Ask HN: How would you design a Technology/Entrepreneur class for high school? - <AUTHOR> I am trying to design a Technology/Entrepreneur course for a rural high school.  I know HN focuses more on building businesses using technology, than building content businesses, but I'm not sure teaching every kid how to program would work.  I have a few kids, that I will be working with separately and will probably follow the traditional HN path with.  For everyone else I have this as a rough outline:
Assumptions:
1a. Rural America suffers from brain drain where talented people leave to find economic leverage elsewhere. 1b. Rural America can cheat and bring economic leverage back to rural America by using technology and the internet (this post is an example of that). 2. College doesn't make sense for an increasing number of students.  Schools must provide options for those students for whom college doesn't make sense and working in a factory doesn't make a lot of sense either. 3. Rural America needs entrepreneurs to build sustainable, technology driven businesses with global reach to remain viable.
Class 1.

   * Develop and Design a website that supports the school and other organizations and groups in the community.
   * Learn Wordpress, become familiar with online writing, develop a better understanding of how internet publishing works.
   * Create Link Bait(?)
   * Briefly touch on css/xhtml as is needed in their work.
   * Learn how to find information they need on google, and use that to be productive.

 Class 2.

   * Study Business Models (pay per click, impression, affiliate marketing, etc)  and Economics through the lense of the online world.
   * Do case studies on online businesses. Wine Library, Gizmondo, lifehacker, etc, etc.
   * Read the books Crush IT and Rework
   * Brain storm ideas and then get involved in communities/forums about what they think their business will be tangentially related to.  Develop relationships.

 Class 3.

   * Form Partnerships, Give out Shares to Advisors, etc, etc.
   * Write Marketing/Business Plan, Conduct Market Research.
   * Start to build their content based business.
 Class 4.

   * Hopefully, a few students have worked on it over the summer (probably have a meeting once a week for students that want to keep keep moving) and this will motivate the others who didn't.
   * They should now be able to contact sponsors, build advertisment, write link bait, etc, etc.
 What am I forgetting, what should I include, what should I leave out?
If you were doing this how would you do it? <comment><USER2> Have them come up with an idea that they believe they can implement on their own, but with your guidance and advice. Something that will bring real money in the door quickly. Even if it is only $20, it is better than lofty goals that a high school person might not have the maturity to follow through on.

Do not let them try to build a Google competitor or something similar. It is unrealistic for them. Have them engage in some kind of e-commerce and use something like PayPal where there is a chance that money will actually come in the door. Have you local newspaper do a story on you and the class participants, maybe following their efforts over time in the Sunday edition.

Form groups of 5 students and have them come up with ideas that you put on a list. When you have 50 money making ideas on the list, break into groups of 2 and let them try to implement the ideas they think will work. If more than one group of 2 chooses the same idea, that is called market competition.

I think they need to learn to bunt, before learning how to hit home runs. If you think they will all hit home runs and work to make no money, I think they will be discouraged and it will be a negative experience for them. Probably not what you want.

Maybe some will discover that this industry is not for them and go on to own a restaurant in your town. I think that the lessons learned can be applied to any business.

I think you should include some examples of companies like Zappos that sells shoes as well as companies that develop and sell software or provide SAS.

Also instead of case studies (that's a lot for kids to focus on and digest) do PowerPoint lectures and also "make them earn" the privilege of learning how to use PowerPoint to make a Pitch Deck on a special Saturday lecture at the end of the course. But of course they can all attend, it's just a ploy to get them to focus hard on the course work that you can dangle over them during the semester. The carrot works better than the stick.

Also, you should have one lecture about, accounting, taxes and legal entity formations where a CPA comes in and answers questions. Also explain what a Corporation is and why Delaware might be a good choice.

<comment><AUTHOR> I think your google point is spot on. I wanted to stay away from this and thought that the content creation route might help mitigate this.

Would you agree that there are three types of online businesses:

1\. Businesses that rely on engineering(twitter, Facebook, google). These are businesses that you for sure want to stay away from.

2\. Businesses that are basically e-commerce. Zappos, Amazon, etc. This would be tough to do because of the need for inventory.

3\. Content businesses lifehacker, wine library, etc. These are ideal because they require little/no capital and only hand work put in by the students. This handwork can then spread over 4 years and hopefully they have something at the end of 4 years to show for it.

As far as home runs vs bunts and thinking they would all be successful, I'd be happy with 1% success rate.

Thanks for the awesome input.

<comment><USER2> I think spreading the work over 4 years is too long. I would focus on getting something workable together and online before halfway through the semester. Push them to stay up late and code and hit a deadline. They won't melt if they lose a little sleep. Then have them work on iterating the design and the business based on feedback from adult relatives who login to the sites.

Also, maybe some of the students want to do e-commerce. Maybe you could offer them some flexibility in this area.

Will the PTA flip out if you involve the students with selling wine? Maybe you could work a deal with some local business where the students websites act as a reseller but carry no inventory. Farm supplies, or something. The customers can be local, if the newspaper does a story on this it is free advertising. Maybe somebody's mom cans preserves or something. Be imaginative. It is just to learn and maybe make some money, not corner the market.

</comment></comment></comment><comment><USER3> Definitely not any of this (sorry). Who cares if you know affiliate marketing? Young kids pretty much already "get it" in the same way that you didn't need to touch our parents about how grocery stores work.

If I were teaching a class on technology/entrepreneurship, I would have teams of 2-3 people come up with a real idea, implement it and market it over the semester/year. Sure, they'd learn things in the lessons along the way, but applying it is what makes it meaningful.

<comment><AUTHOR> You're right.

I think after the first year of wordpress/community sites you put them in groups and let them come up with the ideas themselves and they'll learn whatever is relevant to their project.

</comment></comment><comment><USER4> (1) Hand each student $20-$50. (2) Tell them to go to any store they want and buy something that they can sell for more. Give some examples (flowers by the side of the road, cupcakes at the local hospital, etc.) The only restriction is that they can't do whatever it is that their parents do for a living. (3) Tell them that you want your money back plus $10 within the next {interval} - they get to keep the rest.

