7 ms·
Investor Day
- sachinag 10y agoI assume this is using the same or similar algorithm as the NRMP algorithm uses for U.S. residency match day?
- nickparker 10y agoAlmost definitely. Stable matching is a very well understood problem, and as far as I can tell investor day is a textbook example of it.
- mooreds 10y agoA bit more background here: https://en.wikipedia.org/wiki/National_Resident_Matching_Program#Matching_algorithm https://en.wikipedia.org/wiki/National_Resident_Matching_Pro...
- narsil 10y agoYeah, the Stable Marriage problem provides a solution for matching these ordered preferences between two sets of people/elements: https://en.wikipedia.org/wiki/Stable_marriage_problem https://en.wikipedia.org/wiki/Stable_marriage_problem
- deleted 10y ago[deleted]
- sappapp 10y agoI assume so as well. This algorithm is outlined by the stable marriage problem for those that are interested.
- a-priori 10y agoIt's not quite the stable marriage problem, because in the stable marriage problem you're trying to find an optimal 1:1 pairing. It's also not the NRMP problem because in that case, residents are only matched with one hospital in a year. Here companies are matched with multiple investors, and investors are matched with multiple companies. But regardless, I believe the algorithm is roughly the same as the NRMP algorithm: you run through multiple rounds where you look at each combination of company and investor. If both sides would prefer that they meet with each other, rather than the people they're already paired with, then you reassign them. Once you've done that several times you arrive at a stable state.
- Finbarr 10y agoYes you are on the money. There are also some additional constraints, e.g., we don't want to match startups with multiple investors from the same fund.
- tdstein 10y agoIn the NRMP there is a N:1 matching between residents and hospitals, where N <= the number of open positions in the hospital. If the meetings are time sliced, let's say by hour, then run the algorithm for each time slice.
- huac 10y agoWell, with the constraint that no startup wants to have multiple visits with the same investor (and vice versa) - so you need to rerun the algorithm with the earlier matches removed from a preference list.
- Finbarr 10y agoVery close. It's many:many with multiple iterations until a stable solution is found.
- koolba 10y ago> Using both these ranked inputs, our software will create “Investor Day” schedules for each investor and each startup, which will take place at the Computer History Museum on Wednesday 8/24. Sounds like the backend of a dating site for startups and investors.
- BinaryIdiot 10y agoSeems like a solid idea. I honestly thought something like this was already in place so it makes sense. Still though the first thing I thought of is what it might feel like to be part of the statistic few who get zero investors clicking the button (I mean statistically this should happen at least a couple of times due to the batch size, right? Or am I severely underestimating the amount of investors that attempts do demo day?)
- tdstein 10y agoYes if investors are not forced to meet with X number of startups
- Finbarr 10y agoThere are a lot more investors attending demo day than startups so this is not likely to be an issue for the companies.
- pc86 10y agoIf you can't get a single investor to give you 20 minutes after Demo Day you've got much bigger problems.
- ryanSrich 10y agoA few years ago sure, but 2016 has been pretty brutal for seed and series A. I imagine a small percentage of great companies will lose out as a result of a cold funding climate.
- argonaut 10y agoSeed is roughly the same as it's always been. Even if a lot of VC firms are retrenching, there are still tons of angel investors and seed funds out there casting wide nets. Series A, definitely.
- BinaryIdiot 10y ago20 minutes? I thought they got an order of magnitude less time. Regardless yeah it's probably a sign of an issue but with the current climate I don't think that necessarily has to be true.
- idlewords 10y agoThis is so romantic!
- skrebbel 10y agoI really like that they cancel slots when no partners of the VC firm are present.
- canistr 10y agoReminds me a lot of Waterloo's co-op matching system, Jobmine.
- udba 10y agoWhich is an absolutely awful system, for a multitude of reasons. One of the biggest faults that looks like it might be replicated here (the article does not specify) is that once employers (VCs) rank students (startups), the students can't see the numerical ranking they were given. For example, if I'm a student who was ranked by several companies, I cannot see the numerical ranking they gave me. This introduces a significant bias against students for no apparent reason; employers do not lose out if we can see how they ranked us. This is one of the reasons that UWaterloo as a school is hugely overrated (although the students are generally as good as they are hyped up to be).
