[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).