If they decide to do a web-based biz, great. The important thing is doing a biz.

They can worry about accounting and the like after they've demonstrated traction.

</comment><comment><USER5> It seems the purpose of the class shouldn't be to give concrete tools. The purpose should be to spark their interest in technology so that they stick with it and think about how to leverage it in their setting (rural America).

Specifics are hard, but here are some guiding principles I would follow:

* Creating beautiful things should be easy

* Introduce them to new technology using content they already understand

* Focus on actually building stuff, not case studies, lectures, papers, papers, reading, etc.

</comment><comment><USER6> The best way to learn is to do. Start by getting them out of the building, and help them understand that entrepreneurship means getting outside of your comfort zone and focusing on things people actually want.

The lean startup machine weekend just held in NYC was like a 2.5 day customer development bootcamp and it was amazing. People pitched ideas, teams formed around the best ideas, and they had to get out and learn as much as possible. The creativity behind all the different ways to test and disprove ideas, and then evolve and improve those ideas, was quite something. Reach out to Trevor Owens who organized it, because he might inspire some great ideas for you.

</comment><comment><USER7> I read lots of business books and the like over the years. It never resulted in a business. What do these kids want to DO (other than "make money")?

</comment><comment><USER8> 52 weeks of work experience</comment>


The Handshake Deal Protocol - <AUTHOR> http://ycombinator.com/hdp.html <comment><USER2> YC has helped shape many ways in which modern startups do business and I could see this protocol adding to this by setting minimum expectations for defining who is truly "in" on a funding round before the binding documentation is done.

I see it as a remote risk that any such exchange would be treated as a legally binding contract. Too many essential terms would be missing, as for example in the case of a bridge note such things as time to maturity, interest rate, size of equity raise triggering mandatory conversion, etc. While the otherwise missing essential terms might be supplied by a term sheet used by the startup as a basis of discussion, such term sheets invariably make clear that they do not become legally binding until definitive documents are signed. To say, then, that one is "in" on such a term sheet would signify no more than what one signifies by actually signing it: that is, the investor becomes morally bound to negotiate in good faith until the documentation is prepared and signed and also morally bound to participate when such documentation is prepared in good faith and along customary lines. Of course, beyond the legal hurdles, there is the not insignificant issue of how either an investor or a startup would be treated in a tight-knit community such as YC if the person becomes known as being "sue happy." Could such lawsuits ever come about? Yes, and there may be unusual cases where the parties had had a true meeting of the minds, or where one party relied to his detriment on the other's statements and conduct such that a court might find an enforceable contract, but the practical risk of this happening would be near zero for almost all such cases - enough so, I think, that it may be effectively disregarded.

What the protocol does do is help prevent misunderstandings, inadvertent outcomes, and the occasional deliberately weasly overreaching that can occur with informal verbal exchanges. It says to the investor: do I _really_ have a commitment from you such that, should you back out, your reputation will take a hit? It says to the startup: pin your investors down to the point where you can't be double-dealt but also make sure the commitment you think you have is real and not a product of your own wishful thinking.

I can see this working beautifully as a first step within YC. Beyond that, it will work as people come to terms with its existence and see it as useful. For its purpose, it is really an elegant solution to a knotty problem and therefore worthwhile.

</comment><comment><USER3> This protocol causes a valid and enforceable contract to be formed.

In fact, the constraints imposed by the protocol are almost exactly what you might learn about contracts in the first year of law school. A contract is composed of a 1) reasonably specific offer, 2) acceptance of that offer, and 3) some consideration between the parties.

By forbidding vague offers, PG is assuring that obviously questionable or unenforceable agreements aren't made. The consideration in this case is the startup reserving space in its round for the investor.

As far as steps 3 and 4, documenting the agreement is obviously valuable, but the contract is formed at the end of step 2 [2].

Now, it does seem unlikely that anyone would try to enforce this in court, in the same way that few are going to start a legal case over someone backing out on a term sheet, but if you could show damages based on your reliance on the other party's performance, you would in theory have a case.

Interestingly, it seems that either PG et al. must have aligned this protocol with the constraints of contract law, or in trying to achieve their ends, they independently reinvented the contract formation protocol that has been with us for at least hundreds of years.

\--

Edit #1: Regarding the questions along the lines of, "this can't be a contract because there are many other terms to address," a contract can _always_ be longer. If you don't address a term in a contract a court will try to divine the intent of the parties, or look at industry norms, or use defaults established by statute law, and try to do something reasonable. A valid contract isn't dependent on covering every possible, or even every usual, term. The fact that one party _reasonably relied_ on the agreement and was thereby harmed by the other party's non-performance is often going to be sufficient.

[2] (edit): By reducing the contract to writing, even just one sentence in an email (steps 3 & 4), you would fulfill many statutory requirements for written agreements on certain kinds of transactions.

Edit #3: To be clear, I believe the contractual nature of this protocol is a feature, not a bug. You really do want the elements of a contract regardless of whether this is going to be enforced by a court, a person's own conscience, reputation networks, or public shaming.

<comment><USER4> Though this does follow the qualities of a contract, it's important to note that oral agreements only get you so far in many jurisdictions and particularly have an upper limit on the value, around the order of $500. So while its great this is an explicit and clear conversation, I don't think you can say that it is assuring unenforceable agreements aren't made.

<comment><USER5> There is a written component to the protocol: The follow up email/text. "This is to confirm you're in for X." "Yes."

<comment><USER6> I do wonder what happens without step 4 occurring.

<comment><USER7> I wondered this too. How long could an investor wait before sending the "Yes" and have it still considered valid? Could the investor not reply for a few weeks or months and only send the "Yes" once the startup is growing and worth more than the initial deal's valuation?

I think there needs to be an explicit timer between step 3 and 4. Something on the scale of a few hours or at most a few days.

