Bandwidth killed by YC? Anyone have a copy or cache?
Try just refreshing - the Change.org server has been acting up lately - sorry!
yeah, we (or at least, i) discussed this idea in the last thread on this topic.
if i had more money, i'd be working out a way to make it happen, already.
if i had more money, i'd be working out a way to make it happen, already.
noodle, thats awesome. I know people are talking about opening up a Hub affiliate in SF and NYC, so maybe there's an opportunity
only awesome once the ball starts rolling, until then, just idle thoughts :X
i originally wanted to start up some coworking space, but evolved it to include the concepts mentioned in the article.
edit: also, fwiw, i'm relocating to the atlanta area, which is a place that has potential but is not being correctly tapped (you might recall this article http://blog.jeffhaynie.us/whats-wrong-with-the-atlanta-start...), which is one of the reasons the thoughts turned towards how to make more than just coworking space happen.
i originally wanted to start up some coworking space, but evolved it to include the concepts mentioned in the article.
edit: also, fwiw, i'm relocating to the atlanta area, which is a place that has potential but is not being correctly tapped (you might recall this article http://blog.jeffhaynie.us/whats-wrong-with-the-atlanta-start...), which is one of the reasons the thoughts turned towards how to make more than just coworking space happen.
I'm particularly interested in thoughts you have about how you lay Y-Combinator type investment on top of it. What's the right strategy? Having those folks give some development time to nonprofits is just one idea. Another idea would be to actually have promising college-age developers have a year long fellowship where 50% of their time was pro-bono and 50% of their time was working on their own projects.
i will admit to two things -- one is that because of my lack of ability to execute currently, i've not thoroughly thought through things as well as i would like to have done before airing my ideas in public :). and two, you've taken it in a different direction, which i like, but don't have many thoughts on.
the concept i was thinking about was not to give any actual cash to any company, but exchange the services of the space for equity. basically, whatever they would need to survive for X months, including (possibly) food and a place to sleep. would allow the company to focus on bootstrapping themselves when they don't have to focus on paying for groceries, and by bootstrapping themselves, they would hopefully become profitable faster without having to worry about obtaining more funding or dying from excessive debt.
i'd not thought about the idea of diverting some time to worthy causes, but i do like it and would probably implement it, as it works well with the model on several levels.
edit: added a few things
the concept i was thinking about was not to give any actual cash to any company, but exchange the services of the space for equity. basically, whatever they would need to survive for X months, including (possibly) food and a place to sleep. would allow the company to focus on bootstrapping themselves when they don't have to focus on paying for groceries, and by bootstrapping themselves, they would hopefully become profitable faster without having to worry about obtaining more funding or dying from excessive debt.
i'd not thought about the idea of diverting some time to worthy causes, but i do like it and would probably implement it, as it works well with the model on several levels.
edit: added a few things
Also, I know of some people in Atlanta who are at least tentatively interested in something like The Hub model..
i know a few as well. perhaps your few and my few and a few others could combine to make enough.
hmmm interesante - i'll be talking to them on tuesday so we should stay in touch. [email protected]
In return, they give up [...] a small chunk of their developer time (25%? 10 hpw?) to pro-bono or reduced cost projects
... not because of the pro bono aspect, but because of the distraction. The arithmetic here isn't linear- X% of my time spent on something else would cost far more than X% of the total, because of side-effects like context switching. Every time I do something like this, it's like letting pressure out of a balloon. It takes time to re-pressurize the balloon. And you can't do as much with your balloon when its pressure is low. However, I concede that I suck at multitasking, as well as metaphors when caffeine-deprived.