This sounds like a scrappy side project, not a company. Why did you work on getting insurance, getting incorporated, any of that, and why didn't you wait to do that until you had something with validation or growth?
Depending on a 'cultural shift' sounds incredibly dubious, and IMO sounds like you all don't really know what you are doing. I would walk away and take these lessons out of it, reflect some more, and take a sharper approach for the next project.
> Why did you work on getting insurance, getting incorporated, any of that, and why didn't you wait to do that until you had something with validation or growth?
"If I met an undergrad who knew all about convertible notes and employee agreements and (God forbid) class FF stock, I wouldn't think "here is someone who is way ahead of their peers." It would set off alarms. Because another of the characteristic mistakes of young founders is to go through the motions of starting a startup. They make up some plausible-sounding idea, raise money at a good valuation, rent a cool office, hire a bunch of people. From the outside that seems like what startups do. But the next step after rent a cool office and hire a bunch of people is: gradually realize how completely fucked they are, because while imitating all the outward forms of a startup they have neglected the one thing that's actually essential: making something people want.
We saw this happen so often that we made up a name for it: playing house. Eventually I realized why it was happening. The reason young founders go through the motions of starting a startup is because that's what they've been trained to do for their whole lives up to that point. Think about what you have to do to get into college, for example. Extracurricular activities, check. Even in college classes most of the work is as artificial as running laps."
I remember watching this lecture by PG in Sam's course. I thought PG was being too kind to them, because I think a major part of why young founders 'go through the motions' without tackling the real work head-on is because they are deeply motivated by the alleged social cachet of being a young startup founder, plus the fact they typically come from upper middle class backgrounds where it's expected they do something 'prestigious'. In other words, the worst reasons.
If you look at the pasts of some of the most successful people, you'll find at many points that they were "in it for the wrong reasons". Whatever reasons you find yourself doing something for isn't as important as the effectiveness of the actions you're taking.
I've known plenty of really successful people whose morals I wouldn't touch with a ten foot pole. Note I'm not talking about ethics, you can't succeed in business past a certain point without good ethics, startups are way past that point, nobody will deal with you. They were pleasant to deal with professionally, but then start spouting off stupid things about women, what dumb things they were going to do with all their money, things you just have to tune out if you want to make something out of the business relationship.
The difference between your's and PG's assessment is that PG is making a statement directly concerning their ability to run a startup. They literally don't know the first thing about what it takes to succeed in that avenue, making something people want. You are assuming it's their motivations that cause that ignorance. It's not, even the most prestige-hungry kid can grasp that you have to make something people want.
> you can't succeed in business past a certain point without good ethics, startups are way past that point
Uber HQ called and said they want to have a word with you.
Otherwise I agree (that little part I sadly have to disagree with, even though I so want to believe it's true). What pg is really complaining about there is that "playing house" is basically cargo-culting startups. Which means having a completely wrong framework to think about how to make something work.
> Uber HQ called and said they want to have a word with you.
I think this is a moral judgment cloaked as an ethical one.
For an example I'll point to the perennial Rockefeller and Standard Oil. If you look on the surface, Rockefeller's business practices look positively abhorrent. In an event called the Cleveland Massacre, he threatened to bury rival refiners unless they sold their business to him.
But look underneath, and the picture changes dramatically. The prices he offered for his rivals were so good that many of them started new refineries just so they could sell to Rockefeller. If they took Standard Oil stock, they became fabulously wealthy. Rockefeller was eminently fair in his business dealings. Those who claimed otherwise were doing so out of malice or ignorance.
I bet if you looked under the surface at Uber, you'd see a different picture than the one you see now. When I look at Uber, I see a company bravely fighting a political battle that absolutely has to be fought.
Rockefeller hired some really nasty guys that didn't have the same ethical practices he did, they caused him no end of trouble, but in the end, he needed all the competent oilmen he could get his hands on to run Standard Oil. His executives got as far in the business as their ethics would allow.
Uber needs all the resources it can muster to change the way the country thinks about transportation and business. The people at the top can't afford to sweat the details of everything their employees are doing.
I don't know exactly which Uber business practices you're referring to as unethical, but I bet if you critically analyzed them, you'd find that they're either small and localized, (shenanigans in local markets against Lyft) or actually fair when you take a closer look. (their driver compensation structure) Those at the top can't afford to get something so important wrong.
You can choose not to deal professionally with people like that, but if you're running the kind of public-facing business that YC is, you have to fine-tune your people sense past the point of "I like or don't like them" if you want to serve a broader audience. That's essentially what moral judgments boil down to. If you ran a convenience store, you wouldn't refuse to sell someone gas just because you don't like them as people.
For me personally, I try to see past my distaste for people's inner beliefs / convictions / desires. I consider that to be an important part of professionalism. Also too there might be the opportunity to show someone how to be better as a person while you're helping them fix whatever business problems they're having.
On the other are people that fear all of those things about founding a company. Taxes, employing people, insurance, etc. but can "tackle the real work head-on".
That's an unfriendly interpretation, but a totally valid interpretation nevertheless.
I think this happens to most people in most situations. We go into things with all sorts of expectations, and then find out that our expectations were inconsistent with reality. Applies to joining any industry we might have looked at with rose-tinted glasses, or even making life decisions like getting married or having children.
The desire for prestige isn't limited to upper-middle-class folks. Poor young kids join gangs and do drugs for similar reasons.
Very cynical view, but it's one I share in most cases as well. Not every startup I meet falls in to that category, but enough do that it's not some outlier random fluke theory.
That part struck me as well, but I guess hindsight is 20/20 and they learned their lesson.
When I did my very first project when I was 18 I spent money on a lawyer and incorporation before we made any sales, of course the project tanked after we made a couple of hundred in revenue and then split ways.
Depending on a 'cultural shift' sounds incredibly dubious, and IMO sounds like you all don't really know what you are doing. I would walk away and take these lessons out of it, reflect some more, and take a sharper approach for the next project.