<comment><USER8> > Where no time is specified in the offer, the offeree has a reasonable period > of time to accept the offer. After a reasonable period of time expires, the > offeree's power to make a contract by accepting the offer "lapses". ... When > a seller purports to accept an offer after it has lapsed by the expiration > of time, the seller's acceptance is merely a counteroffer and does not > create a contract unless that counteroffer is accepted by the buyer.

\-- Anderson's Business Law, Formation of Contracts: Offer and Acceptance: Lapse of Time

</comment></comment></comment></comment></comment></comment><comment><USER9> Why not do something creative like have the investor sign a dollar bill (of any denomination) and give it to the founders?

Every founder comes prepared with some cash in their wallet, and then when you confirm a deal the founders ask the investors to sign the dollar bill with a Sharpie/pen. On it would be some sort of short-hand for the deal valuation... Cash is more ubiquitous than phones - even impromptu, it's highly likely one person will have a cash on them - plus you don't have to deal with sharing emails, phone signal, phone battery, waiting for that text/email message to come through, blah-dee-blah.

And then you can frame it and do all sorts of other creative/cutesy stuff. If YC made it a tradition to do a "signed cash" deal as a way of indicating the confirmation of a deal, it'd make for a cool way of looking back at all the great (or not-so-great) investments... sort of like that whole "my first dollar" thing some people do.

<comment><USER10> >Cash is more ubiquitous than phones

Are you sure? Right now I have a phone but I don't have any cash.

<comment><USER11> The last time I had cash on my person, it was because I was traveling, and wanted some on hand. I haven't carried cash, as a rule, in almost a decade.

<comment><USER12> I'm not in the valley, but I have the opposite policy: I systematically use cash unless it is not possible to do so. (It's better for privacy.)

<comment><USER13> I have your policy, but for a different reason: I generally don't want the merchant to be charged a fee for the transaction.

</comment></comment></comment></comment></comment><comment><USER14> The protocol is flawed at step 4.

The investor should reply "I confirm I'm in for <offer> for <startup>" otherwise the investor could say it said yes to the wrong text message/mail, and that's it's all a misunderstanding yada yada yada

Hard to do that if you have to answer something explicit.

<comment><USER15> "Yes" is sufficient. Remember that this purpose is to formalize a usually in- person handshake deal. Even out of that context, claiming "oh I signed the wrong paper" won't fly.

<comment><USER14> In a restaurant crowded with founders and investors I think it's easy to say "I said yes to the wrong sms"... Otherwise a malicious founder could overhear a conversation and send a sms at the right time to have a yes "proof"...

My main point is that it doesn't hurt to be explicit when confusion is possible.

</comment></comment></comment><comment><USER16> >> Finally, it isn't possible to add conditions to a handshake deal. For example, there is no way for an investor to use this protocol to offer, as some investors try to do, to invest if other people will—e.g. to say that they'll invest as part of a larger round if you can find a lead.

I disagree with this statement -- specifically about having a lead. As an angel, I would use this condition because I wouldn't invest without a lead institutional investor. What they bring to the table is: a) diligence during the investment period b) lawyers that know what they're doing c) taking a seat on the board

I feel these add material value to a deal (when it's the right lead, there can be bad ones). I hope I'm adding value, both with money and with advice / monitorship / whatever, but I'm not going to in a positon to look after legal, finance, or accounting issues, I'm probably not going to insist on auditing books, I am probably not interested in a board seat, etc. etc.

There are definitely angels and institutions who invest largely on social proof. But there are real reasons to want a "real lead". I will probably never invest in a party round unless it's really a friends and family round.

I will say "$X with $Y cap, but only with a lead". As a "small time" investor, I am not willing to set or negotiate the valuation. I am not going to judge based on who else you get or who your lead is but I do want there to be a lead.

<comment><USER17> This is a perfectly reasonable attitude. If _your_ constraints don't allow you to make a handshake deal until later (when a lead is found), then _you_ shouldn't be making a handshake deal until then.

</comment></comment><comment><USER18> This is great protocol for all discussions/agreements. It's pretty hard for any relationship to break down if there's a shared understanding of expectations.

The re-statement/confirmation email is a great weapon against what time+memory do with reality, whether it's in the investment setting, with a partner, with an employee, or, heck, with a friend/spouse.

<comment><USER19> I wouldn't expect most "handshake deals" with a friend/spouse to require that level of formality - unless money is changing hands.

<comment><USER18> Agreed with the "most" sentiment. But it is worthwhile for anything where a misunderstanding is possible and the consequences of a misunderstanding would be meaningful (to you).

<comment><USER20> When I was first dating the woman who became my wife, we decided to take a vacation together and split the expenses. We worked up a budget and did a pretty good job of sticking to it, until our car had a minor issue and we had some extra expenses (an extra meal at a restaurant, etc.) When we did the numbers at the end of the trip, it turned out that I overpaid by a bit, and she wrote me a check for that amount. When I cashed it a week later, she got very upset with me, because she forgot about it and already slated the money for something else. My response was "well, you gave me a check and I simply cashed it. I would have gladly paid for the extra stuff, if I knew that's what you wanted". Her issue was that something unexpected happened with her money.

Long story short, a quick text with "About to cash the vacation check you wrote" would have saved us a fight. OTOH, coming up on 10 years together, so I think it worked out OK.

<comment><USER21> I'm curious if something like this would happen today. With PayPal, Venmo, Interac E-mail Money Transfer, and other similar services, I would expect such a transfer (if the other person felt obligated to make one) would be nearly instantaneous.

<comment><USER20> PayPal for VC's? "OK, I'll invest in your company. Here's $5M!", "Gee, thanks!", meeting over.

<comment><USER21> I was referring to the specific case of having a significant other.

I think that the protocol as described makes a lot of sense, because paperwork. (Although I think Clerky was supposed to be trying to help out with that?)

</comment></comment></comment></comment></comment></comment></comment><comment><USER22> I think this protocol has a flaw, in a corner case.

In the seventh paragraph, PG explicitly points out that it's in the interest of duplicitous investors to delay commitment while retaining the ability to retroactively commit. Delay between stages 3 and 4 gives investors that power, and isn't explicit.

