4 ms·

PG hacked the VC system so he didn't have to be a dealmaker. YC has standard terms so there's no haggling on price, pro rata, board seats, or anything else. The

PG hacked the VC system so he didn't have to be a dealmaker. YC has standard terms so there's no haggling on price, pro rata, board seats, or anything else. They've automated a lot of what they do via software and their network. And because of the content they put out and the reputation they've built, founders from all over the world come to them and accept much worse terms than any normal VC would offer.

Ericson2314 5y ago
I was peaved until I got to the last phrase. Well written. When the deals go away because the contract is standardized and non-negotiable, it's because the dealmaker got more powerful!
samatman 5y ago
The big question is whether this leads to better overall outcomes. If the company fails, or is aquihired by the skin of its teeth, it doesn't matter which terms the various rounds offered when. YC is perceived as offering a greater chance of success, a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort. As long as that perception is there, founders will keep taking the deal. If that perception is accurate, then they're smart to: and the terms aren't worse than any normal VC would offer, they're better. So there's a lot riding on that being true, which I have no special insight into. Having to guess, I suspect it's less true than it used to be.
- thesausageking 5y ago
  The terms are worse in the sense that they're at a much lower valuation than most VCs would offer, not that it wasn't a good deal for the startup. Almost every YC alumni I've talked to believes it was worth it.
- mcguire 5y ago
  "...a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort..." But that's exactly what a dealmaker does, right?

4 ms·

PG hacked the VC system so he didn't have to be a dealmaker. YC has standard terms so there's no haggling on price, pro rata, board seats, or anything else. The

by thesausageking 5y ago

Ericson2314 5y ago
I was peaved until I got to the last phrase. Well written. When the deals go away because the contract is standardized and non-negotiable, it's because the dealmaker got more powerful!
samatman 5y ago
The big question is whether this leads to better overall outcomes. If the company fails, or is aquihired by the skin of its teeth, it doesn't matter which terms the various rounds offered when. YC is perceived as offering a greater chance of success, a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort. As long as that perception is there, founders will keep taking the deal. If that perception is accurate, then they're smart to: and the terms aren't worse than any normal VC would offer, they're better. So there's a lot riding on that being true, which I have no special insight into. Having to guess, I suspect it's less true than it used to be.
- thesausageking 5y ago
  The terms are worse in the sense that they're at a much lower valuation than most VCs would offer, not that it wasn't a good deal for the startup. Almost every YC alumni I've talked to believes it was worth it.
- mcguire 5y ago
  "...a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort..." But that's exactly what a dealmaker does, right?