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YC has pro rata rights, so maybe that 4% is low? Regardless, I concede that it's entirely possible many (or all) of the YC batches are unprofitable without the
by staunch 8y ago
YC has pro rata rights, so maybe that 4% is low? Regardless, I concede that it's entirely possible many (or all) of the YC batches are unprofitable without the hits. It's an interesting question.
I just think the entire concept of asking founders how big their companies could be doesn't make much sense. If Drew Houston predicted that he would be willing to sell Dropbox for $1 million in six months, and the Google Guys wanted to sell Google for a few million to Yahoo, YC had zero idea how big Airbnb would be, etc. what exactly is the point?
My understanding is that YC asks the question "How big could your company become?" but discounts the answer very heavily because of how hard it is to predict at the earliest stages. Almost any startup can give an answer about how they could conceivably be huge. Anyone trying to build a $20 million ARR SaaS company has a very easy answer.
It seems obvious that a founder with nothing would love to have a nice $20 million ARR business. It also seems obvious that when they achieve that level of success their ambitions will often grow, as happened with Dropbox, Facebook, Google, Stripe, and virtually every other hit startup ever.
I do think there's a good point about focusing on sustainable growth, and "not growth at all costs" but this just seems like what all the best founders and VCs actually practice, so it boils down to "don't be stupid".
- einarvollset 8y agoSo if I may - your assertions are: A) There is nothing wrong with how funding currently operates in the tech space. It allocates resources optimally in terms of risk adjusted returns for investors and there is no room to try alternate approaches. B) There is no way to assertain what the potential size of a business is, anything could become Dropbox (including - I dunno, a SaaS focused on kitchen countertop installers) C) The only way to provide suitable risk adjusted returns for investors is the current approach (focusing on finding unicorn outliers that can scale to 1000x)