- emmett 10y agoWhy is sharing the rating with students so critical? I can see why people would be curious, but I'm not sure why it matters so much?
- lihorne 10y agoBecause students don't know how much a company wants them, and so cannot set their ranking with that knowledge in mind. For example, Apple could rank a student a 9 and Microsoft a 2, but to the student it looks like their level of interest is the same. The student could personally prefer Microsoft, but have a low chance of getting matched, whereas if they knew Apple was closer to a sure-shot of having a job, they might be more risk-averse and rank Apple as their most desired over Microsoft.
- emmett 10y agoI still don't see how on average it's worse for students. It might be worse for student A who would have applied to MS knowing a higher chance of getting in, but that's then probably worse for student B who genuinely wants to work at MS and doesn't get the slot that A took. Isn't it better if everyone expresses their true preferences and then we do the best matching we can on that basis, rather than having students attempt to game the system in response to company ratings? Your description makes the system sound close to optimal to me.
- DelaneyM 10y agoAre investors weighted by their fund's size? Or are founders told the ranking they were given by each interested investor? I can imagine many firms go into demo day with the resources and willingness to fund 10-20 ventures, whereas others are looking for only one or two. I would much rather be the fifth choice of the former than third choice of the latter. If I knew my position in the stack I could figure it out for myself, or it could be calculated for me if YC is trying to avoid the negative consequences of making that transparent.
- Finbarr 10y agoInvestors are not weighted by their fund's size - they are ranked by the founders individually. Founders would be able to apply your stated preference for meeting with larger funds or with known high frequency investors, if they were so inclined.
- DelaneyM 10y agoWithout knowing how one ranks, though, it's substantially harder to prioritize. This doesn't hurt the big funds so much as it does the small ones. If I were an eCommerce or Logistics company, for example, there are a subset of niche funds which would be great strategic investors; but knowing they're only going to invest in one or two ventures would leave me disinclined to prioritize them when high-frequency investors are in the mix. I don't want to kvetch here, it's a much better system than the current free-for-all. But since investors already get the first-mover advantage, it would be nice if entrepreneurs had more complete information. To carry the theme of relationship analogues in this thread: knowing who's interested in me is great, but I'd rather be someone's dream girl than a fallback or fling.
- Finbarr 10y agoWe do have a lot of context on investors that can help founders when choosing who to meet with. In addition, we're going to let investors specify a reason why they want to meet with each company (optionally). This should give less well known investors who are highly suited to particular companies a chance to get noticed.
- sytse 10y agoThis is great, it would have saved us (GitLab) a lot of driving around. It is one of those idea's that are very obvious in hindsight but for sure I didn't think of it.
- RCortex 10y agoFrom the way they've set this up, it appears to be optimal for investors and pessimal for founders. Anyone else notice the same or disagree? It's in the proof for a particular theorem.
- etjossem 10y agoIt is optimal for the more scarce and selective group, whoever they happen to be in a given batch.
- dkonofalski 10y agoWhat makes you say that? This seems to me like a great idea that gives startup founders a quick pitch and an instant response from potential investors. It's almost like a match.com or Tinder for startups/investors.
- mpenn 10y agoI disagree and believe this should be better for founders. Demo Day works so well because it's a forcing function for getting a lot of investors to see you at once and make a decision quickly, because so many other investors are deciding at the same time. Typically, investors want a long time to consider a company, and they only move fast if someone is / might bid against them. Scheduling meetings post-Demo Day is tough, and most people do it sub-optimally (by scheduling them too far apart). This new system makes meetings happen faster and more per day, increasing a chance of getting a bite quickly, which should lead to a higher chance of closing the round. The downside I see is that if you are bad at meeting investors / need to iterate on your pitch, these meetings won't allow you to do that, as they'll be over before you can rethink it. But I think it's generally worth more / faster meetings. *As another investor pointed out, 20 minute meetings may also be too short. I am not sure what the optimal meeting length should be. 30 minutes might be better. 1 hour is probably too long (you can always schedule a follow up meeting).
