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"Advice ... [is] easy to find" This is the mistake. Advice is easy to find, but it varies in value. This guy can correctly value our money. It's worth the s

by pg 18y ago

"Advice ... [is] easy to find" This is the mistake. Advice is easy to find, but it varies in value. This guy can correctly value our money. It's worth the same as everyone else's. But he has no idea whether our advice is good or bad, and if good, how much better it is than "average" advice, whatever that is.

trickjarrett 18y ago
I think another fallacy in his argument is that he is saying all Angel investors are worth the same outside of money. Sure, some angels will bring good advice, input and ideas to the table, but some will not. With YC you know there's a solid support infrastructure.
scott_s 18y ago
Not only does advice vary in value, but when you're new to an area, you probably lack the ability to evaluate advice on its own merits.
vaksel 18y ago
To be fair, noone knows if your advice is good or bad(essays notwithstanding). Can you give an example of some specific advice you gave to one of the YC startups recently?
- harpastum 18y ago
  I think the point of the essays and this community is to give startups an idea of the sort of advice they'll be getting [1]. Any "specific" advice would either be too close to the issues to have any meaning outside the company. As far as I can tell, PG has no qualms about "trade secrets"--if he thinks the advice would benefit everyone starting up a company, he will probably write an essay about it. If those ideas and themes resonate with you, you have an idea of what benefits you'll reap from the support of the YC staff. [1] Work hard to create wealth. ( http://www.paulgraham.com/start.html http://www.paulgraham.com/start.html )
- pg 18y ago
  Actually around 300 people know, because that is about the number of founders we've funded. So if people (e.g. those applying for funding) want to know if YC is worth it, we usually suggest they contact some and ask them individually. I could never talk about conversations I'd had with specific startups, because the more useful the advice was, the more precisely you'd be able to identify the startup.
  - vaksel 18y ago
    Well yeah, I was more talking about people outside looking in, like the author, since he can't judge the quality of the advice he resorts to just comparing the monetary terms
endlessvoid94 18y ago
Also, the type of advice you're able to find online hasn't always been there. When did you start YC? 3 years ago? 4? It seems like startup-advice blog-type sites have only sprung up since then.
pkaler 18y ago
The first thing I see is the 3.6% difference in equity taken. If I can bring in 3 great advisors and give them 1% equity each then I am ahead in terms of cash investment and advice.
- mannicken 18y ago
  They'll also give you much more money :)
- pg 18y ago
  then I am ahead Your conclusion is your assumption.
mannicken 18y ago
But is your advice worth (50-12) 38 thousands of dollars? Of course, it's not only advice, so I assume experience+popularity+connections. Is it worth that much money? Maybe, I don't know. If startup is so freaking awesome it was accepted by a rich Angel and the YC, it can "buy" all that stuff for $38,000 from you. The question of whether non-monetary YC experience is worth that much money is a hard one and it would probably involve calculating probability rate of success at YC vs Angel, non-monetary factors (well-being), externalities (with all the benevolence), and other things. On the other hand, there is $38,000 just laying around, waiting for you to grab and multiply your runway by ~5 (50,000/12,000).
cominatchu 18y ago
I would argue that by putting such a high valuation on your advice, people think it's worth more, just as they have a natural tendency to think that they are getting a higher quality shirt if it is priced at $50 instead of $5. Another point to note is that there is an incentive for all of the Y-combinator startups to say they had a good experience, because if they said otherwise they might be burning the bridges they built (which they would not want to do, even if those bridges are not worth what YC charges for them).
goldenson 18y ago
Hi Paul, I agree advice varies greatly in value. Bad advice is worth less than zero because it obscures the good. I think YC's advice is generally quite good. The thrust of my argument was that advice and connections are more commodities than most investors believe. Naval Ravikant, a YC speaker, says to assume investors are mostly money, as does Marc Andreesen: http://venturehacks.com/articles/dumb-money http://venturehacks.com/articles/dumb-money http://blog.pmarca.com/2007/06/the_truth_about_1.html http://blog.pmarca.com/2007/06/the_truth_about_1.html "Odds are, nothing your VC does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure." Ironically, because you distribute a lot of advice freely in essays and events, and because YC's connections are high-profile enough to work outside YC, it's less necessary to join YC for them. To me, the other entrepreneurs in YC are the biggest value-add and worth a premium. I don't argue YC should match angel terms, just come closer to them than 1/10th. I mention all this because I'm a fan of YC and want to see it succeed. The #1 criticism I hear about YC is the terms.* Investing a bit more is a good way to address that and one that now seems feasible. Otherwise it remains an obstacle to some high-quality founders and a way the increasing number of incubators can compete with you. To use a mixed metaphor, I know I'm preaching against the choir in the lion's den, so I expect skepticism. I intend it as a friendly perspective. -Mark * #2 is that YC ideas aren't "big" enough, but that's mainly a VC complaint and one I mostly disagree with, anyway.
- flipper 18y ago
  "Odds are, nothing your VC does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure." The effect of VC advice is in principle measurable. That would suggest an empirical approach is possible to determine whether YC is really 10x better than a 'regular' angel. Of course you'd have to consider the effect of how being chosen by YC might affect the performance of a startup. Also, whether YC is better at picking 'winners' than a regular angel. YC is really the first angel/excubator to sell themselves on the idea that they are mostly not money. They have to, because they don't give a lot of it.

