LFGSS: Turning a hobby into a technology startup

Someone has to...

And by insinuation that nobody else does, the money should be there for the taking :-)

"and you could be brought to air to tell the Breakfast Team in order to win the money."

I'd love to hear this idea explained in a radio friendly laymens term kinda way :)

Someone has to...

You could ask a relative.

Santander will go the same was as Kaupthing.

9 Servers isn't excessive when 1,500 people are online simultaneously.

4 web servers.
1 load balancer and memory cache.
1 file server.
2 database servers.
1 mailing list server.

All run quite warm, and taking out any creates a weak point on the solution.

Yet all could support more... another 9 sites the size of LFGSS, or 100 sites that are really small.

Where are all of these hosted?

You're an IT guru, why even ask?

Was wondering if they are hosted in a data center or bed room or is that both..

Just that I am part of a Canadian hosting company, so could help if required.

We're here: http://www.telecitygroup.com/colocation-data-centre-docklands.htm

Right next to LINX, which gives the vast majority of users (who are in and around London) a ping below 15ms. Which avoids the 100ms addition from hopping the pond.

Handy for flooding :-p

We have a London based services etc also for that reason also.

I wouldn't worry, we're backed up elsewhere (off-site, twice), and if the Docklands gets knocked out due to a flood then the whole of the UK won't have the internet anyway. So no point keeping the server up... will give me time to have the machines restored to New Jersey instead (which I can do with a phone call).

^ and this is why your my hero Velocio :)

I've got some news back from YCombinator... "you've not been rejected just yet".

Feels like I'm living the X Factor of my life. How weird.

Apparently we should hear some more next week, but the late application means we're going to be last to find out amongst the thousands of companies that applied.

Meanwhile, I've sold most things, have managed to feed myself and my girl for only £48 this week with a target of £45 next week. That includes all lunches, snacks, etc... so I think we're doing well in our prep for being brassic.

good to hear - fingers crossed :)

Meanwhile, I've sold most things, have managed to feed myself and my girl for only £48 this week with a target of £45 next week. That includes all lunches, snacks, etc... so I think we're doing well in our prep for being brassic.

We salute you!

Absolute Radio are announcing a chance for a share in £10,000 in assocation with Santander for new businesses. There's supposed to be a place to enter on the Absolute website. There was a reference on the homepage the other day that just linked to Santander but there's nothing obvious on the homepage or anywhere else that I could find just now despite it still being announced today.
May be worth contacting them to ask for details and offering to run their website so it's ties in with what the dj's say is on there!?

Edit - found link - http://www.absoluteradio.co.uk/freebies/competitions/santander/comp.html

I am quite good mates with Geoff Lloyd from Absolute radio, I could ask him what he knows about the comp and if he can give any useful tips on how to increase your chances if you like?

David, you are obviously hesitant to take money from the largest, supportive community that you probably have. It is also a funding prospect that is not demanding a detailed business plan with a rosy NPV and which could be substantial in the aggregate: nobody needs to tell you that the prospect is like a unicorn. You mentioned your concern about not hurting your chances of gaining some funding from ycombinator, which I do not really understand, but it seems that you have several other concerns. They are probably all valid concerns, but perhaps there are ways to overcome many of them. If you are happy to share them with your (interested) membership, then we may be able to find solutions, that is, only if you so desire.

Either way, I wish you all the best. I think the fundamental concept is a win.

Concerns about taking funding are mostly political.

What does it mean to take funding? It means that some party is investing cash in return for a share of the venture.

In simple terms, what the founders are investing is skill, time, and a small bit of money (our costs whilst we live and build this thing).

In return for our investment we also get a share.

What this means in real terms is that anyone with a share close to the conception of the venture has a voice in the venture. There are three founders, and if we took YCombinator investment then effectively we are 4 founders, it's just that one of them is investing cash and some other stuff (their value is more than cash, it's mentorship, network, training, etc).

The ventures success in part lies in the ability to execute well.

That is, to focus on what needs to be done, and do that well, and do nothing else. To waste little of our investments (time, skill, money), to give the opportunity the best success.

It's felt strongly by both investors and all of the founders that our ability to execute is tied to our ability to focus. And if we have a investor that is actually 200 people, all of whom feel that they have a say, then we have 203 (possibly 204 if we get YCombinator) voices very early. How the hell could we focus?

It's not that we wouldn't consider selling shares and taking community investment later. But only after we've successfully delivered a launchable and viable product, i.e. after we've executed to the point that we've demonstrated the vision and our ability to do it.

