This is great. Someone needed to do one of these, I dabbled in this market with my little one person shop because it seemed so critically underserved, but my constraints were a bit different.
Some of the challenges I faced in trying to help startups: I needed to be paid in real money, which is tough for a startup. I didn't market myself at all (not even a webpage) which is just neglectful. And finally, surprisingly: frankly I found startups to have the worst legal advice and contracts. All of them went to their lawyers and came back with contracts that looked like employment agreements and frankly included worse terms than most employment agreements. I had my own agreement, but it didn't help much. I had a surprising number of deals fall through because of this. Part of it is I clearly allowed incorrect expectations, and part of it is, I think is if people haven't heard of you they just assume you'll be unrepresented and shocked when you don't just sign their standard "we put whatever we thought would be best for our client" contract and instead asked for a version for a lawyer to redline.
So frustrating. And for real, most startups didn't need that much of my time, so it became not worth it.
Instead I had a much better experience with a lot less pain (and frankly more interesting work) working on multibillion dollar public infrastructure contracts (train systems mostly) and focused on those instead. Go figure.
You'd expect startups to do better in this area than larger companies.
Thankfully Thomas is well known on the Internet, which I think will help a lot with startups. And it's a better model than what I was doing.
Anyway! Thanks for doing this! It's a huge unfilled area. Someone needed to and I hope it works well!
That part seems really compelling for some startups. But I'll be curious to see if at the end of the day it turns out to be compelling for you all. (FWIW, the few times I tried that approach people weren't used to it. It probably is far enough away from everything else that it also squarely removes you from the usual "we'll hand you a contract for a contractor" situation too. I am guessing you'll have more luck with it than I did.) You might find pushback from folks who don't want to add another row to their cap table. It seems like it shouldn't be a big deal, but different people have the strangest dealbreakers.
I am also curious: do you plan to value options when you accept those at whatever valuation is current and let other investors determine the rate? Or do you plan to try and determine option valuation yourself? How VC-like do you intend to get here? :)
For the most part, we're really just going to exploit every lever we can find for making our payment structure flexible. I wouldn't say we're hoping to become investors.
We spent a few years working with lots of young startups at Matasano and we had the obvious learning experience: none of them, even the ones with traction, can afford the kind of security work that larger companies get. That's a problem we're hoping to address, at least for a small number of clients.
So you're actually investing in startups, but instead of your money, you invest your time/expertise?
I don't know anything about Matasano, apart from seeing the name on HN frequently, but I was wondering if you already had a successful security consultancy and sold it, why set up another one? I guess this answers that question.
Some of the challenges I faced in trying to help startups: I needed to be paid in real money, which is tough for a startup. I didn't market myself at all (not even a webpage) which is just neglectful. And finally, surprisingly: frankly I found startups to have the worst legal advice and contracts. All of them went to their lawyers and came back with contracts that looked like employment agreements and frankly included worse terms than most employment agreements. I had my own agreement, but it didn't help much. I had a surprising number of deals fall through because of this. Part of it is I clearly allowed incorrect expectations, and part of it is, I think is if people haven't heard of you they just assume you'll be unrepresented and shocked when you don't just sign their standard "we put whatever we thought would be best for our client" contract and instead asked for a version for a lawyer to redline.
So frustrating. And for real, most startups didn't need that much of my time, so it became not worth it.
Instead I had a much better experience with a lot less pain (and frankly more interesting work) working on multibillion dollar public infrastructure contracts (train systems mostly) and focused on those instead. Go figure.
You'd expect startups to do better in this area than larger companies.
Thankfully Thomas is well known on the Internet, which I think will help a lot with startups. And it's a better model than what I was doing.
Anyway! Thanks for doing this! It's a huge unfilled area. Someone needed to and I hope it works well!