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Please don’t start comments in that patronizing way. This field is highly counterintuitive. It’s easy to feel smart by parroting the obvious-seeming positions w

Please don’t start comments in that patronizing way. This field is highly counterintuitive. It’s easy to feel smart by parroting the obvious-seeming positions whilst being utterly wrong. To your point: when YC interviews companies, they are mostly very early stage and pre-revenue. What YC cares about is how much money they could make if everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. The current financial picture has minimal bearing on that. Obviously, to the extent that it does have a bearing, YC is smart/experienced enough to consider that. But again, you can glean this from a conversation better than an accounting document.

darksaints 5y ago
Even if you are an early stage company, you've still got to have something resembling the concept of a balance sheet, even if it's an excel spreadsheet with a list of two computers, a bank account, and an AWS bill that hasn't been paid yet. Maybe he's right that he personally has never read a balance sheet, but for literally any company that has already formed before the investment, they would be extremely foolish to overlook it. I've personally seen A-rounds fall through because of balance sheets...turns out that when you promise hundreds of thousands of dollars in future services in exchange for a little bit of present cash flow, it can drastically affect your balance sheet and prospects for future investment.
- tomhoward 5y ago
  I feel like this is something that’s really important to you for some reason, and as such you’re getting more wound up about it than necessary. Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment. The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, whereas one with incomplete bookkeeping but an incredible product and market opportunity is much more likely to be a good investment.
  - darksaints 5y ago
    If that truly is the point he's trying to make, then he needs to say that. The message he actually conveyed is "these things aren't important". And while I'd agree with him on the business plan, telling prospective startup founders that they shouldn't ever worry about the balance sheet is pure negligence and he should be called out for it. I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.
    - tomhoward 5y ago
      “telling prospective startup founders that they shouldn't ever worry about the balance sheet” He said nothing of the sort.
      - darksaints 5y ago
        He just told them that he isn't ever gonna look at it. Not sure how you could interpret that in any other way.
        tomhoward 5y ago
        It could be interpreted in several ways, and you're choosing the worst possible way to argue against. And you're totally overlooking the fact that his career success since the very start of YC has hinged entirely on giving good advice to startups and focusing on the right things. You might think that after 17 years and countless successful companies, we might just think twice about presuming ignorance or malice in what he's saying. The point of this tweet is just that balance sheets don't determine outcomes for early stage startups; good products and excited users do. Balance sheets matter later. Many of the teams PG invested in were not even incorporated when he invested in them.
        biorach 5y ago
        He said _he_ is not going to look at it. That's all. Tax authorities, YC's due diligence team and others will want to look at it. Anyone competent enough to start a company will know this. Interpreting this as "pg says balance sheets don't matter at all to anyone" is.... weird. Repeatedly pushing this point is weirder. Maybe take a break from the internet for an hour or two
ant6n 5y ago
> What YC cares about is how much money they could make is everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. Isn't that what a business plan is? In some sense, it's a description of what your cash flow looks like in a couple of years.
- tomhoward 5y ago
  By "business plan", he means a multi-page (usually at least 10 pages but often many many more) document with detailed predictions of what the company will do and how they will do it over the long term. That's what he's saying he doesn't ever read. What he does read (or did, when he was still working), is the YC application form response, which is designed to glean the important information in a very succinct format. If he likes what he reads, then he'd have a 5-10 minute conversation with the founders, and decide whether or not to invest based on that. So, yes he wants to know what the founders' general plans are. That's very different from reading or recommending lengthy business plan documents.

darksaints 5y ago

Even if you are an early stage company, you've still got to have something resembling the concept of a balance sheet, even if it's an excel spreadsheet with a list of two computers, a bank account, and an AWS bill that hasn't been paid yet. Maybe he's right that he personally has never read a balance sheet, but for literally any company that has already formed before the investment, they would be extremely foolish to overlook it. I've personally seen A-rounds fall through because of balance sheets...turns out that when you promise hundreds of thousands of dollars in future services in exchange for a little bit of present cash flow, it can drastically affect your balance sheet and prospects for future investment.

tomhoward 5y ago
I feel like this is something that’s really important to you for some reason, and as such you’re getting more wound up about it than necessary. Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment. The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, whereas one with incomplete bookkeeping but an incredible product and market opportunity is much more likely to be a good investment.
- darksaints 5y ago
  If that truly is the point he's trying to make, then he needs to say that. The message he actually conveyed is "these things aren't important". And while I'd agree with him on the business plan, telling prospective startup founders that they shouldn't ever worry about the balance sheet is pure negligence and he should be called out for it. I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.
  - tomhoward 5y ago
    “telling prospective startup founders that they shouldn't ever worry about the balance sheet” He said nothing of the sort.
    - darksaints 5y ago
      He just told them that he isn't ever gonna look at it. Not sure how you could interpret that in any other way.
      - tomhoward 5y ago
        It could be interpreted in several ways, and you're choosing the worst possible way to argue against. And you're totally overlooking the fact that his career success since the very start of YC has hinged entirely on giving good advice to startups and focusing on the right things. You might think that after 17 years and countless successful companies, we might just think twice about presuming ignorance or malice in what he's saying. The point of this tweet is just that balance sheets don't determine outcomes for early stage startups; good products and excited users do. Balance sheets matter later. Many of the teams PG invested in were not even incorporated when he invested in them.
      - biorach 5y ago
        He said _he_ is not going to look at it. That's all. Tax authorities, YC's due diligence team and others will want to look at it. Anyone competent enough to start a company will know this. Interpreting this as "pg says balance sheets don't matter at all to anyone" is.... weird. Repeatedly pushing this point is weirder. Maybe take a break from the internet for an hour or two

ant6n 5y ago

> What YC cares about is how much money they could make is everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. Isn't that what a business plan is? In some sense, it's a description of what your cash flow looks like in a couple of years.

tomhoward 5y ago
By "business plan", he means a multi-page (usually at least 10 pages but often many many more) document with detailed predictions of what the company will do and how they will do it over the long term. That's what he's saying he doesn't ever read. What he does read (or did, when he was still working), is the YC application form response, which is designed to glean the important information in a very succinct format. If he likes what he reads, then he'd have a 5-10 minute conversation with the founders, and decide whether or not to invest based on that. So, yes he wants to know what the founders' general plans are. That's very different from reading or recommending lengthy business plan documents.