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Jason Calacanis' Warning To Y Combinator Startups [video]
- deleted 16y ago[deleted]
- dchest 16y agoJason worked for Facebook Did I miss something? Like they say, [citation needed].
- deleted 16y ago[deleted]
- bradendouglass 16y ago10M for Hot Potatoe...I thought that acquisitions' numbers were unconfirmed?
- dzlobin 16y agoI was just quoting what I read, I'm not sure if that's confirmed. http://www.allfacebook.com/facebook-hot-potat-2010-08 http://www.allfacebook.com/facebook-hot-potat-2010-08 http://techcrunch.com/2010/07/28/facebook-to-pay-10-million-cash-for-hot-potato-says-source/ http://techcrunch.com/2010/07/28/facebook-to-pay-10-million-...
- jacquesm 16y ago> Also, how could I forget Jason worked for Facebook? Obviously he didn't enjoy his job. I think you are mistaken here, when Calacanis said he was 'quitting facebook' he meant that he would close his account there, not that he handed in his resignation.
- dzlobin 16y agoDamn it, that will teach me to make poor jokes. I just meant he has no real insight on whether or not the job will 'suck'
- lionhearted 16y agoIt's amazing what high production quality on audio and video does for credibility.
- randomwalker 16y agoFor those who prefer reading, or can't reach Youtube, etc. "This is a message to YCombinator companies and hopefuls: if you tell Facebook about your startup before you reach critical mass and you get found by Facebook in any way you're an idiot. They will steal your company's ideas and try to get you to take a small price for your company and vision and take a job at Facebook. Which by the way is going to be a job that sucks. Don't do it. It's a scam. It's a trap. It's a trap. It's a trap. Insert Star Wars quip here. It's a trap. IT'S. A. TRAP. End of message."
- strlen 16y agoThis sounds completely bizarre. If your ideas are such that they can be stolen and executed upon by others trivially, than a job at Facebook (with a signing bonus) is pretty damn impressive exit.
- tptacek 16y agoSay what? Posterous isn't rocket science, but I'm pretty sure they wouldn't consider a signing bonus at Facebook impressive.
- strlen 16y agoPosterous is out in the open for everybody to see. Why hasn't Facebook "killed it", then? Understanding user behaviour and preferences is part of what makes something defensible. Not having to build a product to operate at Facebook's scale (and expectation of reliability) at day one is a way to help discover people's preferences, especially for a "new idea".
- tptacek 16y agoThere is no startup success that this argument can't attribute to the intangible "understanding behavior and preferences", and no signing-bonus exit that the same argument can't dismiss the same way. My point is simply that there are a lot of very straightforward ideas that merit far more than a signing-bonus exit.
- tptacek 16y agoAs viscerally unappealing as it is to find myself agreeing with Calacanis, I'll note that Facebook doesn't even need to intend to trap YC companies for the net effect to be negative. The problem is the same as with "strategic investors": an early, quasi-structural relationship with a potential acquirer may be perceived as a de facto right of first refusal to the rest of the industry. It can be a trap even if it wasn't designed to be! I sort of watched this happen with a friend's company. Obvious caveats apply: (a) I'm not a social networking entrepreneur and don't know the space that well, (b) you have to balance the risk --- and the opportunity cost of another business in a different market --- against the benefit of collaborating with Facebook, (c) to whatever extent Facebook benefits unreasonably from this program, YC probably suffers.
- jmtame 16y agojason is making it sound as if he personally knows someone who made this mistake. i think you're claiming the same, and based on how many (few) acquisitions facebook makes, it's possible that you both know the same person who feels they were "trapped." can you say who it is, or did you intentionally leave out the name of the person you know? edit: sorry if i misread this part to imply it had to do with facebook: I sort of watched this happen with a friend's company.
- tptacek 16y agoI don't know anyone who's been scammed by Facebook. I like Facebook.
- pg 16y agoIf a bunch of startups that might have grown big were nipped in the bud by Facebook, it would be as bad for YC as for them. So Jason is essentially claiming that by agreeing to let YC-funded startups get early access to Instant Personalization (which is all this deal amounts to), we were acting against our own interest. That should at least make one skeptical about his claims. It is possible that we've done something that wasn't in our interest, but surely by default one should assume we understand and care about our interests more than Jason does. Or to put it more briefly: this is mere linkbait.
