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I think Paul Graham would respond that after having watched the startup world for a few decades, you start to have serious questions with your bad bet meter, as

I think Paul Graham would respond that after having watched the startup world for a few decades, you start to have serious questions with your bad bet meter, as such a huge percentage of groundbreaking ideas seem like such bad bets beforehand. So when people undertake what seems like a bad bet and they fail, that’s okay. You don’t need to gloat that your bad bet meter was correct this time because most bets fail anyway.

Retric 6y ago
I have seen plenty of bad bets become temporary unicorns, but I can’t think of any that became giant successful aka profitable companies. What in your mind makes that list?
- monoideism 6y ago
  Dropbox, famously. And what's your definition of a "temporary unicorn".
  - scarface74 6y ago
    Even now Dropbox is cash flow negative and it appears that Jobs was right. DropBox is a feature not a product. I can buy the entire Office Suite with a combined 6TB of storage for Dropbox’s 2TB plan. The same price for GSuite. I’ll consider DropBox successful when it is consistently profitable and cash flow positive.
  - Retric 6y ago
    Dropbox was and is an obvious niche that just comes down to execution. “Temporary Unicorn” is a valuation in the billions without profit to back that up. Tesla for example could still fail, but it’s made 100+M in profit for multiple quarters which seems like a safe objective benchmark.
    - eindiran 6y ago
      This is my point exactly: Dropbox isn't a super obvious niche. The top-rated comment from the release on HN: https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224 > I have a few qualms with this app: > For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software. Now that Dropbox is a unicorn (and there are dozens of other competing products, some of them unicorns in their own right), it's easy to pass this off as an obvious idea. But plenty of people at the time thought it was a bad bet.
      - Retric 6y ago
        And that exact poster changed his mind when presented with more information it’s directly below it. You are correct that this presents a very good, easy-to-install piece of functionality for Windows users. The Windows shortcomings that you point out are certainly problems, and I think that your software does a good job of overcoming that. https://news.ycombinator.com/item?id=9479 https://news.ycombinator.com/item?id=9479 As Windows was by far the largest OS at the time the user was acknowledging a very clear market. Personally I described the niche as a source code repository for regular people several years before, but I thought the UI was going to be the issue. Their first demo more or less nailed it.
  - jcranmer 6y ago
    Theranos would be a great example of a "temporary unicorn": it peaked at over a $1 billion before its fraud was discovered.
- eindiran 6y ago
  It's difficult to say in hindsight, because most "good ideas" seem obvious after the fact. Eg Twitch seems like such an obvious idea now (but I don't think my bad bet meter would have given Twitch a good score in 2008 - why would people watch other people play games instead of, you know, playing the game themselves?). In all honesty, I don't think I would have predicted the meteoric success of a search engine or social media. Who wants an app that just deletes pictures from your phone? Why would I trust a stranger enough to get into their car? The Wright brothers sound a bit wonky in the head, trying to get something that heavy to fly. Etc.
  - Retric 6y ago
