Love to hear the reverse, where not spending money costs you big time. I've been bitten more than once on my startups as a bootstrapper where not spending a dollar cost me ten or more.
It's all about spending right: you can hire top people for the money, but they will be doing nothing usefull for you if you do not know by yourself why you actually need them.
Even though I had a background in software engineering, I hired contractors to build the app. I ended up wasting 6 months in developing the MVP. I learned my lessons, fired all the contractors and developed the app in 1 month.
(21:59) simple explanation - when things go wrong, advisors get the blame. When something is successful, the founders take the credit for themselves - it’s a human thing.
As a startup, mistakes will affect you twice as hard than being established as a company already. Very insightful video, I'm sure a lot of folks here learned a lot from this!
Here is a little trick for PR: It's much less expensive to just buy a story than hire a PR agency. You can get a headline story at Forbes for 7K - if you need that for your investor outreach, just buy the space. You can do that with literally every publication. Publications will love you, when you come with a budget. They'll be skeptic, if you just want freebies, so free articles. You can get lucky and a journalist likes you so much, they give you a story but that's rare. We live in a time where media outlets are run like corporations and most don't allow their journalists anymore to just give you free PR, unless you bring them a lot of clicks. You can do it, this is how Elon Musk operates - he gives you massive amounts of clicks in exchange for scoops, but it's hard to get to this point as a startup.
Wasting money comes from the lack of focus on validation. It's too tempting for early-stage founders to compare their startups with mature companies. They have clients, suppliers, processes, shares, employees... But once founders realize they must prioritize validation, they're able to question: "how much do I need to validate?", "How will this help me to validate?", etc...
Yep I wish I would have heard this advice 3 years ago. I paid a marketing agency about $12k, of my own money, for a custom website and I totally thought that would be the thing to boost my sales to the next level. Guess what? Nothing happened. It’s good to hear I’m not the only one who makes these mistakes.
Especially because on fiver and similar websites you find super-talented people that do a great job for a fraction of the cash. There are websites out there where you can basically make designers pitch to you their concept and you can choose the design, you like which means it's basically risk-free. They build it in photoshop, if you like it, they'll code it.
Lol I met a founder who probably took your advice a little too seriously. He offered me 1% equity (pre-seed) with no salary, to be the CTO and lead their team in building their platform from scratch. I very politely declined. He got offended anyway. Story aside, you all provided excellent advice. Thanks for advising us for free (see what I did there?). Viva YC!
For a CTO, they seem to recommend an equity share + salary equal to what the founder is getting, but with a one year cliff for the equity and a four year vesting period. Now the one year cliff could mean that you get zero equity if you're let go within that first year.
It's interesting to observe how many founders end up making costly mistakes repeatedly. In my opinion, a major factor contributing to this pattern is the overwhelming stress and desperation that often accompanies the entrepreneurial journey. The intense desire for positive change can lead to trying almost anything in the hopes of achieving success. This eagerness to make a difference, coupled with the constant pressure to prove oneself, can sometimes cloud judgment and result in wasteful decisions. As aspiring entrepreneurs, it's crucial for us to learn from these experiences, finding ways to strike a balance between enthusiasm and prudent decision-making. By doing so, we can navigate the challenges of entrepreneurship more effectively and avoid falling into the trap of making the same costly mistakes.
I had a small high tech startup. I wanted to hire people with experience where I didn't have it. However, in the long run, we needed to invent new technology in order to make our product and these people I wanted to hire didn't know how to do it either. We had to just grind it out ourselves. Lack of money prevented us from making a big financial mistake.
I was at that PayPal conference, working for PayPal. There was a small buzz about some desparate startup dropping a block of ice in front of the building (Moscone center, nice place). We had a chuckle and went back to our booths.
I think it's better to hire an engineer with previous experience building & shipping products in small teams than a code test. The best engineers will only take a code test for big companies with big pay and many inexperienced engineers will ace a code test anyway.
