3 ms·

> Of course, through the lens of expected value, these numbers look worse as traditionally there has been a high failure rate to startups. "worse" here does a

by senko 4y ago

> Of course, through the lens of expected value, these numbers look worse as traditionally there has been a high failure rate to startups. "worse" here does a lot of heavy lifting here and doesn't begin to convey the magnitude of "worse" Use YC companies as an example. Acceptance rate around 2%, success rate about 10%. This gives you 0.2% success rate for a typical startup applying to YC. If you do succeed, unless you bootstrapped, you're going to get diluted. Let's handwave this to keeping 75% of your company (a generous assumption!). This gives the expected value of $30k, for 2 to 5 years of hard work. Before taxes.

nequo 4y ago
By success, do you mean making it big or staying in business? If the latter, do you think that the 98% who are rejected by YC all go defunct? I don’t know the numbers and I’m curious.
exac 4y ago
The set of companies that are rejected from YC can also succeed or fail.
reducesuffering 4y ago
You're twisting those numbers quite a bit. Anyone can apply to YC, like half are an idea. I'd wager most of the rejected are not following through with 2-5 years of hard work on it. You're also acting like a reject from YC means 0 EV, even when many successful startups have like 3 applications to YC, if they even were accepted at all. That $30k EV number is useless and not in any way the actual EV of 2-5 years hard work on a startup.
akomtu 4y ago
This logic is faulty for one reason: it's not a casino with randomly distributed chances. The number of FANG employees is low compared to the entire population, yet some of the students are almost guaranteed to make it there, because of their apparent smarts and mindset, while others have about zero chances. So it's a lottery, but the tickets aren't sold to everyone. The same is true for startup founders: some of them are obviously going to make it one day, while others don't even need to apply.

by senko 4y ago

nequo 4y ago

By success, do you mean making it big or staying in business? If the latter, do you think that the 98% who are rejected by YC all go defunct? I don’t know the numbers and I’m curious.

exac 4y ago

The set of companies that are rejected from YC can also succeed or fail.

reducesuffering 4y ago

You're twisting those numbers quite a bit. Anyone can apply to YC, like half are an idea. I'd wager most of the rejected are not following through with 2-5 years of hard work on it. You're also acting like a reject from YC means 0 EV, even when many successful startups have like 3 applications to YC, if they even were accepted at all. That $30k EV number is useless and not in any way the actual EV of 2-5 years hard work on a startup.

akomtu 4y ago

This logic is faulty for one reason: it's not a casino with randomly distributed chances. The number of FANG employees is low compared to the entire population, yet some of the students are almost guaranteed to make it there, because of their apparent smarts and mindset, while others have about zero chances. So it's a lottery, but the tickets aren't sold to everyone. The same is true for startup founders: some of them are obviously going to make it one day, while others don't even need to apply.