    Odd, I thought Twitch seemed like a great idea at the time. Starcraft already had multiple successful TV shows in South Korea. Which made it clear there was a market for people watching others play video games. As a teen I had multiple times had a room full of other kids watching me play video games so it wasn’t just a question of competitive sports. Finally, the focus was different many people had been making money for years entertaining over webcams, it’s ripe for stalker behavior. I will agree with you on Uber though for economic and regulatory reasons. Taxi medallions where created because of the external costs of operating a Taxi so just ignoring that system seems unlikely to work. Similarly without subsides drivers and passengers are going to be willing to jump ship. That said, carpool lanes and Taxi where a thing which covers the stranger angle. Economically CitySprinter (much earlier startup) and Uber had the same basic issue in my mind, the overhead of operating internationally needs some significant economies of scale to work out.
  - jcranmer 6y ago
    > I don't think my bad bet meter would have given Twitch a good score in 2008 - why would people watch other people play games instead of, you know, playing the game themselves? Let's Plays were already an established format before Twitch's predecessor started. Indeed, Twitch was spun off its predecessor site precisely because the gaming section was overwhelmingly popular. > Why would I trust a stranger enough to get into their car? It wasn't until I went to college that I discovered that slugging wasn't a common thing. What's slugging? It's the commuting practice of a driver rolling up to a line of people, saying "I'm going to the Pentagon, I've got three seats; who wants to come with?" and three people peel off the line into the car. > The Wright brothers sound a bit wonky in the head, trying to get something that heavy to fly. The Wright brothers were the first to succeed of a large group of people attempting to build working airplanes. It was a technological race going on, and the main difficulty was actually in getting a compact engine working that could provide sufficient forward speed to produce lift. Glider technology was already decently accomplished by the time of the first powered flight, which is the milestone the Wright brothers achieved.
- shalmanese 6y ago
  I actually made a "bad bet" with a friend about Instagram. Specifically, I bet him a steak dinner that Instagram would not have more users 12 months from now than it did today, this was right around the iPhone 4 times when Instagram was like, 100K users. I believed at the time that filters was a flash in the pan gimmick that was making Instagram the fad of the day but they didn't have any deep engagement loops that would drive long term return usage after people got sick of seeing someone else's sunset with moire on it for the 200th time. I wasn't exactly alone at the time about this either.
  - Retric 6y ago
    For investors any startup close to 50:50 is a great investment. At the seed stage anything above ~5% is actually very good odds. That increases in latter funding rounds, but that’s the benchmark I am describing as a bad bet.
jariel 6y ago
His bad bets are risk mitigated, $100k per bet. $1B is a gigantic sum to spend on a totally new things. It breaks all the rules of startups which is start small, MVP, pivot to find the fit - and then scale. The barriers to entry for them are not like Tesla where you have to set up a plant.
- eindiran 6y ago
  I totally agree: in my view, Quibi's failure was in the cards from the start. Nothing about their model made sense to me personally, and their failure to pivot or iterate seems like a huge business mistake. I'm just making the point that PG and many other SV founder/VC types don't feel the need to take another swing at Quibi on Twitter because most companies (good ideas or bad) fail anyway. And if they had succeeded, by 2027 everyone would have collectively re-written history to think that Quibi was a super-obvious idea from the beginning.
  - raywu 6y ago
    I basically upvoted every one of your comment on this thread.