Another 10 out of 10 episode. One thing I discovered on the PR agencies is that you can just literally email the journalists directly. Thats what we did and we got a story every time. Used a template we got from YC on how to write the story. Also one more danger of using ads I had to learn the hard way, is that in the beginning your tracking is incomplete. So when you start using ads it looks like it is super cheap. And only much later do you find that actually these customers dont have the average conversion later in the untracker funnel, or they spend less or they churn at a higher rate. In our case all of the above - compared to incoming traffic which we were averaging them with and of course they would be better customers.
This is the Whole Raw Truth up one side down the other. Love this. Every contract hire I have had has been a nightmare, wait and wait no finished work, nothing to show from them. I ended up doing all the work I paid others to do except for manufacturing my molds. Even that went a way I did not pay for - they outsouced my made in america product to china.
12:30 No joke, I am *quite literally* at this very moment debating this and listing out ALL these pros hiring a PR person would bring. It is so obvious, a no-brainer because I am the typical founder listed by Brad 😅. Thanks so much, you guys are a life-saver cause I'm definitely taking your advice here. - Derick. Edit: To add to this, I was actually considering a payment-equity split to "keep costs down" so it would have been a double whammy for sure. 🙏😄
I love where some of the topend engineers can make, but it is also about what amount of leverage the business has within the market it participates in. It isn't like the FAANG engineers are that much better, but we the folks have a lot of leverage within that market
I have done everything that's almost on this video, but especially advisors, lawyers in RP. Will be definitely points that I will be more careful with. Thanks!
Before I watch it, after losing my first strap with $160k burned, here's my own list: talent, assets to build the product before testing it on the market, workspace. These 3 were the majority for us, way before giving salary for ourselves...
As a Portuguese, Sebastianism is something we refer to the same way. We use the story to paint a clear picture of a scenario that will never happen. The King lost his life in a battle that took place in what is now Morocco in the 1500s, and the saying goes that the dorment king would one day return in our darkest hour.
Sometimes contractors are the only people getting the work done. The employees get paid even if they don't finish the project and hard to fire in G10 countries. Contractors get kicked out when they don't deliver.
Interesting video. How do you want your founders to move their company forward? Alone? For me bottom line is on all topics: hire or contract people within your budget that get the job done. In case they don’t move things forward - cancel the contract.
Try hiring a bunch of people without product market fit. Being there. Just a bunch of people sitting in a desk "Working" on something that have no value. That's why they recommend to always found the company with a cofounder so you are not alone doing everything.
The issue with marketing spend is to think you have Market Fit too early... so you're trying to scale your acquisition when you actually have not proven your product yet.
I think the flip side of hiring experts is the tendency for startups to hire inexperienced employees who are asked to do things that someone with experience would manage far more effectively. FANG employees, sure, they’re F’ANG expensive. Hiring junior designers, building out an entire marketing team with executives and not having a product, having zero product leadership, always operating in “Crunch mode” - that’s a recipe for chaos and wasteful spending.
I love how all of these stories involve people wanting to wear the hat of a CEO without actually building a product, as if people would do anything except build the product they pitched in the first place.
Anyone can file the paperwork to incorporate a business in a single afternoon. This includes filling out and filing the State and federal forms. As for corporate by-laws or articles of operation for a LLC, you should not just take the boilerplate document drafted by an attorney. You need to understand the document to ensure that you are willing and able to operate your business in accordance with the terms therein.
Spending money pre-market fit should pass the kitchen table smell test. If a founder thinks something like that will not go smoothly at a family/housemates meeting, it’s a good sign that the expense /“investment” ;) is a bad idea.
YC content is obviously great content. The one downside is they don't spend enough time talking about the reverse of their guidelines. They do tend to be a bit too academic for people playing in the entrepreneurship game. You really can't make it one size fits all.
The hard tech startup professor equity stake statement really seems to be the case from my perspective as well. Most professor founders are more of an SAB member instead of a founder level employee working to build the company. Giving them such a high equity stake (if you are a co-founder with them) seems crazy and rent seeking from their part.
