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History tends to get rewritten by big successes, so that in retrospect it seems obvious they were going to make it big. For that reason one of my most valuable

History tends to get rewritten by big successes, so that in retrospect it seems obvious they were going to make it big. For that reason one of my most valuable memories is how lame Facebook sounded to me when I first heard about it. As a thought experiment, I would love to hear what pg and team would have thought about the following companies, had they applied to YC before they grew in popularity (assuming YC existed when they were starting out): PayPal, Twitter, Pandora, SalesForce, Instagram, FourSquare, and Pinterest. And perhaps a few others as well.

pg 14y ago
That is a very interesting exercise. I feel pretty sure we'd have been impressed enough by Max and Peter to fund them regardless of the idea (which initially had almost nothing in common with Paypal). I knew Ev before Twitter so I'm sure we would have funded that. Pandora I know nothing about, so I can't guess there. SalesForce I'm pretty sure we would have funded because Benioff radiates "winner" in much the same overwhelming way that Zuckerberg does. Instagram is the one we'd most likely have missed. It all depends when we'd talked to them. They were a kind of overnight success in traffic. If we'd talked to them even a day after they launched we would certainly have said yes. But before that it might have seemed too speculative. I don't know about FourSquare. I've never met the founders and don't understand the business. Pinterest we definitely would have funded, because Ben is a two time YC alum (with different companies alas). We knew he was good because the first time he was part of a startup that as an experiment we didn't make move to California. As Demo Day approached, they were in terrible shape. But Ben swooped in at the last moment and gave one of the most convincing Demo Day presentations.
- dschobel 14y ago
  a guy 'radiates "winner"'? Really? I sincerely hope you're being flippant and don't mean that as a serious answer.
  - pg 14y ago
    I mean it. Have you met either of them? They both seem unstoppable.
    - dschobel 14y ago
      It strikes me as smacking of old-school fatalistic "some are born winners" type thinking which is fundamentally contrary to everything we are led to believe about startups (namely; success is a function of smarts, hustle and luck). I have not met either of them. And while I have met a few individuals who have achieved success I can honestly say I have never met anyone who I thought radiated success or was otherwise predisposed to success.
      - a45l98 14y ago
        This is exactly how many VC work. They will only fund projects that involve people they know. Those people are almost always ones who have a history of past success. It's simply a way to manage risk with minimised effort. Deal with people you already know. If the project turns out to be a dud, the past history of success of the people involved negates any arguments that it was not the right decision to fund it. No one is going to question that the people involved were not "winners". They had proven that already; that's why the project received funding: because those particular people were involved with it. To use an oft regurgitated title: "No one ever got fired for funding a project that involved [insert so-called born winner name here]" Just for fun: How about Andrew Mason, the guy behind Groupon. How far do you think he would have gotten by taking the YC route? Is he a "born winner"? Groupon made some investors very happy. One might wonder why no one can tell us who the "born winners" are until after they've had some "victories".
      - ajju 14y ago
        When did he claim they were born that way?
        startupgrrl 14y ago
        http://paulgraham.com/determination.html http://paulgraham.com/determination.html startup founders win [...] more on determination than brains. The simplest form of determination is sheer willfulness. [...] A good deal of willfulness must be inborn
- juniorer 14y ago
  Anyone know what the two YC companies Ben from Pinterest was a part of?
  - pg 14y ago
    Audiobeta and MightyQuiz.
- 00000000swan 14y ago
  This seems to suggest the decision to fund has less to do with the idea and more to do with the founders. We already knew that. Does this also mean that the "big winners" will not come merely from a pool of what appear to be bad ideas, but from a subset of that pool: bad ideas put forth by founders the VC thinks are impressive? That too, seems somewhat obvious. Taking it one step further, can you separate the "idea" from the "founder" in assessing the project's chances of being a "big winner"? Maybe that was the goal of requesting that people should apply to YC even if they had no "idea". After all, the supply of "bad ideas" is potentially limitless.
  - pmarca 14y ago
    Yes -- this is why, for example, we (at A16Z) have such a strong bias towards technical founders with strong personalities, typically with a background of accomplishment of some reasonably strong form (even if very young). You have to screen at the founder level since there are too many bad ideas from less qualified founders otherwise.
    - a45l98 14y ago
      And how has that worked out for you? Have you ever experimented with an opposing strategy? (Funding "non-technical" founders with "weak" personalities.) Probably not, lest you would risk your reputation. Hence, you might not have evidence to show that this approach would not yield suffcient numbers of "big winners" to justify the investments. For example, if someone sugested the hypothesis that from a set of a given size of non-technical founders with weak personalities, some "big winners" will emerge, could you disprove that? If you wanted to be scientific, you would have to test it, repeatedly. From my intepretation, I think one of the points in the pg essay is that human "intuition" will only take you so far toward the "big rewards". By its very nature it steers us away from the counterintuitive and protects us from taking what others would perceive as unreasonable risks. It will stop you from adopting a strategy that no one else is using that might get you labelled as foolish (but, as history shows us time and again, might actually yield an enormous reward). In hindsight we'll continue to see that some of the biggest winners would have been viewed as unreasonable risks by many VC. Foresight won't allow us that vision. So-called intuition will stop you from investing in a "big winner". Hard to accept, but true.
asmithmd1 14y ago
Here is what Bessemer said about PayPal when they passed: "Rookie team, regulatory nightmare" http://www.bvp.com/portfolio/antiportfolio http://www.bvp.com/portfolio/antiportfolio
- aptwebapps 14y ago
  Great link. "Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?”"

