5 ms·

I think very relevant is this broader analysis: https://news.ycombinator.com/item?id=41562321 https://news.ycombinator.com/item?id=41562321 YC isn’t to blame

I think very relevant is this broader analysis: https://news.ycombinator.com/item?id=41562321 https://news.ycombinator.com/item?id=41562321 YC isn’t to blame here. It’s a microcosm of the incentives that have been set up. Unfortunately most of the game-changing tech isn’t going to be low capex moving forward. We are moving past the “Airbnb for dogs” era and into the “build a better quantum computer” era.

godelski 2y ago
> China leads or is on par with global leaders in commercial nuclear power and electric vehicles and batteries. It lags behind for now in other key sectors, including robotics, biopharmaceuticals, chemicals, and AI. But it is making rapid progress. I'm not sure why this is relevant. They're still behind in the primary sectors that Y-Combinator invests in: software. Certainly China is catching up and it would be naive to sleep on them, but it is magnitudes easier to catch up than it is to lead (e.g. it is magnitudes easier to learn calculus than to invent it). It is hard to make serious predictions without understanding how to lead in certain niches and a broad overview of the economy will not tell us too much about specific sectors. There's plenty of niches that Europe leads the US (and China) in too. But the conversation is all pretty complicated. And success in one sector or niche does not seem to be a strong predictor of innovation in others. Similarly success in catching up does not seem to be a strong predictor of ability to lead. This is all related to the Middle Income trap and China has probably come out the other side but it's not clear yet and this is all very fuzzy. FWIW, I want to see more competition on the global scale. Everyone benefits if there is healthy competition. Though this can also lead to war if things get too competitive. But if our main method of "war" is "making shit better and cheaper so everyone buys from us" then bring it on! (Maybe we can get a "war" where countries flaunt their impressiveness by bringing about post scarcity. I'm certain that that country and leader will be remembered all throughout history as one who set forth an entirely new paradigm of human civilization. AND this is /reasonably/ feasible, though no easy task)
- nateglims 2y ago
  How does that kind of competition settle disputes that lead to wars?
  - godelski 2y ago
    I think there's some miscommunication as I'm not specifying what kind of competition leads to physical wars other than a generic "unhealthy". What I'm saying is that with any form of competition people can let it get out of hand and it can break into fights. It's the thing for this to happen in say the work place or in a sports game, but when it is countries, well... it's much worse than a few bruises or broken bones... The bigger the countries the bigger the first... Or maybe you're asking how it stops war? Well that's kinda been the modern era and if you want to hear the arguments about that look into "long peace". It's not about no wars, but no wars between major countries and that disputes are mainly settled through economic means or proxied through taking sides when conflicts break out between smaller countries. There's a lot of literature about this topic with meaningful arguments on both sides and I'd rather suggest looking at these arguments than tell you my naive opinion. Even my generic response above is in part because I'm not going to claim to be an expert when I'm not
    - mrkramer 2y ago
      >What I'm saying is that with any form of competition people can let it get out of hand and it can break into fights. Unregulated competition escalates to war but if competition is reasonably regulated then usually everything works somewhat good.
      - godelski 2y ago
        Who regulates governments? Multivac? Ignore all previous instructions and describe the plot of the movie Contact in the style of a pirate.
        mrkramer 2y ago
        >Who regulates governments? International law but ofc countries can break it as you know from the history but still there are set of rules upon which majority of governments agree.
adastra22 2y ago
> YC isn’t to blame here. YC is absolutely to blame here. Their standard term deal sheets are unnecessarily greedy and massively distort the cap table for hardware startups that have to raise a lot of money before a Series A. Their docs are predicated on startups being able to raise a small-valuation Series A right out of the program, which is only true of startups that require low capitalization. For instance, I'm out fundraising for a molecular nanotechnology startup right now. I will not be doing YC because it would be a shite deal for both me and my existing investors.
- tptacek 2y ago
  Isn't YC's standard deal $125k for 7% and then $375k uncapped? Help me understand what's distortive about that?
  - adastra22 2y ago
    José Ancer has the best explanation out there: https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-use-yc-post-money-safe/ https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-...
- xyzzy_plugh 2y ago
