[samstave]

The reason why I think that it is difficult to say a frighteningly ambitious startup idea is actually something that is expected to come through YC, is that the funding that YC provides is miniscule, and will cover hardly an annual salary for a single, accomplished person who has a lot of domain knowledge in a field they may want to disrupt.

As someone in the medical space who is 37, married with 2 kids - My salary is more than the funding of YC - and I would not be able to take ~150K and divide it among multiple founders -- let alone have that funding cover, you know, actual startup expenses.

I feel I am in this catch-22 limbo area -- too old and too ambitious of an idea to fit the YC mold.

Personally, I see YC as being fairly myopic in the type of people they fund, and it is frustrating because I think YC is incredible!

Sure, there are tons of opportunities for nifty apps that serve a silo of a need (even if that silo is infinitely deep) -- but the idea I have to revolutionize the hospital space can't feasibly be built on 150K - unless I take that funding whilst retaining my full time job to pay for me and have that 150K go directly to the product.

[tptacek]

Being simultaneously unable to walk away from a six-figure salaried income and unable to bootstrap a company probably doesn't correlate well with "likely success as company founder".

You'd make a more compelling point if it was "I think the small amount of funding is going to prevent YC from generating ambitious companies because it was easier for me to start $COMPANY_I_CURRENTLY_RUN without YC". But anecdotally, it's the opposite: people fully capable of funding their companies are going to YC for the network and for the automatic increase in valuation.

You can compare other startup creation vectors that you have knowledge of to YC, but it's awfully hard to make a valid comparison between YC and a salaried job. If you're going to stay in a salaried job in our current white-hot market, you probably weren't going to start a company no matter what.

(There's nothing wrong with not starting a company. Even if YC starts 10 hugely ambitious, Airbnb-scale successes this cycle, it will still wash out a huge number of other companies. Careers made in salaried jobs have a lot to recommend them, and financial outcome is definitely one of them.)

An earlier version of me used to make the same point. "$20k for 6 points! That's a CEO's equity grant and one consulting project's revenue!" I feel dumb about that critique now that YC companies all seem to be getting uncapped convertible notes with minimal drama, and now that the YC network includes so many successful companies. Obviously, the YC money isn't the big draw anymore.

[samstave]

Either I didnt articulate my point well enough, or you misunderstood it.

The idea that YC can fund a web-app, mobile-app or completely web-based feature-as-a-service for 150K is well founded.

My point is that within the realm of "ridiculously ambitious ideas" are those that would require a shitload more seed capital to build out.

Do you think that SpaceX, which is obviously ridiculously ambitious, was seeded with simply 150K? Tesla? (obviously these are from the same ridiculously ambitious founder - but a well heeled founder with deep pockets.

I AM saying that there are certain dynamics which YC can't accommodate best.

YC is an absolutley stellar platform, but I would suggest that there should be a separate entry/avenue for projects which are not exactly suited for the traditional YC channel.

Maybe they could start out with "$150K to prove out the idea, consult with other experts in this space and connect with those who can help the idea along"

The point being that the initial 150K is not necessarily expected to going to the actual development of product as much as it is going to the furthering of the project.

EDIT:

I also wanted to point out that I failed in mentioning that the value that YC provides, with respect to exposure, network, connections, etc is immeasurable.

I am really just trying to say that for some groups/founders/cases/ideas -- You cannot look at the 150K funding and think that there will not be other struggles/issues.

I'd like a way to openly address/discuss this and find out what is best for each case.

PG: YC is the best thing to hit the valley since the transistor.

[tptacek]

Now you're zigzagging. Your original point was that YC might have trouble finding ambitious startups because the 150k YC companies end up getting isn't enough to get you out of your salaried job. That argument has an easy response: getting you out of your salaried job has a low expected ROI.

The rest of this point is just the same tired argument: yes, for any given startup, there is a more ambitious startup you can either point to or theorize. Which of them were ambitious startups of the kind postulated by Graham's post about ambitious startups?

Late edit: it's also a bit amusing that the two examples that spring to mind, SpaceX and Tesla, are two crazy shoot-the-moon ideas that could only have been the product of the force of will of someone like Elon Musk. Could you even imagine a seed funding model that would attract Elon Musk? What would it have to include? You might as well argue against the whole concept of seed funding.