Brilliant discussion. I'm close to beta launch and hopefully won't fall into these traps. As a non coder I built an entire back and front end myself. With that knowledge I was able to hire a proper programmer in India to rebuild the front end and I trained her on backend. Completely agree on not overspending on lawyers and marketing. I'm bootstrapping so every dollar is precious.
Another spot money gets wasted on lawyers is patents- it’s an endless pit. I think there are very few YC breakout success stories that rely on patents.
Hey, Do you guys think "Product market fit" is click or hit situation or it is something that gradually takes place. How would you advise a founder on their startup when they have two choices, 1. Add more features to product. 2. Pivot the product to make something else. Would love to hear examples of failures/successes around both of these.
I am in the process of building a community with goal an environment where intelligent and ambitious people get value and help each other to reach their goals
My family we jokes that we have a sixth sibling name "Somebody" as in "Somebody ate the ice cream" or "Somebody will make dinner". Who knew we really should have named him Sebastian!
The mistake isn't the hiring of the people, it's the not knowing how to drive those people effectively. That said, in the beginning, pre PMF, spending more time talking to customers vs anything else is the answer to nearly all your problems.
The largest chunk of wasteful spending by modern technology startups is FEDERAL INCOME TAX on artificial profits. This is due to changes in the tax code requiring Research & Development costs to be amortized over 5 years (domestic) or 15 years (foreign). A business that generates annual revenue of $1,000,000 with annual R&D expenditures of $1,000,000 will now be paying first-year taxes on $800,000 on artificial profit. Unless the startup has investors with deep pockets the federal income taxes due will force the company into bankruptcy. FYI - This is an overly simplistic example that does not account for other legitimate expenses (i.e., taxes, rent, utilities, etc.) which would result in an actual operating loss.
@@CyY-vo3nb It is not a good thing. It is a TERRIBLE thing. Let's take a look at an theoretical technology startup's revenues, expenses, and net LOSSES - but ARTIFICIAL PROFITS. The company makes $1,200,000 in gross sales. It has labor expenses of $1,000,000 and other operating expenses of $250,000. In reality, the company operated at a net loss of $50,000 and had no real income. However, the current tax code only allows this technology company to write off $100,000 of the $1,000,000 in the first year and $200,000 in each subsequent year until the costs are fully amortized. The company owes taxes on $900,000 in ARTIFICIAL "NET PROFITS" but has ZERO DOLLARS with which to pay. The company cannot declare bankruptcy to avoid the tax obligations, but it also cannot continue to operate because of the debt burden to the IRS. Investors will not want to put money into a company when their investment will not go toward furthering R&D but will be applied to the tax bill. This is insanity and anyone who supports such nonsense is not playing with a full deck.
The only thing I disaprove on this video, it is the amount of sentences using "like" (ugh) inapropriately. Here is a new product idea: use auto correct real time of your speech with predefined guidelines, using AI LLM for voice content purposes (sort of autotune for content creators) 😅
Always cracks me up when you got millionaires in a vod using 20 USD microphones. Mates, half the stuff you say is inaudible in that echo-y room you are sitting in.
I'm so excited to have watched this and can cleanly say its super exciting to be in an under-developed country on this one... we just really don't bother with much of this. But on the question of technical advisors, we're in a rather new market in South Africa, do we bootstrap and just work on our product or do we pay the technical advisory fee and utilise the optimizations they offer to accelerate our entry into the market?
