4 ms·

A 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 fi

by pg 14y ago

A 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 ago
How do you decide/realize you "missed a good startup"? Profits? Traction?
- pg 14y ago
  You 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.
  - jeltz 14y ago
    Interesting. In Sweden the high level information about a private company is publicly available. Several websites like allabolag.se lives from aggregating this data and reselling it.
    - lazyjones 14y ago
      In Sweden all salaries are made public too, so that's not particularly surprising. ;-)
      - debacle 14y ago
        Sweden sounds like a very rational place.
  - pbhjpbhj 14y ago
    Is there nothing more to it than revenues? [that's not intended to be snarky and rhetorical however it sounds in your head!] Like do you think "Wow, sorry we missed them, they're making awesome stuff" or is it primarily financial. This kinda fits in with the Kickstarter discussion, scale is entirely different of course. I guess in short is business more about making money or about creating value.
npguy 14y ago
Thanks PG !
pwendell 14y ago
Does it always mean that something went wrong if you passed on an eventually successful startup? That seems like an assumption baked into the question and your answer. At the end of the day you are taking a calculated risk. The interesting question isn't whether you wished you had funded them, because that is asking you to make a risk-free (in hindsight) decision. The real questions is how you decide whether a missed opportunity indicates a lapse in the way you calculated risk/reward, or simply a bet you ended up on the wrong side of despite it being the right bet at the time. That's the question I'd really be interested in hearing the answer to. How do you decide whether a missed opportunity represents an error in your process?
- pg 14y ago
  As far as we're concerned, missing a good startup is by definition an error in our process. We may never get our error rate down to zero, but we can try. And it's reasonable to assume we have a lot of room to, considering how early we are. Having funded 465 startups over 7 years may not sound early, and I suppose it isn't in a relative sense, but it is in an absolute one. Society in general and we in particular are still learning how to predict which startups will succeed.
  - kylebrown 14y ago
    Startup success is a reflexive (from social theory) process, not a scientific one. As in economics, successful long-term predictions would, by definition, beat the market. Its impossible for "society in general" to learn how to do that.
  - mirsadm 14y ago
    If you guys ever figure that out please share it with the rest of us :)
  - deleted 14y ago
    [deleted]
  - pwendell 14y ago
    But surely there are success stories which are outliers/anomalies/red herrings, that you really don't want to try and replicate? To say that every missed opportunity is a failure is like saying that every CA lottery I didn't buy a ticket for was a mistake. That strategy risks over-fitting to successful fluke's, to people who made bad bets that happened to work out. There is enough loose money floating around today that some people out there are going to make bad bets and succeed. I don't see why you/YC wouldn't focus on bets where you have an unfair advantage over the market and feel fine passing those up where you don't, even if they have some non-zero probability of success.
chmike 14y ago
Note that a rejected applicant will have learned from the failed YC interview and adjust his presentation accordingly when applying to another incubator. Kudos for your postmortem optimization feedback loop. This is one of the non visible features of YC that could explain the difference. Do you record the presentations for later review in such case ? For the applicants, this gives the hint that they should apply to many different incubators and angels before applying to YC so that they can learn from their rejection how to optimize their submission. ;)
ot 14y ago
Sorry about the obvious and slightly more controversial question, but are there any startups that you regret having funded? In particular from the non-economic perspective.
- redthrowaway 14y ago
  I'm hoping he regretted funding 9GAG. It's one of the most unethical companies I've ever come across. This post on /r/4chan details some of their misdeeds: http://www.reddit.com/r/4chan/comments/zacju/9gag_repost_machine_explained/ http://www.reddit.com/r/4chan/comments/zacju/9gag_repost_mac...
  - bnr 14y ago
    Barely anything on reddit is original content, I don't think the users should complain about reposts on other sites. If it keeps certain demographics away, it might even be a good thing for reddit's content/comment quality.
    - redthrowaway 14y ago
      There's a difference between posting something from another site, even if it's a screenshot, and scrubbing the watermark then adding your own in an attempt to claim authorship. Reddit does the former, 9GAG the latter.
    - mnicole 14y ago
      > Barely anything on reddit is original content On the contrary, Reddit (and particularly smaller subreddits) contain some of the most active and intelligent conversation available to vast general audiences on the web. AMAs alone spark a lot of interesting dialogue. Nick Eftiamiades' yesterday was really enlightening (http://www.reddit.com/r/IAmA/comments/zchnb/ive_appeared_on_nbc_abc_bbc_npr_and_testified/ http://www.reddit.com/r/IAmA/comments/zchnb/ive_appeared_on_...). The hivemind can be embarrassing, but there's still a lot to glean from such a userbase.
  - barry-cotter 14y ago

by pg 14y ago

shin_lao 14y ago

How do you decide/realize you "missed a good startup"? Profits? Traction?