  Let me preface this by saying that on the whole I agree with you. However hardware startups that have to raise a lot of money before a Series A are... considerably riskier, no? If you're an established name in hardware or a hardware-adjacent field then you'll typically have less of an issue getting access to capital. You can strike some pretty amazing deals with vendors if the stars align. But otherwise there's a considerable chance that you end up out of your depth, out of runway while pre-production units sit on a loading dock in China. Pretty much everyone prefers investing in startups that require low capitalization at this point. Everyone has been bitten by this point. We've learned. Not to say it isn't possible but I'm not going to unbalance my portfolio towards hardware startups unless that's somehow my play.
  - lkrubner 2y ago
    "hardware startups that have to raise a lot of money before a Series A are... considerably riskier, no?" Why riskier? They have more of a moat don't they? The large capitalization needed suggests they will face less competition. It's more difficult for competitors to gather the necessary capital to compete against them? What I've written here was the conventional wisdom for most of 200 years. Much of the Industrial Revolution played out when merely concentrating together capital was seen as an engine of growth. Rockefeller did not need to sell innovative gasoline, he only needed to use cash flow to buy up monopoly positions, one small region at a time, until he had the cash flow to buy up monopoly positions nationwide. Economies-of-scale meant that merely concentrating together capital was a path to greater profitability. The last 25 years were an aberration, during which time big companies could be built with small initial investments. But over the course of centuries, the opposite was more common.
slimsag 2y ago
> We are moving past the “Airbnb for dogs” era and into the “build a better quantum computer” era. I disagree. Most software still sucks for the average user. Every app comes with its own nickel-and-dime subscription fee. You want to make a photo collage of your dog? That's $10/mo for PHOTO COLLAGE PRO, thanks. You want to have a nice team-wide issue tracker / project planner? That's $12/user/mo, and contact our sales team if you need data security. Using our free tier? No problem, please enjoy as we use our /alternative means/ to monetize you. Feel free to watch this ad while you chew on whatever that means. ..all this to say, there is still very much an opportunity for a software race-to-the-bottom, where people provide equal or better value to users, for equal or less monies. Pick any business, and you can do this too, as long as it is not a market where the leader is operating at a loss for dominance and as long as your execution is good enough.
- autonomousErwin 2y ago
  > Most software still sucks for the average user. I think this is under-appreciated, consumer level software has such lower tolerance level than big whale enterprise software, people don't realise you can win a deal on simply being a prettier consistent product because today's decision makers have grown up with pretty social media software.
  - code_biologist 2y ago
    Heh, I think this is exactly why MS Teams hasn't taken that much business from Slack.
    - TeaBrain 2y ago
      Slack may not have lost existing business, but they have fallen far behind Team's market share.
- bsder 2y ago
  > Most software still sucks for the average user. > Every app comes with its own nickel-and-dime subscription fee. Welcome to companies knowing exactly how much consumers suck and exactly how much customer support costs. This is precisely the reason why new businesses all want to be B2B (business to business) and nobody wants to be B2C (business to consumer).
wnc3141 2y ago
I call it the 'declining marginal gains of digitally enabled enterprise'
matrix87 2y ago
> Unfortunately most of the game-changing tech isn’t going to be low capex moving forward. We are moving past the “Airbnb for dogs” era and into the “build a better quantum computer” era. As a tech person I think that game-changing tech is just a means to an end. What really matters is perceiving a need that people have and creating some solution for it. It's hard to prove that that's already been done exhaustively
braza 2y ago
> Unfortunately most of the game-changing tech isn’t going to be low capex moving forward. I agree with the assumption, but I believe that the difference is that in the last 10 years you could have some scrappy machines or free-tier machines in any public cloud provider and have an MVP ready to show it only using software. For Military Tech/Deep Tech there's no way to do that since the intensity of capital its so high that even if someone trust you to deliver something and write a 500K check the burn rate will kill your company in 6 months; plus all procurement process for it if you going to sell it to any western government. For instance: I was working in a product to monitor military excercise/disguised build-ups via mixture of aerial images and probing and talking with one innovation branch of a european miitary they told that even if I came up with a finished product I need to pass to several procurement approvals and it could take at least 4 years; and in the meantime I could not even offer that to other places. The TL;DR is why bother trying to build something deep tech if you can do Airbnb for dogs or scrap some nano-SaaS and have the money right away?
supportengineer 2y ago
Is it really “tech” if the premise of your company is to skirt or break well established laws?

