This is probably my biggest topic of contemplation and experimentation.
The startup I co-founded was funded by YC the month after this essay was published. It was the same batch as Airbnb. We didn't tick the VC boxes. PG commented later that we were "so nervous" in the interview; he had no idea how much.
It was said that all the startups in our batch were chosen because we seemed particularly resilient. It's amazing how being told that by someone like PG will make it come true.
Our startup didn't make it as a "home run" success, and we found it hard to raise VC funding, partly, I think due to not ticking VC boxes. But the company still exists in a different form. It employs over 10 people and is doing really important work to help airlines recover from the effects of the pandemic. It could yet be a huge success, thanks to the resilience and determination of the people still there (I left about 7 years ago).
Thanks in large part to the YC experience and vote of confidence, I've been undertaking a very profound journey of self-discovery and growth, and have worked on several important and successful projects. I'm now exploring multiple opportunities to start or join new startups, some related to the work we were doing in our YC-funded startup, and others completely different.
I think the last few years has been a tough time to be the kind of founder who doesn't tick VC boxes; the whole startup world has been dominated by glitz and hype.
It feels like that's changed in the past week. It seems the latest hype era is over, and we're re-entering a period where resilience, resourcefulness and determination will be in strong demand.
Please don't be discouraged. If you really want to build something important and valuable, you'll find a way to do it, and you'll get the support and funding you need when you're ready. It may take a long time, but important work always takes a long time.
I hope you find the purpose and motivation you need to have a go. It really can be the most amazing, life-changing experience. Feel free to contact me (email in bio) if you want to ask or discuss anything.
Looks like the site is Adioso, but I don't see a link to it on the Internet. A reddit post which you replied to says you shut it down for now , is there a link I can visit? Or are you talking about another startup that employs 10 people?
The original company rebranded when it pivoted to enterprise. I traded the Adioso brand/IP for my equity when I left, but have been working on other things, particularly since the pandemic arrived. A bit of LinkedIn sleuthing will lead you to the rebranded/active company, or you can email me if you want to know more.
I'm a little skeptical of the thesis because the company you're referring to survived by becoming increasingly VC friendly. It got leadership with connections to investors and pivoted to VC-legible products. There's only one person still there from the beginning, who is, admittedly, resilient and determined, but would also tick the VC boxes because he's just generally a stud
This is mostly false, except perhaps for the suggestion of my co-founder being a stud.
The company survived by becoming commercially focused and profitable, which happened after we recruited a leader with experience/connections in the airline industry, not to investors. The products the company pivoted to were not more "VC-legible" than what we started out doing; they were just products that could generate enough short-term revenue to enable survival. The company hasn't raised funds from VCs; its funding has been from angels, airline/travel tech companies and family offices.
It has unquestionably taken a ton of resilience to get the company to where it was before the pandemic, then to survive the pandemic, and to find a way to thrive on the other side of it.
Startups are a game of kings, courts and conquerers. Everything written by a player is propaganda, it was written with intention to further an interest. No one gives a fuck if a peasant can become Alexander the Great but they very much benefit from getting you to dream that you can, and your compliance.
I don't see how a VC benefits, they'd be throwing their own money at a peasant who might not be successful.
Most VC’s don’t fund peasants. Founders tend to be the children of lesser nobles, with a few social climbers thrown in to add spice.
VCs do not market to peasants. When a VC emphasizes "team" - that is a specific euphemism for "not peasant". But if they said that outright they would be cancelled.
That's a pretty accurate way of putting it.
> This whole “what matters is the founder” idea really discourages me.
Yep that is one of those pesky traits...not getting discouraged from rejection.
I think everyone should at the least start their own business, even if just to become a better employee in the future through their failure and gaining perspective of how difficult starting and running one successfully is.
Before this turns into a rant about how soft the world has become and I share my unacceptable opinions, I will just say that if you allow fear of failure to keep you from making the attempt you fail by default.
> It’s such a VC perspective
Ideas don't execute themselves. Problems are everywhere and ideas are a dime a dozen. Reddit is full of armchair generals. Companies are ultimately run by people. They live and die by whether the people running the company can build a solution, sell a solution, recruit people to expand the solution, and keep the people they have come to depend upon. Everything else - even money - is secondary.
> Reddit is full of armchair generals
So is the local pub. Sometimes what they say is based on some inside information, a unique perspective, or otherwise makes a lot of sense. There can be actual value in those comments, even if the commenter themself doesn't recognise this or simply isn't in a favourable position to exploit it. Dismissing all that's said off-hand is rather wasteful :)
> This whole “what matters is the founder” idea really discourages me. It’s such a VC perspective. The VC has a flock of people they pick from to invest in and if your traits doesn’t fit the necessary requirements you shouldn’t start a startup.
