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As someone who went through YC and met PG while he was still actively running it, I can tell you that at least in our batch he was 100% spot on about who was go

As someone who went through YC and met PG while he was still actively running it, I can tell you that at least in our batch he was 100% spot on about who was going to do well. He had a tendency to spend his free time with the same individuals who ended up doing phenomenally well. It would be easy to be dismissive about this and say something about doubling down on his best investments, etc. But during our batch many of those companies had not yet become the clear cut winners that they are today, and instead only turned into them a year or so down the road. One of the best companies from our batch is Flexport, and PG had been super impressed by Ryan Petersen even before he was officially accepted into YC [1]. It's pretty clear in hindsight that taking note of who PG was hanging out with was a very investable strategy. In fact, one of my batchmates had some money to put into other companies in our batch, and when he asked me for my opinion of who to invest in, that's exactly what I told him. I just did some quick math and would estimate that his ROI today is somewhere in the 1,000x range. I am not the only who figured this out - while this wasn't quite as much of a factor during my batch, nowadays there is an entire cottage industry of YC-only funds who invest only during YC demo days. As you can imagine, the way they differentiate from each other is by how much insider knowledge they are able to accumulate leading up to demo day (I am not implying that the partners ever leak anything, but these funds are very motivated and they look for all sorts of signals). One such signal is to track all other investors around you, and a well-connected angel can single-handedly increase the valuation of a startup (which explains why they manage to get in before demo day and at a discount). I have to say though - while the success rate of these YC-only funds is likely good enough to make them quite profitable, none of them come even close to what I observed with PG's ability to pick the winners (which makes sense, since a lot of other people have tried to build accelerators and none of them come even close to YC). [1] https://youtu.be/syoqjYLDs48?t=1169 https://youtu.be/syoqjYLDs48?t=1169

sillysaurusx 6y ago
It's pretty clear in hindsight that taking note of who PG was hanging out with was a very investable strategy. In fact, one of my batchmates had some money to put into other companies in our batch, and when he asked me for my opinion of who to invest in, that's exactly what I told him. I just did some quick math and would estimate that his ROI today is somewhere in the 1,000x range. That’s hilarious. Cheers! I never thought of a person’s movements as an investment signal, but in hindsight it certainly must’ve been.
- Budabellly 6y ago
  A strategy as old as hedge funds themselves: https://www.bloomberg.com/news/articles/2019-07-02/hedge-funds-are-tracking-private-jets-to-find-the-next-megadeal https://www.bloomberg.com/news/articles/2019-07-02/hedge-fun...
vorhemus 6y ago
That sounds like a self-fulfilling prophecy: If a lot of investors and angels want them succeed, they will succeed. I doubt that it is always hard work and passion that make the difference in whom to invest, I think there are other variables that are less talked about (e.g. sympathy).
- darawk 6y ago
  > That sounds like a self-fulfilling prophecy: If a lot of investors and angels want them succeed, they will succeed. This is nonsense. VCs do not have that kind of power to will something into existence. They can pour money into it, but they can't make a company successful. And if they continually spend more than they make...they don't get to stay VCs for very long.
  - TeMPOraL 6y ago
    But how many of startups are self-fulfilling prophecies? Runaway success? Where by "success" I mean growth and ultimately good return for investors. The way it's achieved is by... perpetually operating at a loss, burning VC dollars from follow-up rounds. It has that nice pyramid scheme flavor to it, where the final investors - or the public - are the ultimate parties left holding the bag. Such a scheme can indeed be willed into existence if enough push is made to set up an initial feedback loop.
    - tomhoward 6y ago
      I think what you're describing is WeWork and Theranos. So, sure, they happen, but they get found out eventually, and in both cases, they were found out before they went public. Looking at the list of "Former Unicorns" on this page [1], I can't see many that fit your description. Sure, there's a handful, inevitably, but it's far from the norm. Most of them have grown into real businesses making real revenues. And sure, some of them may be still making losses but that's a valid strategy where there is still growth potential in the market. Granted, Uber is a big question mark; it remains to be seen whether they will ever turn out to be profitable. But everyone knows what the strategy and the bet is, it's just a matter of waiting to see if the bet pays off. But no serious commentator could dispute that Uber's founders and present executives are talented people, building a company of substance. So, if the claim is that it's commonplace for unskilled/disingenuous founders to build huge, successful-seeming companies just through huge sums of VC money being pumped in, then exiting and fleeing the scene before they get found out - there don't seem to be many real examples of that happening as far as I can tell. [1] https://en.wikipedia.org/wiki/List_of_unicorn_startup_companies https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan...
throwaway03857 6y ago
Or he makes winners rather than picking them by giving them extra attention, recommending them to fellow VCs and being willing to go further on the whole "disruption" (Aka law breaking) front for them.

