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On $600B of Y Combinator startup success
- 21723 4y agoIt's astonishing how much money can be made while providing absolutely nothing of value to society.
- georgehill 4y ago> ...absolutely nothing of value to society. Are you serious? I am interested to hear your perspective.
- 21723 4y agoMost venture-funded startups solve silly non-problems or in fact cause serious harm to society, but make billions of dollars in doing it. Meanwhile, we haven't been to the moon since the '70s, life expectancy in the US is declining, and a substantial percentage of our energy comes from coal. Oh, but if you want to bet your life savings on (entries in a distributed ledger that say you own) digital pictures of dog penises, I imagine there's a way to do it. Technology didn't fix the evil of neoliberalism. It didn't clean anything up. It accelerated the corrosion.
- sillysaurusx 4y agoHow many of your arguments would apply to a casino? Do you feel that the world shouldn’t be allowed to have casinos?
- 21723 4y agoCasinos are regulated. Casinos don't dominate the economy. Casinos haven't wasted the bulk of a generation's top talent to enrich a small number of pederasts in a tiny geographic area. My view of "morals" laws is that harm reduction should be the policy. Do I like gambling or drug abuse? Of course not. Do I think they should be illegal? Probably not, because empirical evidence shows that harm is better reduced by making these things legal and then regulating them. Of course, if I found that casinos were having huge negative externalities, then my opinion would change.
- 1270018080 4y agoSeems like every public YC company has fallen 50%+ within the last 12 months. I'm sure the private ones are even worse off. I'm hoping the definition of success changes. I'd like to see "rational valuations", "cash flow positive", or "a sustainable business model" as metrics in the future.
- instance 4y agoI wouldn't say that's a YC-specific issue. Look at Nasdaq, this is a general issue with tech stocks right now, just this immense selling all across the board.
- adamsmith143 4y agoThis is pretty much the case for the entire market so I'm not sure it says anything in particular about YC companies.
- somethoughts 4y agoYes it's probably going to round trip back to $300B given AirBNB and DoorDash have taken their hits as of late. That said - I do think since the lock-up periods have probably expired on the big ones - the pre-IPO investors like YC/founders/VC probably made it out just fine already. It's really a message to those of us retail investors buying the IPO or post IPO shares of YC companies that need to be aware of the track record w.r.t. an investment. Most of the gains have been extracted already and future post IPO growth has already been priced in. It also does suggests that YC was perhaps a beneficiary of easy monetary conditions that lifted valuation.
- deleted 4y ago[deleted]
- whiplash451 4y agoWhy would this be specific to YC IPOs vs other IPOs?
- somethoughts 4y ago
- ShivShankaran 4y ago> data-driven approach to our investments This is as absurd as saying "data-driven approach for finding out successful humans". I am kind of aggravated to see drivel like this from VC's. This is similar to algorithm trading on stock market and not funding deserving startups. This 'data-drive' garbage is how you end up with more grocery delivery, food delivery and pet walking startups.
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- ksajadi 4y agoAbsolutely! Looking at the success in hindsight is not data driven. Just because the most of the past YC unicorns have been in industry X, doesn't mean the next ones are going to be like that. This is even more pronounced when it comes to the year of the batch, which is already past. Unless he wants to suggest companies in batches of the years with even numbers achieve higher valuations.
- sam0x17 4y agoDon't forget about hover-board-renting!! But yes, these days I think "data-driven" is really just a convoluted way of saying "we approximate the informed decisions of others without specifically understanding what we're doing". This is ML in a nut-shell after all. Is it possible to use ML and data science to find insights and draw conclusions that you then base your activities off of? Sure, but most are just looking for a magic black box that makes decisions for them specifically because they don't want to go to the trouble of understanding X. Once you abstract things away to that extent, you're inevitably training your algorithms to do what others do in an informed way, because where else would the training data come from?
- exolymph 4y ago> data-driven approach for finding out successful humans not absurd at all, simply do IQ tests
- ShivShankaran 4y ago
- jomjomv 4y agoThose pie charts should either a) be sorted by size---not by name :eyeroll: or b) be tables.