In an uncharitable interpretation, this is tech/VC returning to the mean -- this is the "good ol' boys club" (the sex of the person in particular is not important) that generally people talk about, and it's how society works most of the time. VC is not charity, they are incentivized to filter, and they do. That does not necessarily mean it's the same discriminatory environment but that depends on the person doing the searching and their ethics/principles/choices.
That said, YC is just about the antithesis of the aforementioned phenomenon -- they were one of if not the first to significantly drop the barriers to accessing VC. They took their program abroad and lowered barriers to entry for smaller international economies abroad. They've upped the amount given to founders and are running hot trying to accommodate huge incoming batches. They make founder school and other resources available absolutely free. YC's made it a breeze to work at any of their companies and get on the hundreds/thousands of rocketships they launch every year, VISA difficulties aside (there was also some mention of them working on a VISA "fast track"-ish path or something).
> It’s just that it feels like if you don’t have the grit etc necessary you’re just out of luck and out of this club and it’s not really something you can work on. (After all if it was something you could improve then it could be taught but PG et al seems to think - and I think they’re right - that it’s an innate thing.)
This is an extremely reasonable thing to filter for -- judging startup ideas is hard/impossible, and with lots of reflection it seems that grit is one of the things that sets founders apart (clearly ideas don't, execution usually will but maybe sometimes doesn't, etc). It makes sense for all VCs to filter for these qualities.
Now where I do agree is that people who can game the system -- but maybe grit is hard to fake. At some point you end up just... acquiring grit, because the situation is hard.
Grit and perseverance can definitely be learned. What it takes to embed it in yourself and motivations may vary from person to person, but it can definitely be acquired most of the time, I think.
[EDIT] - forgot about free founder school and stuff on YT
Great points here especially about YC, and but I want to highlight one that you missed which I think is most impactful, which is the innovation of a SAFE.
Early stage fundraising before SAFEs became a norm sucked. You had to deal with awful convertible note terms if you wanted a note, or deal with highly dilutive priced rounds; either way, there was so much friction on both sides. With the SAFE, you had a highly standardized instrument that both parties understood and which was very founder friendly. If investors wanted special things beyond that, they need to specifically carve it out into a side letter which spells out the special things they want. Just a different conversation.
Beyond that, it's not just that the SAFE as an instrument revolutionized early stage funding, it's that YC made it the de facto norm. This, more than anything else YC has done IMO, has permanently changed the landscape for early stage founders. I'll always be thankful to YC for that.
Ahhh yes, you're totally right -- the invention and forcing forward simplification/normalization of the process of raising money and running a startup is huge.
I agree 100%,
I donate every year to charitable causes but VC is not charity.
This thread reminds me of my softer youthful years, I can still feel the despair while standing with my back against the wall at the school dance, wondering why and noting how unfair it was that I wasn't dancing with anyone...
Having grit is probably the single most important trait of a founder, and one of the few which could reasonably argued to be innate. Just about everything else is learned, often by doing, which is why you need grit -- the learning curve is long and steep. Grit is how you bootstrap your way to being good at the other parts of building a startup.
I think grit is obtained through adversity.
Hard times create strong people, Strong people create good times, Good times create weak people, Weak people create hard times.
What time is it?
Hard times create weak people. People aren't iron that gets tougher when forged in fire. People are bags of meat. People accumulate damage and damage creates scars. Scars are only "tough" in the sense that they are less easily damaged than the virgin tissue before. Otherwise, the function of the tissue is degraded in every other property.
Stress causes health issues. Particularly traumatic stress causes (wait for it) Post-Traumatic Stress Disorder. All else being equal, a person with ulcers and anxiety disorders and depression and PTSD is a less capable person than one without.
It’s „weak people“?
Not everyone can start a successful business. When you start you have your idea and yourself, and as the saying goes ideas are cheap.
So I think that the founder is key, indeed, and whether VCs are involved is not relevant. But of course this means that VCs will judge the founder, not just the business plan.
I would only consider the lack of grit unfair if you have passion for achieving a specific goal and you cannot achieve it due to the lack of grit. Is that possible? If you deeply want to achieve something, don't you automatically have the grit to achieve it?
Lack of grit should be more a problem for people who see startups as a job where they are team-leads and they need some level of perseverance to overcome obstacles.
Still, why shouldn't grit be trainable? It's just that VC make money by selecting founders with grit. In a sense, they corner the market by investing into the best. Why should they destroy their moat by flooding the market with viable founders?
