> also pointed out that if founders stay lean, this is more than enough capital to survive for years, regardless of the economic environment.
What does this look like?
I'm thinking 2 people's salary and overhead at say $110K each -- including employer's taxes, healthcare, and all benefits, that's maybe salaries of like $75-85K? Which is of course not a lot of money at all by software engineer standards (or to live near YC HQ), but is that still more than YC means by "lean"?
Because after two years that's $440K, leaving $30K/year for any infrastructure (like, that your software runs on) or marketting, or any other overhead at all.
So, yeah, that's lasting for "years" (2, which is I guess the minimum amount of "for years"), with exactly two founder employees, but it definitely seems very very lean to me.
How do you think YC is thinking about it, about like that, or I guess, even less take-home for the founders? Or is this not supposed to include the founders supporting themselves for those two years, is that not how it works? Or is the assumption they'd have at least a couple hundred thousand of revenue in those years too? Or thinking they will surely get some additional investment? (but that doens't seem to be what "this is more than enough capital to survive for years" suggests).
I'm not saying 500K is "not a lot of money", of course it is!
I'm just saying it's not clear to me how it's enough money to run a business "for years", even "leanly". Just curious how they're thinking about it like that, how I'm thinking about it wrong/different. I figure I don't know what I'm talking about, hoping someone will explain how it works!
I've also pondered how these sorts of VC things work. Are they just targeted towards people fresh out of university who can afford to live cheaply? Seems a lost opportunity to hire experienced (expensive) people who can execute with no problems. For instance, what if say 2 experienced people went in on a startup, simply paying themselves out of eg that 500k - 125k each per year? For instance in australia that'd almost be competitive vs just taking a normal software job if you're experienced. I'm just curious how these things work :)
You take a pay cut. In return you get to be a decision maker and drive the mission of the company.
I worked a few years at a high paying job (about $100K), am single and can forgo some luxuries. I did a startup with some friends because we enjoyed hanging out and could afford to work for free. I worked on contract for $6K a month. No benefits.
Just curious what people do once they're at a stage in life (eg kids) where taking a paycut isn't very doable? Do they simply bow out of the startup world? I wonder if people at that stage have the experience to execute startups very effectively, i wonder if there's a structural weakness in how startups are financed that with a bit more capital (and there should be plenty of that sloshing around with governments printing like crazy) they could execute far better. I dont have fully formed thoughts on this of course :)
Yes, unfortunately, that seems to be the case. I've had some startup colleagues who were married with young kids, but it was rare, and often the case that their partner had a stable well-paying job. The risk simply becomes too much of a burden at a certain point in life, for most people.
The other alternative? Be rich/have a huge nest egg, or get to seed round type funding stage super early - aka actually know how to execute on a startup.
Most sane people just don’t do startups though if they are in that position.
i think you and all the other top comments are missing the point. this isn’t meant to pay any salary at all. the cost to bring a product, nay an mvp, to market have gone up significantly since the $125k deal.
this is meant to get you through on the same rice and beans, everyone living together or better yet free in the basement, as earlier.
if you spend it on salaries you are squandering it
What does this look like?
I'm thinking 2 people's salary and overhead at say $110K each -- including employer's taxes, healthcare, and all benefits, that's maybe salaries of like $75-85K? Which is of course not a lot of money at all by software engineer standards (or to live near YC HQ), but is that still more than YC means by "lean"?
Because after two years that's $440K, leaving $30K/year for any infrastructure (like, that your software runs on) or marketting, or any other overhead at all.
So, yeah, that's lasting for "years" (2, which is I guess the minimum amount of "for years"), with exactly two founder employees, but it definitely seems very very lean to me.
How do you think YC is thinking about it, about like that, or I guess, even less take-home for the founders? Or is this not supposed to include the founders supporting themselves for those two years, is that not how it works? Or is the assumption they'd have at least a couple hundred thousand of revenue in those years too? Or thinking they will surely get some additional investment? (but that doens't seem to be what "this is more than enough capital to survive for years" suggests).
I'm not saying 500K is "not a lot of money", of course it is!
I'm just saying it's not clear to me how it's enough money to run a business "for years", even "leanly". Just curious how they're thinking about it like that, how I'm thinking about it wrong/different. I figure I don't know what I'm talking about, hoping someone will explain how it works!