5 ms·

I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a

I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand. There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise decision to give up. While angels are far from being 100% accurate in choosing what to invest in, overall they have to have some sense of what's a good idea in order to sustain themselves. If they're all passing, better off hitting the drawing board.

pg 15y ago
I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.
- spicyj 15y ago
  Why are you more likely to be able to accurately judge a startup than other potential investors?
  - palish 15y ago
    Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.
  - pg 15y ago
    I have so much more data. I've been watching their trajectory for 4 months, while other investors (especially those that chose not to invest) may only have seen them for a few minutes at Demo Day.
    - robg 15y ago
      But without something as quirky as the cereal story, you would have rejected them?
      - pg 15y ago
        No. We liked them as people. The cereal story was just evidence of the qualities we sensed when we met them.
  - bane 15y ago
    Many investors view a company based on how much of a multiplier it can offer them on their investment. Is this a 2x money maker for me or a 10x? If I'm only interested in the 10x home runs then a 2x company may look like a bad idea to me.
- photon_off 15y ago
  > we can tell people candidly whether we think it's the investors who are wrong, or the startup. If YC chooses to invest in an applicant, it probably offers great advice to the start-up. If it chooses not to, would you consider that rejection candid advice that the start-up is wrong?
  - mrkurt 15y ago
    I got extremely candid advice when I was not selected after interviewing for the w2011 group. It was both unexpected and good feedback.
  - pg 15y ago
    Sometimes yes, sometimes no. Sometimes we're just not sure. We try to distinguish in the email we send after the interview.
- thaumaturgy 15y ago
  Yet, you (reportedly) weren't fond of the idea, either ...
  - pg 15y ago
    We weren't. This is a good illustration of why you want to invest based on the founders rather than the idea. The founders we liked immediately. Also, the idea was different initially. Initially they expected the host always to be there.
    - revorad 15y ago
      "Because otherwise who will cook the breakfast???", Brian asked once...
    - prayag 15y ago
      I also remember someone talking about airbnb airlifting breakfasts for the guest. That seemed like a weak link. I am kind of surprised that you didn't buy in the idea. Couchsurfing.org has been very successful
- robg 15y ago
  Yet that candid advice didn't break through to someone like Fred Wilson. I wonder if more visionary ideas are harder for investors to truly recognize with their templates of "experience". Ebay for Spaces is a very clever shorthand, but it seems just abstract enough to question without a concrete instance. Now, of course, it is one of those brilliant with hindsight instances that seem easy but require immense dedication.
- kjksf 15y ago
  You're assuming that you're more likely to be right than other investors. There's an adjective for that kind of thinking, which I won't use because in context of hn it would be downvote suicide. And yes, I know you're THE pg, but other investors, like Fred Wilson, John Doerr or Marc Andreessen are also THE investors. The argument that I would find more persuasive would be that YC can help because it's willing to take more risks on "out there" ideas due to dramatically lower investment in any one startup and higher number of startups it funds.
  - pg 15y ago
    Did you not see this? http://news.ycombinator.com/item?id=2600286 http://news.ycombinator.com/item?id=2600286
nostrademons 15y ago
I think it matters who tells you it's a stupid idea. If it's investors, you can safely ignore them; they aren't looking for what you're selling anyway. If it's potential customers, however, you probably have a problem. In AirBnB's case, they had already validated the market. They had their first 3 customers before they even thought it could be a business. If people are willing to pay you money for your idea, it really doesn't matter what investors think.

pg 15y ago

I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.

spicyj 15y ago
Why are you more likely to be able to accurately judge a startup than other potential investors?
- palish 15y ago
  Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.
- pg 15y ago
  I have so much more data. I've been watching their trajectory for 4 months, while other investors (especially those that chose not to invest) may only have seen them for a few minutes at Demo Day.
  - robg 15y ago
    But without something as quirky as the cereal story, you would have rejected them?
    - pg 15y ago
      No. We liked them as people. The cereal story was just evidence of the qualities we sensed when we met them.
- bane 15y ago
  Many investors view a company based on how much of a multiplier it can offer them on their investment. Is this a 2x money maker for me or a 10x? If I'm only interested in the 10x home runs then a 2x company may look like a bad idea to me.
photon_off 15y ago
> we can tell people candidly whether we think it's the investors who are wrong, or the startup. If YC chooses to invest in an applicant, it probably offers great advice to the start-up. If it chooses not to, would you consider that rejection candid advice that the start-up is wrong?
- mrkurt 15y ago
  I got extremely candid advice when I was not selected after interviewing for the w2011 group. It was both unexpected and good feedback.
- pg 15y ago
  Sometimes yes, sometimes no. Sometimes we're just not sure. We try to distinguish in the email we send after the interview.
thaumaturgy 15y ago
Yet, you (reportedly) weren't fond of the idea, either ...
- pg 15y ago
  We weren't. This is a good illustration of why you want to invest based on the founders rather than the idea. The founders we liked immediately. Also, the idea was different initially. Initially they expected the host always to be there.
  - revorad 15y ago
    "Because otherwise who will cook the breakfast???", Brian asked once...
  - prayag 15y ago
    I also remember someone talking about airbnb airlifting breakfasts for the guest. That seemed like a weak link. I am kind of surprised that you didn't buy in the idea. Couchsurfing.org has been very successful
robg 15y ago
Yet that candid advice didn't break through to someone like Fred Wilson. I wonder if more visionary ideas are harder for investors to truly recognize with their templates of "experience". Ebay for Spaces is a very clever shorthand, but it seems just abstract enough to question without a concrete instance. Now, of course, it is one of those brilliant with hindsight instances that seem easy but require immense dedication.
kjksf 15y ago
You're assuming that you're more likely to be right than other investors. There's an adjective for that kind of thinking, which I won't use because in context of hn it would be downvote suicide. And yes, I know you're THE pg, but other investors, like Fred Wilson, John Doerr or Marc Andreessen are also THE investors. The argument that I would find more persuasive would be that YC can help because it's willing to take more risks on "out there" ideas due to dramatically lower investment in any one startup and higher number of startups it funds.
- pg 15y ago
  Did you not see this? http://news.ycombinator.com/item?id=2600286 http://news.ycombinator.com/item?id=2600286

nostrademons 15y ago

I think it matters who tells you it's a stupid idea. If it's investors, you can safely ignore them; they aren't looking for what you're selling anyway. If it's potential customers, however, you probably have a problem. In AirBnB's case, they had already validated the market. They had their first 3 customers before they even thought it could be a business. If people are willing to pay you money for your idea, it really doesn't matter what investors think.