> why shouldn't grit be trainable?
Grit is not trainable in the sense that one can add it to a grade school curriculum and reliably graduate people with grit. Fundamentally, grit is formed by coming up against obstacles, failing, and getting back up again and perservering. No curriculum on the planet can standardize the experience of failure - even the Kobayashi Maru was beat by Kirk.
Kirk didn't beat the Kobayashi Maru.
You don't need a guarantee of failure. Let the students do several challenges at their skill level and they are bound to fail at some. That's where they can learn.
Generally things are pretty bad yeah.
- housing issues are reaching levels we’ve never seen. Not just buying, but renting is becoming exceedingly difficult for some. The fed raising interest rates so far has done nothing to level home prices.
- supply chains are crumbling. It’s nearly impossible to find a new vehicle. Used vehicles are selling for more than new ones. It’s yet another bubble that will burst miraculously.
- gas prices are still through the roof. It’s not uncommon to see $6/gal on the west coast (in any of the three states).
- the baby formula shortage is actually much worse than people realize. It went from hard to find to literally no one has any over the course of 7 days.
- stocks and crypto are tanking. Yes, some stocks aren’t seeing it as bad as others, but it’s not insignificant.
- food prices are increasing, and it’s very noticeable walking around a grocery store. Meat is $1-3/lb higher than it was 6 months ago. Certain produce is either not available or marked up 1.5-2x what it should be.
Now, a lot of these are going to get much much worse. The government seems content with really doing nothing other than seeding billions to countries not named the United States.
I think it’s fair for financial analysts and investors to be in full on bear mode.
> The fed raising interest rates so far has done nothing to level home prices.
They've barely raised rates! 0-1% federal funds rate is not a normal range, especially when inflation is ~10%
> The government seems content with really doing nothing other than seeding billions to countries not named the United States.
I think this isn't quite accurate for a variety of reasons, much of it is that the federal government actually has significantly limited control of the above + what control it does have it has to pass through a hostile senate to accomplish.
- The federal government cannot force local government to build housing to increase supply, it can only try to incentivize, and housing can't be built fast enough to offset current demand
- The federal government cannot factories, particularly overseas ones, to produce more
- The federal government can, at most, go through a faster approval process for foreign baby formula; it cannot force current domestic makers to produce formula
- The federal government literally doesn't control crypto that's what the attraction of crypto was lol; its bombing is entirely crypto's fault; and the stocks have been pushing back against government regulation for ages already
- The gov't cannot set food prices
So precisely what do you expect the government to be doing here?
So basically you are saying that federal government is useless in a crisis. That's inaccurate, there are mandates that can be overwritten, constitution is very clear about it.
This is so wrong.
> The federal government cannot factories, particularly overseas ones, to produce more
I am assuming you mean 'force'. Trump literally used the defense production act to keep hamburger patties flowing when workers were complaining about COVID.
While keeping hamburgers coming was the purpose of this EO. This act allows the president to force producers to change production to benefit the defense needs of the united states. To produce 'more' of something through retooling or other means.
> - The gov't cannot set food prices
Please see a history of price controls. The article literally has a poster prohibiting charging more than govt set prices. Not saying price controls are a good idea, but do not claim something easily disproven with a google search. I learned about this in middle school.
Because VC funding is by its nature a Ponzi scheme hoping they can throw enough money at a business until it looks like it might be a viable profitable business to the “bigger fool” in the future (“$x is a gazillion dollar market. If we just capture 1% then we can be worth billions”). That “fool” can either be some other tech company that acquires it and let’s it whither (and the founders post a message about “our amazing journey”) or the public markets.
The retail investors don’t have any desire when the stock market is tanking to buy stocks in money losing former unicorns. The investment bankers who organize the IPO also won’t see the initial “pop” that allows them to make a quick profit.
Of course the employees who sacrificed real compensation in cash or RSUs in a public company in lieu of statistically worthless “equity” come out on the short end as the companies repeatedly delay an IPO waiting for the “environment to improve”.
All this to say, if you want to be a founder, go for it. But unless the startup you are thinking about has enough funding to compensate you as an employee at market value in cash, skip it.
> But unless the startup you are thinking about has enough funding to compensate you as an employee at market value in cash, skip it.
Yes, and the good new is these companies have been paying significantly more cash in the last few years. It may not be enough to justify moving or staying in the Bay Area, but many small companies are paying the same remote, which seems like a better deal than the big tech companies in the short term, if you're looking to cut costs while their equity is down.
