[logicallee]

You're simply empirically wrong [about the 'amount' of money that represents, whether it is large enough to make a substantial difference], and your anchors[1] are not only irrelevant and misleading in an early-stage context, but extremely toxic.[2] What was Google's first check in the amount of? $100K. It was a ton of money. As Wikipedia points out, "The first funding for Google as a company was secured in August 1998 in the form of a US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist." They used that to raise "On June 7, 1999, a round of equity funding totalling $25 million", about 10 months later. Pop quiz. Which was more money, the $100K in the first context or the $25M in the second? Well, as I've heard they never did spend much of that $25M, it sat in Google's bank account while they grew and raised further rounds....

But that $100K? That was a ton of money.

Basically, you are wrong that it was not a ton of money, your anchors and comparisons are toxic and misleading, and if he had not cut that check then Larry and Sergey would not have created Google. That is what actual reality shows us.

You simply do an incredible disservice to all early-stage startups by talking in these terms.

I gave you several actual examples of far less than $120K being a ton of money in an early-stage context. As little as $5000 being a ton of money. I also specifically stated that if, say, $20K, weren't a lot of money, then it would make no difference empirically if YCombinator did not actually pay that cash. And YC companies wouldn't have either relied on or even actually spent that cash. But it does make a difference, and they did.

As I specifically point out: your FTE expenses are completely irrelevant, and even part (less than 100%) of the after-tax portion of a single FTE salary is a ton of money. (In an early-stage context.)

To imply otherwise does a huge disservice to all first-time, early-stage founders everywhere. The very idea is toxic and needs to die.

[1] The meaning of anchor I use is: http://en.wikipedia.org/wiki/Anchoring

[2] Your figures both about (1) the cost to the company of a fully loaded FTE senior engineer and (2) the amount that a good freelancer can generate above living expenses in a year, are irrelevant and do not need to be argued. I will grant both as irrelevant to the discussion.

[tptacek]

Your comment is very emphatic, but you didn't rebut either of my points:

* 120k will barely pay the fully loaded cost of a single engineer

* A good freelancer can generate 120k above living expenses in a year

Your response was "the fully loaded cost of an engineer is irrelevant". That's a weird argument, given that the cost of engineers dominates the expenses of early-stage startups.

[waterlesscloud]

That's cool and all, but what matters to a very early stage startup isn't the cost of hiring an engineer, it's covering the founders' living expenses and whatever business expenses arise (which may be very small).

You know this, so I'm not sure why you're off on a tangent about things that don't normally apply in these situations.

[tptacek]

There was a long comment here, but I found a better way to make my point:

If I gave you $120k to start a company with 1-2 other people, and you had no other funding commitments, I don't think I'd be changing your odds all that much.

But I have no trouble believing that when YC gives founders $120k, they are changing the odds significantly.

[nostrademons]

$100K is a ton of money to a student or someone whose career hasn't really "launched" yet. It's peanuts to anyone working in tech with a track record. You can easily save that much money in 1-2 years working at a 9-5 in a big company, or consulting.

The skills to get that big company job or land those consulting clients are pretty much the same skills you need to make your product company successful. An understanding of what people will pay you money for. Ability to execute on a project. Collaboration and communication. And of course, solid coding skills. The difference is that a product company also requires a fair degree of business strategy, determination, and sheer resourcefulness that you don't need to get a job.

So if you want to found a successful company, you're much better off developing those skills, testing them by getting a job or someone else to pay you money, and then striking off on your own. If you just get the money, chances are you will lose the money pretty soon too.

[argonaut]

You say it "was a ton of money," but you haven't provided any reasons that is the case, other than claiming that Google would not exist otherwise, something we don't really know either. Maybe Larry and Sergey didn't really need that 100k either, but took it just in case? And even if it were a lot of money at the time, 1999 was a different time and place. First-time founders were a lot less sophisticated. The seed funding environment that exists today didn't exist. AngelList did not exist. The current market rate for engineers and cost of living is a lot higher than then.