4 ms·

But if we offer a free alternative with equivalent benefits, then 6% is way overpriced. And that's what we do. Paul omits a discussion of opportunity cost. Sur

But if we offer a free alternative with equivalent benefits, then 6% is way overpriced. And that's what we do. Paul omits a discussion of opportunity cost. Sure, buying a coke for 50 cents is great ... but getting it for free is much better. Remember that at 6.4% improvement, you end up even with ycombinator. At 6.4% improvement with MassChallenge, you end up 6.4% ahead.

staunch 16y ago
Do yourself a favor: wait until you have a track record and reputation that's at least 5% the quality of YC's before you start bragging about how much better you are.
- JohnHarthorne 16y ago
  This isn't about me. I don't do this. MassChallenge is a community supported by literally thousands of volunteers foregoing value capture to support value creation. After year 1, we asked our finalists this survey question: How likely are you on a scale of 0-10 to recommend MassChallenge to another startup? 79% answered either 9 or 10. (Just about 60% answered 10). One person answered 6 -- the lowest score. For perspective, that means that our finalists are slightly more enthusiastic about MassChallenge than Apple customers are about Apple Computer ... see here for more details and other metrics: http://www.masschallenge.org/2010_metrics http://www.masschallenge.org/2010_metrics Again, please visit some time. I'm sure you will understand why we are so excited about MassChallenge if you do.
  - mctavjb9 16y ago
    I'd be curious to know what the results of this survey question were from companies that made it to the first round but were not selected for the incubation phase. I had the entry fee waived through endorsements last year, but had an experience during the pitch round similar to others who have commented here-- judges who had nothing resembling a clue. I've heard this story over and over and have no intention of participating this year.
    - WarPaul 16y ago
      Again, I'll reference my aforementioned post above: http://news.ycombinator.com/item?id=2388691 http://news.ycombinator.com/item?id=2388691 I guarantee that the judging has been drastically improved from last year. It's still too bad that you feel the way you do. I wish you continued success in your venture.
deleted 16y ago
[deleted]
bmelton 16y ago
But if we offer a free alternative with equivalent benefits That's the thing - you don't. Using the Coke analogy, YCombinator gives me a Coke, but asks that I share 6% of it back to them. You want to charge me $200 for the Coke, which I can supposedly make back with endorsements, or recommendations, or 'engagement' somehow, but you're still charging $200. That it CAN be free, doesn't mean that it is. Spelled out more obviously, ignoring travel costs and all incidentals, if I get in to MassChallenge and it doesn't get any traction, I'm out $200. If I make it in to YCombinator and it doesn't get any traction, I'm out nothing. Also, YCombinator doesn't make any money off of me. They only get 6% IF I SUCCEED, which means that they really want to leverage their connections so that I do. You might consider not taking equity as somehow more generous, but it's just a different strategy. I would rather you took equity on the backend than $200 on the frontend, because that assures me that you'll want to help me succeed.
- WarPaul 16y ago
  What does the 6% on the back end do to your valuation in later rounds? Assuming you do expect to take on more growth capital upon successful completion of YC. Not very much Coke left to enjoy after that...
  - bmelton 16y ago
    I think you're misunderstanding valuation -- valuation represents the potential revenue of a company. Who owns how much of it generally doesn't affect a company's valuation though, in the case of YC (or others known to be successful), it almost certainly chips the valuation up, due to the value add. Who holds issuances of common stock isn't generally something that will negatively affect a valuation.
    - WarPaul 16y ago
      Valuation is also based on the prior investment to equity ratio. How much money is invested in X startup for 6% equity? That would certainly effect the pre on any term sheet, no?

staunch 16y ago

Do yourself a favor: wait until you have a track record and reputation that's at least 5% the quality of YC's before you start bragging about how much better you are.

JohnHarthorne 16y ago
This isn't about me. I don't do this. MassChallenge is a community supported by literally thousands of volunteers foregoing value capture to support value creation. After year 1, we asked our finalists this survey question: How likely are you on a scale of 0-10 to recommend MassChallenge to another startup? 79% answered either 9 or 10. (Just about 60% answered 10). One person answered 6 -- the lowest score. For perspective, that means that our finalists are slightly more enthusiastic about MassChallenge than Apple customers are about Apple Computer ... see here for more details and other metrics: http://www.masschallenge.org/2010_metrics http://www.masschallenge.org/2010_metrics Again, please visit some time. I'm sure you will understand why we are so excited about MassChallenge if you do.
- mctavjb9 16y ago
  I'd be curious to know what the results of this survey question were from companies that made it to the first round but were not selected for the incubation phase. I had the entry fee waived through endorsements last year, but had an experience during the pitch round similar to others who have commented here-- judges who had nothing resembling a clue. I've heard this story over and over and have no intention of participating this year.
  - WarPaul 16y ago
    Again, I'll reference my aforementioned post above: http://news.ycombinator.com/item?id=2388691 http://news.ycombinator.com/item?id=2388691 I guarantee that the judging has been drastically improved from last year. It's still too bad that you feel the way you do. I wish you continued success in your venture.

deleted 16y ago

[deleted]

bmelton 16y ago

But if we offer a free alternative with equivalent benefits That's the thing - you don't. Using the Coke analogy, YCombinator gives me a Coke, but asks that I share 6% of it back to them. You want to charge me $200 for the Coke, which I can supposedly make back with endorsements, or recommendations, or 'engagement' somehow, but you're still charging $200. That it CAN be free, doesn't mean that it is. Spelled out more obviously, ignoring travel costs and all incidentals, if I get in to MassChallenge and it doesn't get any traction, I'm out $200. If I make it in to YCombinator and it doesn't get any traction, I'm out nothing. Also, YCombinator doesn't make any money off of me. They only get 6% IF I SUCCEED, which means that they really want to leverage their connections so that I do. You might consider not taking equity as somehow more generous, but it's just a different strategy. I would rather you took equity on the backend than $200 on the frontend, because that assures me that you'll want to help me succeed.

WarPaul 16y ago
What does the 6% on the back end do to your valuation in later rounds? Assuming you do expect to take on more growth capital upon successful completion of YC. Not very much Coke left to enjoy after that...
- bmelton 16y ago
  I think you're misunderstanding valuation -- valuation represents the potential revenue of a company. Who owns how much of it generally doesn't affect a company's valuation though, in the case of YC (or others known to be successful), it almost certainly chips the valuation up, due to the value add. Who holds issuances of common stock isn't generally something that will negatively affect a valuation.
  - WarPaul 16y ago
    Valuation is also based on the prior investment to equity ratio. How much money is invested in X startup for 6% equity? That would certainly effect the pre on any term sheet, no?