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The goal of a VC is not to have a high conversion rate... it's to find the big winners. Airbnb + other 'big wins' are 1 in 1500 or higher, but account for the v

The goal of a VC is not to have a high conversion rate... it's to find the big winners. Airbnb + other 'big wins' are 1 in 1500 or higher, but account for the vast majority of returns. YC started out with a sub-dozen class size. Now it has more than a hundred per batch. The conversion rate is going down, but the hit rate, which is all that matters, likely is going up. More hits with more failure == more success for yc.

deleted 9y ago
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orthoganol 9y ago
You're excluding brand dilution as a function of class size. Knowing you are going to be one of 100+ companies going through the program each semester makes you less enthusiastic to join if you already have a very promising or successful company, and it makes it harder for VCs to determine signal; "It's from YC" stops being good enough. A big reason for the class size explosion is almost certainly for network effects, a fleet of ready customers who support YC and drive growth out of the gates. It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable?
- toomuchtodo 9y ago
  > It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable? What would the attributes be of an elite founder?
  - omarchowdhury 9y ago
    Sell their startup for an outsized sum during a bubble to a failing giant only for it to be defunct within a short time? Just to go by viaweb's example. That would put at least Mark Cuban in the contending since they both sold to the same failing giant.
- justonepost 9y ago
  Yes, for sure. Especially with SS coming along which could dilute further. Maybe YC will shrink their class sizes and use SS as a feeder. My worries about SS is how much it will be used as an idea repository for the real batches.
justonepost 9y ago
Sure, great for VC lousy for founders. I agree with the post above. Why would great founders join ycombinator?

deleted 9y ago

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orthoganol 9y ago

You're excluding brand dilution as a function of class size. Knowing you are going to be one of 100+ companies going through the program each semester makes you less enthusiastic to join if you already have a very promising or successful company, and it makes it harder for VCs to determine signal; "It's from YC" stops being good enough. A big reason for the class size explosion is almost certainly for network effects, a fleet of ready customers who support YC and drive growth out of the gates. It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable?

toomuchtodo 9y ago
> It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable? What would the attributes be of an elite founder?
- omarchowdhury 9y ago
  Sell their startup for an outsized sum during a bubble to a failing giant only for it to be defunct within a short time? Just to go by viaweb's example. That would put at least Mark Cuban in the contending since they both sold to the same failing giant.
justonepost 9y ago
Yes, for sure. Especially with SS coming along which could dilute further. Maybe YC will shrink their class sizes and use SS as a feeder. My worries about SS is how much it will be used as an idea repository for the real batches.

justonepost 9y ago

Sure, great for VC lousy for founders. I agree with the post above. Why would great founders join ycombinator?