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The article makes it clear that the YC interview selection process is deeply flawed. Leaving out the idea that they were selected because they told a story abou

The article makes it clear that the YC interview selection process is deeply flawed. Leaving out the idea that they were selected because they told a story about the sound of biting a bottle, surely at the interview stage, if the entrepreneurs do not know what the company is making, or the business looks weak the interviewer should just say no. It's not enough to say "here are two bright people that can pivot". Bright people are everywhere, good business ideas are rare. All this does is cause the stress that the author has gone through as he and his partner have to desperately search for a business idea that may not come. This kind of stress, based on unrealistic expectations, can lead people to kill themselves, and seems to me to be borderline unethical. Meanwhile there are literally hundreds of other companies and thousands of smart people with great ideas that would gladly take their place and succeed, including many of the readers here.

pjlegato 12y ago
It's probably true that the YC interview process is deeply flawed, but OTOH there is no known better way to select worthy investments yet. Good startup business ideas are not only rare but also impossible to identify a priori. The only way to tell whether a business idea is good or not is to actually try it out in the market and see what happens. (This doesn't mean that any crazy idea is good, but it does mean that some good ideas seem crazy before they are tried.) If there were any methodology that could identify worthy investments with anything close to high accuracy, there would not be stock markets and there certainly wouldn't be a VC industry. VC investment works differently from other forms of investment due to the outsize gains on the rare successes. This market requires many comparatively small bets with limited losses and a few low-probability but huge payoffs. Compare this to a Warren Buffet style investment methodology of a few large bets in well-established companies and industries with high probability of moderate payoff. Neither is "right" in an absolute sense; it depends on the investor's risk tolerance and the nature of the opportunities. The VC business model is to apply some coarse-grained filters to screen out obvious scammers and gross incompetents, then give the remainder of the cohort some money, knowing in advance that 99% will fail completely. The remaining 1% will pay for the losses on the 99% many times over. Moreover, in YC's case, the amount of money they invest is so small compared to the massive returns on their few successes that they can now afford to take many of these small risks on "two guys who seem smart." Most of them will fail, and they know that going in. It doesn't matter. They're betting that sooner or later, they'll wind up with another AirBnB or Reddit that will pay for many thousands of these small bets.
- jsonchen 12y ago
  Honestly I think that YC is opting to make fewer risks these days, not more. The days where you can get funding without traction are numbered, and with it go the real crazy idea startups like AirBnb, Stripe, and Twitch.tv.
gravedave 12y ago
I agree with it being arguably unethical, but mostly because it's a business model that tries to appease two sides (the techies with ideas, and the investors), which, in my opinion, easily leads to one side being product for the other side. Some such businesses may work, like job recruitment, but I think it's mostly because the weaker side (the unemployed) doesn't have much to lose.

pjlegato 12y ago

It's probably true that the YC interview process is deeply flawed, but OTOH there is no known better way to select worthy investments yet. Good startup business ideas are not only rare but also impossible to identify a priori. The only way to tell whether a business idea is good or not is to actually try it out in the market and see what happens. (This doesn't mean that any crazy idea is good, but it does mean that some good ideas seem crazy before they are tried.) If there were any methodology that could identify worthy investments with anything close to high accuracy, there would not be stock markets and there certainly wouldn't be a VC industry. VC investment works differently from other forms of investment due to the outsize gains on the rare successes. This market requires many comparatively small bets with limited losses and a few low-probability but huge payoffs. Compare this to a Warren Buffet style investment methodology of a few large bets in well-established companies and industries with high probability of moderate payoff. Neither is "right" in an absolute sense; it depends on the investor's risk tolerance and the nature of the opportunities. The VC business model is to apply some coarse-grained filters to screen out obvious scammers and gross incompetents, then give the remainder of the cohort some money, knowing in advance that 99% will fail completely. The remaining 1% will pay for the losses on the 99% many times over. Moreover, in YC's case, the amount of money they invest is so small compared to the massive returns on their few successes that they can now afford to take many of these small risks on "two guys who seem smart." Most of them will fail, and they know that going in. It doesn't matter. They're betting that sooner or later, they'll wind up with another AirBnB or Reddit that will pay for many thousands of these small bets.

jsonchen 12y ago
Honestly I think that YC is opting to make fewer risks these days, not more. The days where you can get funding without traction are numbered, and with it go the real crazy idea startups like AirBnb, Stripe, and Twitch.tv.

gravedave 12y ago

I agree with it being arguably unethical, but mostly because it's a business model that tries to appease two sides (the techies with ideas, and the investors), which, in my opinion, easily leads to one side being product for the other side. Some such businesses may work, like job recruitment, but I think it's mostly because the weaker side (the unemployed) doesn't have much to lose.