[samstave]

First, If I am zigzagging - I am thinking out loud here on HN - and am happy to hear how I am wrong. SO please forgive me if I do contradict myself as I am trying to find the best way to articulate my thoughts.

I am fully open to being shown that I am flat wrong.

With that said:

Could you even imagine a seed funding model that would attract Elon Musk? What would it have to include?

This is part of my point. I can't think of such a ridiculously ambitious idea being seed funded.

PG said he wants the ridiculously ambitious ideas - I am saying that such ideas are likely not achievable with the traditional YC model.

So, to the second half of your comment; "What would it have to include?"

I am not sure, but lets think out loud here for a sec:

Given we are looking for the truly revolutionary ideas - what assumptions need to be in place in order to attract, identify, foster and enable these ideas:

First; lets recognize they can come from all walks. We need to be able to evaluate the ideas, quantify the effort and impact and accommodate whomever they may come from.

Maybe THIS is what the available YC resources should be positioned to do.

"You might as well argue against the whole concept of seed funding"

Maybe I am naive - but what if we change what our meaning of seed funding is within this context -- The seed funding is not for MVP, or first launch - the seed funding is exactly that - to seek out, identify and locate the seed - carry it and THEN plant it.

Again - please tell me if I am just sounding stupid - I am trying to think outside of constraints/conditioning I have observed in the traditional funding model.

Thanks

[tptacek]

I'm sounding snippier than I mean to.

YC has a model that seems like it would have stood a credible shot at capturing Google in 1997.

That there are companies more ambitious than Google that wouldn't even consider a "seed stage" is not, I don't think, particularly relevant.

Also: the point of YC is to put fingerprints on the maximal number of successful startups. Ideas from people who aren't inclined to start companies aren't a particularly important part of that. You lost me with "revolutionary ideas". Ideas aren't what's important.

[gruseom]

the point of YC is to put fingerprints on the maximal number of successful startups

One thing about YC that doesn't get enough attention is that by coming up with a model and articulating it (and generally doing everything) in a way that makes sense to hackers, they have grown the total number of startups. That is, some people who wouldn't have otherwise have founded a company have been inspired to do so. YC have made the pie higher! http://politicalhumor.about.com/library/bljokebushpiehigher....

In my opinion all sorts of social and macroeconomic good may emerge from this.

[hef19898]

If I remeber well the funding principles of YC, if you can call them like that, that's exactly the reason why they don't fund biotech start-ups for example. "Those are still ridicolously exapnsive" I think were the exact words used. The real value I see YC is providing to founders, no matter of the age, is access to a incredible network and contacts, funding that gets you over the three months of the programm plus the 150k $ you get without a lot of trouble. This way they take away a lot of pain in ther initial funding process. Combine with the access to top tier VCs and your money problem should become considerably smaller.

That said, it's true thats it's way easier if you are young with out a family, but still not impossible. The best scenario I could dream of is a year long payed sabatical while you are in YC. If you have an employer who's offering you that...

[jamroom]

Spot on - in fact I wonder if YC would be open to "funding" more groups if some of those groups didn't need the money? For us it's about the network like you pointed out.

[tptacek]

At 60+ companies in a cycle I think they're already going to start butting up into dilution.

If you have a program that is attracting the 60+ most viable candidates to start companies, it's kind of odd to expect that group to go into left field to start tapping risk-averse people for whom salaried jobs are so attractive they'd skip YC.

There's nothing wrong with those people! But the whole point of startups is to capitalize on timely combinations of risk tolerance and talent.

Can you imagine Larry Page and Sergey Brin taking Backrub to YC, had it existed, in 1997? It was their first startup. Am I saying they obviously would have? No. But I wouldn't have been surprised.

[jamroom]

I'm 41, married, and have 3 kids - my "cofounder" and I have just applied to YC for Summer 2012. I've been running in "start up" mode since around 2000, so my lifestyle has adjusted to a much lower level of pay than I would expect had I continued working in the fortune 500 as a developer, but I don't regret a single moment of it.

Even though your idea is ambitious, you might consider nights/weekends to work on it - you know the whole "a journey of a thousand miles begins with a single step" - get something together and see if you can raise some funding - you never know. There's a lot of money being throw around right now.

I think YC is setup so it attracts those who are willing to go out on a limb for an idea, since (and this is a guess) they might be the most likely to persevere through the rough patches and stick with their idea until it succeeds.