The second factor to bear in mind aside from the political one (too many voices and lack of focus) is the money one. If we take investment from the community, we are restricting what can happen in the future. We're closing our options out. We want to keep those open, and different venture capital firms have different views on this stuff. Some prefer to have fewer investors involved, and would rather have the option to buyout other shareholders to achieve this. If I lock away an amount in a place that is hard to get back, they may have reservations about investing. That would be foolish thing to do.

And a third but much smaller factor is what forumengers would believe that they own. Shares are dilutable, we could always invent and issue more. If we issued 100 shares and you purchased 1 to what amounts to 1% of the forum, and then we were in the position that we could hire someone but needed to offer them equity to attract them... so we issue 10 more shares, and now we have 110 shares, and your 1 share is now only 1 / 110 of the company or 0.9%. This happens many times in the first few years of a startup company as the future potential of the company to bargain. I think most people will be very pissed if they believed that they owned something that was constantly being diluted.

Those last two factors just aren't as important as the first though... the politics is just too much of a distraction to want to bring in. The company needs as few voices as possible to be able to focus and get the job done. We've a lot to do, and the best way to do it is to have all of the invested people in the same room every day (large investors usually appoint someone to the board to make this the case) to ensure we are all doing what we believe needs to be done.

The best thing people could do to help would be to buy a cycling jersey ( http://shop.lfgss.com/ ), make a donation ( http://www.lfgss.com/payments.php ), use the recommended retailers thread, or just send me random bits of food, drink, washing power and toiletries (that stuff is expensive).

And for my part of the bargain, I'll live on very little and work my arse off to try and make the right thing for this community and others.

It's a bootstrapped, ramen noodle approach. But when you have big ideas and little money, it's the best thing to do. Chasing investment is just a distraction, and focus demands that we're not distracted.

David, you and your colleagues have obviously put much thought into this. I would suggest that you sit down and talk this over with a third party that is familiar with capital structuring although I appreciate that you would not want to make things terribly complicated.

Your first two concerns are valid. However, they both appear to assume that there is only one way to inject capital, through voting shares in your new company. The Newco can issue non-voting pref shares, but I can appreciate that institutional investors may not want 200 pref share holders to queue up ahead of them in case Newco is liquidated. I do not think that a bond/gilt/loan/promissory note is appropriate since there is a definite obligation to repay, which may or may not happen; and your institutional investors would not want 200 creditors to get ahead of them in a liquidation.

Without knowing all the facts, I could imagine that LFGSS can be a future client of Newco rather than Newco 'owning' LFGSS. If that were to be the case, I could imagine that LFGSS can, if incorporated, issue non-voting pref shares to which members can subscribe, with the understanding that LFGSS can use the proceeds to make an unsecured loan to Newco. If carrying a debt is a problem for your institutional investors, then LFGSS could start as a shareholder of Newco (perhaps 1 share), which in turn should enable you to reclassify LFGSS's loan to Newco as a shareholder's loan which could be deemed a quasi-equity rather than real liability, in which case your institutional investors might be agreeable especially if it is treated as debt that will be settled only after, not before, the shareholders upon liquidation. Of course, all this is nought if the investors in Newco are also expecting a direct slice of LFGSS's income stream.

Furthermore, the above, under the simplest of scenarios, requires admin overhead in terms of time, effort and cost, but you don't get money for nothing, especially at a rate that is likely to be lower than what your high street bank will charge.

I do not pretend to know anything even remotely resembling the whole picture and am only shooting from the hip (Americans call it brainstorming). All that I am saying is that perhaps you should give it another thought. Any given community is built on good will, and it is obvious that there is quite a bit of good will around here. Good will takes a long time to build, which puts you way ahead of the game in many respects. However, there is also a matter of timing: the 3Fs(family friends fools) that are willing to throw money at you today may not be so willing six months from now. You never know.

On a related note, the members that want to help financially may want to feel that they extended their help specifically for this purpose rather than a vague, indirect contribution such as buying a jersey that s/he may or may not like/want or a general donation, both of which could dilute the sense of satisfaction derived from the contribution. Put another way, they don't really give a solid bragging right at the pub to say, 'yeah, I helped Velocio with his start-up' which can be a perceived currency of sorts. Of course, a jersey can be sold, or specific donations can be solicited, specifically for the benefit of Newco, but then again, I think we come back to your other point about not being a charity case.

Alright, I'll stop rambling. Good luck.
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Shredder, I love your ingenuity, but if we did what you suggest, some poor fuck would have to be the CEO of LFGSS. Any takers?

Scoble: he doesn't even take holidays. Well, he does but he doesn't think other people need to.

I nominate Will

Actually strike that, we need someone with "Silver Fox" hair for credibility