HN Gopher Feed (2017-09-18) - page 1 of 10 ___________________________________________________________________
Stripe Atlas: Pitching Your Startup
153 points by matthewhelm
https://stripe.com/atlas/guide/pitching___________________________________________________________________
ploggingdev - 5 hours ago
Since the guide is partly focused on the YC application process, I
have one thought (potentially misconception) that I would like
others to weigh in on. For context : I'm working on a Disqus
alternative with a focus on privacy, so no ads, no tracking scripts
( https://www.indiehackers.com/@ploggingdev/building-my-first-...
). I started working on it a little over two weeks ago and am a few
days away from launching. So by the application deadline, I would
have only onboarded beta users. Being a single founder who has been
working on a product for less than 3 weeks, even if I follow all
the advice and craft a well written YC application, I just don't
see why YC would consider funding me instead of the numerous other
applicants with serious revenue and something that might resemble
product-market fit. In other words, I think when talking about
crafting a YC application, it's important to discuss that there
exists a certain baseline above which such guides really make
sense. Sure, I could apply the actionable advice to my application,
but will it move the needle at all when I'm a single founder with
an MVP? On the other hand the only impressive part about the
application might be that I built it in under 3 weeks and onboarded
beta users. Thoughts?
wjossey - 5 hours ago
I wouldn't jump to say that your story is exactly limiting in
terms of why you should or should not apply. If you had launched
your product with beta customers, but they were in fact all
paying, I'd say that time frame actually makes you even more
interesting, not less. Much of the "magic" that happens in
technology occurs over remarkably short periods of time when you
look at "when the work happens". But, in reality, I'm assuming
you've been noodling on the Disqus alternative for a long while,
and you just felt comfortable now putting down pen to paper.The
bigger concern I would have with applying to YC in your case is
the existential question, "Should I take VC money or not?" What I
don't see above is an understanding of the why behind financing.
How will financing accelerate your business? If I give you $1M,
what will you do that makes it worth $10M in X timeframe? While
not necessarily a deal breaker for a lot of seed funds, I think
anytime one is looking at taking on multiple hundreds of
thousands of dollars of investment, they should have some basic
answer to that question.
ploggingdev - 4 hours ago
> The bigger concern I would have with applying to YC in your
case is the existential question, "Should I take VC money or
not?" What I don't see above is an understanding of the why
behind financing. How will financing accelerate your
business?So it goes back to my earlier point about a baseline
for getting accepted which my application would not cut since I
don't have hard data to show CAC, LTV and other relevant
metrics. It's certainly not set in stone as a small number of
very early stage companies do get accepted, but in general
products have to be much further along to have a serious chance
of acceptance, or at least that's the impression I get.
briandear - 4 hours ago
We need your product: email me at discusalternative@icouch.meYour
solving a big problem: having commenting that protects user
privacy. We are happy to pay if the product works in our use
case.Totally off the parent topic, but you do seem to be building
something that is incredibly useful, at least for us.
ricokatayama - 3 hours ago
Great stuff!It isn't mindblowing, but insightful enough to take a
look. "Focus on nascent greatness" is particularly a great section,
because tries to solve some misconception about bizplan and ideas
softwareqrafter - 2 hours ago
Great writeup, though I have to be completely honest here and say
that I love Patrick's writeups for independent hackers, makers,
micropreneurs, bootstrappers etc. His writings and practical case
studies gave me the power, as a nobody, to make tens of thousands
of dollars in order to be more with my wife and child, while doing
the work I love. I kind of miss those essays.
stefantheard - 2 hours ago
Have you written anything about your experience executing
whatever you did to make that happen? I would be interested in
hearing more, I always like hearing stories about how developers
think of something, make it, and then generate revenue from it.
Especially if you were able to make it happen as one person.
sebg - 5 hours ago
Also worth checking out Patrick's tweet storm following his tweet
about this new resource ->
https://twitter.com/patio11/status/909800194509758464
Kiro - 5 hours ago
> Do not cite gross merchandise volume (GMV) as revenue; if you
facilitate a transaction between two parties and collect a fee then
the total transaction is GMV but only your cut is revenue.I thought
revenue was a "protected" term, like how it's described in the
books. In that case isn't GMV the same as revenue? Since that's the
money you actually invoice. And your cut is "net revenue", profit
or something instead.