🎯 Key Takeaways for quick navigation: 00:00 🤝 *Introduction to the video topic and speakers* - Introduction to the discussion about common financial mistakes by startups - Emphasis on the repetitive nature of the advice given to startups 01:37 💸 *Common financial mistakes made by startups* - Detailed exploration of the financial blunders early stage founders often make - Insights into why these mistakes are common despite advice against them 02:18 👥 *Mistakes in hiring practices* - Discussion about the pitfalls of hiring decisions in startups - Examples of poor hiring decisions, like overpaying or misunderstanding the role of contractors 06:43 📈 *Marketing and advertising misconceptions* - Analysis of marketing strategies and their often ineffective results - The illusion of success through advertising and the reality of its limited impact 09:44 📰 *The ineffectiveness of PR agencies for startups* - Debunking the perceived necessity of hiring PR agencies - Personal anecdotes illustrating the inefficiency of PR agencies in the startup context 16:00 ⚖️ *Legal expenses and managing lawyer relationships* - Discussion on the overexpenditure on legal services by startups - Strategies for minimizing legal costs and optimizing legal services 20:24 🧑🏫 *Misconceptions about the value of advisors* - Critique of overvaluing advisors and the cost of their equity - Advice on managing advisor relationships effectively 24:51 🚀 *Conclusion and summary* - Summary of discussed topics and final thoughts on startup expenditures - Emphasis on the importance of being financially disciplined in the early stages of a startup. Made with HARPA AI
I'm willing to pay you for necessary work relevant to the scope of the project. I'm reluctant to pay for for unnecessary work that is outside the scope of the project or for your time to learn the relevant law (which you should have already been familiar with before taking the job and told me before taking the job if you weren't familiar).
Why are contractors seen as cheap? In the UK contract developers earn 30%+ more and tend to be easier and always much faster to hire. Why fill the first positions with junior to mid level perm developers when a smaller team of experienced developers will get you moving fast. Just don’t mix up contractors with out sourced development companies. That’s a whole different proposition….
Love to hear the reverse, where not spending money costs you big time. I've been bitten more than once on my startups as a bootstrapper where not spending a dollar cost me ten or more.
Exactly! More appropriately, what to spend your money on after PM-fit (without second-guessing)?
You should make a video about it. I’d watch
@@marketing_examples Thanks but I only watch videos ;
It's all about spending right: you can hire top people for the money, but they will be doing nothing usefull for you if you do not know by yourself why you actually need them.
@@rickhmason 100% we are not all billionaires we depend on those videos so we can learn and know more about start-ups
Even though I had a background in software engineering, I hired contractors to build the app. I ended up wasting 6 months in developing the MVP. I learned my lessons, fired all the contractors and developed the app in 1 month.
Did you develop it yourself
Six months is crazy for an MVP. That's junior dev numbers. They definitely did that to get as much money out of you as possible
This part on ad spending from Brad is amazing: "The UI makes your feel really smart"
So true!
After going broke 3x in the last 5 years Ive learned how to look for the free solution to my problem. Its almost always there.
channel is pure gold!
(21:59) simple explanation - when things go wrong, advisors get the blame. When something is successful, the founders take the credit for themselves - it’s a human thing.
about hiring contractors as a bandaid, there's a saying: "there's nothing more permanent than a temporary solution".
As a startup, mistakes will affect you twice as hard than being established as a company already. Very insightful video, I'm sure a lot of folks here learned a lot from this!
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
Here is a little trick for PR: It's much less expensive to just buy a story than hire a PR agency. You can get a headline story at Forbes for 7K - if you need that for your investor outreach, just buy the space. You can do that with literally every publication. Publications will love you, when you come with a budget. They'll be skeptic, if you just want freebies, so free articles. You can get lucky and a journalist likes you so much, they give you a story but that's rare. We live in a time where media outlets are run like corporations and most don't allow their journalists anymore to just give you free PR, unless you bring them a lot of clicks. You can do it, this is how Elon Musk operates - he gives you massive amounts of clicks in exchange for scoops, but it's hard to get to this point as a startup.
this should be higher!
That does not sound like good journalism.
Is there a way to buy TV spots? Example Bloomberg Interview etc. ?
Wasting money comes from the lack of focus on validation. It's too tempting for early-stage founders to compare their startups with mature companies. They have clients, suppliers, processes, shares, employees... But once founders realize they must prioritize validation, they're able to question: "how much do I need to validate?", "How will this help me to validate?", etc...
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
Yep I wish I would have heard this advice 3 years ago. I paid a marketing agency about $12k, of my own money, for a custom website and I totally thought that would be the thing to boost my sales to the next level. Guess what? Nothing happened. It’s good to hear I’m not the only one who makes these mistakes.
You’re definitely not the only one. Lesson learned for sure
Especially because on fiver and similar websites you find super-talented people that do a great job for a fraction of the cash.
