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Everyone at YC knows exploiting naive founders is more profitable and less risky than doing a startup. The key is to perpetuate a mythical cult around the start

by 7e 3y ago

Everyone at YC knows exploiting naive founders is more profitable and less risky than doing a startup. The key is to perpetuate a mythical cult around the startup and convince huge swaths of kids to give you equity for almost nothing. The chumps are the founders, not the investors.

idiotsecant 3y ago
Effort and result are not synonyms. YC investors take a big risk - a lot of these startups will have well intentioned and hard working founders and they will fail anyway. VCs provide a valid service. They make money (if they are good guessers and are also lucky) and founders make money (if they work hard and smart and are also lucky). Everyone wins.
simonw 3y ago
"The key is to perpetuate a mythical cult around the startup and convince huge swaths of kids to give you equity for almost nothing" I found that amusing seeing as the second most recent video in their series, "Should Your Startup Bootstrap or Raise Venture Capital?", spends most of its time making a strong case for why VC isn't right for the vast majority of founders: https://www.youtube.com/watch?v=D81y-kh11oI https://www.youtube.com/watch?v=D81y-kh11oI
- fakedang 3y ago
  Tbf that video came pretty late (post the ZIRP era). Before that, YC was one of the strongest proponents for raising VC because that's ingrained in their business model. I've heard that YC before would be quite disappointed at founders choosing not to raise money, because that meant a lower upside for them via the SAFE model. Not to mention, most YC exits are usually via acquisitions, and often between YC companies.
  - simonw 3y ago
    Right, YC are a VC firm themselves - so if you don't want to do the VC rocketship thing they're probably not the right match for you.
- svnt 3y ago
  Gatekeeping/exclusivity is part of the play. Strategic self-anticonformity.
  - latency-guy2 3y ago
    I think you've assembled words in an orientation that might make sense to you, but it doesn't to me. Can you expand? How does this relate to the parent comment?
    - svnt 3y ago
      Strategic self-anticonformity is the technical term for reverse psychology. By making raising VC seem specific and exclusive, they make it seem high-value and make people want it more. It is telling people that the object at the top end of the price sheet is not really for them, vs saying “yes, everyone should buy this.” The former increases interest, the latter increases suspicion.
- WalterSear 3y ago
  IMHE as part of multiple YC-backed founding teams, this is a new tone from YC. In the past they have been very condescending of anything that doesn't involve trying to be a unicorn as fast as possible. There's even a video in their catalog deriding 'lifestyle' (ie - non-vc, non-unicorn, non-blitz-scaling) startups. It makes sense given their business model, but I found it distasteful that they were advising young, impressionable entrepreneurs to take on more risk and to move away from their core competencies: greatly reducing the entrepreneurs' own chances of success in order to give YC and their associates another lottery ticket for a billion dollar payoff.
  - simonswords82 3y ago
    As a bootstrapped founder I am biased but given everything I have seen and heard in the last couple of decades I think the tone has shifted from success at any cost to creating sustainable/profitable businesses. It also helps that in many ways creating a startup has been commoditized. Specifically, it's now cheaper and easier to use various online tools to get a new business up and running with little upfront cash/time than ever before. This trend will continue. That's not to say this is true for all startups but it is true for the majority of them. The good old days of being able to exploit starry eyed kids for their ideas in return for taking the majority of their equity is hopefully behind us.
intelVISA 3y ago
Bootstrapping > VC
joshxyz 3y ago
its quite wild how sam altman left and did it again though, these guys are crazy good
coffeemug 3y ago
What would a version of YC that doesn't exploit naive founders look like?
- riehwvfbk 3y ago
  Google (in its heyday)
- password4321 3y ago
  I think that's the sales pitch for https://tinyseed.com/ https://tinyseed.com/
ren_engineer 3y ago
the worst case scenario for being a YC founder is probably a 500K+ job at FAANG or another YC startup if you fail
- molsongolden 3y ago
  This isn’t really true though. Plenty of founders are early career and don’t have the experience or chops to pull that kind of salary. Many founders are not very impressive but what they have is confidence (however blind) in their ability to do the thing.