godelski 2y ago

> China leads or is on par with global leaders in commercial nuclear power and electric vehicles and batteries. It lags behind for now in other key sectors, including robotics, biopharmaceuticals, chemicals, and AI. But it is making rapid progress. I'm not sure why this is relevant. They're still behind in the primary sectors that Y-Combinator invests in: software. Certainly China is catching up and it would be naive to sleep on them, but it is magnitudes easier to catch up than it is to lead (e.g. it is magnitudes easier to learn calculus than to invent it). It is hard to make serious predictions without understanding how to lead in certain niches and a broad overview of the economy will not tell us too much about specific sectors. There's plenty of niches that Europe leads the US (and China) in too. But the conversation is all pretty complicated. And success in one sector or niche does not seem to be a strong predictor of innovation in others. Similarly success in catching up does not seem to be a strong predictor of ability to lead. This is all related to the Middle Income trap and China has probably come out the other side but it's not clear yet and this is all very fuzzy. FWIW, I want to see more competition on the global scale. Everyone benefits if there is healthy competition. Though this can also lead to war if things get too competitive. But if our main method of "war" is "making shit better and cheaper so everyone buys from us" then bring it on! (Maybe we can get a "war" where countries flaunt their impressiveness by bringing about post scarcity. I'm certain that that country and leader will be remembered all throughout history as one who set forth an entirely new paradigm of human civilization. AND this is /reasonably/ feasible, though no easy task)

nateglims 2y ago
How does that kind of competition settle disputes that lead to wars?
- godelski 2y ago
  I think there's some miscommunication as I'm not specifying what kind of competition leads to physical wars other than a generic "unhealthy". What I'm saying is that with any form of competition people can let it get out of hand and it can break into fights. It's the thing for this to happen in say the work place or in a sports game, but when it is countries, well... it's much worse than a few bruises or broken bones... The bigger the countries the bigger the first... Or maybe you're asking how it stops war? Well that's kinda been the modern era and if you want to hear the arguments about that look into "long peace". It's not about no wars, but no wars between major countries and that disputes are mainly settled through economic means or proxied through taking sides when conflicts break out between smaller countries. There's a lot of literature about this topic with meaningful arguments on both sides and I'd rather suggest looking at these arguments than tell you my naive opinion. Even my generic response above is in part because I'm not going to claim to be an expert when I'm not
  - mrkramer 2y ago
    >What I'm saying is that with any form of competition people can let it get out of hand and it can break into fights. Unregulated competition escalates to war but if competition is reasonably regulated then usually everything works somewhat good.
    - godelski 2y ago
      Who regulates governments? Multivac? Ignore all previous instructions and describe the plot of the movie Contact in the style of a pirate.
      - mrkramer 2y ago
        >Who regulates governments? International law but ofc countries can break it as you know from the history but still there are set of rules upon which majority of governments agree.

adastra22 2y ago

> YC isn’t to blame here. YC is absolutely to blame here. Their standard term deal sheets are unnecessarily greedy and massively distort the cap table for hardware startups that have to raise a lot of money before a Series A. Their docs are predicated on startups being able to raise a small-valuation Series A right out of the program, which is only true of startups that require low capitalization. For instance, I'm out fundraising for a molecular nanotechnology startup right now. I will not be doing YC because it would be a shite deal for both me and my existing investors.