StephenCanis - 4 hours ago
I think the difference in these cases is that the business never
owned or controlled the merchandise being sold. For example I
would expect a real estate agent to report their commission as
revenue rather than the price of the house sold. However, the
price of the houses sold may make good marketing material.
amrrs - 4 hours ago
Even though I agree with you in financial terms. GMV shown as
revenue doesn't make much of a sense to picture how much a
company would do in future which would be something of VC's
interest. Of course, A few years back every Uber of X and
ecommerce company managed to raise $$$$ showing GMV and maybe
it's time to bring some robustness and understand the importance
of unit economics. So considering the 'cut' as revenue the
inflated number that exaggerates the picture is eliminated (even
though both these numbers are directly proportional)
mikeyouse - 4 hours ago
Uber deals with this by calling their topline "Gross Bookings"
(which includes the driver portion of each ride) and then
starting a new P&L below that with Revenue as the new topline.The
GAAP guidance instructs companies to make the determination
whether they're the principal or the agent with the following
criteria:1. You are the primary obligor in the sales transaction.
This means, are you responsible for providing the product or
service, or is the supplier? If you?re doing the work or shipping
the product, you can probably record at gross.2. You have general
inventory risk. If you take title to the inventory before you
sell it to the customer, and you take title to any returns from
customers, you can probably record revenue at gross.3. You can
select suppliers. This one is important, since it implies that
there isn?t some key supplier operating in the background who?s
actually running the transaction.4. You have credit risk. This
means that if the customer does not pay, then you absorb the
loss, and not a supplier. However, if you?re only at risk for
losing a commission if the customer doesn?t pay, then you?re
probably looking at recording the revenue at net.5. If you get to
set the price, then you probably have control over the entire
transaction, and you can record the revenue at gross.6. The
amount you earn is fixed. This indicates a commission structure,
which is sometimes set up as a fixed payment per customer
transaction. If you earn a percentage of what the customer pays,
this is also an indicator that you report revenue at net. In
either case, you?re really just an agent for someone else.7. The
other two guidelines for reporting at net are just the reverse
side of some earlier guidelines. If a supplier has credit risk,
or if a supplier is responsible for providing products or
services to the customer, then you?re probably looking at
reporting revenue at net.There's a pretty comprehensive document
from the 'Emerging Issues Task Force' of the FASB here:http://www
.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=121...
lpolovets - 3 hours ago
I'm a VC, and this list is great. At a high level, VCs care about
three things: team, product/idea, and market. Every VC cares about
all of these things, but their prioritizations vary.Most of
Patrick's excellent advice can be lumped into these three buckets.
Specifically:1) You have to establish the credibility of the team:
you've done impressive things before; you have a deep understanding
of what you're working on now; you can read your audience and know
how to communicate effectively; you can get a strong intro (nice-
to-have); etc.2) You have to establish the viability of the market:
it's big; it has a real problem; the existing competitors are not
doing a good job in a clear way; etc.3) You have to establish the
quality of the idea/product: you have a unique insight or approach
relative to competitors; the prototype/early validation is strong;
etc.A lot of the pitches become mediocre when founders are handwavy
in one or more of these areas. For example, if the founder spends a
lot of time talking about the market and the product idea, but not
enough time explaining why the team is uniquely/extremely qualified
to succeed. Or the founder has good answers to product/team/market
questions, but their answers show they don't know how to read the
audience or explain their idea. (Example of not reading the
audience: the investor is non-technical and the founder, who is
productizing their PhD thesis, spends 90% of the pitch geeking out
about technical details.)Also, I'll add a few tips:- Don't
exaggerate or mislead. An investor will pass if they doubt one of
your statements ("silverware is a $150 billion dollar market!") or
realize that you're spinning facts (e.g. you say Dropbox is a
customer, but later it turns out you meant that one of your free
users has an @dropbox.com email). If it turns out that one
statement you made is false, then investors will assume there might
be more.- Understanding risks is better than sweeping them under
the rug. If your competitor landscape is missing key companies
(mentioned in Patrick's post) or you dismiss some $1b+ company as a
competitor without any rationale, your audience will become very
skeptical. Admitting something is a problem and explaining how you
will address is it much more compelling.- Really know the ins and
outs of everything about your company -- at least relative to the
audience. If I ask a question or make a product suggestion that the
founder hasn't considered, that's a yellow flag. Someone who has
been living and breathing their startup for several months should
have a much, much deeper knowledge of their domain than an investor
who is hearing about it for the first time.
godzillabrennus - 2 hours ago
Great tips!I've also worked in VC and would add that you really
need to understand the motivation of the potential investors you
are pitching.Early stage Founders often waste a lot of time by
pitching anyone who says they make investments.This will save you
a lot of time and energy focusing on funds that you believe can
add more than money to your business.Also, funds with a proven
track record are important. I've witnessed outright fraud from a
VC fund that claimed to have $50MM to invest and signed contracts
to invest over $11MM when in reality they had no money at
all.Don't start hiring or otherwise committing your company to
expenses just because a VC fund signed some paperwork.Wait till
the money is actually wired over to your account.You want to vet
your investors as much as they are vetting you.