- Finbarr 10y agoThe way the algorithm is written actually balances out the preferences of both groups. Investors and founders will each get to meet with their counterparts based on a ranking they supply.
- beambot 10y ago> ...if Investing/General Partner is not present, the slot will be cancelled. These seems to be an attempt to reinforce FOMO to force key people to attend demo day. Resorting to these tactics implies a pretty big perceived power imbalance... Eg. is this a reaction to senior partners sending their underlings because of DDay burnout? If so, this could backfire. The senior partners might just not show up (still), and force founders to attend offsite meetings later anyway (in addition to the new DDay meetings). In other words: This might just be a net increase in founder effort without changing the investor-founder DDay dynamic. After all: What do the senior partners gain / lose by this new situation? Not much (aside from FOMO), I'd guess. But the best investors will always be in demand anyway -- whether they attend DDay or not.
- snowmaker 10y agoActually, for a long time now we've only allowed partners to come to demo day. We are relaxing this restriction and allowing partners to bring associates to Investor Day, but only if they come themselves.
- beambot 10y agoWhy the downvotes? Seems like a well-reasoned hypothesis and contributes to the overall discussion. Has HN become that critical of different opinions that downvotes are used to punish dissent rather than using upvotes to indicate agreement?
- Kinnard 10y agoSometimes downvotes mean people just disagree not that the comment was malformed.
- gist 10y agoI actually UPVOTED when I saw "implies a pretty big perceived power imbalance". It's possible that the downvotes took that as a negative where I was in agreement. Downvotes (for whatever reason) mean that more people vote down than vote up (duh). As a result they can change simply because of the people that are reading a particular comment stream. Same comment on a different post could have entirely different results vote wise (at least when it's an intelligent comment as yours was).
- loceng 10y agoThis is extremely valuable data for YC to capture for themselves. I wonder how they might use it other than for a match-making algorithm..
- lpolovets 10y agoAs an investor, I think this will accomplish a few things: 1) A lot of scheduling friction will disappear. The week just after demo day is usually crazy because hundreds of founders and investors are all trying to schedule meetings with each other, and there are inevitable race conditions that lead to a lot of rescheduling and wasted time. (E.g. I email three founders with 5 possible time slots, and they all reply and ask for the same time slot.) 2) I think this will be great for investors who act quickly and go by their gut. There are plenty of investors out there -- especially those who write smaller checks -- for whom 20 minutes will be enough time to make a quick decision. 3) I'm not sure if this will be great for investors like me that approach investing more methodically rather than with their gut.* I love 1-hour meetings because that's plenty of time for both sides to dig in and learn a lot about each other. Twenty minutes feels very short to me, and I'm not sure if a 20-minute meeting is more likely to save me and the founder from an unnecessary 1-hour meeting, or if I end up having just as many 1-hour meeting -- but now with an extra 20 minutes tacked on. That said, I don't want to judge this process before I try it at least once, and I'm looking forward to trying it out in August. * FWIW, there are great gut-based investors and great methodical investors, and I'm not implying either approach is better.
- zillionize 10y agoI am an investor and my experience is, if you have done enough homework about the startup you want to meet, twenty minutes shall be long enough to clarify a few key things so you can make an informed decision.
- iandanforth 10y agoOut of curiosity what constitutes that homework for you and do you feel like you can complete that homework prior to demo day?
- zillionize 10y ago>>what constitutes that homework for you This is the homework we do: https://www.zillionize.com/data/ https://www.zillionize.com/data/ >>do you feel like you can complete that homework prior to demo day Yes the time is very tight so we have built an app to automate that.
- jknz 10y agoThe stable marriage problem has two natural algorithms that produce a stable matching: one algorithm give priority to women's choices and one gives priority to men's choices. If the algorithm used by yc to produce the matching for each slot is based on these, which algorithm is used? The one that gives priority to women's choices or to men's choices? A variation that doesn't give priority to any gender choices?