by 7e 3y ago

idiotsecant 3y ago

Effort and result are not synonyms. YC investors take a big risk - a lot of these startups will have well intentioned and hard working founders and they will fail anyway. VCs provide a valid service. They make money (if they are good guessers and are also lucky) and founders make money (if they work hard and smart and are also lucky). Everyone wins.

simonw 3y ago

"The key is to perpetuate a mythical cult around the startup and convince huge swaths of kids to give you equity for almost nothing" I found that amusing seeing as the second most recent video in their series, "Should Your Startup Bootstrap or Raise Venture Capital?", spends most of its time making a strong case for why VC isn't right for the vast majority of founders: https://www.youtube.com/watch?v=D81y-kh11oI https://www.youtube.com/watch?v=D81y-kh11oI

fakedang 3y ago
Tbf that video came pretty late (post the ZIRP era). Before that, YC was one of the strongest proponents for raising VC because that's ingrained in their business model. I've heard that YC before would be quite disappointed at founders choosing not to raise money, because that meant a lower upside for them via the SAFE model. Not to mention, most YC exits are usually via acquisitions, and often between YC companies.
- simonw 3y ago
  Right, YC are a VC firm themselves - so if you don't want to do the VC rocketship thing they're probably not the right match for you.
svnt 3y ago
Gatekeeping/exclusivity is part of the play. Strategic self-anticonformity.
- latency-guy2 3y ago
  I think you've assembled words in an orientation that might make sense to you, but it doesn't to me. Can you expand? How does this relate to the parent comment?
  - svnt 3y ago
    Strategic self-anticonformity is the technical term for reverse psychology. By making raising VC seem specific and exclusive, they make it seem high-value and make people want it more. It is telling people that the object at the top end of the price sheet is not really for them, vs saying “yes, everyone should buy this.” The former increases interest, the latter increases suspicion.
WalterSear 3y ago
IMHE as part of multiple YC-backed founding teams, this is a new tone from YC. In the past they have been very condescending of anything that doesn't involve trying to be a unicorn as fast as possible. There's even a video in their catalog deriding 'lifestyle' (ie - non-vc, non-unicorn, non-blitz-scaling) startups. It makes sense given their business model, but I found it distasteful that they were advising young, impressionable entrepreneurs to take on more risk and to move away from their core competencies: greatly reducing the entrepreneurs' own chances of success in order to give YC and their associates another lottery ticket for a billion dollar payoff.
- simonswords82 3y ago
  As a bootstrapped founder I am biased but given everything I have seen and heard in the last couple of decades I think the tone has shifted from success at any cost to creating sustainable/profitable businesses. It also helps that in many ways creating a startup has been commoditized. Specifically, it's now cheaper and easier to use various online tools to get a new business up and running with little upfront cash/time than ever before. This trend will continue. That's not to say this is true for all startups but it is true for the majority of them. The good old days of being able to exploit starry eyed kids for their ideas in return for taking the majority of their equity is hopefully behind us.

intelVISA 3y ago

Bootstrapping > VC

joshxyz 3y ago

its quite wild how sam altman left and did it again though, these guys are crazy good

coffeemug 3y ago

What would a version of YC that doesn't exploit naive founders look like?

riehwvfbk 3y ago
Google (in its heyday)
password4321 3y ago
I think that's the sales pitch for https://tinyseed.com/ https://tinyseed.com/

ren_engineer 3y ago

the worst case scenario for being a YC founder is probably a 500K+ job at FAANG or another YC startup if you fail

molsongolden 3y ago
This isn’t really true though. Plenty of founders are early career and don’t have the experience or chops to pull that kind of salary. Many founders are not very impressive but what they have is confidence (however blind) in their ability to do the thing.