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This person has no understanding of what a Monopoly is. A high value service realizing it delivers more value than it initially thought, and raising prices...

by voz_ 5y ago

This person has no understanding of what a Monopoly is. A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. A monopoly would be if: 1) You can only effectively start a startup through YC (Not true) 2) YC actively did things to subvert competition (Not true, at all, from what I can see) 3) YC owned a significant majority portion of some market, and used its position to arbitrarily set prices (A la Apple for taking cuts of apps written by people other than them, to be installed on devices you own), or otherwise damage the market's competitive viability in some way. (Clearly not true)

b112 5y ago
They realise what a monopoly is, but also, what a click bait title, and article looks like. Hence the nisdirect re:monopoly
gxs 5y ago
I think at this point we should relent and find a different word for the actual, technical meaning of the word monopoly. It seems like any time there is an article at the top with the word monopoly in it, one of the first few comments is always someone trying to educate the author/other commenters on what a monopoly actually is. If we do this, then we can all be on the same page when someone is intending to say that a service has become so mainstream/successful that it might feel like there are no alternatives.
jorvi 5y ago
> A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. It is not a monopoly, but it is a sign of an unhealthy market. A simple example: say we have company QualityEars. QualityEars sells budgetBoom ($25), performanceBoom ($60), and premiumBoom ($100) speakers. However, their performanceBoom is so well-engineered, that it performs more like an $90 speaker and thus nearly invalidates the premiumBoom line. In a healthy market, this now forces QualityEars’ competitors to create an equally valuable product, and QualtiyEars itself to increase the price-performance ratio of its premiumBoom and perhaps even budgetBoom line. Instead, what I’ve mostly seen happen in the real world (whether it is products or services) is either the price of the performanceBoom and premiumBoom line get raises, or performanceBoom gets discontinued and worsevalueBoom takes its place. This is a sign of not enough competition. Also known as an unhealthy market :)
- ianbutler 5y ago
  Wait what? This arguably can be seen as adding more value for entrepreneurs, while edging out angel investors. It only becomes potentially onerous depending on the terms of the seed or later round, but the 500k means two people could go for a very long time without that second round and definitely without taking 50-100k checks from a couple of angels. If anything these terms are more competitive because the market is very competitive for startup funding and had to become at least seemingly more founder friendly. I recently put together an investor list because I'm building something that may see early stage funds as a target customer and I put together more than 100 early stage firms in about an hour of searching and that barely scratches the surface. You definitely don't need YC to get funding and if you have the right connections it may behoove you not to if you don't like YC's terms. YC is so far from the only game in town. The market is quite healthy.
  - jorvi 5y ago
    I was responding more in a general sense. If a company realizes that whatever it is delivering is worth more than they are currently asking, in a healthy market their competitors would be forced to match that value. In an unhealthy market, the value just gets lowered (either by lowering the value offered or by raising the price), either of which bones customers.
heavyset_go 5y ago
Note that in the US, anti-trust regulators don't use the layman definition of monopoly. The definition they use is an entity with significant and durable market power, such as having the ability to raise prices or exclude competition[2]. [1] https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
- bobthepanda 5y ago
  None of that really contradicts the parent comment. > Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area. Some courts have required much higher percentages. In addition, that leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power.
soheil 5y ago
No one's really arguing that YC is technically a monopoly. That would be pretty ridiculous to assume since YC is not really a traditional business in of itself and is not selling a product to consumers (not that this is the only way for something to be classified as a monopoly). So of course the term monopoly shouldn't be applied literally. The spirit of the post still remains true and I think we'd better off if we started a healthy conversation around it instead of forming straw man arguments.
- ipaddr 5y ago
  YC isn't monopoly for angel investors. They are a high profile investor who invests in batches. Popular and well known. Compare them to coke or McDonald's.. top of their industries but other brands exist offering a similiar product and they are not monopolies
sjtgraham 5y ago
I don't this really matters or adds anything to the conversation. His point is YC wields power and can crowd out early stage investors in an ostensibly competitive market. It would be more useful to focus on that instead of splitting hairs over semantics IMO.
- voz_ 5y ago
  Thanks for saying my comment doesn't matter, and writing it off. Very productive, and inquisitive. Perhaps you do not have much experience here, but semantics matter, A LOT, when one makes accusations. Were the blog framed more generously - for example, "Is YC's influence and impact crowding out other investors?", my response would be generous in kind.
- mrandish 5y ago
  > YC wields power and can crowd out early stage investors YC IS an early stage investor. Early stage investing has been a cutthroat competitive market since before YC existed to become yet another a competitor. YC started from zero, as an unknown, underfunded startup not even in California, against well-entrenched, large incubators like IdeaLab (funded by billionaire Bill Gross) etc. YC began to land deals and grow through innovation and risk-taking like offering better valuations, offering fixed terms that were standard on all deals, and by offering radical transparency. They probably weren't the very first to ever offer any of these but, as far as I know, they were the first to offer ALL of these innovations at once on every deal and to make that knowledge freely available to startups before they even made contact. Today these kinds of terms have become almost common but I've been around long enough to remember that when I first heard of YC's terms in their early days (probably year 2 or 3) it not only sounded radical - it sounded downright crazy. Every one of their innovations was dramatically more attractive and beneficial to startups than the status quo at the time. They single-handedly created the niche they now lead and earned every bit of their success in the wildly free market of early stage startup investing. Technical regulatory definitions aside, the idea that a true monopoly could even exist in startup investing is ridiculous on its face.
rr808 5y ago
There is that stripe/ycombinator mob thing. https://news.ycombinator.com/item?id=30066969 https://news.ycombinator.com/item?id=30066969

