5 ms·

An individual himself can't predict whether he or she will be successful or not, but someone who's seen many such individuals in their "before" state and in the

An individual himself can't predict whether he or she will be successful or not, but someone who's seen many such individuals in their "before" state and in their "after" state can make more accurate predictions. For example, YC's whole investment model is based on the assumption that it's not just hindsight, and that the YC partners can use the data model that they have, that gets better with each batch, to predict which founders fall into the "success bin", and they choose to invest in those.

ljlolel 15y ago
YC's record is a lot closer to 1% than 100% of getting huge homerun hits. By your logic, this implies that in the best possible circumstances (YC), you're not going to get above a few percent chance a priori of a huge success if you work like crazy. Whereas an equally intelligent person working reasonable hours on the side when appropriate has a decent chance of making a profitable lifestyle business in the millions without the possibility burnout and debt.
- YuriNiyazov 15y ago
  I am not talking about "getting huge" at all, because I don't believe there is enough space in the market for 300+ (number of YC investments so far) huge (Google/Apple/Facebook/Microsoft) companies. I am, however, talking about non-trivial exits, ones that definitely put a founder in the "success" bin. Let's say, 10+ million in 4 years. I don't think it's possible to get to that point "on the side".
  - ljlolel 15y ago
    Don't use generalizations, just do the math. $10 million, minus the VC investment, split each among 2 or 3 founders. That ends up being what, $2-3 million in 4 years? I personally know several people who make more than that off of one iPhone app on the side. Apple's paid out billions to app developers. Again, look at the numbers: what percent of YC investments have exited at $10 million+ in 4 years? Again, much closer to 10% than 100%. This is in a thread where pg implies that the chances of a big success are 2/3 or higher for some people. Empirical evidence proves that top investors are not right anywhere near the probability suggested.
ryanwaggoner 15y ago
Investors are incentivized to not only pick the founders they think have a very high chance of huge success, but to make as many founders as possible think they belong to that group. If they're right, big rewards. If they're wrong, the founders (and LPs) pay the price. More: http://www.paulgraham.com/venturecapital.html http://www.paulgraham.com/venturecapital.html
- jdp23 15y ago
  Great point. And founders who have taken the 90-hour-a-week path are emotionally incentivized to believe it's the only path to success -- because if not, they could have made different tradeoffs.
- pg 15y ago
  The VC firm in business for the fees was mostly a product of the Internet Bubble of the late 90s. There were still a significant number around when I wrote that 6 years ago, but in the last few years (and particularly since 2008) the bad firms have been ruthlessly pruned. No VC whose name you recognize will invest in bad startups to get the management fees.
- YuriNiyazov 15y ago
  I don't think that's any different from most other institutions that "accept" people for challenging endeavors. If you are accepted into medical school, work insane hours, and then fail out, you still have the loans to pay back.

ljlolel 15y ago

YC's record is a lot closer to 1% than 100% of getting huge homerun hits. By your logic, this implies that in the best possible circumstances (YC), you're not going to get above a few percent chance a priori of a huge success if you work like crazy. Whereas an equally intelligent person working reasonable hours on the side when appropriate has a decent chance of making a profitable lifestyle business in the millions without the possibility burnout and debt.

YuriNiyazov 15y ago
I am not talking about "getting huge" at all, because I don't believe there is enough space in the market for 300+ (number of YC investments so far) huge (Google/Apple/Facebook/Microsoft) companies. I am, however, talking about non-trivial exits, ones that definitely put a founder in the "success" bin. Let's say, 10+ million in 4 years. I don't think it's possible to get to that point "on the side".
- ljlolel 15y ago
  Don't use generalizations, just do the math. $10 million, minus the VC investment, split each among 2 or 3 founders. That ends up being what, $2-3 million in 4 years? I personally know several people who make more than that off of one iPhone app on the side. Apple's paid out billions to app developers. Again, look at the numbers: what percent of YC investments have exited at $10 million+ in 4 years? Again, much closer to 10% than 100%. This is in a thread where pg implies that the chances of a big success are 2/3 or higher for some people. Empirical evidence proves that top investors are not right anywhere near the probability suggested.

ryanwaggoner 15y ago

Investors are incentivized to not only pick the founders they think have a very high chance of huge success, but to make as many founders as possible think they belong to that group. If they're right, big rewards. If they're wrong, the founders (and LPs) pay the price. More: http://www.paulgraham.com/venturecapital.html http://www.paulgraham.com/venturecapital.html

jdp23 15y ago
Great point. And founders who have taken the 90-hour-a-week path are emotionally incentivized to believe it's the only path to success -- because if not, they could have made different tradeoffs.
pg 15y ago
The VC firm in business for the fees was mostly a product of the Internet Bubble of the late 90s. There were still a significant number around when I wrote that 6 years ago, but in the last few years (and particularly since 2008) the bad firms have been ruthlessly pruned. No VC whose name you recognize will invest in bad startups to get the management fees.
YuriNiyazov 15y ago
I don't think that's any different from most other institutions that "accept" people for challenging endeavors. If you are accepted into medical school, work insane hours, and then fail out, you still have the loans to pay back.