There are websites out there where you can basically make designers pitch to you their concept and you can choose the design, you
like which means it's basically risk-free. They build it in photoshop, if you like it, they'll code it.
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
Spending $12k on a website makes no sense. But investing $12k in direct response marketing makes plenty of sense if you have a good sales funnel.
Lol I met a founder who probably took your advice a little too seriously. He offered me 1% equity (pre-seed) with no salary, to be the CTO and lead their team in building their platform from scratch. I very politely declined. He got offended anyway.
Story aside, you all provided excellent advice. Thanks for advising us for free (see what I did there?). Viva YC!
For a CTO, they seem to recommend an equity share + salary equal to what the founder is getting, but with a one year cliff for the equity and a four year vesting period. Now the one year cliff could mean that you get zero equity if you're let go within that first year.
Classic 😅
This is every prospective non-technical cofounder I've ever talked to.
Gettin real tired of it.
It's interesting to observe how many founders end up making costly mistakes repeatedly. In my opinion, a major factor contributing to this pattern is the overwhelming stress and desperation that often accompanies the entrepreneurial journey. The intense desire for positive change can lead to trying almost anything in the hopes of achieving success. This eagerness to make a difference, coupled with the constant pressure to prove oneself, can sometimes cloud judgment and result in wasteful decisions. As aspiring entrepreneurs, it's crucial for us to learn from these experiences, finding ways to strike a balance between enthusiasm and prudent decision-making. By doing so, we can navigate the challenges of entrepreneurship more effectively and avoid falling into the trap of making the same costly mistakes.
I don't have a startup but I am running a family business in agriculture sector and the information you provided was helpful.
I had a small high tech startup. I wanted to hire people with experience where I didn't have it. However, in the long run, we needed to invent new technology in order to make our product and these people I wanted to hire didn't know how to do it either. We had to just grind it out ourselves. Lack of money prevented us from making a big financial mistake.
I was at that PayPal conference, working for PayPal. There was a small buzz about some desparate startup dropping a block of ice in front of the building (Moscone center, nice place). We had a chuckle and went back to our booths.
Hired an engineer without a code test. Cut my losses quickly and learned a valuable lesson!
Did you outsource to India or something?
@@Arnold_X3 PhD student in America
Ouch!
I think it's better to hire an engineer with previous experience building & shipping products in small teams than a code test. The best engineers will only take a code test for big companies with big pay and many inexperienced engineers will ace a code test anyway.
@@FrankOdongkara good perspective! Need someone who can ship product
Another 10 out of 10 episode. One thing I discovered on the PR agencies is that you can just literally email the journalists directly. Thats what we did and we got a story every time. Used a template we got from YC on how to write the story.
Also one more danger of using ads I had to learn the hard way, is that in the beginning your tracking is incomplete. So when you start using ads it looks like it is super cheap. And only much later do you find that actually these customers dont have the average conversion later in the untracker funnel, or they spend less or they churn at a higher rate. In our case all of the above - compared to incoming traffic which we were averaging them with and of course they would be better customers.
4:21 6:02 8:09 9:17 10:43 11:02 13:29 14:50 15:09 16:25 21:18 22:00 23:13 23:59 25:00 25:30 That's very good advice
This is the Whole Raw Truth up one side down the other. Love this. Every contract hire I have had has been a nightmare, wait and wait no finished work, nothing to show from them.
I ended up doing all the work I paid others to do except for manufacturing my molds. Even that went a way I did not pay for - they outsouced my made in america product to china.
12:30 No joke, I am *quite literally* at this very moment debating this and listing out ALL these pros hiring a PR person would bring. It is so obvious, a no-brainer because I am the typical founder listed by Brad 😅. Thanks so much, you guys are a life-saver cause I'm definitely taking your advice here. - Derick.