sillysaurusx 6y ago

It's pretty clear in hindsight that taking note of who PG was hanging out with was a very investable strategy. In fact, one of my batchmates had some money to put into other companies in our batch, and when he asked me for my opinion of who to invest in, that's exactly what I told him. I just did some quick math and would estimate that his ROI today is somewhere in the 1,000x range. That’s hilarious. Cheers! I never thought of a person’s movements as an investment signal, but in hindsight it certainly must’ve been.

Budabellly 6y ago
A strategy as old as hedge funds themselves: https://www.bloomberg.com/news/articles/2019-07-02/hedge-funds-are-tracking-private-jets-to-find-the-next-megadeal https://www.bloomberg.com/news/articles/2019-07-02/hedge-fun...

vorhemus 6y ago

That sounds like a self-fulfilling prophecy: If a lot of investors and angels want them succeed, they will succeed. I doubt that it is always hard work and passion that make the difference in whom to invest, I think there are other variables that are less talked about (e.g. sympathy).

darawk 6y ago
> That sounds like a self-fulfilling prophecy: If a lot of investors and angels want them succeed, they will succeed. This is nonsense. VCs do not have that kind of power to will something into existence. They can pour money into it, but they can't make a company successful. And if they continually spend more than they make...they don't get to stay VCs for very long.
- TeMPOraL 6y ago
  But how many of startups are self-fulfilling prophecies? Runaway success? Where by "success" I mean growth and ultimately good return for investors. The way it's achieved is by... perpetually operating at a loss, burning VC dollars from follow-up rounds. It has that nice pyramid scheme flavor to it, where the final investors - or the public - are the ultimate parties left holding the bag. Such a scheme can indeed be willed into existence if enough push is made to set up an initial feedback loop.
  - tomhoward 6y ago
    I think what you're describing is WeWork and Theranos. So, sure, they happen, but they get found out eventually, and in both cases, they were found out before they went public. Looking at the list of "Former Unicorns" on this page [1], I can't see many that fit your description. Sure, there's a handful, inevitably, but it's far from the norm. Most of them have grown into real businesses making real revenues. And sure, some of them may be still making losses but that's a valid strategy where there is still growth potential in the market. Granted, Uber is a big question mark; it remains to be seen whether they will ever turn out to be profitable. But everyone knows what the strategy and the bet is, it's just a matter of waiting to see if the bet pays off. But no serious commentator could dispute that Uber's founders and present executives are talented people, building a company of substance. So, if the claim is that it's commonplace for unskilled/disingenuous founders to build huge, successful-seeming companies just through huge sums of VC money being pumped in, then exiting and fleeing the scene before they get found out - there don't seem to be many real examples of that happening as far as I can tell. [1] https://en.wikipedia.org/wiki/List_of_unicorn_startup_companies https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan...

throwaway03857 6y ago

Or he makes winners rather than picking them by giving them extra attention, recommending them to fellow VCs and being willing to go further on the whole "disruption" (Aka law breaking) front for them.