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> YC will proudly tell you that you are more likely to end up with a billion dollar business if you join them. That may be true. What they’re more reluctant to
by a_wild_dandan 3y ago
> YC will proudly tell you that you are more likely to end up with a billion dollar business if you join them. That may be true. What they’re more reluctant to tell you is that only about 50 companies met that expectation out of the 4,000 or so that went through their program. That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot! See the problem now?
No. Those are frankly astonishing odds, and success exists on a spectrum between the extrema of abject failure and a billion-dollar business. Framing outcomes as one of two, mutually exclusive states feels disingenuous. (Also, minor nit: that's not how probability works.)
I'm ignorant of the startup space, so the author's conclusions might be generally accurate. I don't know. But the piece sets off red flags for me, so I'm distrustful of it. Kudos for introducing me to the concept of ergodicity, though!
- Retric 3y agoBeing nominally a billion dollar VC backed company isn’t success until you’ve got a 7 figure exit, it’s just a number someone made up. So sure, you can have a “successful” exist without becoming a unicorn, but that doesn’t mean the odds end up very good or you wouldn’t have been better off financially working for Google.
- mattmaroon 3y agoSurely someone must have the statistic on how many YC companies had an exit/are still running, right? I bet it beats the industry average by a long shot.
- themanmaran 3y agoIt varies by cohort and age of companies. But the 10 year average is: - 58% alive - 8% acquired - 34% dead
- hcks 3y agoPretty sure 7 figures would be a massive failure in that case
- Retric 3y agoFounder’s don’t keep a high percentage of the company through multiple rounds of funding, employee stock options and YC prefers multiple founders. Zuckerberg had 28% of Facebook at IPO but the other 4 founders had far less of a stake. Sub 10% of 1 billion is 7 figures.
- fairity 3y ago> Sub 10% of 1 billion is 7 figures 8 figures, not 7
- deleted 2y ago[deleted]
- Retric 2y agoI meant sub 10% of 28%, which is what the other FB founders got but you’re right that could be low 8 figures even after taxes. Except you also take a pay cut for several of those years so your benefit from a billion dollar IPO over non startup really can be 6 figures if you’re not the CEO.
- Retric 2y ago* can be 7 figures if you’re not the CEO. Though obviously if the unicorn is worth 20B things look vastly better even with a 2% stake.
- gizmo 3y agoAlso consider that out of those 4000 startups many are not unicorns yet. The long term percentage might be closer to 2.5%. And the latest batches have many AI startups which I suspect will have an ever greater unicorn success rate.
- worik 3y ago> And the latest batches have many AI startups which I suspect will have an ever greater unicorn success rate. I am resolutely of the opposite opinion In two decades AI will be incredible business It will be clusterfucks and graveyards in the meantime I am very moved by the dot com comparison One or two huge successes, and bleached bones and "WTF were you thinking" spread thickly
- what 3y ago>AI startups Which are all thin wrappers around OpenAI. None of those will be unicorns.