- wheaties 16y agoWhat's your taken on Foursquare and Facebook's own entry into the same sorts of space? Could you write up something about competing with an incumbent who already has the captured audience effect going for them?
- skmurphy 16y agoFacebook is not an investor like Sequoia, they have a primary business to run and there is some merit to Jason's warning, linkbait or not. How would you judge a year from now if this was a mistake? What criteria are you going to use to assess whether or not the deal met your goals?
- dchest 16y agoI think calling it linkbait is dishonest to Jason. While he's known for such things, it looks like his genuine opinion on the deal, and not an attempt to get more [page]views.
- sbarre 16y agoI would say like any other commentary on the web, consider the source! Jason makes some good (if generic) points about any industry where large incumbents will try to absorb or nullify innovative competitors or startups. Microsoft did it in the 90s and 2000s as well.. But we all know how much Jason hates Facebook, so he's using them as the bogeyman in this example, because, well, he hates Facebook! Mapquest learned this the hard way when they got stomped by Google Maps.. If your product doesn't have built-in "hard to replicate" or proprietary features (or data), then a better-funded competitor can just buy their way past you by using more resources to replicate what you have.
- ephermata 16y agoMaps are an interesting example because map data is actually hard to replicate. Google went ahead and built their own database anyway, after several years of licensing from NavTeq and then Tele Atlas. http://blog.daveburrows.com/2009/10/08/google-drops-teleatlas-for-us-map-data/ http://blog.daveburrows.com/2009/10/08/google-drops-teleatla... This allows Google to do whatever they like with the data, including offering turn by turn directions on Android.
- marcamillion 16y agoI understand what Jason is saying here...but to be honest, it's hard to tell someone that is used to living on $40k/year, that they shouldn't take an offer of $20M - that instantly makes them a millionaire. Ofcourse, once you make that first sale and have the FU money to fall back on, it makes gambling (i.e. growing to IPO) much easier. I am a little skeptical of Zuck too though.
- bconway 16y agoSure, but a sub-$2M sale for a company still in embryo stage is a very different proposition.
- MichaelApproved 16y ago$20mil from a company that isn't public yet isn't as good as it sounds. Who knows what the vesting terms are as well. Yes, it's still a lot and there are ways to sell the stock but that's assuming they even get $20 million.
- marcamillion 16y agoYou say it's not 'as good as it sounds', it all depends on your perspective. If you are earning $40k - $60k/year - which many young founders were likely earning before joining YC - even if after multiple dilutive rounds of financing you end up with 10% of the company, in a $20M exit....that's still $2M. Sure, you can't buy Fiji....but you are literally going from a bank account with a few hundred/thousand/tens of thousands, to literally hundreds of thousands/millions. That is VERY major the first time it happens. I guess the point I am making is, the jump from having $10K in the bank to $1M in the bank, is SOOOO much bigger than from $1M to $100M - because it impacts your life much more.
- erikstarck 16y agoI listened to a podcast where Jason was a guest not that many months ago (2-3 perhaps). He wasn't aware of the concept MVP ("minimum viable product") which kind of surprised me. Sorry, don't remember the name of the podcast.
- Recontemplation 16y agoCalacanis is an attention queen. I really wish I could down vote this.
- quellhorst 16y agoThis is mostly Jason Calacanis doing linkbaiting.
- c1sc0 16y agoI'm sorry, but even on HN I feel it is appropriate to reply to this jackass with only two characters: FU [Edit: the downvotes be damned]
- MichaelApproved 16y agoDidn't this exact thing happen with divvyshot? Facebook bought them, shutdown the company and had them working on image functions within the site. From what it seemed they didn't get paid much since they were mostly after what the guys learned from the site. Meaning it sounded like they were just after talent and not technology or user base. Can't imagine that would be a multimillion dollar deal. http://techcrunch.com/2010/04/02/facebook-buys-up-divvyshot-to-make-facebook-photos-even-better/ http://techcrunch.com/2010/04/02/facebook-buys-up-divvyshot-...