The twelfth paragraph does address this ("both parties will usually have mobile devices... ordinarily [send messages] in person... suspicious if the other is unwilling to"). However, as it acknowledges, only USUALLY. Mobile devices get forgotten, or they run out of battery, or founders might be really crazy frugal.

It seems obvious that the fix is for Step 3 to include an expiry date/time, to be agreed upon just prior to step 1.

If only there were a discipline that had already studied things like this...

[http://en.wikipedia.org/wiki/Consensus_%28computer_science%2...](http://en.wikipedia.org/wiki/Consensus_%28computer_science%29)

<comment><USER23> This should be the top comment.

One of the explicit reasons for the protocol isn't met by the protocol.

</comment></comment><comment><USER24> This seems completely sound. Is it implicitly understood that all investors get the same terms? I assume that if there is an agreement to invest $100k at $5M cap, then the startup can't go take another $100k at a $4M cap, without giving that same deal to the first investor.

<comment><USER25> Can someone define cap for me in this context?

<comment><USER26> Convertible debt is the trendy way to finance seed-stage startups these days. It allows early investors to essentially "punt" on determining the true valuation of the company at an early stage, while still ensuring that they get a decent deal when a valuation does get determined.

The way it works: instead of negotiating over true valuation early on, the seed investor hands over the cash as a _debt instrument_ (so the startup technically owes the investor the money they paid), under the agreement that if the startup later raises a "real" (venture) investment round, the debt converts to equity at the price of the later round.

Of course, to avoid screwing the seed investors over, they typically insist on a "valuation cap" -- maximum valuation -- (so if you later raise venture at $10mm, but the cap was $5mm, the seed investors get twice as much equity as the venture investors per dollar paid). But if the venture investors only pay for a $5mm valuation, then they get the same equity-per-dollar as the seed investors.

<comment><USER25> This is exactly what I wanted to know, thank you!

</comment></comment></comment></comment><comment><USER27> "Sam Altman, Marc Andreessen, Paul Buchheit, Ron Conway, Ronny Conway, Chris Dixon, Ben Horowitz, Ash Patel, Geoff Ralston, Joshua Schachter, Harj Taggar, Albert Wenger, and Fred Wilson for reading drafts of this."

So we can assume that the VC's named in the above have agreed to this protocol and will be using it?

<comment><USER28> I saw the same thing. PG is pretty consistent with that tagline. So presumably the VCs knew it would be there. If those VCs didn't want to give the appearance of agreement, they probably would have asked to have their names witheld.

PG also specifically mentions VC "noobs" as being a motivation for this protocol. I would think that experienced VCs would be in favor of such a protocol so that "dishonest" or noob VCs wouldn't disrupt a potential deal or increase the cost of the deal with disingenuous offers.

</comment></comment><comment><USER29> Oh I like this a lot. That adds a lot of clarity around what can be a very tumultuous time for a young company. I've personally been burned by the "We would like to come in but we don't want to lead." line. I treat such statements as polite "no thank you"s now.

</comment><comment><USER30> This doesn't make sense to me. Fundamentally, you either have a signed legal contract, or you 'just' have a verbal agreement aka handshake deal. The problem that this supposedly solves, is that verbal agreements are non binding and leave wiggle room.

If you cant trust the other party, the only recourse is the full legal contract. If you can trust the party then the handshake and the intention is enough.

Further more even handshake deals made by trustworthy agents with the best intentions sometimes fall apart before the full legal contract is signed. This will never go away.

Bottomline, handshake deals work in situations where the reputation of the individuals with each other is more valuable than the benefit of breaking a given handshake deal. Its just game theory really.

Further if the protocol did get buy in and become widespread, it will eventually reach a point where there are true legal ramifications for breaking a handshake deal. At which point everyone will (and should) refuse to make these deals for the same reason no one signs million dollar contracts without having the lawyers review the details.

<comment><USER31> As pointed out elsewhere in the thread, verbal agreements that contain all the other aspects of a valid (for example written) contract is infact every bit as binding as a written version providing you can prove it occurred. You can do this all sorts of ways - witnesses for examples. The wiggle room that enters verbal agreements are typically not the result of it being a verbal agreement, but that verbal agreements are typically more concise than written agreements, and therefore lack the specificity and breathe.

In summary, a concept of a legal contract is largely abstracted away from the medium it is expressed it. The medium only effects the ease at which you can prove that your version of the contract is infact the version that both parties agreed to.

<comment><USER30> I understand completely verbal contracts are enforceable if all the 'wiggle room' is squeezed out, by specifying in detail the specifics of the contract and witnesses to remove the 'he said she said'. That's all a written contract with all the legalese and signatures in triplicate etc really provides.

My point is IF you create a handshake protocol that meets all the criteria to be fully 'enforceable', no one will actually partake, because business people do not enter legally binding contracts without lawyers reviewing etc.

The handshake deal in addition to the legal aspect really requires a level of trust. a handshake deal works because both parties trust the other really is making a deal, that both parties are operating in good faith, AND that if their is some technicality does occur they can still back out, but trust exists that neither party will back out unless such a technicality does occur.

</comment></comment></comment><comment><USER32> Step 4 needs to be:

The investor replies with Yes within 96 hours.

Otherwise it's the equivalent of having one party execute a contract, and the other party just sit on the contract to wait for more information. Either executing if it's clearly beneficial, or ignoring if it's not.

<comment><USER33> If this is a handshake deal - then doesn't the investor reply yes immediately? It would be nice if those who are more knowledgeable than I would weigh in and indicate whether these things happen in real-time. I.E. The "Handshake" deal takes place within the space of a few minutes.

g.

<comment><USER32> The conversation seems to happen in real time, then flips over to email for a written record. Without a defined expiry it's not clear what happens if the investor says "yes" two months later after the startup receives some fantastic press.