pg 14y ago

That is a very interesting exercise. I feel pretty sure we'd have been impressed enough by Max and Peter to fund them regardless of the idea (which initially had almost nothing in common with Paypal). I knew Ev before Twitter so I'm sure we would have funded that. Pandora I know nothing about, so I can't guess there. SalesForce I'm pretty sure we would have funded because Benioff radiates "winner" in much the same overwhelming way that Zuckerberg does. Instagram is the one we'd most likely have missed. It all depends when we'd talked to them. They were a kind of overnight success in traffic. If we'd talked to them even a day after they launched we would certainly have said yes. But before that it might have seemed too speculative. I don't know about FourSquare. I've never met the founders and don't understand the business. Pinterest we definitely would have funded, because Ben is a two time YC alum (with different companies alas). We knew he was good because the first time he was part of a startup that as an experiment we didn't make move to California. As Demo Day approached, they were in terrible shape. But Ben swooped in at the last moment and gave one of the most convincing Demo Day presentations.

dschobel 14y ago
a guy 'radiates "winner"'? Really? I sincerely hope you're being flippant and don't mean that as a serious answer.
- pg 14y ago
  I mean it. Have you met either of them? They both seem unstoppable.
  - dschobel 14y ago
    It strikes me as smacking of old-school fatalistic "some are born winners" type thinking which is fundamentally contrary to everything we are led to believe about startups (namely; success is a function of smarts, hustle and luck). I have not met either of them. And while I have met a few individuals who have achieved success I can honestly say I have never met anyone who I thought radiated success or was otherwise predisposed to success.
    - a45l98 14y ago
      This is exactly how many VC work. They will only fund projects that involve people they know. Those people are almost always ones who have a history of past success. It's simply a way to manage risk with minimised effort. Deal with people you already know. If the project turns out to be a dud, the past history of success of the people involved negates any arguments that it was not the right decision to fund it. No one is going to question that the people involved were not "winners". They had proven that already; that's why the project received funding: because those particular people were involved with it. To use an oft regurgitated title: "No one ever got fired for funding a project that involved [insert so-called born winner name here]" Just for fun: How about Andrew Mason, the guy behind Groupon. How far do you think he would have gotten by taking the YC route? Is he a "born winner"? Groupon made some investors very happy. One might wonder why no one can tell us who the "born winners" are until after they've had some "victories".
    - ajju 14y ago
      When did he claim they were born that way?
      - startupgrrl 14y ago
        http://paulgraham.com/determination.html http://paulgraham.com/determination.html startup founders win [...] more on determination than brains. The simplest form of determination is sheer willfulness. [...] A good deal of willfulness must be inborn
juniorer 14y ago
Anyone know what the two YC companies Ben from Pinterest was a part of?
- pg 14y ago
  Audiobeta and MightyQuiz.
00000000swan 14y ago
This seems to suggest the decision to fund has less to do with the idea and more to do with the founders. We already knew that. Does this also mean that the "big winners" will not come merely from a pool of what appear to be bad ideas, but from a subset of that pool: bad ideas put forth by founders the VC thinks are impressive? That too, seems somewhat obvious. Taking it one step further, can you separate the "idea" from the "founder" in assessing the project's chances of being a "big winner"? Maybe that was the goal of requesting that people should apply to YC even if they had no "idea". After all, the supply of "bad ideas" is potentially limitless.
- pmarca 14y ago
  Yes -- this is why, for example, we (at A16Z) have such a strong bias towards technical founders with strong personalities, typically with a background of accomplishment of some reasonably strong form (even if very young). You have to screen at the founder level since there are too many bad ideas from less qualified founders otherwise.
  - a45l98 14y ago
    And how has that worked out for you? Have you ever experimented with an opposing strategy? (Funding "non-technical" founders with "weak" personalities.) Probably not, lest you would risk your reputation. Hence, you might not have evidence to show that this approach would not yield suffcient numbers of "big winners" to justify the investments. For example, if someone sugested the hypothesis that from a set of a given size of non-technical founders with weak personalities, some "big winners" will emerge, could you disprove that? If you wanted to be scientific, you would have to test it, repeatedly. From my intepretation, I think one of the points in the pg essay is that human "intuition" will only take you so far toward the "big rewards". By its very nature it steers us away from the counterintuitive and protects us from taking what others would perceive as unreasonable risks. It will stop you from adopting a strategy that no one else is using that might get you labelled as foolish (but, as history shows us time and again, might actually yield an enormous reward). In hindsight we'll continue to see that some of the biggest winners would have been viewed as unreasonable risks by many VC. Foresight won't allow us that vision. So-called intuition will stop you from investing in a "big winner". Hard to accept, but true.

asmithmd1 14y ago

Here is what Bessemer said about PayPal when they passed: "Rookie team, regulatory nightmare" http://www.bvp.com/portfolio/antiportfolio http://www.bvp.com/portfolio/antiportfolio

aptwebapps 14y ago
Great link. "Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?”"