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0 pointspg12y ago0 comments

We like domain expertise, but empirically it's not critical. The Airbnbs knew zero about the hospitality industry when they started. They just knew they'd had a life-changing experience when they rented out airbeds on their floor during a conference. The Stripes didn't know anything about payments before they started Stripe, except what any hacker who'd tried to process payments before Stripe did (that existing options were terrible). And it was because the Homejoys didn't know how to clean, and thus found themselves living in squalor, that they ended up starting Homejoy.

It's also rare for a startup to succeed without making money for the employees. The founders have the same type of stock as the employees, so the founders generally can't make money without the employees also doing so. There are occasionally cases where a startup gets so close to death that it has to raise money on terms that wipe out all the existing shareholders (including the founders), and then goes on to succeed. But usually those successes are middling anyway.

I agree about unsexy ideas though. All the startups I mentioned were unsexy ideas to start with, though their success has made some of the ideas seem somewhat sexier.

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7Figures2Commas12y ago· 2 in thread

> We like domain expertise, but empirically it's not critical.

That's quite a statement. Companies like AirBnB are exceptions, not rules. If you look at most of the top tech IPOs in 2013, which is as legitimate a way as any of identifying companies that have actually delivered liquidity to employees, there's domain expertise everywhere. Examples:

Veeva - founder was previously at salesforce.com, PeopleSoft, IBM

Marketo - founders hailed from Epiphany

FireEye - founded by a former Sun Microsystems engineer

Zulily - founded by Blue Nile execs

Tableau Software - founded by university researchers who specialized in data visualization

Rocket Fuel - founders all worked in ads at Yahoo

RingCentral - founder previously sold a software communications company to Motorola

Pretending that you can spot the next Mark Zuckerberg or Brian Chesky is a fool's errand if you're a prospective startup employee. Domain expertise doesn't guarantee success, but it is more likely to minimize certain risks, particularly those around market fit and sales.

> It's rare for a startup to succeed without making money for the employees though.

A founder who owns 4% of a $1 billion company gets a $40 million pay day when his company goes public. And chances are he's going to be receiving more equity if he's still a member of the management team. An employee who owns .01% of a $1 billion company gets a $100,000 bonus when his company goes public. Even if you own .1%, you won't net $1 million after taxes. This is not the type of "making money" many early startup employees are after.

Simply put, the idea that owning a smaller piece of a bigger pie is better than owning a bigger piece of a smaller pie doesn't stand up to scrutiny in Silicon Valley because most startups don't go public at billion-dollar valuations and the vast majority of M&A deals are under $50 million. The odds that you are going to work at Facebook in 2006 or AirBnB in 2009 are not very high.

Heck, the odds are that you won't even get an exit, so why not work for (or with) somebody who isn't figuring things out for the first time?

pgOP12y ago

I just mentioned 3. There are many more. Like I said, we like domain expertise. But when you have that many exceptions there's not much of a rule left.

7Figures2Commas12y ago

Just how many Facebooks and AirBnBs are there? You can look at the biggest success stories on the internet, from Google to Salesforce, and you'll find that in the vast majority, the founders had what most people would reasonably call "domain expertise." If you want to debate or exclude the concept of "domain expertise" altogether, that's fine. The number of major internet companies founded by folks with no professional experience/accomplishment is even smaller.

In any case, I respect that you're looking at this from the perspective of a tech investor in Silicon Valley, but you're in a completely different boat than prospective startup employees like the OP.

The universe of opportunities for developers is significantly greater than the universe of investment opportunities for Silicon Valley investors. There are literally countless opportunities in literally countless markets to build companies that, if not pure "tech" companies by standard Valley definition, use technology and the web to gain advantage. A lot of these would not be viable investment opportunities for YCombinator, but they will still make those who are successful in exploiting them very financially "comfortable."

Bottom line: any developer motivated in some part by a desire to make real money is doing himself a disservice by considering that the best path to financial success is to join an early-stage Silicon Valley startup for basis points in equity.

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