pg 14y ago
You 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.
- jeltz 14y ago
  Interesting. In Sweden the high level information about a private company is publicly available. Several websites like allabolag.se lives from aggregating this data and reselling it.
  - lazyjones 14y ago
    In Sweden all salaries are made public too, so that's not particularly surprising. ;-)
    - debacle 14y ago
      Sweden sounds like a very rational place.
- pbhjpbhj 14y ago
  Is there nothing more to it than revenues? [that's not intended to be snarky and rhetorical however it sounds in your head!] Like do you think "Wow, sorry we missed them, they're making awesome stuff" or is it primarily financial. This kinda fits in with the Kickstarter discussion, scale is entirely different of course. I guess in short is business more about making money or about creating value.

npguy 14y ago

Thanks PG !

pwendell 14y ago

Does it always mean that something went wrong if you passed on an eventually successful startup? That seems like an assumption baked into the question and your answer. At the end of the day you are taking a calculated risk. The interesting question isn't whether you wished you had funded them, because that is asking you to make a risk-free (in hindsight) decision. The real questions is how you decide whether a missed opportunity indicates a lapse in the way you calculated risk/reward, or simply a bet you ended up on the wrong side of despite it being the right bet at the time. That's the question I'd really be interested in hearing the answer to. How do you decide whether a missed opportunity represents an error in your process?

pg 14y ago
As far as we're concerned, missing a good startup is by definition an error in our process. We may never get our error rate down to zero, but we can try. And it's reasonable to assume we have a lot of room to, considering how early we are. Having funded 465 startups over 7 years may not sound early, and I suppose it isn't in a relative sense, but it is in an absolute one. Society in general and we in particular are still learning how to predict which startups will succeed.
- kylebrown 14y ago
  Startup success is a reflexive (from social theory) process, not a scientific one. As in economics, successful long-term predictions would, by definition, beat the market. Its impossible for "society in general" to learn how to do that.
- mirsadm 14y ago
  If you guys ever figure that out please share it with the rest of us :)
- deleted 14y ago
  [deleted]
- pwendell 14y ago
  But surely there are success stories which are outliers/anomalies/red herrings, that you really don't want to try and replicate? To say that every missed opportunity is a failure is like saying that every CA lottery I didn't buy a ticket for was a mistake. That strategy risks over-fitting to successful fluke's, to people who made bad bets that happened to work out. There is enough loose money floating around today that some people out there are going to make bad bets and succeed. I don't see why you/YC wouldn't focus on bets where you have an unfair advantage over the market and feel fine passing those up where you don't, even if they have some non-zero probability of success.

chmike 14y ago

Note that a rejected applicant will have learned from the failed YC interview and adjust his presentation accordingly when applying to another incubator. Kudos for your postmortem optimization feedback loop. This is one of the non visible features of YC that could explain the difference. Do you record the presentations for later review in such case ? For the applicants, this gives the hint that they should apply to many different incubators and angels before applying to YC so that they can learn from their rejection how to optimize their submission. ;)

ot 14y ago

Sorry about the obvious and slightly more controversial question, but are there any startups that you regret having funded? In particular from the non-economic perspective.

redthrowaway 14y ago
I'm hoping he regretted funding 9GAG. It's one of the most unethical companies I've ever come across. This post on /r/4chan details some of their misdeeds: http://www.reddit.com/r/4chan/comments/zacju/9gag_repost_machine_explained/ http://www.reddit.com/r/4chan/comments/zacju/9gag_repost_mac...
- bnr 14y ago
  Barely anything on reddit is original content, I don't think the users should complain about reposts on other sites. If it keeps certain demographics away, it might even be a good thing for reddit's content/comment quality.
  - redthrowaway 14y ago
    There's a difference between posting something from another site, even if it's a screenshot, and scrubbing the watermark then adding your own in an attempt to claim authorship. Reddit does the former, 9GAG the latter.
  - mnicole 14y ago
    > Barely anything on reddit is original content On the contrary, Reddit (and particularly smaller subreddits) contain some of the most active and intelligent conversation available to vast general audiences on the web. AMAs alone spark a lot of interesting dialogue. Nick Eftiamiades' yesterday was really enlightening (http://www.reddit.com/r/IAmA/comments/zchnb/ive_appeared_on_nbc_abc_bbc_npr_and_testified/ http://www.reddit.com/r/IAmA/comments/zchnb/ive_appeared_on_...). The hivemind can be embarrassing, but there's still a lot to glean from such a userbase.
- barry-cotter 14y ago