4 ms·

The tech culture of investing gigantic sums of money in a handful of hyped up projects is sick IMO. Especially when these investors already know perfectly well

The tech culture of investing gigantic sums of money in a handful of hyped up projects is sick IMO. Especially when these investors already know perfectly well that only 1 out of 10 startup makes it and that it's almost impossible to predict which ones will succeed. Even Y Combinator, which is top of the top, doesn't have that high success rate in terms of number of companies. Instead of giving this one company $2.6 billion, the investors could have invested $100k in 26k different startups. They could have literally scrolled through the list of the top 26k open source projects on GitHub and invested 100K in each of their teams to come up with any kind of business related to their expertise. Their success rate is bound to have been better. This money was just wasted. Investors are just too lazy to interact with so many companies. Too fat and lazy to make an impact.

marcinzm 6y ago
There is a non-trivial cost to investing money into a venture. Investing into 26k projects means you're going to lose a large percentage of money in overhead, legal fees, communication, etc. Then there's the continuing overhead of monitoring the investment which will cost even more.
skrebbel 6y ago
> giving This is not at all how investing works. It sounds like you're talking about some kind of charity.
- sokoloff 6y ago
  I think that's a pretty uncharitable reading of deep meaning into a single word (that isn't even wrong).
amitutk 6y ago
> Instead of giving this one company $2.6 billion, the investors could have invested $100k in 26k different startups. This already happens, its called angel or accelerator funding. YC gives $150K to 200+ company every year. Some of these companies then raise more, then some more. For founder with successful exits or other outstanding achievement, they can effectively start with series C and raise 50 million as the first round. Thereafter everyone wants to bet on the winning horse.
- jondubois 6y ago
  It doesn't happen enough. Nowhere near enough. The number of companies which apply to YC versus the number which are actually accepted is a very bad ratio. YC and all other incubators combined do not represent a free market by any stretch of the imagination. They're picking winners based on some selection criteria which worked at one point in history... This funnel has been so thoroughly gamed and hacked that at this stage, they might as well invest in random companies. Does anyone realize just how hard it is to get even $20k in funding for a hard working honest founder who is not a psychopathic manipulator. IMO, anybody who can't setup a functional profitable business with $20k funding is unfit to run any company. You've got to give a first chance to more people and fewer second, third and fourth chances to charming psychos.
  - objclxt 6y ago
    > Does anyone realize just how hard it is to get even $20k in funding for a hard working honest founder who is not a psychopathic manipulator It isn't that hard to get $20k in funding if your idea is halfway decent - that's not the value that YC provides. The value that YC provides is in the networking and connections, which I think a lot of people would argue is worth far more than the money. > anybody who can't setup a functional profitable business with $20k funding is unfit to run any company Not quite. Good luck setting up a profitable hardware business with $20k of funding, tooling costs alone are going to dwarf your seed capital.
    - jondubois 6y ago
      >> It isn't that hard to get $20k in funding if your idea is halfway decent - that's not the value that YC provides. The value that YC provides is in the networking and connections It's very hard in most countries - Coming from someone who has been applying constantly for 10 years. At one point I even managed to get invited to some events and conferences where a specific seed stage investor was going and I approached him enough times at different events that I was eventually able to secure coffee with the guy; took 2 years from when I started trying to get investment. Then this investor encouraged me to apply to their incubator... Then they just rejected me. My open source project was one of the most popular in Australia at the time. I had worked on it for several years and I had a solid business strategy and I could really have benefited from $20K and any kind of support network (I was never asking for YC level business connections, just some help me get 1 foot in the door with 1 B2B customer would have been great). BTW my project was more than 'halfway decent'. As proof, today my project powers multiple mainstream tech projects and several major blockchain projects and I'm collecting forging rewards on one of them. Did it with $0 funding and most people I met actively working against me instead of helping me. Got screwed over so many times. I don't think my case is unusual. What happened to me is just average. The thing is that in spite of it being so difficult to secure a mere $20K, this whole experience did not make me believe that fiat money is valuable. It did the exact opposite. So now I'm dedicating my career to the fight against fiat money.
valachio 6y ago
Look up "power law". Peter Thiel talks about this in detail in his book

marcinzm 6y ago

There is a non-trivial cost to investing money into a venture. Investing into 26k projects means you're going to lose a large percentage of money in overhead, legal fees, communication, etc. Then there's the continuing overhead of monitoring the investment which will cost even more.

skrebbel 6y ago

> giving This is not at all how investing works. It sounds like you're talking about some kind of charity.

sokoloff 6y ago
I think that's a pretty uncharitable reading of deep meaning into a single word (that isn't even wrong).

amitutk 6y ago

> Instead of giving this one company $2.6 billion, the investors could have invested $100k in 26k different startups. This already happens, its called angel or accelerator funding. YC gives $150K to 200+ company every year. Some of these companies then raise more, then some more. For founder with successful exits or other outstanding achievement, they can effectively start with series C and raise 50 million as the first round. Thereafter everyone wants to bet on the winning horse.

jondubois 6y ago
It doesn't happen enough. Nowhere near enough. The number of companies which apply to YC versus the number which are actually accepted is a very bad ratio. YC and all other incubators combined do not represent a free market by any stretch of the imagination. They're picking winners based on some selection criteria which worked at one point in history... This funnel has been so thoroughly gamed and hacked that at this stage, they might as well invest in random companies. Does anyone realize just how hard it is to get even $20k in funding for a hard working honest founder who is not a psychopathic manipulator. IMO, anybody who can't setup a functional profitable business with $20k funding is unfit to run any company. You've got to give a first chance to more people and fewer second, third and fourth chances to charming psychos.
- objclxt 6y ago
  > Does anyone realize just how hard it is to get even $20k in funding for a hard working honest founder who is not a psychopathic manipulator It isn't that hard to get $20k in funding if your idea is halfway decent - that's not the value that YC provides. The value that YC provides is in the networking and connections, which I think a lot of people would argue is worth far more than the money. > anybody who can't setup a functional profitable business with $20k funding is unfit to run any company Not quite. Good luck setting up a profitable hardware business with $20k of funding, tooling costs alone are going to dwarf your seed capital.
  - jondubois 6y ago
    >> It isn't that hard to get $20k in funding if your idea is halfway decent - that's not the value that YC provides. The value that YC provides is in the networking and connections It's very hard in most countries - Coming from someone who has been applying constantly for 10 years. At one point I even managed to get invited to some events and conferences where a specific seed stage investor was going and I approached him enough times at different events that I was eventually able to secure coffee with the guy; took 2 years from when I started trying to get investment. Then this investor encouraged me to apply to their incubator... Then they just rejected me. My open source project was one of the most popular in Australia at the time. I had worked on it for several years and I had a solid business strategy and I could really have benefited from $20K and any kind of support network (I was never asking for YC level business connections, just some help me get 1 foot in the door with 1 B2B customer would have been great). BTW my project was more than 'halfway decent'. As proof, today my project powers multiple mainstream tech projects and several major blockchain projects and I'm collecting forging rewards on one of them. Did it with $0 funding and most people I met actively working against me instead of helping me. Got screwed over so many times. I don't think my case is unusual. What happened to me is just average. The thing is that in spite of it being so difficult to secure a mere $20K, this whole experience did not make me believe that fiat money is valuable. It did the exact opposite. So now I'm dedicating my career to the fight against fiat money.

valachio 6y ago

Look up "power law". Peter Thiel talks about this in detail in his book