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At that scale, you simply aren't betting on world-changers. You're betting on flippers. Flippers are your bread and butter That's false. Effectively all our re
by pg 15y ago
At that scale, you simply aren't betting on world-changers. You're betting on flippers. Flippers are your bread and butter
That's false. Effectively all our returns come from the big successes. HR acquisition valuations are rounding error by comparison. Which is why for example when I recently estimated the total value of all the companies we'd funded, I ignored the bottom 90%.
- redthrowaway 15y agoAt a 6% stake, even a $15MM acquisition leaves you with $900k, or enough money to fund 50 new startups (almost a full YC round). Are you saying these acquisitions have little to no impact on your bottom line?
- pg 15y agoCompanies won't pay 15m for HR acquisitions. Try 3-5. But yes, statistically, even 15m exits don't affect our returns much. (Your hypothetical case is also off, because you forget dilution and operating expenses. A 15m acquisition would fund less than a third of a batch.)
- fijiaaron 15y agoPeople also need to realize that Y Combinator is really just a monetization of Paul Grahams blog that he has worked very hard at for over a decade. There haven't been any serious companies (or acquisitions) created through YC as yet. What's the most successful YC company? reddit/hackernews -- which is either an extension of Paul's blog or a digg/slashdot clone depending on how you look at it, and either way, a content delivery website. What Y Combinator has been successful at is attracting money to Y Combinator -- in other words, banking on Paul's reputation established through his long-running blog.