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I think you're reading my argument as something it's not. I'm not saying that the current model is in any way bucking market forces, quite the opposite. I'm s

I think you're reading my argument as something it's not. I'm not saying that the current model is in any way bucking market forces, quite the opposite. I'm saying that the current model of entrepreneurship seems to be focussed more on a quick ROI/liquidity event rather than innovation or business-building. That in itself is not bad. My complaint, which I think the author is hinting at as well, is that this model of startup is far more "credit swap" than "mom and pop". It is, as she said, a commoditization of entrepreneurship. YC, while invaluable for founders, is also an investment vessel factory, and the economic model it embodies shares much more in common with the kinds of financial products we see from Wall Street than traditional venture capitalism. Yuri Milner's offer of $100k to each YC graduate embodies this. It's a scattergun approach that, while likely profitable, incentivizes flipping over innovating.

garry 15y ago
This sentiment is an insult to the hard work, blood, sweat, and tears that my YC friends and colleagues put in every single day. YC is made up of brilliant, hard working hackers, designers and hustlers who are trying to change the world through building disruptive software. It's never been about flipping. It has _always_ been about making something people want. Once you make something people want (which IS none other than innovation), only then do you have the optionality of selling or doubling down. This argument is utterly confused. In so many words: You can't flip something that isn't actually innovative. Because nobody will want it.
- redthrowaway 15y ago
  Not intended to be an insult, although it's nice of you to go ahead and downvote every comment I made on this thread. Perhaps instead of taking a criticism of the industry as a personal insult (and reacting in kind), you could look at the meat of what I'm saying and address those points? Edit: Sorry, not just every post in this thread, but every post I've made today. Wow. Way to represent YC. Stay classy, man.
- thaumaturgy 15y ago
  I think you're being oversensitive, especially given that redthrowaway was responding to a comment which said, in part: "There is however a difference in aptitude for running an early stage startup and building a business that will pay you $300K per year." ...which, at your level of sensitivity, is extremely insulting to the rather large number of people that own and manage the many small businesses that society relies on.
grandalf 15y ago
Any angel investor or VC firm resembles wall street. As I'll explain, this is a meaningless assertion: - Suppose there is high risk. Any investor, whether it's an angel, VC firm, hedge fund, etc., is going to very likely use a scattergun approach. That's just how the numbers must work when you're looking at high risk investments. An exception means that someone got lucky. - Take a mom and pop business. Suppose it needs capital. The typical approach is to get a bank loan. This is similar to selling shares to a VC but with different terms and a different distribution of risk. Just because something like a farm lends itself to loans and something like a video game for the iPhone lends itself to VC funding doesn't mean that the two businesses are fundamentally different, just that the cash flow and risk result in a slightly different form of cooperation between the individual(s) and the financial firm. - "Traditional venture capitalism" was simply a more risk-averse type of financial firm. They let angels take the big risks and reap the big rewards and settled for bets that looked more like a sure thing (but still riskier than would have made it suitable for other forms of funding). - I don't think you have made the case that any of this incentivizes flipping, or that flipping is "bad". I'd argue that to the extent that firms exist b/c they can be flipped, that is innovation that would not have happened if the financial structures didn't exist to match investment dollars with innovation and entrepreneurship -- startups get acquired because an acquisition offers better value and/or lower risk to the acquiring firm than trying to develop the equivalent thing in-house. If you're stretching this into an analogy about elaborate financial instruments, I think it's quite a stretch. I think that what you're actually seeing is a bit of a credit bubble around startups that resulted from the destruction of many of the risky (but well known) wealth creation instruments that Wall Street had been using. Of course, more investment means another "layer" of startups will exist with another "layer" of risk characteristics. Yes this is similar to wall street, but it's a consequence of the basic laws of economics and nothing else.

garry 15y ago

This sentiment is an insult to the hard work, blood, sweat, and tears that my YC friends and colleagues put in every single day. YC is made up of brilliant, hard working hackers, designers and hustlers who are trying to change the world through building disruptive software. It's never been about flipping. It has _always_ been about making something people want. Once you make something people want (which IS none other than innovation), only then do you have the optionality of selling or doubling down. This argument is utterly confused. In so many words: You can't flip something that isn't actually innovative. Because nobody will want it.

redthrowaway 15y ago
Not intended to be an insult, although it's nice of you to go ahead and downvote every comment I made on this thread. Perhaps instead of taking a criticism of the industry as a personal insult (and reacting in kind), you could look at the meat of what I'm saying and address those points? Edit: Sorry, not just every post in this thread, but every post I've made today. Wow. Way to represent YC. Stay classy, man.
thaumaturgy 15y ago
I think you're being oversensitive, especially given that redthrowaway was responding to a comment which said, in part: "There is however a difference in aptitude for running an early stage startup and building a business that will pay you $300K per year." ...which, at your level of sensitivity, is extremely insulting to the rather large number of people that own and manage the many small businesses that society relies on.

grandalf 15y ago

Any angel investor or VC firm resembles wall street. As I'll explain, this is a meaningless assertion: - Suppose there is high risk. Any investor, whether it's an angel, VC firm, hedge fund, etc., is going to very likely use a scattergun approach. That's just how the numbers must work when you're looking at high risk investments. An exception means that someone got lucky. - Take a mom and pop business. Suppose it needs capital. The typical approach is to get a bank loan. This is similar to selling shares to a VC but with different terms and a different distribution of risk. Just because something like a farm lends itself to loans and something like a video game for the iPhone lends itself to VC funding doesn't mean that the two businesses are fundamentally different, just that the cash flow and risk result in a slightly different form of cooperation between the individual(s) and the financial firm. - "Traditional venture capitalism" was simply a more risk-averse type of financial firm. They let angels take the big risks and reap the big rewards and settled for bets that looked more like a sure thing (but still riskier than would have made it suitable for other forms of funding). - I don't think you have made the case that any of this incentivizes flipping, or that flipping is "bad". I'd argue that to the extent that firms exist b/c they can be flipped, that is innovation that would not have happened if the financial structures didn't exist to match investment dollars with innovation and entrepreneurship -- startups get acquired because an acquisition offers better value and/or lower risk to the acquiring firm than trying to develop the equivalent thing in-house. If you're stretching this into an analogy about elaborate financial instruments, I think it's quite a stretch. I think that what you're actually seeing is a bit of a credit bubble around startups that resulted from the destruction of many of the risky (but well known) wealth creation instruments that Wall Street had been using. Of course, more investment means another "layer" of startups will exist with another "layer" of risk characteristics. Yes this is similar to wall street, but it's a consequence of the basic laws of economics and nothing else.