4 ms·

I always just think about the investors you get access to if you do YC, and the network of people. I think if you are on an exponential growth curve but want th

I always just think about the investors you get access to if you do YC, and the network of people. I think if you are on an exponential growth curve but want the YC experience I think it would be worth discussing that 7%, I believe it's not set in stone and exceptions can be made. Why wouldn't YC want a smaller percentage of something that was clearly already going to be huge... And as for the 7% I'd say you might get that back with more funding for less equity if you're already one of the larger companies by demo day, lots of investors will throw money at you.

rjzzleep 5y ago
I think it's worth looking at the leaked emails from when Google acquired YT. They didn't acquire it because they thought their tech was great or that they had a great product. They acquired it because a) the team was local and b) because sequoia invested in it. https://twitter.com/TechEmails/status/1433837480449613839 https://twitter.com/TechEmails/status/1433837480449613839
- dang 5y ago
  Discussed here: Larry Page: “I think we should look into acquiring YouTube” (2005) - https://news.ycombinator.com/item?id=28424339 https://news.ycombinator.com/item?id=28424339 - Sept 2021 (245 comments) FWIW I think their reasoning must have changed drastically in the year between those initial emails and when they actually acquired Youtube. The emails suggest $10-15M as a price. They ended up paying $1.65B, which shocked everyone at the time (and now seems small). The difference is that in that year, YT grew exponentially. So this is actually an example of a high-growth win; indeed it's one of the classic examples. This sequence of tweets kind of confirms that: https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/jhuber/status/1433866494752935938 https://twitter.com/jhuber/status/1433866494752935938 (the last one is the important one but the sequence is amusing)
- redis_mlc 5y ago
  > They didn't acquire it because they thought their tech was great or that they had a great product. Well, the actual fact is that Youtube was a great product with twice as many features as Google Videos as documented in the San Jose Mercury News diagrams published at the time. And growing faster. So however Google discussed (underestimated) it at the time, Youtube was not only a credible product, but a better one, which was understood by Google, if unstated. IOW, Google might have been arrogant about the difficulty of building a similar product, but that doesn't change reality that they didn't. > They acquired it because a) the team was local and b) because sequoia invested in it. That might be what the initial reasons were. But after Youtube won the eyeballs, Google paid a market rate for network effects and eyeballs to monetize at 1000x their initial valuation estimate. Also, Sequoia's funding meant that Youtube would continue to grow exponentially and stay ahead of Google Videos. So it's true that SV VCs are incestuaous across boards, but their funding also in reality builds out competitors. Similar situations are when Microsoft also chased Hotmail and Facebook as they climbed in value, far greater than MS' initial valuations and offers. Ballmer actually tried to motivate Zuck by saying he could buy a private jet if he took MS' offer. It's one of the most Ballmer things I've ever heard. The second-most is when he said he'd stay on the board for a year but bought a sports team instead - taking his toys and going home.
- anxman 5y ago
  The real reason was that YouTube had become the number two search engine on the Internet. Nobody in Corp dev acquires a company simply because of who invested in it.
dang 5y ago
FWIW I'm pretty sure YC just offers a standard deal and doesn't make exceptions. For one thing it's way too hard to manage negotiations when working with so many startups (they fund close to 800 a year these days, and consider many more). Maybe there are exceptions (I don't know) but they'd be extremely rare.
- andy_ppp 5y ago
  Fair play, I just seem to remember reading it somewhere that it wasn’t set in stone. Maybe that’s either changed or I misunderstood what I read or I’m remembering wrong (tried to Google for it but no luck). Clearly your knowledge of the matter takes precedence and my comments around the 7% should be disregarded.
  - dang 5y ago
    Actually I don't know any more about it than you do :) - other than I vaguely remember a couple cases where founders tried to negotiate the 7% and just ended up coming across as irritating. But probably they didn't have the goods to justify it...if it's big enough, why not? but in that case maybe it wouldn't make sense to apply to YC in the first place.
    - andy_ppp 5y ago
      I mean it depends, maybe you are bad at getting equity and don’t have a feel for what a good deal is. Also I would think having the catharsis of people who have suffered through exponential growth and your company nearly dying many times would be very helpful. If there’s a choice between doing YC and having great examples who have done it all before I’d personally be happy with the 7% just knowing I had people to reach out to with the same war stories.