- boringg 4y agoFor real those are visualization fails.
- data-ottawa 4y agoTop countries by Founding Year should have been a series of histograms, or a swarm plot, or just a horizontal line per industry.
- yawnxyz 4y agomaybe Lagos, Nigeria DOES have the most unicorns...!
- dmitriid 4y agoHow come most "successful" Y Combinator startups lose hundreds of millions of dollars per year, every year. Well, they suffer no consequences, and get more money to lose, so that's success, I guess.
- kevingadd 4y agoSometimes losing tons of money is an intentional decision, so if the board/investors are OK with it, it's not a failure. Certainly not the best way to run a company though...
- droopyEyelids 4y agoA "dumping" period where your business gains marketshare and undercuts competitors to drive them under is an essential part of establishing monopoly power.
- pc86 4y agoAlso strangely enough it's illegal if you're already a successful company and try to do it in a new vertical, but completely fine if you're a couple unknowns with a few hundred million of venture capital.
- 21723 4y agoNinety-nine percent of private equity profits come from taking strategies that are illegal with regulated, public companies and applying them to unregulated assets. And venture capital is a subset of private equity. Almost every conversation VCs have amongst themselves would be considered market manipulation if it pertained to an exchange-traded company, and of course the fact that it's all insider trading goes without saying. So no one should be surprised.
- pc86 4y agoThis is one of those things that sounds right, and I'm inclined to believe, but I've never read any in-depth discussion of it so I'm hesitant as it's sort of confirming my own bias without a ton of concrete evidence.
- gsibble 4y agoPersonally, I want to know how much Y Combinator companies have lost in Market Cap in the latest route. Many are trading below their IPO prices and have lost a huge amount of value.
- jrlocke 4y agoYou're looking for rout, not route :)
- gsibble 4y agoWhoops, my bad!
- skeeter2020 4y agoThough a bad one can lead to the other!
- mensetmanusman 4y agoAt a long enough time scale everything is below value because our star collapses.
- garbagetime 4y agoProve it
- gmmeyer 4y agoHate to be pedantic but our star won't collapse it's not large enough for that, it will simply puff out and die leaving behind a very hot core called a White Dwarf
- ProAm 4y agoYou're underestimating humanity's future potential to add more gas to our star!
- 4y ago
- jamesmcintyre 4y agoI wonder if it'd be an overall boon for Rebel Fund to open up their data sets? Pros: - The HN/YC community would almost certainly contribute new models with new types of signal. - It's been proven many times that we mere mortals often unknowingly either bake-in our own biases into models or act on model output unaware that the models arrived at what could be undesirable, unintentional bias. Having more eyes on the data & methodology could not only prevent unintended biases but reveal signals that turn out to be much more insightful. - If these signals point to real, underlying fundamentals (which they likely do) perhaps YC startups could benefit by learning from them or using them as guideposts. Cons: - Obviously Rebel Fund may risk giving away their competitive advantage. - YC startups and applicants may over-optimize for these signals, distracting them from their unique challenges and overall end-user value generation. On one hand it seems obvious for Rebel Fund to protect their IP- on the other hand what if more value could be generated for YC, YC startups and Rebel Fund by finding a way to introduce a cooperative positive feedback loop? Any loss of their slice could be outweighed by growing the pie. This is likely an oversimplification and naive to the many factors being weighed but it's an interesting space for thought! (edited for formatting)
- rkk3 4y ago> YC recently published an updated Top Companies list including 271 companies with a combined official valuation of over $600B (we now estimate it closer to ~$900B). Much can change in a year! 900B! Is this time travel or cognitive dissonance? #3-5 on the list are being valued significantly above 50B and closer to 100B Meanwhile... #3, Instacart now 24B (private valuation) #4, Doordash now 20B #5, Coinbase now 12B
- hmate9 4y agoMy main takeaway from this was how much B2B SaaS companies dominate their unicorn distribution.
- drumhead 4y agoHow much profit are they generating and how much free cashflow?
- golemiprague 4y ago