- wrsh07 10y agoFor clarity, the "women" : "men" are "investors" : "founders" in this context
- shimon 10y agoI don't think those algorithms are applicable here, because it's normal (even good) for investors to invest in multiple companies. https://en.wikipedia.org/wiki/Stable_marriage_problem https://en.wikipedia.org/wiki/Stable_marriage_problem The logical optimization target for YC is the total valuation of their companies, which probably means whatever approach creates the most competition among investors. Edit: more active discussion on this topic at https://news.ycombinator.com/item?id=12051218 https://news.ycombinator.com/item?id=12051218
- cperciva 10y agoThe stable marriage problem has two natural algorithms that produce a stable matching: one algorithm give priority to women's choices and one gives priority to men's choices. This is true under two conditions: 1. Marriages are heterosexual; and 2. Marriages are monogamous. While startup/VC relationships are heterosexual (err, heterofinancial?), they are absolutely not monogamous, so the analogy to the stable matching algorithm already fails.
- emagdnim2100 10y agoThis is almost exactly how some law schools run their on-campus interviewing process (except the bit about actual decision-makers being required to attend). From what I've observed, it works really well. Pre-screening for at least some level of mutual interest can save everyone a lot of time.
- chollida1 10y agoI don't know, your answer very wrong to me. What do you even know about math. Did you even win the Putnam, if not then please don't be bolder than the parent poster.
- xarien 10y agoIf you're interested, please swipe to the right...
- chicagoBears76 10y agoIs there a signaling issue introduced at all? 1) can investors see that a startup is not at the venue or at a table all morning and get a feel for demand? 2) can investors gather any information from the matching results to get a feel for demand? 3) is there a chance for investors to send false signals by showing their interest in other startups artificially? Vice versa for startups at all (would require collusion so unlikely) 2 and 3 not so much but regarding number one, will physical observation of the meeting space introduce any signaling oppurtinities be it genuine or fraudulent by either party?
- sandGorgon 10y agoThis is exactly what will happen (re: my comment in this thread). This is a highly investor friendly move and will benefit the top 10 startups of a batch. This will worsen the situation for the long tail.
- Finbarr 10y agoI don't think so. 1) There are way more investors than startups and we anticipate a busy day for everyone based on past data. 2) Not the demand for a company. 3) No.
- cheriot 10y ago"all the companies will be set up at tables to meet with you face to face." A study on speed dating showed an increased opinion from the person that approaches the other. Intentional?
- sandGorgon 10y agoDepending on how this is organized, this can be a spectacularly BAD idea. Investors would love it because they now have visual confirmation of who all are the "hot" matches. I bet everyone other than the Sequoias would be straining to look at who the hot startups are...and completely ignore the ones in front of them. For the long tail of a YC batch - the ones that are not hotly contested - this could be a disaster. Previously, investors would be forced to actually look at a startup and decide in isolation. Now they can simply look at the Big VC. I can completely see why investors would love this. One might as well make public the interest match list and rank it by order of "likes" received. People are perfectly capable of driving up and down the Bay Area. Guess what - we get a few free meals and coffees out of it. EDIT: guess what, you can bring associates to tailgate Sequoia & A16Z investors. EDIT2: what you guys might be trying to do is be helpful. For example, this lets you force-schedule investor meetings for startups that had no investor interest and term it as "the AI did it!". But I'm not sure if that will be really helpful ... at the cost of drastically reducing FOMO factor for most other startups.
- steve_taylor 10y agoI don't see anything in the description that allows investors to see an aggregated ranking of YC startups.
- sandGorgon 10y agoI said - it might as well be that. They can physically do that now (using their associates,etc) by checking out the marquee VC activity in the room. Even if these were individual rooms, you would have significant tailgating behavior. People don't realize this, but the most popular question of demo day is "who else is investing in you" While earlier every deal was always evaluated in isolation.
- free2rhyme214 10y agoThis is cool. Good to see YC improving.