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This seems pretty accurate, and if so it would explain why so few of this type of student start startups after college. A startup is exactly the opposite situa
by pg 17y ago
This seems pretty accurate, and if so it would explain why so few of this type of student start startups after college. A startup is exactly the opposite situation: you really have to commit to something, and you are immediately and uncompromisingly judged by customers. It's the opposite of a decorous way to keep your options open. But of course risk and reward are usually proportionate.
- gmichnikov 17y agoI have not seen any data, but I don't think that's totally fair. Students from my class or those within one of mine at Harvard have started Facebook, Scribd, Airbnb, Paperless Post, drop.io, Baking for Good, and probably others that I am not aware of. Granted Facebook was not "after" college. I am also not sure that in this regard risk and reward are proportionate. Again I have no data, but I think a random sample of 100 people from Harvard who went into finance 5-15 years ago may have made more money to date (and taken far less risk) than a random sample of 100 college students who started startups 5-15 years ago. I think the fear of not knowing what else to do, not the money, is the primary force that leads most to finance or consulting. Anecdotally, 0-10% of my friends from college have any concrete thoughts at all about what they really want to do.
- pg 17y agoConsidering there are IIRC 1600 students in each undergrad class that probably counts as few. As for the risk/reward ratio, you may be right, or you may be wrong, but since neither of us have any data we should probably default to the assumption that they're proportionate.
- philk 17y agoBut of course risk and reward are usually proportionate. In aggregate startups should actually provide greater than proportionate rewards as they're not merely more risky, but also more poorly defined and require more internal motivation.
- joubert 17y agoAn investment isn't automatically potentially more rewarding just because it carries higher risk.
- arjunnarayan 17y agoWell, risk taking is not the forte of the overachievers: at least not the typical overachiever. They're the ones (and I say this being a member of the group) who have learned how to avoid risks, rather than take them. Consider what the continuous inflated GPA system teaches a student: don't take courses that might drop your GPA and put you below the mysterious wall-street/google-cut (which is rumoured to be 3.7/3.8. It doesn't really matter if it exists - what matters is that there's a perception that it exists). Instead, take courses that "look hard". Stay in your major. Don't explore. Risk avoidance, ironically, is a fantastic skill for risk takers to have --- as they end up minimizing risks skillfully.
- albertsun 17y agoDespite the high risk/high reward, I think the expected value (in money) of going to Wall Street is still quite a bit higher than that of a startup.
- pg 17y agoThe one place data is easy to find is at the high end-- in the Forbes 400-- and there at least that is not the case.
- netcan 17y agoHow long do you think it will take before YC can work out an expected return for founders?
- pg 17y agoIt could take 20 years to get numbers for YC specifically, because in startups the returns are dominated by the big hits, which (a) take longest and (b) are rare. However, you could do a crude back of the envelope calculation now, based on average exits for series A funded companies. I believe the average (again, dominated by the big wins) is on the order of $100m. If you assume founders have 10% at exit, that's $10m. Currently 20-25% of YC funded cos raise series A. So if you ignore startups that don't raise series A (which could be an increasingly large mistake), you get a lower bound of $2m to $2.5m per founder. Interesting. I'd never done that calculation. The bogusness of it, of course, is evident from the fact that your expected value is so dependent on the performance of the other startups we accept. If 100% of the startups we funded went on to raise series A, the expected value would jump to $10m. And of course we have no idea how well YC funded startups will do compared to series A funded startups in general.
- cperciva 17y agobased on average exits for series A funded companies Is that counting all the series A funded companies which never exit? $100M sounds about right to me as an average exit size, but only after excluding non-exits.