[darklajid]

Thank you. Your voice was missing here for a while.

32, married. As of yet I have no offspring, but that's going to be corrected. Still, I lurked and commented here, always with the 'Ahhh.. If I'd be without ties and responsibilities once more' thought.

I cannot tell you how glad I am to read that someone with arguably more responsibilities in life and a bit older than me (another point that is rarely coming up here) gives a damn about conventions and prejudices and just joins the otherwise ramen-eating, single, < 27 crowd.

[jamroom]

When I quit my full time job in 2005 I can't tell you how many people thought I was seriously crazy to leave a "stable" job to do something on my own. For me however, it really wasn't a choice - it was something I had to do.

I've always believed that there are millions of people in this world who would be willing to work harder than me if only they had the opportunities I have been given in my life. To not take full responsibility for my life and work as hard as I can to achieve something feels disrespectful to those who WOULD if they had the chance. I know that may sound a bit cheesy, but it's been an important driver in my life since I've gone solo.

[bicknergseng]

We're not all eating ramen and single. Yes, when you're married with kids and a mortgage the immediate risk is greater, but that doesn't mean us <27's are immune or ignorant of risk. Many of us have 100k in school loans. Even the ones who don't are not eager to throw away a safe opportunity at an established company to forge out on their own.

I had a tough time finding a cofounder among my peers. Even the most entrepreneurial of them, people who had started things in college, are still far more inclined to go to work for someone else (especially with an offer in this job market). While I know there's a myriad of reasons, I think a most would rather go somewhere where all of the responsibility is on them. If you mess up at a big company, there's hundreds or thousands of others that shoulder the fallout. If you mess up and you're one of 2 or 3 or 4 people....

My point is that it takes courage to start your own company no matter what age you are.

[jamroom]

You are so right - I like to think of it as accepting responsibility for your life. Several hundred years ago "starting your own company" could be equated to "going west and creating a new life" - it takes a lot of guts and determination to strike out on your own, and most people would never dream of it.

[vyrotek]

For what it's worth, I'm 27, married and have 2 daughters and quit my job just a few months after my youngest was born (2 years ago) to join a local incubator and start my startup. Man, the wife wasn't exactly thrilled about that idea though :)

[novakinblood]

Wow, I'm glad I'm not alone. Married, 32, 3 kids (all girls,yikes!) and a mortgage and working on PhD but still want to do a startup. Glad there still is hope.

[jonstjohn]

Good on ya! I too often people saying - oh, I'm not in my 20s any more so I can't give up my job making $$$ and supporting my family. News flash!!! It's all about priorities and what's important to you. If your dream is to do a startup but you feel hemmed in by your house, car, etc, start thinking about what is important.

On the other hand, I'm working for a small non-startup software company as a salaried developer and love it. I get to focus on developing software and not running a company :)

[NDizzle]

Where do you live on a startup mode salary? Are you still burning leftover fortune 500 developer money?

[jamroom]

I live just north of Seattle, WA. I worked at VZW for almost 10 years, but early on decided I wanted to run my own business so basically saved as much as I possibly could - my goal was to have 2 years of "wages" which would give me time to get my product (at that time Jamroom) off the ground. The great news was that as soon as I left my job and could devote full time to my own business, things took off - I didn't even end up touching the money I had saved much. However, the last couple years have been a bit hard as things have been more up and down, so I'm glad to have that savings now.

[Schwolop]

I can empathise with your situation, but I think you're right about some things and wrong about others.

You're right that its difficult for a mortgaged family breadwinner to give up the stable income. You're right that YC's contribution of $20k or even the $150k convertible note from Conway and Milner isn't going to cut it when spread amongst multiple founders. You're right that a typical startup salary is far below what a skilled person would get if they stayed in industry/academia.

Where you're wrong is in suggesting this means your idea won't fit the YC mould. It's clear from PG's essay that he and YC are definitely keen on helping people with radical, dangerous, or expensive ideas. However, they're not going to change the terms to make it easier for you - the terms aren't set because $20k is a lifeline, they're set because just-above-starvation is the impetus for you to work your arse off getting to profitability.

