At first I thought this seemed a bit like a scam, but on further reading, ignoring the $5k as that is a bit of a loss-leader, the terms of the $100k investment seem very well considered at this point.
At a max of 20% of a funding round you don't have to be concerned that one investor is going to hold all the power. Though they may attempt to bring other investors in, you are able to maintain the balance in the investment.
Daniel's history with Cue, having been through multiple rounds and an acquisition are also good signs for an early investor.
I don't have the time to dig into the specifics, but I like this more than I thought I would. What are others thoughts? Am I missing something? How can we help others not have the initial reaction that I had if it would actually benefit them?
Glad that they clarified this, as I was confused about the details of the original offer. The "and raise money from investors" part makes this much more attractive to me.
I thought the earlier feedback from HN was especially critical and cynical. I'm curious to know how much of the update to the offer came from the feedback here vis-à-vis the applicants themselves.
HN is a wonderful fuzzer on optimism, so I'm sure it'll find some negative angle here as well. HN caused us to think about it, but we made the decision after talking to applicants. Most didn't seem to mind. A few did. We figured it was worth another revision. We're a startup, too. Launch. Talk to users. Iterate. Etc. Etc.
Turns out partially enslaving high school children for $5000 for eight years generates some backlash.
And to think, that from a guy who is already set for life; what does it say about a person if they're already rich and entertain themselves by preying on young people for money they don't remotely need? Other opportunities abound (with a higher capex and effort barrier), but why work when you can be a vulture and buy half some kid's life for $5000?
It's good the terms have been revised, but the initial terms were so inconceivably shitty that I not only wouldn't do business with Gross, but wouldn't even do business with anyone who does business with him -- I don't want to contribute to the prosperity of people _THAT_ predatory.
But hey, at least you get an introduction to the network of other vultures.
edit:
the original terms were $5K and they get 3% of any company, even if unrelated to your funded project, that you start for the next 8 years, with the option to buy another few percent as well. So it was basically a slavery contract for n% of your life for essentially no money, passed off as a "fund your dreams" thing.
I am still not sure about the $5k. Why not $15k, which is what someone working minimum wage should expect to earn in a year?
The target population seems to be people who come from poorer backgrounds. $5k can be a lot of money for someone making only 3x that per year, but it doesn't seem anywhere near enough to get said person to focus on a project and especially not enough to get them to work on it and found a company. If the goal is to get "lost Einsteins" to spend time creating things and building companies, then you must give them the time luxury to do so and $5k just seems on the very low end of possibilities.
I had to dig up the prior discussion to understand what was updated about the offer. Previously it was:
"In exchange for the investment and benefits below, Pioneer will retain 3% of any company you found over the next eight years. Pioneer will also have the option of investing an additional $20,000 for 5% in any of those companies. These conditions apply if you already have an incorporated company."
There was a lot of pushback from HN on those terms:
I don't get it? At first I thought you write an application and if its good enough you get 5k to explore it, but on the get started page is suggests you have to work on the project for weeks and submit updates every Sunday.
How much work do you have to do to join the competition?
13 comments
[ 3.0 ms ] story [ 44.9 ms ] threadAt a max of 20% of a funding round you don't have to be concerned that one investor is going to hold all the power. Though they may attempt to bring other investors in, you are able to maintain the balance in the investment.
Daniel's history with Cue, having been through multiple rounds and an acquisition are also good signs for an early investor.
I don't have the time to dig into the specifics, but I like this more than I thought I would. What are others thoughts? Am I missing something? How can we help others not have the initial reaction that I had if it would actually benefit them?
And to think, that from a guy who is already set for life; what does it say about a person if they're already rich and entertain themselves by preying on young people for money they don't remotely need? Other opportunities abound (with a higher capex and effort barrier), but why work when you can be a vulture and buy half some kid's life for $5000?
It's good the terms have been revised, but the initial terms were so inconceivably shitty that I not only wouldn't do business with Gross, but wouldn't even do business with anyone who does business with him -- I don't want to contribute to the prosperity of people _THAT_ predatory.
But hey, at least you get an introduction to the network of other vultures.
edit: the original terms were $5K and they get 3% of any company, even if unrelated to your funded project, that you start for the next 8 years, with the option to buy another few percent as well. So it was basically a slavery contract for n% of your life for essentially no money, passed off as a "fund your dreams" thing.
This is not an exaggeration, as it would clutter future cap tables and cause your co-founders to reconsider working with you.
The target population seems to be people who come from poorer backgrounds. $5k can be a lot of money for someone making only 3x that per year, but it doesn't seem anywhere near enough to get said person to focus on a project and especially not enough to get them to work on it and found a company. If the goal is to get "lost Einsteins" to spend time creating things and building companies, then you must give them the time luxury to do so and $5k just seems on the very low end of possibilities.
What am I missing?
I'm not against the idea, I'm wondering where the $5k is coming from. It just seems arbitrary and not very much without a proper justification.
"In exchange for the investment and benefits below, Pioneer will retain 3% of any company you found over the next eight years. Pioneer will also have the option of investing an additional $20,000 for 5% in any of those companies. These conditions apply if you already have an incorporated company."
There was a lot of pushback from HN on those terms:
https://news.ycombinator.com/item?id=17725751
How much work do you have to do to join the competition?