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Ask PG: Is There A Startup You Regret Not Funding? (Like Fred and AirBnB)
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- jaredsohn 14y agoHere's Fred Wilson's post about passing on AirBnB: http://www.avc.com/a_vc/2011/03/airbnb.html http://www.avc.com/a_vc/2011/03/airbnb.html
- david_shaw 14y agoI'm neither Paul Graham, nor a venture capitalist. I've never invested in a startup. However, I have been involved in the process with potential investors deciding whether or not to invest in a company -- on both sides of the table. I can't answer your question, but I might be able to lend some relevant conversation on the topic. Investors, especially those who specialize in early-stage startups, take a lot of risks. We all know that most startups will fail -- and those that don't are not always wildly successful. There are plenty of ramen-profitable startups that will piddle out, and plenty more that never even get to that point. Because of the inherent risk involved with investing in general, it makes sense to take as risk-averse an approach as possible. That's why YC-backed companies are built on such solid, great ideas (the best foundation possible) -- and even many of those, even with Y Combinator's full support, still fail. Whether or not pg has regrets is a question that only Paul himself can answer (and I hope he will), but my opinion is that his approach is the same that I take towards my investment portfolio: maybe a slight tinge of missed opportunity, but the decision whether or not to put money into a company is calculated rationally. Because of this, there's no real regret to be had.
- klochner 14y agoand you slept at a Holiday Inn last night? [edit] I meant Holiday Inn Express
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- chmike 14y agoCould you explain your comment ? It don't understand the relation with the comment you responded to.
- tehwebguy 14y agoThere is a series of commercials where someone who is handling a task well explains that they are not a professional but they slept at a Holiday Inn Express the previous night. The original commenter's post read like the beginning of one of these commercials.
- klochner 14y agoIt's an american joke, my apologes for both using a cultural reference and making a pretty snarky comment. A more "HN-spirited" comment would have been: You aren't speaking from any real authority or experience, and your 5 paragraphs could have been summed up with the following: "when you gamble you don't expect to win them all, so regret is baked into the equation". Please be more concise with your comments and get to the point.
- Confusion 14y agotl;dr the only way to catch them all is to fund them all
- lifeisstillgood 14y agoMy next one ;-) Edit: joking aside, I cannot comment for pg but there are a number of startups I regret not funding - funding with my time and effort. Whatever strategies or not people use to invest in others companies we can all invest in one - our next one. I am minimising my regrets, by investing in me. (I do worry about that management team though !)
- rolandal 14y agoI feel like this is a common problem - we all get presented with many opportunities to join startups that become great. I remember reading a similar post that was about how an engineer felt about turning down the opportunity to be a 1-10 employee at Facebook
- pg 14y agoA couple. I can't name names though because I feel like we're obliged to keep applications confidential. When we miss a good startup, we always go back and figure out what went wrong and try to fix it. One advantage of all the other incubators that have arisen is that when we miss a good company, we at least find out about it. We've changed our application process several times in response to misses. (Strangely enough, it might actually be net beneficial to YC to have so many competitors, because they're training our filter.)
- shin_lao 14y agoHow do you decide/realize you "missed a good startup"? Profits? Traction?
- pg 14y agoYou can never find out a private company's revenues, so the best we can do is to go by approximations like how frequently we hear about them, later funding rounds, etc.
- paulsutter 14y agoSurely they wish they were able to allow the n+1'th team to join a given class, but they're busy enough with the n they do select that I'm sure they dont give it a lot of thought. Certainly not regret. YC's investment is primarily about time and effort, not money anyway.
- tomasien 14y agoI think a MUCH better question is "Are there any companies that didn't ultimately reach exits that you regret funding: I.E. companies who you believe YC itself would have made the essential difference in their success" This would be a company who got grew initial growth but, for lack of proper guidance and mentoring, made really bad decisions that killed them. Perhaps a company that had a chance to be huge, did well initially, but didn't have the proper connections to scale after that. That to me is a harder but ultimately much more valuable question.
- tomasien 14y agoMore valuable because of COURSE PG had some misses. If he didn't have misses, he wouldn't be human. But where it gets really interesting is in his estimation of the YC effect, which I think is estimable: what companies would have been billion dollar companies with the YC effect but aren't because they don't have it?
- andrewhillman 14y agoi think they rejected sendgrid, but not 100% sure.