by voz_ 5y ago

b112 5y ago

They realise what a monopoly is, but also, what a click bait title, and article looks like. Hence the nisdirect re:monopoly

gxs 5y ago

I think at this point we should relent and find a different word for the actual, technical meaning of the word monopoly. It seems like any time there is an article at the top with the word monopoly in it, one of the first few comments is always someone trying to educate the author/other commenters on what a monopoly actually is. If we do this, then we can all be on the same page when someone is intending to say that a service has become so mainstream/successful that it might feel like there are no alternatives.

jorvi 5y ago

> A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. It is not a monopoly, but it is a sign of an unhealthy market. A simple example: say we have company QualityEars. QualityEars sells budgetBoom ($25), performanceBoom ($60), and premiumBoom ($100) speakers. However, their performanceBoom is so well-engineered, that it performs more like an $90 speaker and thus nearly invalidates the premiumBoom line. In a healthy market, this now forces QualityEars’ competitors to create an equally valuable product, and QualtiyEars itself to increase the price-performance ratio of its premiumBoom and perhaps even budgetBoom line. Instead, what I’ve mostly seen happen in the real world (whether it is products or services) is either the price of the performanceBoom and premiumBoom line get raises, or performanceBoom gets discontinued and worsevalueBoom takes its place. This is a sign of not enough competition. Also known as an unhealthy market :)

ianbutler 5y ago
Wait what? This arguably can be seen as adding more value for entrepreneurs, while edging out angel investors. It only becomes potentially onerous depending on the terms of the seed or later round, but the 500k means two people could go for a very long time without that second round and definitely without taking 50-100k checks from a couple of angels. If anything these terms are more competitive because the market is very competitive for startup funding and had to become at least seemingly more founder friendly. I recently put together an investor list because I'm building something that may see early stage funds as a target customer and I put together more than 100 early stage firms in about an hour of searching and that barely scratches the surface. You definitely don't need YC to get funding and if you have the right connections it may behoove you not to if you don't like YC's terms. YC is so far from the only game in town. The market is quite healthy.
- jorvi 5y ago
  I was responding more in a general sense. If a company realizes that whatever it is delivering is worth more than they are currently asking, in a healthy market their competitors would be forced to match that value. In an unhealthy market, the value just gets lowered (either by lowering the value offered or by raising the price), either of which bones customers.

heavyset_go 5y ago

Note that in the US, anti-trust regulators don't use the layman definition of monopoly. The definition they use is an entity with significant and durable market power, such as having the ability to raise prices or exclude competition[2]. [1] https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

bobthepanda 5y ago
None of that really contradicts the parent comment. > Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area. Some courts have required much higher percentages. In addition, that leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power.

soheil 5y ago

No one's really arguing that YC is technically a monopoly. That would be pretty ridiculous to assume since YC is not really a traditional business in of itself and is not selling a product to consumers (not that this is the only way for something to be classified as a monopoly). So of course the term monopoly shouldn't be applied literally. The spirit of the post still remains true and I think we'd better off if we started a healthy conversation around it instead of forming straw man arguments.

ipaddr 5y ago
YC isn't monopoly for angel investors. They are a high profile investor who invests in batches. Popular and well known. Compare them to coke or McDonald's.. top of their industries but other brands exist offering a similiar product and they are not monopolies

sjtgraham 5y ago

I don't this really matters or adds anything to the conversation. His point is YC wields power and can crowd out early stage investors in an ostensibly competitive market. It would be more useful to focus on that instead of splitting hairs over semantics IMO.

voz_ 5y ago
Thanks for saying my comment doesn't matter, and writing it off. Very productive, and inquisitive. Perhaps you do not have much experience here, but semantics matter, A LOT, when one makes accusations. Were the blog framed more generously - for example, "Is YC's influence and impact crowding out other investors?", my response would be generous in kind.
mrandish 5y ago
> YC wields power and can crowd out early stage investors YC IS an early stage investor. Early stage investing has been a cutthroat competitive market since before YC existed to become yet another a competitor. YC started from zero, as an unknown, underfunded startup not even in California, against well-entrenched, large incubators like IdeaLab (funded by billionaire Bill Gross) etc. YC began to land deals and grow through innovation and risk-taking like offering better valuations, offering fixed terms that were standard on all deals, and by offering radical transparency. They probably weren't the very first to ever offer any of these but, as far as I know, they were the first to offer ALL of these innovations at once on every deal and to make that knowledge freely available to startups before they even made contact. Today these kinds of terms have become almost common but I've been around long enough to remember that when I first heard of YC's terms in their early days (probably year 2 or 3) it not only sounded radical - it sounded downright crazy. Every one of their innovations was dramatically more attractive and beneficial to startups than the status quo at the time. They single-handedly created the niche they now lead and earned every bit of their success in the wildly free market of early stage startup investing. Technical regulatory definitions aside, the idea that a true monopoly could even exist in startup investing is ridiculous on its face.

rr808 5y ago

There is that stripe/ycombinator mob thing. https://news.ycombinator.com/item?id=30066969 https://news.ycombinator.com/item?id=30066969