by pg 18y ago

trickjarrett 18y ago

I think another fallacy in his argument is that he is saying all Angel investors are worth the same outside of money. Sure, some angels will bring good advice, input and ideas to the table, but some will not. With YC you know there's a solid support infrastructure.

scott_s 18y ago

Not only does advice vary in value, but when you're new to an area, you probably lack the ability to evaluate advice on its own merits.

vaksel 18y ago

To be fair, noone knows if your advice is good or bad(essays notwithstanding). Can you give an example of some specific advice you gave to one of the YC startups recently?

harpastum 18y ago
I think the point of the essays and this community is to give startups an idea of the sort of advice they'll be getting [1]. Any "specific" advice would either be too close to the issues to have any meaning outside the company. As far as I can tell, PG has no qualms about "trade secrets"--if he thinks the advice would benefit everyone starting up a company, he will probably write an essay about it. If those ideas and themes resonate with you, you have an idea of what benefits you'll reap from the support of the YC staff. [1] Work hard to create wealth. ( http://www.paulgraham.com/start.html http://www.paulgraham.com/start.html )
pg 18y ago
Actually around 300 people know, because that is about the number of founders we've funded. So if people (e.g. those applying for funding) want to know if YC is worth it, we usually suggest they contact some and ask them individually. I could never talk about conversations I'd had with specific startups, because the more useful the advice was, the more precisely you'd be able to identify the startup.
- vaksel 18y ago
  Well yeah, I was more talking about people outside looking in, like the author, since he can't judge the quality of the advice he resorts to just comparing the monetary terms

endlessvoid94 18y ago

Also, the type of advice you're able to find online hasn't always been there. When did you start YC? 3 years ago? 4? It seems like startup-advice blog-type sites have only sprung up since then.

pkaler 18y ago

The first thing I see is the 3.6% difference in equity taken. If I can bring in 3 great advisors and give them 1% equity each then I am ahead in terms of cash investment and advice.

mannicken 18y ago
They'll also give you much more money :)
pg 18y ago
then I am ahead Your conclusion is your assumption.

mannicken 18y ago

But is your advice worth (50-12) 38 thousands of dollars? Of course, it's not only advice, so I assume experience+popularity+connections. Is it worth that much money? Maybe, I don't know. If startup is so freaking awesome it was accepted by a rich Angel and the YC, it can "buy" all that stuff for $38,000 from you. The question of whether non-monetary YC experience is worth that much money is a hard one and it would probably involve calculating probability rate of success at YC vs Angel, non-monetary factors (well-being), externalities (with all the benevolence), and other things. On the other hand, there is $38,000 just laying around, waiting for you to grab and multiply your runway by ~5 (50,000/12,000).

cominatchu 18y ago

I would argue that by putting such a high valuation on your advice, people think it's worth more, just as they have a natural tendency to think that they are getting a higher quality shirt if it is priced at $50 instead of $5. Another point to note is that there is an incentive for all of the Y-combinator startups to say they had a good experience, because if they said otherwise they might be burning the bridges they built (which they would not want to do, even if those bridges are not worth what YC charges for them).

goldenson 18y ago

Hi Paul, I agree advice varies greatly in value. Bad advice is worth less than zero because it obscures the good. I think YC's advice is generally quite good. The thrust of my argument was that advice and connections are more commodities than most investors believe. Naval Ravikant, a YC speaker, says to assume investors are mostly money, as does Marc Andreesen: http://venturehacks.com/articles/dumb-money http://venturehacks.com/articles/dumb-money http://blog.pmarca.com/2007/06/the_truth_about_1.html http://blog.pmarca.com/2007/06/the_truth_about_1.html "Odds are, nothing your VC does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure." Ironically, because you distribute a lot of advice freely in essays and events, and because YC's connections are high-profile enough to work outside YC, it's less necessary to join YC for them. To me, the other entrepreneurs in YC are the biggest value-add and worth a premium. I don't argue YC should match angel terms, just come closer to them than 1/10th. I mention all this because I'm a fan of YC and want to see it succeed. The #1 criticism I hear about YC is the terms.* Investing a bit more is a good way to address that and one that now seems feasible. Otherwise it remains an obstacle to some high-quality founders and a way the increasing number of incubators can compete with you. To use a mixed metaphor, I know I'm preaching against the choir in the lion's den, so I expect skepticism. I intend it as a friendly perspective. -Mark * #2 is that YC ideas aren't "big" enough, but that's mainly a VC complaint and one I mostly disagree with, anyway.

flipper 18y ago
"Odds are, nothing your VC does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure." The effect of VC advice is in principle measurable. That would suggest an empirical approach is possible to determine whether YC is really 10x better than a 'regular' angel. Of course you'd have to consider the effect of how being chosen by YC might affect the performance of a startup. Also, whether YC is better at picking 'winners' than a regular angel. YC is really the first angel/excubator to sell themselves on the idea that they are mostly not money. They have to, because they don't give a lot of it.