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> Do other folks agree with PG that the economy is a rounding error compared to the quality of the founders? When I was in YC (in 2009, a few months after this

> Do other folks agree with PG that the economy is a rounding error compared to the quality of the founders? When I was in YC (in 2009, a few months after this essay was published), I remember PG saying that plenty of VCs, (specifically Marc Andreessen, as an example), pay just as much/more attention to market/macro conditions as they do to founder talent, but added that this is a luxury Andreessen has when all the very best companies want to be funded by Andreessen, so he can pick companies that have both great founders and favourable market conditions. > I think it's his job to believe in the "great man" theory, and to not credit circumstances, luck, etc PG acknowledges often that luck plays a critical role in success. But the point is that weak founders with all the luck in the world won't achieve much, whereas great founders with only a little bit of luck can be hugely successful. He also points out that it's a long journey, much longer than a downturn will last, so better to start now when you're inspired, especially when the downturn can bring favourable conditions (like cheaper talent, rent, services, etc). YC is also quite happy to back founders a second time. Off the top of my head, Stripe, Twitch and Cruise were all founded by 2nd or 3rd-time founders. So YC's approach is to find founders with potential, get them into their network, then support them for as long as they need to find success. > Is there a statistical analysis of YC and PG which shows they choose effectively? Some people have tried to evaluate this quantitively or qualitatively, but most miss the point, or can't evaluate it correctly without knowing YC's financials, which nobody outside YC management and their investors knows. YC's approach isn't to try to "choose" only the good founders. Their approach is to cast a very wide net, to invest in a huge number of companies including some very crazy-looking ones, knowing that only a handful will win big but that will yield big enough returns to more than pay for all the losses. So the question is not whether they chose good founders and rejected bad ones, but whether they backed a big enough and broad enough pool of companies to get a significant number of huge winners - like, say, Dropbox, Airbnb, Twitch, Segment, Cruise, Coinbase, Instacart, Flexport, Brex. Answer: yes, evidently.

jt2190 6y ago
> ...weak founders with all the luck in the world won't achieve much, whereas great founders with only a little bit of luck can be hugely successful. To clarify a bit here, it’s very hard to know in advance that a founder will be “great”, so I suspect that there are some rough proxies that investors use, and what you or I think of as “great” may not be what the marketplace of investors values when “shopping” for “great” founders to back. For example, academic achievement. Is that something that makes a founder great? What about social connections? What about dogged determination? Each investor will have a theory, and one or two might even be right. Probably the only thing that really matters is “the founder actually got the company to a point where it can generate revenue”, and the rest is wait and see. Which leads back to your excellent summation: > So the question is not whether they chose good founders and rejected bad ones, but whether they backed a big enough and broad enough pool of companies to get a significant number of huge winners...
- tomhoward 6y ago
  > What about dogged determination PG said often back then that this is what they think matters most. I was there when he was taking about it in a casual chat with a group of the batch members after one Tuesday night dinner, and he said something along the line of “if only we could do something like coat the floor between the front door and the interview room in a highly slippery liquid, and the people who make it to the room get funded”.
alisonkisk 6y ago
It's absurd to say that only a little bit of luck is necessary.
- DangitBobby 6y ago
  If you are successful, it's gratifying to think that your circumstances are as much about things inside of your control as outside. If you are not, the opposite is a comfort. I find myself to be moderately successful due to a hearty helping of merit with an enormous mountain of luck.
  - bnonhacker 6y ago
    I totally agree with this. In terms of academic achievement, it's more of "where you were" at the time and overall competency, but reality is much more brutal. The luck factor is well-known in financial circles and business circles alike (those two are tied to the hip). This is why the adages "Control what you can" and "Control your destiny" are still hold true today. As arrogant as they sound, at least they emphasize pushing towards making choice in the face of adversity. Accepting luck is an important piece of humility.
- tomhoward 6y ago
  It’s lame conduct to pick a single phrase out of a much longer comment, wrap that phrase in a new sentence to make it mean something entirely different to what was originally written, then deride that as “absurd”. Luck is not objectively definable or measurable, and is highly contextual. Was the pandemic bad luck or good luck for Airbnb? It instantly caused hundreds of millions of dollars of lost bookings, forcing staff layoffs and requiring an emergency $1b loan to keep the company alive. But now it’s reported their bookings are stronger than ever, due to people’s different living/working arrangements in response to the pandemic. Maybe it would look like terrible luck if the company/founders hadn’t been formidable and skilled enough to navigate through the initial shock in March-April, leading to the company collapsing. Thanks to getting through to the point where they now have higher-than-ever bookings, it looks like great luck. Anyway, clearly the point of my sentence about luck was that good luck is necessary but not sufficient; any amount of luck, however you define/measure it, is worthless without strong founders who can take full advantage of it.

jt2190 6y ago

> ...weak founders with all the luck in the world won't achieve much, whereas great founders with only a little bit of luck can be hugely successful. To clarify a bit here, it’s very hard to know in advance that a founder will be “great”, so I suspect that there are some rough proxies that investors use, and what you or I think of as “great” may not be what the marketplace of investors values when “shopping” for “great” founders to back. For example, academic achievement. Is that something that makes a founder great? What about social connections? What about dogged determination? Each investor will have a theory, and one or two might even be right. Probably the only thing that really matters is “the founder actually got the company to a point where it can generate revenue”, and the rest is wait and see. Which leads back to your excellent summation: > So the question is not whether they chose good founders and rejected bad ones, but whether they backed a big enough and broad enough pool of companies to get a significant number of huge winners...

tomhoward 6y ago
> What about dogged determination PG said often back then that this is what they think matters most. I was there when he was taking about it in a casual chat with a group of the batch members after one Tuesday night dinner, and he said something along the line of “if only we could do something like coat the floor between the front door and the interview room in a highly slippery liquid, and the people who make it to the room get funded”.

alisonkisk 6y ago

It's absurd to say that only a little bit of luck is necessary.

DangitBobby 6y ago
If you are successful, it's gratifying to think that your circumstances are as much about things inside of your control as outside. If you are not, the opposite is a comfort. I find myself to be moderately successful due to a hearty helping of merit with an enormous mountain of luck.
- bnonhacker 6y ago
  I totally agree with this. In terms of academic achievement, it's more of "where you were" at the time and overall competency, but reality is much more brutal. The luck factor is well-known in financial circles and business circles alike (those two are tied to the hip). This is why the adages "Control what you can" and "Control your destiny" are still hold true today. As arrogant as they sound, at least they emphasize pushing towards making choice in the face of adversity. Accepting luck is an important piece of humility.
tomhoward 6y ago
It’s lame conduct to pick a single phrase out of a much longer comment, wrap that phrase in a new sentence to make it mean something entirely different to what was originally written, then deride that as “absurd”. Luck is not objectively definable or measurable, and is highly contextual. Was the pandemic bad luck or good luck for Airbnb? It instantly caused hundreds of millions of dollars of lost bookings, forcing staff layoffs and requiring an emergency $1b loan to keep the company alive. But now it’s reported their bookings are stronger than ever, due to people’s different living/working arrangements in response to the pandemic. Maybe it would look like terrible luck if the company/founders hadn’t been formidable and skilled enough to navigate through the initial shock in March-April, leading to the company collapsing. Thanks to getting through to the point where they now have higher-than-ever bookings, it looks like great luck. Anyway, clearly the point of my sentence about luck was that good luck is necessary but not sufficient; any amount of luck, however you define/measure it, is worthless without strong founders who can take full advantage of it.