4 ms·

A typical YC company receives $200k or so, with the goal of achieving enough progress on a novel business idea to be investable. A typical McDonalds costs $3 m

by patio11 11y ago

A typical YC company receives $200k or so, with the goal of achieving enough progress on a novel business idea to be investable. A typical McDonalds costs $3 million to open. They reheat burgers. I might recalibrate on whether a YC company counts as enormously resourced.

ZoF 11y ago
I'd argue that the resources a YC company has available extend far beyond the $200K in funding; even if you ignore the effect YC's 'seal of approval' has on future rounds. Compared to other incubators I don't think it's a stretch at all to consider them extremely well resourced. No comment on the hit rate.
- ryanSrich 11y ago
  The non-monetary resources provided to YC companies are mostly freely available to any company (startup school, how to start a startup, pg's blog, sama's blog, AmAs, etc.). Sure, you could argue that being a YC alum helps you raise that first round, but even YC companies that raise smaller-ish rounds fail all the time. I feel like people think if you're in YC you're a sure bet. That's not the case at all. First and foremost you need a product that's going to be better than anything that currently exists. At the end of the day YC is just an angel investment firm with a great track record.
  - ZoF 11y ago
    >I feel like people think if you're in YC you're a sure bet. Did not mean to imply I feel YC makes success a sure bet, that is obviously and demonstrably false. That said; non-monetary resources made available to YC companies are 'mostly' available to every startup? Really?[0] -Regular founders dinners(networking, helps with initial traction) -Free legal counsel -AWS/Azure credit well above what the respective companies offer non-yc startups. -Being YC alum helps with future funding rounds. ->but even YC companies that raise smaller-ish rounds fail all the time. Yes...Of course they do, that's the point of VC Yes blog posts and AMA's are great learning material, but I'd argue they aren't nearly as valuable as regular 1on1's with the people that wrote them. I'm not trying to say YC is a magic bullet or that YC alum 'have it easy', it's hard as hell to create a successful startup. I am saying that there are not-so-trivial advantages to being incubated at/by YC [0]http://www.fastcompany.com/3042861/the-y-combinator-chronicles/the-secret-million-that-y-combinator-invests-in-all-its-startups http://www.fastcompany.com/3042861/the-y-combinator-chronicl...
abalashov 11y ago
Just for the sake of shooting the breeze: how much of that $3m goes into COGS and capitalised assets or improvements?
- patio11 11y ago
  Off the top of my head: approximately $1 million for land, $1 million for building, $1 million for working capital of which only about $30~50k is COGS. Some of the working capital is machines and other improvements; more than you would expect is salaries for employees for the first few months. (n.b. Some of this is fronted by McDonalds, some by the franchisee. McDonalds has an interesting model where they insist on the franchisee being a tenant of theirs, at least domestically -- this turns them into one of the largest commercial real estate options in the world.)
  - abalashov 11y ago
    Huh! $1m for land? Where, in Monaco? What's a McDonald's sit on, 1/4 acre? And I assume the $1m for "building" includes all the branding collateral, signage, custom cabinets, and other expensive to-spec physical accoutrements?
pbreit 11y ago
And a Subway costs $100k. The resources are mainly non-cash, yes. And the YC cachet (an extremely valuable asset) helps out in the fundraising.

by patio11 11y ago

ZoF 11y ago

I'd argue that the resources a YC company has available extend far beyond the $200K in funding; even if you ignore the effect YC's 'seal of approval' has on future rounds. Compared to other incubators I don't think it's a stretch at all to consider them extremely well resourced. No comment on the hit rate.

ryanSrich 11y ago
The non-monetary resources provided to YC companies are mostly freely available to any company (startup school, how to start a startup, pg's blog, sama's blog, AmAs, etc.). Sure, you could argue that being a YC alum helps you raise that first round, but even YC companies that raise smaller-ish rounds fail all the time. I feel like people think if you're in YC you're a sure bet. That's not the case at all. First and foremost you need a product that's going to be better than anything that currently exists. At the end of the day YC is just an angel investment firm with a great track record.
- ZoF 11y ago
  >I feel like people think if you're in YC you're a sure bet. Did not mean to imply I feel YC makes success a sure bet, that is obviously and demonstrably false. That said; non-monetary resources made available to YC companies are 'mostly' available to every startup? Really?[0] -Regular founders dinners(networking, helps with initial traction) -Free legal counsel -AWS/Azure credit well above what the respective companies offer non-yc startups. -Being YC alum helps with future funding rounds. ->but even YC companies that raise smaller-ish rounds fail all the time. Yes...Of course they do, that's the point of VC Yes blog posts and AMA's are great learning material, but I'd argue they aren't nearly as valuable as regular 1on1's with the people that wrote them. I'm not trying to say YC is a magic bullet or that YC alum 'have it easy', it's hard as hell to create a successful startup. I am saying that there are not-so-trivial advantages to being incubated at/by YC [0]http://www.fastcompany.com/3042861/the-y-combinator-chronicles/the-secret-million-that-y-combinator-invests-in-all-its-startups http://www.fastcompany.com/3042861/the-y-combinator-chronicl...

abalashov 11y ago

Just for the sake of shooting the breeze: how much of that $3m goes into COGS and capitalised assets or improvements?

patio11 11y ago
Off the top of my head: approximately $1 million for land, $1 million for building, $1 million for working capital of which only about $30~50k is COGS. Some of the working capital is machines and other improvements; more than you would expect is salaries for employees for the first few months. (n.b. Some of this is fronted by McDonalds, some by the franchisee. McDonalds has an interesting model where they insist on the franchisee being a tenant of theirs, at least domestically -- this turns them into one of the largest commercial real estate options in the world.)
- abalashov 11y ago
  Huh! $1m for land? Where, in Monaco? What's a McDonald's sit on, 1/4 acre? And I assume the $1m for "building" includes all the branding collateral, signage, custom cabinets, and other expensive to-spec physical accoutrements?

pbreit 11y ago

And a Subway costs $100k. The resources are mainly non-cash, yes. And the YC cachet (an extremely valuable asset) helps out in the fundraising.