There's a lot of bad jobs out there right now, but if you're not in a gambling mindset, there are some good opportunities to improve your overall financial position.
I took the route of working for a public $BigTech company. My RSUs for the year might be down 33% YTD. But at least they are will be worth something and I can diversify as soon as they vest.
Yes, it’s bad. Gas and rent are very high. People are broke and not spending. Everyone in retail, including myself, is feeling it.
Sorry to hear that. I have no idea how most people afford rent. I do OK, and rent hikes the last 2 years were making me nervous. I cannot imagine how someone making retail/service wages are even surviving. I really wish the government would or could do something to help here.
What they could do,
lower tariffs, subsidize capital investment into production of lumber/housing, aggressively push and fight for higher density residential zoning, limit leverage allowed for investors of buy and hold rental properties, eliminate capital gains tax advantage for income above $1 million/year, enact temporary taxes on non essential consumption items, restart student loans (billions a month in excess spending for consumers). Etc etc
Instead they keep trying to tie BBB to inflation fighting, when its provisions are nothing of the sort.
They handed consumers far too much money, and need to suck it back up in a way that targets discretionary spending (vs essential spending). Too bad they won't...
And food. Stuff is almost double from a couple years ago.
Local restaurants that survived Covid are shutting down due to cost of food. Others are adding x% to food bill to cover cost. Things are rising so fast they don’t want to keep ordering new menus.
Eating out now is ridiculous. It's extremely easy to spend $100 for a family of four.
I would argue that the supply chain is the economy, and the rest is fantasy if and when money can't make the supply keep up with the growing demand.
Innovation used to save our bacon, but now you have to innovate just to stay in the same place. Just pouring money on the problem doesn't work, it increasingly won't with climate change.
So we are between a rock and a hard place, inflation and recession. Choose your adventure. If the future could vote it would vote for curtailing demand across the globe.
> I would argue that the supply chain is the economy,
Agreed, though that includes not just the supply of things, but the supply of money as well, which is also being reduced as the Fed raises interest rates.
> I would argue that the supply chain is the economy, and the rest is fantasy…
An increasing and rapidly growing part of the economy is Services and Services are not that dependent on supply chains.
Also supply chains were disrupted mainly due to the world economy being overly dependent on China and China being shutdown.
In the long run this might actually be bad for China as countries pass laws to not be so dependent on China.
What you are thinking is manufacturing versus services, what I'm thinking about is the distinctly B2B supply chain that includes both. Then there is B2C, which depends on the supply chain.
The financial markets are used to facilitate the operation of this economy and my argument was that it should not be seen as the economy itself.
The current inflation is because of China, Russia, the pandemic, lack of investment into the supply chain (during deflation, resilience being seen as inefficiency, preference for stock buybacks), bad investment (during the pandemic), lack of innovation and increasingly climate change. Something weird is going on with the fuel prices too.
IMHO The people that come out ahead here (for good or bad) are large locked debt holders. EG. You have a 700k mortgage that you locked in 2020 at 3%. Each month inflation eats away the loan - and the bank can do nothing accept eat it. Property has already inflated 10-15% in a year. I don't see interest rates that low for a decade -- that group of people lucked out. I don't see a huge home construction boom due to supply constraints - so those investments are pretty secure.
The people that get screwed are cash users/holders and maxed 401k holders. EG People about to hit retirement paying rent. Young people working two jobs to trying to pay bills. There will be nothing but rent hikes for years - shrinking ETFs, with tight restrictions to become debt holders. As usual the poor guy gets shafted. :(
In terms of raising money, which is a major concern for startups, yes, it's bad.
When you have the high priests of capitalism demanding old-school industrial policy and state planning and intervention, you know the economic model in place since the Reagan & Clinton years... may have jumped the shark:
I'd say we're in the mid-stages of what might be called an "economic crisis"; that doesn't necessarily mean riots in the streets and stocks plummeting to zero. But it means severe transformations that will displace the way things are done.
In most crisis it's usually the working classes who suffer first and most deeply. And that's been happening for some time; long prior to COVID, probably dating back to 2008. Once the upper and uppder middle classes start saying things like what you see above, you're already in the trenches and now shit's gonna get real.
Whatever is your opinion of the current economy, it's about to get worse. Investment is drying up, and that has a delay before reaching the factors most people care about.
I don't understand, aren't there many successful travel search engines doing something quite similar to that?
I think it was close to impossible at the time for a start up. Not today, but a crazy amount has changed in 20 years. Access to this kind of data has really opened up.