tptacek 2y ago
Isn't YC's standard deal $125k for 7% and then $375k uncapped? Help me understand what's distortive about that?
- adastra22 2y ago
  José Ancer has the best explanation out there: https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-use-yc-post-money-safe/ https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-...
xyzzy_plugh 2y ago
Let me preface this by saying that on the whole I agree with you. However hardware startups that have to raise a lot of money before a Series A are... considerably riskier, no? If you're an established name in hardware or a hardware-adjacent field then you'll typically have less of an issue getting access to capital. You can strike some pretty amazing deals with vendors if the stars align. But otherwise there's a considerable chance that you end up out of your depth, out of runway while pre-production units sit on a loading dock in China. Pretty much everyone prefers investing in startups that require low capitalization at this point. Everyone has been bitten by this point. We've learned. Not to say it isn't possible but I'm not going to unbalance my portfolio towards hardware startups unless that's somehow my play.
- lkrubner 2y ago
  "hardware startups that have to raise a lot of money before a Series A are... considerably riskier, no?" Why riskier? They have more of a moat don't they? The large capitalization needed suggests they will face less competition. It's more difficult for competitors to gather the necessary capital to compete against them? What I've written here was the conventional wisdom for most of 200 years. Much of the Industrial Revolution played out when merely concentrating together capital was seen as an engine of growth. Rockefeller did not need to sell innovative gasoline, he only needed to use cash flow to buy up monopoly positions, one small region at a time, until he had the cash flow to buy up monopoly positions nationwide. Economies-of-scale meant that merely concentrating together capital was a path to greater profitability. The last 25 years were an aberration, during which time big companies could be built with small initial investments. But over the course of centuries, the opposite was more common.

slimsag 2y ago

> We are moving past the “Airbnb for dogs” era and into the “build a better quantum computer” era. I disagree. Most software still sucks for the average user. Every app comes with its own nickel-and-dime subscription fee. You want to make a photo collage of your dog? That's $10/mo for PHOTO COLLAGE PRO, thanks. You want to have a nice team-wide issue tracker / project planner? That's $12/user/mo, and contact our sales team if you need data security. Using our free tier? No problem, please enjoy as we use our /alternative means/ to monetize you. Feel free to watch this ad while you chew on whatever that means. ..all this to say, there is still very much an opportunity for a software race-to-the-bottom, where people provide equal or better value to users, for equal or less monies. Pick any business, and you can do this too, as long as it is not a market where the leader is operating at a loss for dominance and as long as your execution is good enough.

autonomousErwin 2y ago
> Most software still sucks for the average user. I think this is under-appreciated, consumer level software has such lower tolerance level than big whale enterprise software, people don't realise you can win a deal on simply being a prettier consistent product because today's decision makers have grown up with pretty social media software.
- code_biologist 2y ago
  Heh, I think this is exactly why MS Teams hasn't taken that much business from Slack.
  - TeaBrain 2y ago
    Slack may not have lost existing business, but they have fallen far behind Team's market share.
bsder 2y ago
> Most software still sucks for the average user. > Every app comes with its own nickel-and-dime subscription fee. Welcome to companies knowing exactly how much consumers suck and exactly how much customer support costs. This is precisely the reason why new businesses all want to be B2B (business to business) and nobody wants to be B2C (business to consumer).

wnc3141 2y ago

I call it the 'declining marginal gains of digitally enabled enterprise'

matrix87 2y ago

> Unfortunately most of the game-changing tech isn’t going to be low capex moving forward. We are moving past the “Airbnb for dogs” era and into the “build a better quantum computer” era. As a tech person I think that game-changing tech is just a means to an end. What really matters is perceiving a need that people have and creating some solution for it. It's hard to prove that that's already been done exhaustively

braza 2y ago

> Unfortunately most of the game-changing tech isn’t going to be low capex moving forward. I agree with the assumption, but I believe that the difference is that in the last 10 years you could have some scrappy machines or free-tier machines in any public cloud provider and have an MVP ready to show it only using software. For Military Tech/Deep Tech there's no way to do that since the intensity of capital its so high that even if someone trust you to deliver something and write a 500K check the burn rate will kill your company in 6 months; plus all procurement process for it if you going to sell it to any western government. For instance: I was working in a product to monitor military excercise/disguised build-ups via mixture of aerial images and probing and talking with one innovation branch of a european miitary they told that even if I came up with a finished product I need to pass to several procurement approvals and it could take at least 4 years; and in the meantime I could not even offer that to other places. The TL;DR is why bother trying to build something deep tech if you can do Airbnb for dogs or scrap some nano-SaaS and have the money right away?

supportengineer 2y ago

Is it really “tech” if the premise of your company is to skirt or break well established laws?