People’s Software Company

Very timely post from YCombinator’s Paul Graham on raising money for your start up. Some snippets:

“Investors evaluate startups the way customers evaluate products, not the way bosses evaluate employees. If you’re making a valiant effort and failing, maybe they’ll invest in your next startup, but not this one. But raising money from investors is harder than selling to customers, because there are so few of them…”

and

“Consulting is the only option you can count on. But consulting is far from free money. It’s not as painful as raising money from investors, perhaps, but the pain is spread over a longer period. Years, probably. And for many types of startup, that delay could be fatal. If you’re working on something so unusual that no one else is likely to think of it, you can take your time. Joshua Schachter gradually built Delicious on the side while working on Wall Street. He got away with it because no one else realized it was a good idea. But if you were building something as obviously necessary as online store software at about the same time as Viaweb, and you were working on it on the side while spending most of your time on client work, you were not in a good position.”

and

“The upshot is, you can choose your pain: either the short, sharp pain of raising money, or the chronic ache of consulting. For a given total amount of pain, raising money is the better choice, because new technology is usually more valuable now than later.”

There’s alot more, all worth reading at Paul Graham’s site.

(Via Brad and David))