rjzzleep 5y ago

I think it's worth looking at the leaked emails from when Google acquired YT. They didn't acquire it because they thought their tech was great or that they had a great product. They acquired it because a) the team was local and b) because sequoia invested in it. https://twitter.com/TechEmails/status/1433837480449613839 https://twitter.com/TechEmails/status/1433837480449613839

dang 5y ago
Discussed here: Larry Page: “I think we should look into acquiring YouTube” (2005) - https://news.ycombinator.com/item?id=28424339 https://news.ycombinator.com/item?id=28424339 - Sept 2021 (245 comments) FWIW I think their reasoning must have changed drastically in the year between those initial emails and when they actually acquired Youtube. The emails suggest $10-15M as a price. They ended up paying $1.65B, which shocked everyone at the time (and now seems small). The difference is that in that year, YT grew exponentially. So this is actually an example of a high-growth win; indeed it's one of the classic examples. This sequence of tweets kind of confirms that: https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/jhuber/status/1433866494752935938 https://twitter.com/jhuber/status/1433866494752935938 (the last one is the important one but the sequence is amusing)
redis_mlc 5y ago
> They didn't acquire it because they thought their tech was great or that they had a great product. Well, the actual fact is that Youtube was a great product with twice as many features as Google Videos as documented in the San Jose Mercury News diagrams published at the time. And growing faster. So however Google discussed (underestimated) it at the time, Youtube was not only a credible product, but a better one, which was understood by Google, if unstated. IOW, Google might have been arrogant about the difficulty of building a similar product, but that doesn't change reality that they didn't. > They acquired it because a) the team was local and b) because sequoia invested in it. That might be what the initial reasons were. But after Youtube won the eyeballs, Google paid a market rate for network effects and eyeballs to monetize at 1000x their initial valuation estimate. Also, Sequoia's funding meant that Youtube would continue to grow exponentially and stay ahead of Google Videos. So it's true that SV VCs are incestuaous across boards, but their funding also in reality builds out competitors. Similar situations are when Microsoft also chased Hotmail and Facebook as they climbed in value, far greater than MS' initial valuations and offers. Ballmer actually tried to motivate Zuck by saying he could buy a private jet if he took MS' offer. It's one of the most Ballmer things I've ever heard. The second-most is when he said he'd stay on the board for a year but bought a sports team instead - taking his toys and going home.
anxman 5y ago
The real reason was that YouTube had become the number two search engine on the Internet. Nobody in Corp dev acquires a company simply because of who invested in it.

dang 5y ago

FWIW I'm pretty sure YC just offers a standard deal and doesn't make exceptions. For one thing it's way too hard to manage negotiations when working with so many startups (they fund close to 800 a year these days, and consider many more). Maybe there are exceptions (I don't know) but they'd be extremely rare.

andy_ppp 5y ago
Fair play, I just seem to remember reading it somewhere that it wasn’t set in stone. Maybe that’s either changed or I misunderstood what I read or I’m remembering wrong (tried to Google for it but no luck). Clearly your knowledge of the matter takes precedence and my comments around the 7% should be disregarded.
- dang 5y ago
  Actually I don't know any more about it than you do :) - other than I vaguely remember a couple cases where founders tried to negotiate the 7% and just ended up coming across as irritating. But probably they didn't have the goods to justify it...if it's big enough, why not? but in that case maybe it wouldn't make sense to apply to YC in the first place.
  - andy_ppp 5y ago
    I mean it depends, maybe you are bad at getting equity and don’t have a feel for what a good deal is. Also I would think having the catharsis of people who have suffered through exponential growth and your company nearly dying many times would be very helpful. If there’s a choice between doing YC and having great examples who have done it all before I’d personally be happy with the 7% just knowing I had people to reach out to with the same war stories.