The 'checkbook is certainly important to any startup. However, let's look closer. When the money runs out, a non-technical founder can no longer afford to run the startup, and it effectively shuts down. However, even with no money, a technical founder can continue to build the business on their own. I think that's a core difference: even in the worst case (no money, no employees, no traction), technical founders can still work on actually building something.
On one hand, you're absolutely correct. On the other, if I were interested in running a one man show, I'd have become a programmer!
I suppose it's part of this start up culture that the "money runs out". I also understand that that can happen anywhere. However, part of being a good business guy is making sure that doesn't happen, through careful planning and implementation. Really, that's the business guy's job.
I thought of something that you might have missed. This is very particular to YC.
Perhaps you didn't realize, but a successful application to Y-Combinator gets an average investment from YC of $18k.
("Twice a year we invest a small amount of money (average $18k) in a large number of startups" http://ycombinator.com/.)
18,000 for the whole company.
Let's look at it if you don't have a "technical cofounder=coder" who is part of the team getting the 18,000.
Now you have to put some of the 18,000 toward coding.
Now it is generally acknowledged that the total cost to a company of a worker is about double the stated salary.
So, 18k will get you 9k worth of salary. But of course you have all kinds of miscellaneous expenses associated with setting up a company!
Like paying for hosting, or a space to work.
Maybe you can reduce ALL of your other expenses to 20% of the investment, so that you're left with 80% of the investment (a preposterously large amount) that you can use on a coder. This is 14.4k.
This equals a 7.2K of salary (remember, you double stated salary to get actual cost to your company).
This is how much coding you get for 7.2k.
0.09 years = 1.44 months at 60k annual salary rate, or
0.15 years = 1.08 months at 80k annaul salary rate, or
0.125 years = 0.9 months at 96k annual salary rate.
At forty hours, you are getting:
230 hours at 60k, or
172.8 hours at 80k or
144 hours at 96k.
This is two weeks of crunch development time. And this is if you can give 80% of your investment to an outside coder.
Does this sound reasonable?
Also bear in mind that contractors are more expensive than salaried positions. And, if you have no coder on board, in other words you need a complete architect and CTO, then you are looking at the very highest end of that range.
And all this is you spent 80% of your investment on an outside coder.
To me, it would seem fair to say that you have more like half of your investment that you can possibly spend up-front on an outside developer, bringing those numbers to...
143.75 hours at 60k, or
108 hours at 80k or
90 hours at 96k.
Do you think you can hire a guy to build your next eBay-of-x for you in 90-140 hours to the point where it GENERATES ENOUGH PROFIT FOR YOU TO KEEP PAYING HIM?
Absolutely out of the question.
This is why, in particular, the Y-C formula requires a technical cofounder as defined in this blog post.
It's very particular to YC, because they expect you to get a company off the ground for about as much as a traditional company would spend on office space rent in three or four months.
Y-Combinator's formula just doesn't work without a "technical co-founder" working for equity.
Entrepreneurship is simply not enough, when all you have is 18k to work with spread among every single cost the company will have, until it's profitable enough to pay for coders: who are very expensive.
Well, I agree. And that's precisely what incubators like YC are out to solve; the issue of upfront cash flow to fund start ups.
But you can run a software business without knowing how to write a lick of code. I know, because I've done it (okay, I'm not completely inept technically, and I have a keen interest in the industry, but I would never claim to be able to "code").
I think my main point, which I believe to have been re-enforced in this thread, is that programmers often believe they are, bar none, the most important piece of the puzzle. To me, that's arguable.
The auto mechanic is an important part of the car dealership, but he certainly isn't dictating to the owner how to run the business. He can be replaced, as can the programmer. The reality is, most "ideas" only need average abilities, and there are lots of average coders out there. If you're awesome and are doing awesome things code-wise and building amazing products, good for you. You deserve everything you're getting and maybe more. But for my projects, I just need a nice website or a simple app. If you want to flex your muscles to me because you've learned a skill I haven't, I'll pass. Just like you'll pass on a idiotic non-technical founder.
Anyway, this has probably derailed far away from what I and certainly the author intended. Let me just say that it's no accident that most programmers end up working for someone who has never written a line of code.
I don't think you got the GP's point, even though you say you agree. While YC does give you some funds, if you don't have a programmer working for equity, it isn't nearly enough to pay someone to do the technical work. However, if you include the $150K convertible note through the Start Fund, it does become more possible.
Edit: No longer mentioning stuff that isn't essential to my post
Edit: I'm specifically disputing "And that's precisely what incubators like YC are out to solve; the issue of upfront cash flow to fund start ups." The post you were responding to just said that they don't do that well, at least if you have to pay a programmer (although the Start Fund would help with this.)
>"The post you were responding to just said that they don't do that well"
Perhaps not. But I think the premise behind the incubator is to allow coders with ideas to get them off the ground. Obviously, these founders are required to do the actual work. It's sort of a special case. I'm not even sure it makes sense from a non-technical standpoint. Has anyone ever been accepted to YC on a non-technical basis? I know Tech Stars accepted someone...that didn't end well.
>"Entrepreneurship is simply not enough, when all you have is 18k to work with spread among every single cost the company will have, until it's profitable enough to pay for coders: who are very expensive."
That's the point I got; it's pretty hard to fund a tech start up with a non-technical partner when there isn't a whole of money. Nor can a non-coder do it alone, because he would have to pay programmers. And I agree.
Edit: for civility's sake. Glad the internet allows take backs!
Your approach to starting a software business (i.e. by treating coders as replaceable work-for-hire) is pretty close to the sort lampooned on Whartonite-Seeks-Code-Monkey. It's not the model that I'd like to see become dominant.
It comes down to a difference in philosophy. I believe that, for a technical business, the founders ought to be directly responsible for the product creation (as in build-by-git and not build-by-Skype). I'd rather see technical/design skills win out over marketing and business hustle in the end (in terms of capital ownership). And I say this as a business major (who's exercising his coding and design muscles now).
You are excluding the 150K Start Fund convertible notes that all YC companies are eligible for. That makes it more possible for startups with nontechnical founders to succeed.