</comment></comment></comment><comment><USER34> Totally unrelated to the topic at hand, but what is PG's obsession with tiny fonts? this article is set in 8.5pt font - can anybody read that? at 10pt HN itself is almost as bad.

<comment><AUTHOR> Screen resolutions have been increasing.

<comment><USER35> But people's eyesight declines. My dad now puts his 27" iMac at 1024x768 because website font sizes are typically too small for him now.

<comment><USER36> Have you configured his iMac to run in HiDPI mode, using the "Quartz Debug" tool? (free download in the "Graphics Tools for Xcode" bundle from Apple's developer area) That at least increases the sharpness of the text, rather than the plain interpolation you get by changing resolution, which is quite blurry. I've set up my grandfather-in-law's iMac that way, it helps a lot!

<comment><USER35> I'm aware of it, but I don't think it's perfect, at least not for one of the older versions of OS X which his computer runs. Moot point, anyway, he doesn't want me messing with the way he has his display set up.

</comment></comment></comment></comment></comment><comment><USER37> I don't understand why this would be called a "handshake deal" when the last two (and most important) steps involve e-mail. Call it an "e-mail deal" or "e-mail contract" and a lot of the mystique just sort of floats away. Now it's obvious why you need to call it off if either party doesn't want to send an e-mail, it's obvious that the handshake itself isn't enough, etc.

</comment><comment><USER38> Brb while I go make an Unofficial YC Handshake Deal Protocol app.

<comment><USER39> I was just thinking about using the "bump" feature a lot of smartphones have for step 3. The bump would have a message pop up on their screen, to which they would reply yes or no and completing step 4.

<comment><USER40> I would say,

1\. something with a trigger like Bump,

2\. which then pops up an Etherpad-style collaboratively-edited text field,

3\. with MMO trade-dialog style 3-phase mutual-assent commit,

4\. that leads to a copy being saved on both your phones, to a public-but- anonymous URL both parties can cite, and also forwarded to any other parties which either of you please--for example, your lawyers.

<comment><USER41> We live in social days. Add a FB/Twitter sharing "Just got an investissement from X"/"Just invested in Y"

<comment><USER42> It has to be confirmed, so wait till it gets retweeted/liked a few times, and not on an orphaned platform.

</comment></comment></comment></comment></comment><comment><USER43> Surely there's a huge opportunity for the market of VCs to favour those that move quickly: Bring an accountant to the startup demo day to look over the books of ones you find impressive, a lawyer on call to prepare a (i.e. tweak a standard) contract and a free coupon for a same-day courier service for the founders to return it once they've consulted their lawyer and signed. Then an instant money transfer.

Obviously, this puts an awful lot of power in the hands of the investor that actually attends the demo day. Those VCs (and their backers) willing to do so will face the usual risk/reward tradeoff.

<comment><USER44> I would _want_ a potential investor to spend a little more time on due diligence than that. Also, does the lawyer work for free? Don't you want to do some of your own research on the investor? This just sounds utterly bonkers.

<comment><USER43> I don't think many people turned down Yuri Milner's offer.

They may feel differently about a bigger, later stage offer, but they may have to trade that off with how quickly they want to start spending money. Would the speed and organisation of a VC impress you?

<comment><USER44> At the risk of sounding contrarian, yeah I would be very, very skeptical of taking money from someone who is ready to invest after first meeting me a few hours ago. You're likely stuck with this person for the lifetime of your young company.

</comment></comment></comment></comment><comment><USER45> There should be some time limitation mentioned in step 3. Otherwise, there's nothing to stop step 4 from occurring several months later, which ideally would nullify the deal.

</comment><comment><USER46> I could really use some advice on this, actually. It's very serendipitous to see this posted.

What if you have a handshake deal and the other person abruptly disappears? I'm incurring all costs of operation, they've gone back and not completed anything they've said they would and now don't even reply to emails?

<comment><USER47> Honestly? Given what you've described, they aren't interested and it isn't happening.

<comment><USER46> My concern is centered around the "What ifs" that happen in the future.

What if my site starts to take off? What if it doesn't, but is a lifestyle business? Then he decides he wants back in!

I don't want him to come in later and demand anything from me, since he's abandoned me and prior to that at least 90% of his initial promises went unfulfilled.

</comment></comment></comment><comment><USER20> So I've wondered this for a while. Contracts are of course important, but if the only way you can trust the other party is through a contract and don't feel secure without one, can you really be sure that you won't get screwed over because of a hole in the contract? Seems to be that in reality a contract is only as good as the word of the person behind it, and if you wouldn't simply take them on their word, you might reconsider doing business with them altogether.

This protocol highlights that you don't need 50 pages of documentation to agree on something and I like it because of that.

<comment><USER25> That's why you have your attorney look at the contract thoroughly. It's not about distrusting anyone, it's about making sure you're as protected as you can be.

Truthfully, a contract is only as good as your attorney is.

</comment></comment><comment><USER48> I smell an app

Google Glass (or even a simple voice recorder in an app designed for the purpose) would also be great to reduce the friction of having to type something into a phone while talking to an investor.

</comment><comment><USER49> You should probably clarify that this is not intended a legal contract and violations will be dealt with socially (if that is indeed what you intend).

<comment><USER24> What? How is this not a legal contract? All the elements are there.

<comment><USER50> But might that not be a problem? Some deals must get hung up on the documentation, no? Or perhaps more reasonably, a disagreement over the materiality of something discovered in due-diligence? This can't be a promise to invest X at Y valuation no matter what, which it might be if it were treated as a legal contract.

<comment><USER24> > This can't be a promise to invest X at Y valuation no matter what, which it > might be if it were treated as a legal contract.

Legal contracts don't work they way you think. If there is a discrepancy between what is offered and reality, the contract can fail, or the courts can find a reasonable interpretation, or both parties can agree to change the contract (most common). This happens in due diligence all the time.

<comment><USER50> Thanks for your response. Can you help me understand what would happen under this protocol were an investor to pull out because of something that is discovered in due diligence? Or if the proposed modification were not to be acceptable to the company seeking investment? I would imagine in that case that any dispute would be over whether the discrepancy was material enough to justify the modification or withdrawal.

