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I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place. I think I'll just keep working

I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place. I think I'll just keep working on my side projects. They'll never be billion dollar ideas, and that's ok...

ghufran_syed 2y ago
shouldn’t the relevant metric be whether they increase your chance of success more than the cost (equity) you sell them in return?
- tikkun 2y ago
  Yes, and in comparison to whatever your best alternative would be (i.e. max increase of success odds of giving someone else the same equity and same time commitment).
- immibis 2y ago
  Yes, but that is never the case with venture capital.
  - edanm 2y ago
    You think this is literally never the case? Raising VC money has never helped a company significantly?
    - immibis 2y ago
      They might help a lot, but they also take a lot of equity. Let's say you alone might get the company to a 10 million valuation, if you're good. Well, the VCs will help you get it to 100 million, but they'll take 95%.
      - edanm 2y ago
        Those numbers are very inaccurate. But in general, yes - VCs give something and it costs something, like almost everything else in life and certainly in business. It's your job as an entrepreneur to decide if that money is "worth it". Sometimes it is, sometimes it isn't. In the end, just like borrowing money, it's a tool that you have to decide on as an entrepreneur. It's a big decision, maybe one of the biggest at first, but one of many thousands of decisions you have to make every day.
ahstilde 2y ago
> They'll never be billion dollar ideas, and that's ok... Yeah! That's totally ok. But YC's business model is funding companies which will be that big. Otherwise it can't work.
- pclmulqdq 2y ago
  I'm pretty convinced that YC's alpha mostly comes from the fact that they can shine a turd into something that doesn't lose them much (or makes a modest profit) when it fails. Many other VCs that have survived for that long have a huge IPO under their belt, like Google or Uber. The best in the YC portfolio are probably Stripe, Dropbox, and Coinbase. These are great companies and great exits, but don't support 1000+ $0 failures. They do deliver the goods if your failures have a ~0% return rather than a -100% return. That is a good thing for you if you want to learn how to grow a company, though, because it is a great sign that YC actually works as an education opportunity.
  - mikepurvis 2y ago
    Twitch and Cruise are other household name ones but it seems there are quite a few others that aren’t: https://www.ycombinator.com/topcompanies/exits https://www.ycombinator.com/topcompanies/exits Am surprised not to see Airbnb on the list tbh.
    - voiceblue 2y ago
      It’s somewhat uncouth to put AirBNB or Reddit on the list since they were pretty much funded out of pity (and almost weren’t funded).
      - pclmulqdq 2y ago
        Twitch has also never been able to really stand as a company on its own. It's like YouTube: a money-losing business that drives attention to the parent company.
    - calderwoodra 2y ago
throwaway2037 2y ago
Isn't that the point of the music business? They look at talent, then decide if select the "ramen profitable" ones and (try to) hyperscale their popularity with judicious A&R spending. I think people outside the music industry criminally underrate effect A&R. It is really the difference between nobody and famous. For anyone not in the know about the music industry, "A&R" means: > Artists and repertoire... It refers to the department of a record company that is in charge of talent scouting and the creative development of recording artists.
fuzztester 2y ago
>I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place. Yes, and also like book publishers.
ikekkdcjkfke 2y ago
Network effects though
si_164 2y ago
same here

ghufran_syed 2y ago

shouldn’t the relevant metric be whether they increase your chance of success more than the cost (equity) you sell them in return?

tikkun 2y ago
Yes, and in comparison to whatever your best alternative would be (i.e. max increase of success odds of giving someone else the same equity and same time commitment).
immibis 2y ago
Yes, but that is never the case with venture capital.
- edanm 2y ago
  You think this is literally never the case? Raising VC money has never helped a company significantly?
  - immibis 2y ago
    They might help a lot, but they also take a lot of equity. Let's say you alone might get the company to a 10 million valuation, if you're good. Well, the VCs will help you get it to 100 million, but they'll take 95%.
    - edanm 2y ago
      Those numbers are very inaccurate. But in general, yes - VCs give something and it costs something, like almost everything else in life and certainly in business. It's your job as an entrepreneur to decide if that money is "worth it". Sometimes it is, sometimes it isn't. In the end, just like borrowing money, it's a tool that you have to decide on as an entrepreneur. It's a big decision, maybe one of the biggest at first, but one of many thousands of decisions you have to make every day.

ahstilde 2y ago

> They'll never be billion dollar ideas, and that's ok... Yeah! That's totally ok. But YC's business model is funding companies which will be that big. Otherwise it can't work.

pclmulqdq 2y ago
I'm pretty convinced that YC's alpha mostly comes from the fact that they can shine a turd into something that doesn't lose them much (or makes a modest profit) when it fails. Many other VCs that have survived for that long have a huge IPO under their belt, like Google or Uber. The best in the YC portfolio are probably Stripe, Dropbox, and Coinbase. These are great companies and great exits, but don't support 1000+ $0 failures. They do deliver the goods if your failures have a ~0% return rather than a -100% return. That is a good thing for you if you want to learn how to grow a company, though, because it is a great sign that YC actually works as an education opportunity.
- mikepurvis 2y ago
  Twitch and Cruise are other household name ones but it seems there are quite a few others that aren’t: https://www.ycombinator.com/topcompanies/exits https://www.ycombinator.com/topcompanies/exits Am surprised not to see Airbnb on the list tbh.
  - voiceblue 2y ago
    It’s somewhat uncouth to put AirBNB or Reddit on the list since they were pretty much funded out of pity (and almost weren’t funded).
    - pclmulqdq 2y ago
      Twitch has also never been able to really stand as a company on its own. It's like YouTube: a money-losing business that drives attention to the parent company.
  - calderwoodra 2y ago

throwaway2037 2y ago

Isn't that the point of the music business? They look at talent, then decide if select the "ramen profitable" ones and (try to) hyperscale their popularity with judicious A&R spending. I think people outside the music industry criminally underrate effect A&R. It is really the difference between nobody and famous. For anyone not in the know about the music industry, "A&R" means: > Artists and repertoire... It refers to the department of a record company that is in charge of talent scouting and the creative development of recording artists.

fuzztester 2y ago

>I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place. Yes, and also like book publishers.

ikekkdcjkfke 2y ago

Network effects though

si_164 2y ago

same here