Edit: To add to this, I was actually considering a payment-equity split to "keep costs down" so it would have been a double whammy for sure. 🙏😄
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
I love where some of the topend engineers can make, but it is also about what amount of leverage the business has within the market it participates in. It isn't like the FAANG engineers are that much better, but we the folks have a lot of leverage within that market
Chapters (Powered by ChapterMe) -
00:01 - Introduction
02:19 - Hiring lies
04:50 - Contractors
06:51 - Marketing spend
07:56 - Triplebyte
09:53 - Brand advertising
11:02 - Approach events like a startup founder
11:06 - WePay
12:20 - PR
16:01 - Lawyers
20:22 - Advisors
24:39 - Devil's advocate
Thanks
Great growth hack! Lol
Thanks 🙏 time saver.
Thank you!
Thank you
I have done everything that's almost on this video, but especially advisors, lawyers in RP. Will be definitely points that I will be more careful with. Thanks!
Before I watch it, after losing my first strap with $160k burned, here's my own list: talent, assets to build the product before testing it on the market, workspace.
These 3 were the majority for us, way before giving salary for ourselves...
As a Portuguese, Sebastianism is something we refer to the same way. We use the story to paint a clear picture of a scenario that will never happen. The King lost his life in a battle that took place in what is now Morocco in the 1500s, and the saying goes that the dorment king would one day return in our darkest hour.
Sometimes contractors are the only people getting the work done. The employees get paid even if they don't finish the project and hard to fire in G10 countries. Contractors get kicked out when they don't deliver.
Interesting video. How do you want your founders to move their company forward? Alone?
For me bottom line is on all topics: hire or contract people within your budget that get the job done.
In case they don’t move things forward - cancel the contract.
Try hiring a bunch of people without product market fit. Being there. Just a bunch of people sitting in a desk "Working" on something that have no value. That's why they recommend to always found the company with a cofounder so you are not alone doing everything.
I'd love to see a follow-up video to this one, summarised under by question: "what's the best money you've ever spent in your startup?"
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
The issue with marketing spend is to think you have Market Fit too early... so you're trying to scale your acquisition when you actually have not proven your product yet.
I think the flip side of hiring experts is the tendency for startups to hire inexperienced employees who are asked to do things that someone with experience would manage far more effectively. FANG employees, sure, they’re F’ANG expensive. Hiring junior designers, building out an entire marketing team with executives and not having a product, having zero product leadership, always operating in “Crunch mode” - that’s a recipe for chaos and wasteful spending.
Even though, I failed in the YC; I thank you these guys! Their advice helps a lot. Implement those.
Keep pushing forward. You'll get there. Also, you probably don't need much if any outside investment.
I love how all of these stories involve people wanting to wear the hat of a CEO without actually building a product, as if people would do anything except build the product they pitched in the first place.
Anyone can file the paperwork to incorporate a business in a single afternoon. This includes filling out and filing the State and federal forms. As for corporate by-laws or articles of operation for a LLC, you should not just take the boilerplate document drafted by an attorney. You need to understand the document to ensure that you are willing and able to operate your business in accordance with the terms therein.
my question is why accelerator programs do not offer those static services to their startups so they can just focus on their business.
I'm not sure if you're aware of this, but you're a life saver!
Bit late finding the Ycombinator UA-cam channel, but thank you so much for making these videos.
Spending money pre-market fit should pass the kitchen table smell test. If a founder thinks something like that will not go smoothly at a family/housemates meeting, it’s a good sign that the expense /“investment” ;) is a bad idea.
I love these so much, can we push the audio to the YC podcast as well? 🙏🏻
YC content is obviously great content. The one downside is they don't spend enough time talking about the reverse of their guidelines. They do tend to be a bit too academic for people playing in the entrepreneurship game. You really can't make it one size fits all.
The hard tech startup professor equity stake statement really seems to be the case from my perspective as well. Most professor founders are more of an SAB member instead of a founder level employee working to build the company. Giving them such a high equity stake (if you are a co-founder with them) seems crazy and rent seeking from their part.
You guys should start your own Y-combinator.
Brilliant discussion. I'm close to beta launch and hopefully won't fall into these traps. As a non coder I built an entire back and front end myself. With that knowledge I was able to hire a proper programmer in India to rebuild the front end and I trained her on backend. Completely agree on not overspending on lawyers and marketing. I'm bootstrapping so every dollar is precious.