Either way, though, there is a clear difference between this and a verbal agreement in that if the parties cannot reach a reasonable compromise, a dispute around a verbal agreement will most likely (although not always) be dropped, and an email exchange such as this would provide a greater opportunity to litigate.

From my point of view, one primary rational of having a written contract is to reduce the likelihood of litigation. With that in mind, a verbal agreement seems perhaps a better option than an email-based protocol, in a weird sort of way.

</comment></comment></comment></comment></comment><comment><USER51> Seems like a good idea. One issue--

What if the investor doesn't immediately respond to the e-mail? Wouldn't that be sort of like the "partial yes" free option from the article, where they could wait until terms are (or are not) more favorable but still have a seemingly valid claim on an initial agreement?

Perhaps there should be a time limit, or the start-up can have the option of sending a second e-mail withdrawing the initial one?

<comment><USER52> I think in that case, the expectation is that you (as a founder) have no obligation to "keep a place in line" for them. If they never responded, you can consider it a "no."

<comment><USER7> When is the investor considered to have "stepped out of line"? an hour, a few days, a week or more? What happens if the investor doesn't reply, the startup assumes the no reply is a no, and weeks later the investor sends an out of context "yes" hoping to cash in on the terms of the earlier deal?

I know this sounds like a petty concern for a "handshake deal" but the startup's e-mail at step 3 creates a paper trail that an unscrupulous investor could abuse.

</comment></comment></comment><comment><USER53> I am baffled by the idea that this is a binding contract. You agree to a loan without specifying an interest rate -- how is that a done deal??

</comment><comment><USER54> Dishonest men live at all levels.

This doesn't solve the original problem: What you suggest won't solve the issue of investors taking advantage of startups or the other way around. They will simply play another looser version of the handshake as you want it to exist. Anyone that is eager enough will get into this space before they are ready and be subject to the same sharks.

But not every investors is bad, for if they were they would earn an untrustworthy reputation.

The handshake deal first started as a way to avoid legal or financial promises. By giving the handshake such rules, you are diminishing it's intrinsic value as a "safety zone" for both parties to freely communicate. But of course, this shared information can be used to one of the parties advantage over the other.

Now, as another step towards building confidence in the investor/startup relationship, this is a great idea. It refines, offers some support, and starts communication between the parties on a smaller scale.

</comment><comment><USER55> One thing to note is that the CA statute of frauds renders certain kinds of oral contracts invalid, unless there is some memorandum of the oral contract is in writing. One such contract, as outlined in CA Civil Code Section 1624(a)(7) is:

> A contract, promise, undertaking, or commitment to loan money or to grant or > extend credit, in an amount greater than one hundred thousand dollars > ($100,000), not primarily for personal, family, or household purposes, made > by a person engaged in the business of lending or arranging for the lending > of money or extending credit.

This wouldn't seem to apply to equity financings, but I suspect it applies to debt financings. If that's right, an actual "handshake deal" is not legally enforceable absent the kind of e-mail memorialization that PG is talking about. Of course, a "handshake deal" starts to look a lot like a simple written contract if a handshake alone cannot a deal make.

</comment><comment><USER56> _The startup sends the investor an email or text message saying "This is to confirm you're in for <offer>." The investor replies yes._

== This not a handshake deal, de-facto or de jure.

Therefore, this is a terrible, misleading article. A/k/a why god invented lawyers.

[0] The Handshake Deal Protocol (ycombinator.com).

</comment><comment><USER57> The idea here is good, but the execution leaves far too much room for the startup founder or the investor to get screwed. In contract law any ambiguities are judged against the person that wrote the contract. Since the startup founder wrote "This is to confirm you're in for $100k at a $5 million cap." This is the contract that they have offered. Why bother making things so formal and binding when _everyone_ knows that things still need to be dotted and signed.

My main concern is that this is forcing contracts onto normal negotiation. Maybe if the wording was changed to "strongly interested in" so that you can still publicly shame repeat offenders, without having the contract being formed when there are still other things to consider.

<comment><USER58> It seems like the point here is that 'normal negotiation' is flawed. If you're really planning to invest (or accept investment), you're going to be filling out a large and thorough contract fairly soon anyway. What's the harm in starting out with a mini-contract, unless you want an option to weasel out? If there are other things to consider that prevent you from doing this, then you shouldn't be verbally making those same commitments. There's still room to say "strongly interested" or whatever instead, but you shouldn't expect your place in line to be saved if others say "definitely" and follow the protocol.

</comment></comment><comment><USER59> I continue to be impressed at how cleverly Y Combinator hacks investing. What a breath of fresh air!

</comment><comment><USER60> They also arise when punishment for breaking the promise is high. Tight network, word gets around.

</comment><comment><USER61> To avoid confusion I personally think it also makes to be able to define the applicable standard as part of the protocol.

'$100k at a $5 million cap on standard YC terms'

Where standard YC terms refers to an existing terms template or you could refer to another set of standard terms by name.

Explicit Doctype

</comment><comment><USER62> Doesn't this encourage rushing complex decisions? Aren't handshake deals best suited for inherently simple transactions? Diamonds were mentioned, futures traders (in the old school pits) are another.

In other words, does this solve the wrong problem? If venture deals were as simple as diamonds, would such a proposal exist?

I'm no VC, but it seems like it's easy to get a contractual "meeting of the minds" when you're talking about simple things, and this does nothing to simplify things unless you have standard paperwork to go along with it. Are those details not the main destabilizing influence? (this could very well not be the case - as I said, I'm no VC).

</comment><comment><USER63> There are laws surrounding what is and is not a valid agreement. This website claims to somehow set a "standard" that would define when "if and only if" an agreement had occurred, but they do not have the right to just unilaterally do that. Even when dealing with people themselves, unless they can demonstrate that the other person had seen this website and known its contents ahead of time (and that thereby the contents of this website were to be taken as part of the overall oral agreement), the fact that they publish this website doesn't change what is or is not an agreement.