- RBr 16y agoI think that Jason says a lot of stuff to be sensational. He's building an audience of subscribers for his ThisWeekIn network of video podcasts. He's really good at thinking of sensational stuff to say in order to get people to look at what he's doing. "SEO Is Dead" comes to mind. Jason could honestly feel that a company or two has received a lower valuation then they deserved, but isn't that the early stage VC game in a nutshell? Investors trade time for value - they invest early in something they think will succeed. In the end, early stage investing isn't a bad route for people to take. Sometimes, it's the best (or the only) way for a product to get off of the ground.
- j_baker 16y agoI strongly disagree with what he's saying, but I don't think that's a fair way of characterizing Calcanis. To me, it seems as though he trusts his gut instinct. Nothing wrong with that until you trust gut instinct at the expense of sound logic.
- RBr 16y agoI'm not saying this haphazardly or even negatively. I'm not one to ever jump on the "bash Jason" train because I think that he is a smart guy working hard to figure out how to be successful. However, one of his core strengths is talking. He knows what to say and when to say it and how in order to attract people. He is using this issue as a platform to reach his existing audience while attracting new people. I'm not saying that he's right OR wrong about the issue itself. What I'm saying is that he uses topics like this as a platform to further his own influence. The proof is in the pudding... this is a hot story on HN and hundreds of new potential viewers have checked out the clip and likely the entire show.
- Menamena 16y agoWho cares who really said it, I saw the Techcrunch post on this and I had the same concern before seeing this. I think i posted - I hope Facebook doesn't ruin YC.
- middayc 16y agolink to a more verbose opinion before and after the cut: http://www.youtube.com/watch?v=AWJAkjF9qnY#t=1h14m44s http://www.youtube.com/watch?v=AWJAkjF9qnY#t=1h14m44s
- elvirs 16y agoi think he did this to get some traffic for show.
- znmeb 16y agoPaul, Jason: I think Silicon Valley has a huge problem, and this whole Facebook / YCombinator thing is a symptom. Silicon Valley's problem is that it values only dollars and code. Silicon Valley has become a world where the hacker culture, lifestyle, behavior and attitudes are the norm - a world where gladiatorial combat in code has replaced the discipline of software engineering.
- access_denied 16y agoThat's a deep thought. Write a blog post about it, please.
- paul 16y agoIt's sad that this troll gets more upvotes here than the original announcement did. Obviously every startup needs to be mindful of the potential for competition from larger, more established companies, but avoiding all the opportunities they create is even riskier. If you want to be really sure that nobody ever "steals" your great idea, target an obscure platform (Linux desktop?), stay in stealth mode, blackout your windows, and keep all of your computers in a faraday cage. However, if you want to to build something that matters, you're going to have to take some risks and get a little closer to the fire.
- malbiniak 16y agoI loosely know of Jason Calacanis and don't know what credibilty he has to base these statements on, but it he does raise any interesting point. What precedent does Facebook have to support the 3rd party developer ecosystem on apps.facebook? /me points at http://developers.facebook.com/docs/api* http://developers.facebook.com/docs/api*. I'd be really interested to see what other HNers have to say about what I think is the main issue: given you don't think becoming a facebook fte is your desired exit strategy, what would you do to protect your IP from Facebook?
- 10ren 16y agoproduct -> platform -> library -> standard library -> language -> OS -> FPGA -> ASIC -> SoC "Reaching critical mass" [so customers identify you with the technology/idea] is one way to avoid this.
- maddalab 16y agoSocial media start ups or otherwise, it is rarely about the idea, it is about the execution. If you cannot execute better than facebook you should probably consider selling to them, if you can no amount of idea stealing should prevent you from growing your start up. And as part of the execution you guard against being locked in to a specific platform.
- robryan 16y agoIt also depends on how a business uses the access to instant personalization. I would use it as a way to generate fast growth but also focus on segregating this growth from facebook reliance, as Zynga has done to an extent. This way if the relationship remains good you can continue to reap the benefits, if it goes sour you have your own userbase with some separation from facebook. It depends though, plenty of developers are happy to put all their eggs in the Apple app store basket because the benefit now outweighs to potential downside later. This would be the same here.
- deleted 16y ago[deleted]
- eronarn 16y agoMy reply: http://www.youtube.com/watch?v=goc4COUe1Z4 http://www.youtube.com/watch?v=goc4COUe1Z4 (I for one would much rather be stolen by Facebook than Mahalo.)
- michaelhalligan 16y agoI didn't watch the video, did he mention his Tesla?