3 ms·

The funny? thing is, this isn't the only YC company I've seen do this.

CharlieDigital 2y ago
There's a really great Radiolab podcast Dealing with Doubt[0] that talks about how high level competitive poker has evolved over the years. ANNIE DUKE: Sometimes you have to be 40 percent sure. Sometimes you have to be 30 percent sure. You know, if there's $70 in the pot and you only have to call $10, you know, now you're in the 15 percent range in terms of how certain you have to be that your hand is good. JAD: In that case, you can bet this hand that you're really not sure about knowing that while you might lose this time ... MIKE PESCA: If I do that a million times in my poker life, the law of high numbers indicates that I'm going to be very much a winner in the long run. It might be the very long run, but you should be ahead in the long run. ANNIE DUKE: Because it's not—it's not about winning the hand all the time, it's about winning the hand enough of the time. Any VC is making a bet of the same nature. Because there is some intangible in the team itself, it makes sense for the VC to bet on multiples if they believe that there is a valuable problem to be solved here. Some team(s) will be more successful than others, but it's really difficult to tell at the outset. (The podcast is a great listen!) [0] https://radiolab.org/podcast/278173-dealing-doubt/transcript https://radiolab.org/podcast/278173-dealing-doubt/transcript
- DamnableNook 2y ago
  aka “expected value” in statistical terms.
dncornholio 2y ago
Isn't the whole point of VC just throw money at the wall and see what sticks?
NelsonMinar 2y ago
I don't know anything about YC's due diligence. Is it strange they didn't catch this before infesting?
- rdlecler1 2y ago
  YC is putting through 200+ companies per batch and making a tiny investment. It’s far more efficient to swallow the occasional bad bet than to do a lot due diligence… Now the VCs that came in after… that’s another story.

There's a really great Radiolab podcast Dealing with Doubt[0] that talks about how high level competitive poker has evolved over the years. ANNIE DUKE: Sometimes you have to be 40 percent sure. Sometimes you have to be 30 percent sure. You know, if there's $70 in the pot and you only have to call $10, you know, now you're in the 15 percent range in terms of how certain you have to be that your hand is good. JAD: In that case, you can bet this hand that you're really not sure about knowing that while you might lose this time ... MIKE PESCA: If I do that a million times in my poker life, the law of high numbers indicates that I'm going to be very much a winner in the long run. It might be the very long run, but you should be ahead in the long run. ANNIE DUKE: Because it's not—it's not about winning the hand all the time, it's about winning the hand enough of the time. Any VC is making a bet of the same nature. Because there is some intangible in the team itself, it makes sense for the VC to bet on multiples if they believe that there is a valuable problem to be solved here. Some team(s) will be more successful than others, but it's really difficult to tell at the outset. (The podcast is a great listen!) [0] https://radiolab.org/podcast/278173-dealing-doubt/transcript https://radiolab.org/podcast/278173-dealing-doubt/transcript

DamnableNook 2y ago
aka “expected value” in statistical terms.

dncornholio 2y ago

Isn't the whole point of VC just throw money at the wall and see what sticks?

NelsonMinar 2y ago

I don't know anything about YC's due diligence. Is it strange they didn't catch this before infesting?

rdlecler1 2y ago
YC is putting through 200+ companies per batch and making a tiny investment. It’s far more efficient to swallow the occasional bad bet than to do a lot due diligence… Now the VCs that came in after… that’s another story.