How did it turn out
*everything sounds like: LACK OF NEGOCIATION SKILLS... you give away equity too early, too fast.*
Are investors/VCs encouraging companies to spend in any of these categories?
That is why I build never wasting investor money business model
Fantastic advice. I made some of these mistakes and avoided many.
As a senior engineer the first ideas are pretty obvious if you worked in tech more than 3-5 years.
me: Cant afford anything even the attorney that works for me is my friend, whom I basically bully to do things for me.
Please talk about what startups waste too much time on
Another spot money gets wasted on lawyers is patents- it’s an endless pit. I think there are very few YC breakout success stories that rely on patents.
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
Hey,
Do you guys think "Product market fit" is click or hit situation or it is something that gradually takes place.
How would you advise a founder on their startup when they have two choices,
1. Add more features to product.
2. Pivot the product to make something else.
Would love to hear examples of failures/successes around both of these.
I am in the process of building a community with goal an environment where intelligent and ambitious people get value and help each other to reach their goals
if you are interested or want more information. just check my instaa (same name)
The problem with not hiring a FAANG employee is that’s what investors are looking for. Part of the judging factor is what team do you have that’s why.
You don't need a FAANG person if you can strongly demonstrate the team's "why me/why now/what do I brimg"
What has your startup spent money on that didn't live up to expectations?
marketing on social media
Too early to say. But staying lean, vigilant and prudent.
Dev shop. Such a waste.
Spend a lot going to events and conferences
keeping it in my bank account till everyone involved loses their motivation lol
We're going to be huge! Don't worry about waste!
My family we jokes that we have a sixth sibling name "Somebody" as in "Somebody ate the ice cream" or "Somebody will make dinner". Who knew we really should have named him Sebastian!
I love the creative marketing tactics ✨ 11:56
Freak, this is amazing. Super helpful. I'm trying to get my feet wet in the whole start-up context.
I know some startups who have made an advisor equity pool , just to use it for bribing ..... Thats Stupid as well as way too risky
The mistake isn't the hiring of the people, it's the not knowing how to drive those people effectively. That said, in the beginning, pre PMF, spending more time talking to customers vs anything else is the answer to nearly all your problems.
The largest chunk of wasteful spending by modern technology startups is FEDERAL INCOME TAX on artificial profits. This is due to changes in the tax code requiring Research & Development costs to be amortized over 5 years (domestic) or 15 years (foreign). A business that generates annual revenue of $1,000,000 with annual R&D expenditures of $1,000,000 will now be paying first-year taxes on $800,000 on artificial profit. Unless the startup has investors with deep pockets the federal income taxes due will force the company into bankruptcy.
FYI - This is an overly simplistic example that does not account for other legitimate expenses (i.e., taxes, rent, utilities, etc.) which would result in an actual operating loss.
yeah but this sounds more like a good thing than a bad thing
@@CyY-vo3nb It is not a good thing. It is a TERRIBLE thing.
Let's take a look at an theoretical technology startup's revenues, expenses, and net LOSSES - but ARTIFICIAL PROFITS.
The company makes $1,200,000 in gross sales. It has labor expenses of $1,000,000 and other operating expenses of $250,000. In reality, the company operated at a net loss of $50,000 and had no real income.
However, the current tax code only allows this technology company to write off $100,000 of the $1,000,000 in the first year and $200,000 in each subsequent year until the costs are fully amortized.
The company owes taxes on $900,000 in ARTIFICIAL "NET PROFITS" but has ZERO DOLLARS with which to pay. The company cannot declare bankruptcy to avoid the tax obligations, but it also cannot continue to operate because of the debt burden to the IRS. Investors will not want to put money into a company when their investment will not go toward furthering R&D but will be applied to the tax bill.
This is insanity and anyone who supports such nonsense is not playing with a full deck.
Happy to hear this at this hour. Have been listening to Micheal nowadays like. Sometimes I watch twice.
Most startups I worked at had poor resource management.
This channel is so useful, thank you.