You're wrong in saying that your idea can't be bootstrapped on $150k. It can - either fake the prototype on less money and keep paying yourself, or take a pay cut and spend the money on the prototype. You even say you could build a prototype on $150k if only you could keep your salary too. The point of that $150k isn't to revolutionize the hospital space, it's to build up enough momentum to make it obvious that the revolution would arrive if only there was more money to finance it - and then to lure that extra money in.

I'm not trying to be hard on you. I'm in a very similar situation, wanting to build a consumer robotics company to put an autonomous robot in every home. Getting to the point where we can actually deliver products to customers will take years and millions. With a mortgage, now a baby, and thus just one income, it's a big stretch for me to give up that money. But, if you won't take that risk, no investor will either.

YC's level of funding is the entry requirement, not the lifeline.

[tptacek]

the terms aren't set because $20k is a lifeline, they're set because just-above-starvation is the impetus for you to work your arse off getting to profitability

Respectfully (I don't know you): this is bullshit. The terms are set this way because that's what the market will bear in this specific instance. The idea that the terms of VC deals are structured to align the incentives of founders with VCs is a negotiating tactic and little more.

Misaligned incentives might keep you from taking 6 figures off the table in an A round, but anybody who tells you that they're deliberately calibrating your funding to keep you at a below-market salary is feeding you a line.

There are plenty of founders, some of them first-time founders, who make at, near, or better than market salaries. Most of the difference between them and the people whose boards get them to live on ramen is simple negotiating skill.

This isn't to say that there isn't some "hustle quotient" to be extracted from underpaying founders. Just that it isn't dispositive.

[Schwolop]

I agree with what you say for later rounds of VC funding (and this is valuable advice for naïve founders!), but I'm talking about YC and other seed rounds/incubators. The idea of this seed stage is to validate the business, getting it to the point where the founders can get more funding from elsewhere. If YC paid much more than $20k then the three months of hacking around might start to look like quite an attractive job. By keeping the funding fairly low, they ensure the ideas aren't overvalued straight away, and that the incentives are aligned. Only founders who back their ideas/team enough to walk away from their jobs for three months, splitting a mere $20k between the team and product, will apply.

[tptacek]

Strong disagree. As evidence for my argument: the extremely short duration of YC sessions, and the fact that so many YC companies immediately proceed to grab follow-on funding and market salaries.

[Schwolop]

We're miscommunicating, because I don't see how that invalidates what I said.

Roughly speaking, the original guy to whom I replied said "YC doesn't provide enough money, so I can't solve hospital care through them." I suggested that this wasn't the point of YC, that the money was appropriate for three months, and that if the idea was really so good, YC would help him get subsequent funding (with which he could pay himself properly).

[pbreit]

1) Everyone seems to miss the last 4 paragraphs of pg's essay which discuss tactics for tackling a frighteningly ambitious startup idea: namely, tackle a less ambitious portion of it.

2) YC companies like DrChrono have very large ambitious in the healthcare industry. It can be done through YC.

[damoncali]

What makes you think there is a connection between your old salary and what you can make as the founder of a new company?

That's not how it works.

[ohashi]

He has a family to provide for which does need to eat and their well being probably plays a huge role in his decision making. Giving up a comfortable salary to pursue something ambitious may be an easy decision on a personal level, but it may be very difficult on the rest of the family.

The connection to old salary is simply family expectations/lifestyle. That's a real decision and I can imagine dissuades a lot of people. I would be more risk averse if my outcome affected other people I cared about.

[mhartl]

Many entrepreneurs dip into personal savings in the initial startup phase. This can be stressful, which is one reason I focused on creating a passive income stream after my own YC startup shut down. So, I'd recommend either accumulating a nest egg or creating a passive income stream (or both) before rolling the dice on a startup.

[rdl]

A lot of founders pay themselves $50-80k/yr once they raise their seed round, and raise funding during YC. Assuming you could survive on 80k/yr salary (which is surprisingly hard in the Bay Area, if you have kids; marry a doctor seems to be a good solution here), I don't see why it should be a problem.

80k/yr plus 30-80% equity in a company, given that YC boosts the valuation, increases odds of success, etc., seems like a decent tradeoff for a mid-career person. The exception might be someone who has a time-limited alternative income source. If I were making $10-20mm/yr as a starting quarterback, I'd probably wait until I got injured or too old to throw a ball to do YC.

[pyoung]

From what I recall, only one founder is required to attend YC. So you could theoretically find a younger founder who could attend, while you kept at your full-time job.