</comment><comment><USER64> The databaser in me wonders about the applicability of a two-phase commit protocol.

Suppose PG/YC (s/PG/{FW or BF or ...}) acted in the role of a transaction coordinator.

Instead of sending confirmation messages directly to each other, the parties would send their confirmations to the coordinator. Like an escrow agent, the coordinator would wait until all parties had confirmed and then send agreement notifications to all.

This might allow investors to commit with contingencies, such as requiring other investors or a minimum investment greater than their own investment.

<comment><USER65> great idea would add alot of extra work on the plates of yc mentors tho

</comment></comment><comment><USER66> Not being in SV and not following the SV way of building companies I really don't understand the rush, especially for something as important as picking the right investors. This would be like picking your wife on the first date and doing a handshake on it... Why not go for a more slow and more thoughtful route? As I see it great companies are not built in days, but years of hard, concentrated and thoughtful work and decisions.

</comment><comment><USER53> I found the acknowledgements interesting -- folks who've read this and presumably not vomited all over it include Messrs. Andreesen, Horowitz, & Conway.

</comment><comment><USER67> I really like this idea. But "handshake deal" is too ambiguous. pg couldn't have proposed it without sounding crass, but I think it should be called a...

"YC handshake"

</comment><comment><USER68> Not to try too hard here; but is there an opportunity to have an app that one could click a button, and have a confirmation email sent to both parties, but also have the data captured (anonymously, if preferred) so that the volume/type/frequency of deals could be looked at?

Maybe even a YC sponsored app - as part of an industry barometer/metric.

Keep the thing SUPER simple so that its "select offer" enter email addresses, hit "confirm"

</comment><comment><USER69> This is fantastic. Like putting more leverage and negotiating power to engineers (who have traditionally been marginalized by the suits), providing more knowledge and leverage to founders and taking away grey-zone-hand-waving- smoke-and-mirrors wiggle room from the comparatively powerful party (the VCs) can only be positive in bringing about parity in the relationship.

</comment><comment><USER70> Startups should think carefully about any source of bias behind Paul Graham's advice, and whether or not following pg's advice blindly is in their best interest.

Since the startup gave their (legally-binding) confirmation first, the entrepreneur may be able to stake a legal claim whenever they later choose to do so - or not.

</comment><comment><USER71> Not having money is fine, thinking you have money when you don't will kill you.

It's amazing to me that even after having a company utterly destroyed by broken promises from handshake deals that I still trust them, but I do EVERY SINGLE TIME! I'm going to use this protocol for the next few and see how it works out.

</comment><comment><USER72> This sounds very simiar to the medieval merchant law: a non-state-affiliated system of lightweight customs for helping people trust each other in business transactions.

<http://en.wikipedia.org/wiki/Lex_mercatoria>

</comment><comment><USER73> Interesting timing. A similar post landed in my inbox this morning, from the blog of a VC in NYC: [http://www.avc.com/a_vc/2013/03/doing-business-on-a- handshak...](http://www.avc.com/a_vc/2013/03/doing-business-on-a- handshake.html)

<comment><USER74> Not coincidental, given that pg thanks Fred Wilson (avc.com) for feedback/input at the bottom of the handshake protocol page.

</comment></comment><comment><USER75> I think that there needs to be some "time-cap" associated with the handshake protocol. If I don't hear back from step 4 within 24 hours or some other agreed time, I feel it'd be safe to assume the deal is off.

</comment><comment><USER76> Quite an impressive list of "thanks for reading this". Will we see some of them publicize and affirm their commitment to the "handshake protocol"? That would lend a lot of weight and credence to the idea.

</comment><comment><USER77> Why not have both parties sign a contract digitally with crypto?

<https://itunes.apple.com/us/app/opengp/id414003727?mt=8>

<comment><USER77> In fact, you could make everyone who attends register by signing a message- that way everyone at your event would be ready (and have a public key registered with YC) to sign any contract digitally.

Welcome to the future.

</comment></comment><comment><USER78> Nice! A simple 2PC [1] for deals!

[1] <http://en.wikipedia.org/wiki/Two-phase_commit_protocol>

</comment><comment><USER79> Given that messages without guaranteed delivery will tend to be used for step 4, isn't this protocol susceptible to the Two-Generals problem?

</comment><comment><USER80> I like this proposal very much.

On the other hand, it reminds me of a quote by Sam Goldwyn... "A spoken contract isn't worth the paper it's written on."

</comment><comment><USER81> I made this website inspired in the Handshake Deal Protocol: www.hdplist.com for both investors and startups to use it.

</comment><comment><USER82> Is this done before or after due diligence?

<comment><USER83> before, its like a really minimal term sheet and they are alwasy subject to due diligence, failure to reach agreement on the long-form, etc

<comment><USER82> this is only for YC companies right? not just any company. investors assume YC has done its homework

</comment></comment></comment><comment><USER84> Holy fuck, y combinator is on the bar exam.

</comment><comment><USER85> Where I come from, you ask a man if he wants to grab a BEER. Much more productive conversations that way :)

</comment><comment><USER86> So...What happens when the VC hires a few hookers to close really bad deals for startups?

</comment><comment><USER87> Time for a deal protocol app?

</comment><comment><USER88> pilots call this cockpit-tower protocol a "closed-loop communication".

</comment><comment><USER89> Splendid. Was expecting something of this sort after Harj Taggar's post "We'll be circling back" [1]. Hope the protocol does good of what it intends to: i.e not letting VCs hide behind a _VC way of saying no_.

However from a situation standpoint, this kind of indicates beginning of incoming _processes_ in VC funding. Bureaucracy. Like it happens in big boy industry. Seems a bit detrimental but probably dishonest and noob VCs asked for it.