1 mil in SEO will have a bigger impact.
you just saved me lots of money and equity 🙌
I watch YC videos to laugh sometimes
Thanks for another good one Harj, Michael, and Brad.
1. Hiring - get a big company bonafide guy, sebastianism - solve all problems, contractors
2.
Thank you so much. This is very timely.
Awesome video. Thank you.
Absolutely great advice, scaling is super hard for any company.
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
50k on employment contract is unforgivable
Love this, such great advice, hopefully one day I'll be able to thank you chaps in person : )
This video is valuable.
The only thing I disaprove on this video, it is the amount of sentences using "like" (ugh) inapropriately. Here is a new product idea: use auto correct real time of your speech with predefined guidelines, using AI LLM for voice content purposes (sort of autotune for content creators) 😅
I asked a law firm to write me an EULA - they declined my business since they were too busy. Probably dodged a bullet.
Living this now at Convochat
Always cracks me up when you got millionaires in a vod using 20 USD microphones. Mates, half the stuff you say is inaudible in that echo-y room you are sitting in.
Great content thanks!
I'm so excited to have watched this and can cleanly say its super exciting to be in an under-developed country on this one... we just really don't bother with much of this.
But on the question of technical advisors, we're in a rather new market in South Africa, do we bootstrap and just work on our product or do we pay the technical advisory fee and utilise the optimizations they offer to accelerate our entry into the market?
I'm actually going to make a point of complying with this.
Unreal. So so so true and spot on.
Awesome insights, please keep it up!!!
This is 100% right on.
🎯 Key Takeaways for quick navigation:
00:00 🤝 *Introduction to the video topic and speakers*
- Introduction to the discussion about common financial mistakes by startups
- Emphasis on the repetitive nature of the advice given to startups
01:37 💸 *Common financial mistakes made by startups*
- Detailed exploration of the financial blunders early stage founders often make
- Insights into why these mistakes are common despite advice against them
02:18 👥 *Mistakes in hiring practices*
- Discussion about the pitfalls of hiring decisions in startups
- Examples of poor hiring decisions, like overpaying or misunderstanding the role of contractors
06:43 📈 *Marketing and advertising misconceptions*
- Analysis of marketing strategies and their often ineffective results
- The illusion of success through advertising and the reality of its limited impact
09:44 📰 *The ineffectiveness of PR agencies for startups*
- Debunking the perceived necessity of hiring PR agencies
- Personal anecdotes illustrating the inefficiency of PR agencies in the startup context
16:00 ⚖️ *Legal expenses and managing lawyer relationships*
- Discussion on the overexpenditure on legal services by startups
- Strategies for minimizing legal costs and optimizing legal services
20:24 🧑🏫 *Misconceptions about the value of advisors*
- Critique of overvaluing advisors and the cost of their equity
- Advice on managing advisor relationships effectively
24:51 🚀 *Conclusion and summary*
- Summary of discussed topics and final thoughts on startup expenditures
- Emphasis on the importance of being financially disciplined in the early stages of a startup.
Made with HARPA AI
What about lawyers that offer a deferred credit until your next round of fundraising?
*Great videos does anyone know of a good payment plan law firm that will do my investor contact with us.*
as a engineer at start-up i find the initial part funny!
Wow so good, really nailed this topic
I'm willing to pay you for necessary work relevant to the scope of the project. I'm reluctant to pay for for unnecessary work that is outside the scope of the project or for your time to learn the relevant law (which you should have already been familiar with before taking the job and told me before taking the job if you weren't familiar).
so enjoyable thank you
Great advice!
"Valuable advices coming from people for free" - Like this video lol :D
Thanks guys!
Great advice.
Interesting topic, well explained.
Need to cut cost all necessary expenses and cut down it and optimise it
Love the honesty
Why are contractors seen as cheap? In the UK contract developers earn 30%+ more and tend to be easier and always much faster to hire. Why fill the first positions with junior to mid level perm developers when a smaller team of experienced developers will get you moving fast. Just don’t mix up contractors with out sourced development companies. That’s a whole different proposition….
Love this
So valuable.