Retric 6y ago

I have seen plenty of bad bets become temporary unicorns, but I can’t think of any that became giant successful aka profitable companies. What in your mind makes that list?

monoideism 6y ago
Dropbox, famously. And what's your definition of a "temporary unicorn".
- scarface74 6y ago
  Even now Dropbox is cash flow negative and it appears that Jobs was right. DropBox is a feature not a product. I can buy the entire Office Suite with a combined 6TB of storage for Dropbox’s 2TB plan. The same price for GSuite. I’ll consider DropBox successful when it is consistently profitable and cash flow positive.
- Retric 6y ago
  Dropbox was and is an obvious niche that just comes down to execution. “Temporary Unicorn” is a valuation in the billions without profit to back that up. Tesla for example could still fail, but it’s made 100+M in profit for multiple quarters which seems like a safe objective benchmark.
  - eindiran 6y ago
    This is my point exactly: Dropbox isn't a super obvious niche. The top-rated comment from the release on HN: https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224 > I have a few qualms with this app: > For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software. Now that Dropbox is a unicorn (and there are dozens of other competing products, some of them unicorns in their own right), it's easy to pass this off as an obvious idea. But plenty of people at the time thought it was a bad bet.
    - Retric 6y ago
      And that exact poster changed his mind when presented with more information it’s directly below it. You are correct that this presents a very good, easy-to-install piece of functionality for Windows users. The Windows shortcomings that you point out are certainly problems, and I think that your software does a good job of overcoming that. https://news.ycombinator.com/item?id=9479 https://news.ycombinator.com/item?id=9479 As Windows was by far the largest OS at the time the user was acknowledging a very clear market. Personally I described the niche as a source code repository for regular people several years before, but I thought the UI was going to be the issue. Their first demo more or less nailed it.
- jcranmer 6y ago
  Theranos would be a great example of a "temporary unicorn": it peaked at over a $1 billion before its fraud was discovered.
eindiran 6y ago
It's difficult to say in hindsight, because most "good ideas" seem obvious after the fact. Eg Twitch seems like such an obvious idea now (but I don't think my bad bet meter would have given Twitch a good score in 2008 - why would people watch other people play games instead of, you know, playing the game themselves?). In all honesty, I don't think I would have predicted the meteoric success of a search engine or social media. Who wants an app that just deletes pictures from your phone? Why would I trust a stranger enough to get into their car? The Wright brothers sound a bit wonky in the head, trying to get something that heavy to fly. Etc.
- Retric 6y ago
  Odd, I thought Twitch seemed like a great idea at the time. Starcraft already had multiple successful TV shows in South Korea. Which made it clear there was a market for people watching others play video games. As a teen I had multiple times had a room full of other kids watching me play video games so it wasn’t just a question of competitive sports. Finally, the focus was different many people had been making money for years entertaining over webcams, it’s ripe for stalker behavior. I will agree with you on Uber though for economic and regulatory reasons. Taxi medallions where created because of the external costs of operating a Taxi so just ignoring that system seems unlikely to work. Similarly without subsides drivers and passengers are going to be willing to jump ship. That said, carpool lanes and Taxi where a thing which covers the stranger angle. Economically CitySprinter (much earlier startup) and Uber had the same basic issue in my mind, the overhead of operating internationally needs some significant economies of scale to work out.
- jcranmer 6y ago
  > I don't think my bad bet meter would have given Twitch a good score in 2008 - why would people watch other people play games instead of, you know, playing the game themselves? Let's Plays were already an established format before Twitch's predecessor started. Indeed, Twitch was spun off its predecessor site precisely because the gaming section was overwhelmingly popular. > Why would I trust a stranger enough to get into their car? It wasn't until I went to college that I discovered that slugging wasn't a common thing. What's slugging? It's the commuting practice of a driver rolling up to a line of people, saying "I'm going to the Pentagon, I've got three seats; who wants to come with?" and three people peel off the line into the car. > The Wright brothers sound a bit wonky in the head, trying to get something that heavy to fly. The Wright brothers were the first to succeed of a large group of people attempting to build working airplanes. It was a technological race going on, and the main difficulty was actually in getting a compact engine working that could provide sufficient forward speed to produce lift. Glider technology was already decently accomplished by the time of the first powered flight, which is the milestone the Wright brothers achieved.
shalmanese 6y ago
I actually made a "bad bet" with a friend about Instagram. Specifically, I bet him a steak dinner that Instagram would not have more users 12 months from now than it did today, this was right around the iPhone 4 times when Instagram was like, 100K users. I believed at the time that filters was a flash in the pan gimmick that was making Instagram the fad of the day but they didn't have any deep engagement loops that would drive long term return usage after people got sick of seeing someone else's sunset with moire on it for the 200th time. I wasn't exactly alone at the time about this either.
- Retric 6y ago
  For investors any startup close to 50:50 is a great investment. At the seed stage anything above ~5% is actually very good odds. That increases in latter funding rounds, but that’s the benchmark I am describing as a bad bet.

jariel 6y ago

His bad bets are risk mitigated, $100k per bet. $1B is a gigantic sum to spend on a totally new things. It breaks all the rules of startups which is start small, MVP, pivot to find the fit - and then scale. The barriers to entry for them are not like Tesla where you have to set up a plant.

eindiran 6y ago
I totally agree: in my view, Quibi's failure was in the cards from the start. Nothing about their model made sense to me personally, and their failure to pivot or iterate seems like a huge business mistake. I'm just making the point that PG and many other SV founder/VC types don't feel the need to take another swing at Quibi on Twitter because most companies (good ideas or bad) fail anyway. And if they had succeeded, by 2027 everyone would have collectively re-written history to think that Quibi was a super-obvious idea from the beginning.
- raywu 6y ago
  I basically upvoted every one of your comment on this thread.