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The author makes good points here. While it's true that YC and other venture investors invest in many companies to increase the chances of large returns on the

The author makes good points here. While it's true that YC and other venture investors invest in many companies to increase the chances of large returns on the best of their portfolio companies, there is another significant advantage to YC having a bunch of companies in each batch - the teams that are not doing so well are a source of talent for the teams that are doing well. At some point YC can and has encouraged teams they think aren't making enough progress to join teams that are. A friend in one batch described his batch consisting of: 1/3 working on great ideas/products that could be big, 1/3 working on mediocre ideas/products and 1/3 working on bad ideas/products, and those in the bottom 1/3-2/3 still had good team members that could be sourced for talent for the best 1/3 and for previous YC companies doing well.

dkarapetyan 9y ago
The YC network effect is the secret sauce. Most YC companies would not even be able to bootstrap if it wasn't for YC alums like AirBnB.
- tstyle 9y ago
  Definitely. For an organization that spent a decade teaching startup the importance of building moats, it's no surprise that they've built their own.
  - thecrazyone 9y ago
    If they hadn't built such a moat it would surely be irony but wouldn't have unusual to do what they preach
Top19 9y ago
This is a really interesting point about YC. I've heard before that in markets some companies need to fail, their talent and assets act as "fertilizer" for helping the other companies grow.
- joshjje 9y ago
  That's how STARS are born!
Mz 9y ago
YC also basically does a lot of training, mentoring, etc. I don't know how much of that most angel investors provide. But YC is not merely rolling the dice. They are also doing a lot of weeding, watering, making introductions, sharing wisdom, etc. So, pro tip: If you want to successfully invest, treat it like gardening rather than gambling.

dkarapetyan 9y ago

The YC network effect is the secret sauce. Most YC companies would not even be able to bootstrap if it wasn't for YC alums like AirBnB.

tstyle 9y ago
Definitely. For an organization that spent a decade teaching startup the importance of building moats, it's no surprise that they've built their own.
- thecrazyone 9y ago
  If they hadn't built such a moat it would surely be irony but wouldn't have unusual to do what they preach

Top19 9y ago

This is a really interesting point about YC. I've heard before that in markets some companies need to fail, their talent and assets act as "fertilizer" for helping the other companies grow.

joshjje 9y ago
That's how STARS are born!

Mz 9y ago

YC also basically does a lot of training, mentoring, etc. I don't know how much of that most angel investors provide. But YC is not merely rolling the dice. They are also doing a lot of weeding, watering, making introductions, sharing wisdom, etc. So, pro tip: If you want to successfully invest, treat it like gardening rather than gambling.