I remember how expensive a lot of this stuff was back then too. Access to an API for fairly trivial data could have a meaningful cost to a business back then. Tying all of this together, especially with useful geographical data, would probably have been very expensive.
Yes the data was not really there, I knew how enough to build the search part, but without sufficient raw data (i.e. not scraped or just via API without being able to search it directly) it would not have been possible. But that was a long time ago now. Oh well it was only a week...
I understand how doing a PhD is a big opportunity cost. But is it that bad a choice financially though? I mean are the opportunities later not lucrative enough?
Hard to say, but my first job out of grad school was as a process engineer at Intel. The pay grade for a fresh PhD was called "Grade 7", while that of fresh MS is either a "Grade 5" or "Grade 6". The thing is, grade promotions take maybe 2-3 years, so all other things equal, not only did I lose money by not being industry each of my PhD years, I could have been at the same grade level more quickly.
Yes, there are career paths that are only attainable by having a PhD, but those are really only for the top PhD students, so an elite group of an already elite group. The rest of us join career tracks that are accessible by lower credentialed employees by grinding out an equivalent industry experience.
I see. So what you are saying is that the career opportunities did not justify the opportunity cost. Thanks for sharing! As a prospective PhD student, this helps me gauge the worth better.
I don't get your point? I think you are saying "early employees become future founders"?
As a former early employee, I was different from a founder in that I wanted to help build something, I didn't want to lead building something. Founder got more equity because of it. No problem from me.
The founders skills had to be way wider and more diverse than my own, and I got to stretch a bit, but still hone my core skill set.
For likely >80% of HN readers, entrepreneurship is not their day job.
Signing for a job and showing up mon-fri is not nearly the same as building a business from the ground.
I think I am feeling jaundiced - I just smell another "elite" class brewing. Turns out the thing distinguishing the elite from the masses throughout history has been money. Often money in order to for example train in warfare (ie knights or samurai) but money just the same
Our you have this belief that companies are started mostly by people with money.
A high number of the founders I know were all broke as heck to get to company success with no personal or family money.
I don't mean to imply thar entrepreneurs are "superior".
Just that they're quite different roles.
Entrepreneurs definitely developed (and are willing to continually develop) skills that the vast majority of employees don't. And that's fine. It's not meant that one is superior and the other inferior. Just different contributions, risks taken, etc.
Ever started a company and stuck with it for a long while? Yeah - founders without funding are VERY different than early employees, do not kid yourself.
Early employees go out and get a job; founders live through hell, making their lives very difficult to get to where they can hire. I know of many that went from tech salaries to living below poverty for years to make things work. [at least for those not funded in the valley]
Compared to the revenue a successful product and sales process can generate today, people are still quite cheap.
If your product solves a real problem that is painful, there's big enough market paying for it, and you know how to reach thid market and sell, you can pay a good engineer year salary in a week of sales.
I was starting a recruiting business w/ a consulting model (charge for time, not commission on placements), which is a cutthroat, competitive business. I needed big fat margins because I had to grow the business w/ cash flow, and I started from -1000 USD in the bank. I got one customer to pay me 5000 USD in advance for one job, and that was how I got traction. I needed help, and my first hire was a woman w/ a STEM masters from a good school, and she needed a job. I paid her 15/hour while paying myself 12/hour. Things were tight for a really long time!
I'm not sure that was the intention or not, but from my perspective, your experience reinforces that people are still quite cheap.
What's really hard is building a product/service that solves a big enough problem, is marketable and you can sell.
If you don't have those skills, it's quite expensive to develop them. Way more expensive than salaries, even well paid engineers.
Yup I think right now is like best time found company, if you can get funding semifast you can start hiring when layoffs begin.
>If you can get funding semifast...
That is the problem with the current times, people are selling off sure things like bonds and precious metals just to maintain liquidity and meet margin calls right now.
I agree now is the best time to found a company, yesterday was better and tomorrow is almost as good as today! Very much along the lines of the best time to plant a tree!
Unless you find a way to print dollars, I don't see much option besides those two. What would be the alternative to revenue or capital to pay the bills?
>> Are you reliant on discretionary consumer spending, and are you dependent on investment capital. If either of those two things are true you're going to have a tough time during a recession.
> Unless you find a way to print dollars, I don't see much option besides those two.
Selling to government, selling to business (B2B). If you're starting a company that does either of those two things, the risk is generally a lot lower because you'll have your first customer before you even start the company.
Ah ok, the comment referred specifically to B2C, not B2B.
If you are a tool to cut spending for companies maybe not as bad tool for automatically reduction billing in aws,as trying to sell 500 headphones.