[1] <http://paulgraham.com/circling.html>

</comment><comment><USER90> Of course, there's always the "Johnny Lingo Method" of negotiation and deal making: [http://nobudgetbudget.com/be-a-master-negotiator-with-the- jo...](http://nobudgetbudget.com/be-a-master-negotiator-with-the-johnny-lingo- method/)

</comment><comment><USER91> A handshake is generally not taken to be a legally binding contract in itself. An email might be. So it might be worth making it clear in the emails that you don't intend them to be legally binding.

<comment><USER92> Oral contracts are legally binding.

<http://en.wikipedia.org/wiki/Oral_contract>

<comment><USER91> <http://en.wikipedia.org/wiki/Intention_to_be_legally_bound>

<comment><USER92> > There is a presumption for commercial agreements that parties intend to be > legally bound (unless the parties expressly state that they do not want to > be bound

<https://en.wikipedia.org/wiki/Contract>

If you're going to cite Wikipedia, please actually read it.</comment></comment></comment></comment>


Francis Fukuyama: A Conversation with Peter Thiel  - <AUTHOR> http://the-american-interest.com/article.cfm?piece=1187

<comment><USER2> Salient points:

1\. _"In the history of the modern world, inequality has only been ended through communist revolution, war or deflationary economic collapse. It's a disturbing question which of these three is going to happen today, or if there's a fourth way out."_

2\. The left wants income inequality decreased via taxation, the right wants reduced taxes because government spends its tax revenue wastefully, inefficiently (Thiel gives examples). Both are correct assessments of a problem, but both propose solutions that solve only one of the problems - these are the 'Blind Spots' of the Left and Right. Need a solution that solves both problems.

3\. Technological deceleration is a blindspot common to both the left and right. While Internet and Finance are seeing technological acceleration, other big areas of the economy are seeing technological deceleration - transportation, energy the two main ones.

4\. " _There has been a tremendous [technological] slowdown everywhere else, however. Look at transportation, for example: Literally, we haven't been moving any faster. The energy shock has broadened to a commodity crisis. In many other areas the present has not lived up to the lofty expectations we had. I think the advanced economies of the world fundamentally grow through technological progress, and as their rate of progress slows, they will have less growth. This creates incredible pressures on our political systems. I think the political system at its core works when it crafts compromises in which most people benefit most of the time. When there's no growth, politics becomes a zero-sum game in which there's a loser for every winner. Most of the losers will come to suspect that the winners are involved in some kind of racket. So I think there's a close link between technological deceleration and increasing cynicism and pessimism about politics and economics."_

5\. ... I give up, ran out of time. This is only covers the first ~25% of it. Just read the whole thing, awesome interview, probably one of Thiel's best and most thorough.

</comment><comment><USER3> This should make fair-minded Thiel-haters reconsider: he treats government intervention very fairly and is open and thoughtful, even considering the idea of tariffs as a potential policy approach.

Excellent interview.

</comment><comment><USER4> wow! that was a very insightful interview. the idea of technological stagnation is something which I discussed with friends over the last 10 years. really deserves some more attention.

</comment><comment><USER5> Peter Thiel is awesome. This is a long read, but well worth it.</comment>


Random User Generator – API - <AUTHOR> https://randomuser.me/ <comment><USER2> I've used [http://www.fakenamegenerator.com/](http://www.fakenamegenerator.com/) a couple of times (for bulk generation).

Also, there is [http://www.generatedata.com/](http://www.generatedata.com/)

</comment><comment><USER3> I like the "↑ ↑ ↓ ↓ ← → ← → B A" implementation

</comment><comment><USER4> This would be nice(r) if it could generate users from anywhere in the world.

</comment><comment><USER5> Very nice tool.</comment>


Russ Cox talks about the Google Go programming language - <AUTHOR> http://software.intel.com/en-us/blogs/2010/01/21/parallel-programming-talk-60-russ-cox-about-the-google-go-programming-language/

<comment><USER2> Glad to hear that you guys listened to and enjoyed Clay and my talk with Russ. It was a lot of fun doing it. The sound quality issue is a long story. We started out Parallel Programming Talk on a shoe string and set it up as just recorded phone calls figured it out a we went. We pushed really hard and finally got a real studio. You can check out our new "clearer audio" broadcasts at [http://software.intel.com/en-us/articles/parallel- programmin...](http://software.intel.com/en-us/articles/parallel-programming- talk/) Thank you for watching the show! Aaron

</comment><comment><USER3> You would think that a company with the expertise of Intel would be able to get the sound right.

<comment><USER3> This is a serious comment. I am really interested in Go and have been following Russ Cox & Rob Pike for a number of years. I listened to the whole of this interview. It was interesting.

But, the sound is terrible. Which is a shame. With the resources available to an organisation like Intel I would expect better. A couple of decent microphones rather than headsets would have been all it would have taken. Russ was in Google, no doubt, and is a Mac user so I'm sure there would have been no problem for him to connect a decent microphone (or record his end in garageband for later inclusion).

If a one-man shop like Dan Benjamin at 5by5 (<http://5by5.tv/>) can get it right, surely Intel could do a bit better.</comment></comment>


ITConversation using Amazon S3  for Infrastructure-on-Demand - <AUTHOR> http://www.blogarithms.com/index.php/archives/2007/02/03/amazon-for-infrastructure-on-demand/ <comment><AUTHOR> follows on from a point I made earlier ~ <http://news.ycombinator.com/comments?id=2866></comment>


US jumps to top countries in misery index - <AUTHOR> https://www.bloomberg.com/news/articles/2020-08-06/misery-ranking-will-show-u-s-getting-worse-versus-rest-of-world <comment><USER2> can we talk of any other country please. I don't want read about usa in EVERY index. what is happening in Malaysia, Argentina, Japan. not USA everywhere</comment>


Why Twitter Needs Its Power Users: They Play Host to Newbies - <AUTHOR> http://ryanspoon.com/blog/2008/05/29/why-twitter-needs-its-power-users-they-play-host-to-newbies/

<comment><USER2> Twitter really needs to work on reliability so the newbies can use the service without it going down.

<comment><AUTHOR> Very true... no matter what the power users do, they need Twitter to work!</comment></comment>