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That's great but seems - wow crazy. Why does one need that much money that late (not a rhetorical question, I've only ever been at Pre-B series startups)? I've

That's great but seems - wow crazy. Why does one need that much money that late (not a rhetorical question, I've only ever been at Pre-B series startups)? I've already seen Airbnb ads on TV, and it's not like they're a hardware company or some place like Zipcar where they need the capital to buy more machinery or equipment, so what is this really going towards? They're still operating at a loss, so how is this going to get them further out of the red, unless they expect to be operating in the red for a while? Another tangential question I have is - where does YC fit now for startups? We're seeing all of these billion "Unicorn" companies coming up, and YC has grown from a handful of companies in a class to over 100 - can the next YC class really expect to earn the same esteem as the older ones? Is YC incrementally losing it's value to startups with every class that starts (and grows)?

pbreit 11y ago
Truth: best to raise when you can, not when you need.
- kzhahou 11y ago
  Does that scale into the billions, though?
  - shiven 11y ago
    Apparently, it just did.
  - 001sky 11y ago
    Consider it like FB buying instagram. Company is playing around with a small amount of equity as a % of total value. Having some liquidity in the bank for a rainy day is a good thing in a bubble. As is investing it in a way that will increase an eventual IPO value. So in either the upside or the downside here they have options to use the money that likely will move the needle on valuation.
  - pbreit 11y ago
    Absolutely. Once you raise, you're practically praying for the economy to tank. All of your poorly funded competitors go away and everything gets way cheaper (primarily, labor).
    - mcintyre1994 11y ago
      Does this hold if you're selling a luxury good like holidays?
      - pbreit 11y ago
        I'm sure there are exceptions but very few. And not that one. A well-capitalized player could go a long way towards sewing up the entire market.
patio11 11y ago
Is YC incrementally losing it's value to startups with every class that starts (and grows)? Would you rather have the deal that Airbnb got from YC or the deal that the next three kids with a gleam in their eye will get from YC? Airbnb vintage YC deal: Here's $15k for 7% of your company. Also, welcome to the club! Nobody has heard of us, but we're still a club. Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too!
- 7Figures2Commas 11y ago
  > Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too! Sigh. YC has a lot of cachet and no doubt opens certain doors, but founders should never drink too much Kool-Aid. For all of the wonderful things YC provides, the success of YC startups basically follows the same power law distribution you see across the Valley and no founder should delude himself or herself that being part of a "club" guarantees success in today's market. Just look at the experience of the founder of Dating Ring (YC Winter 2014)[1]: And so we focused on growth. For a year, my cofounders and I worked 100-hour weeks, all major holidays and weekends. We gave up social lives and had one of the most impressive graphs at the crazy 78-company Demo Day YC hosted – 60% MoM revenue growth, with 25k in revenue for March. We had more press and name recognition than any other company there, and my pitch was named as one of the top 8 by TechCrunch. Out of the 500 investors there, only one invested. [1] http://advice.datingring.com/fundraising-while-female/ http://advice.datingring.com/fundraising-while-female/
nostrademons 11y ago
I assume that the money is going to Airbnb ads on TV (and on airline seatbacks, and on Facebook, and everywhere else). When you have a model that works and is proven profitable on a unit basis, it makes sense to cram as much money as possible into distribution channels to make sure that it gets in front of everyone.
- untog 11y ago
  When you have a model that works and is proven profitable on a unit basis, it makes sense ...to IPO. In the normal world.
  - nostrademons 11y ago
    Post Sarbanes-Oxley, it never makes sense to IPO, ever. You incur costs of several million dollars for compliance. Meanwhile, the ostensible purposes of an IPO (to provide liquidity for shareholders, and to provide access to public capital markets for the company) have had other solutions crop up. There's now an active secondary market for employee stock of private companies, and the vast majority of the money that would go into the public markets is now managed by the same large investment firms that do these late-stage private rounds. I remember back when I was a countercultural libertarian hacker, we had a saying: "The Internet treats censorship as damage and routes around it." Well, the financial markets treat regulation as damage and route around it.
    - patio11 11y ago
      Post Sarbanes-Oxley, it never makes sense to IPO, ever. Let's go with, maybe, "Pre-SOX, you could reasonably IPO on revenue in the tens of millions with a valuation in the hundred of millions. SOX decisively removes that option. We now have economically viable alternatives to IPO, for high-growth tech companies, at valuations into minimally 'the tens of billions of dollars.' It may make sense to IPO if one is not a high-growth tech company or one desires a valuation higher than 'tens of billions of dollars.'" (Context: Uber is $25 ~ $50 billion, Microsoft is ~$375 billion.)

pbreit 11y ago

Truth: best to raise when you can, not when you need.

kzhahou 11y ago
Does that scale into the billions, though?
- shiven 11y ago
  Apparently, it just did.
- 001sky 11y ago
  Consider it like FB buying instagram. Company is playing around with a small amount of equity as a % of total value. Having some liquidity in the bank for a rainy day is a good thing in a bubble. As is investing it in a way that will increase an eventual IPO value. So in either the upside or the downside here they have options to use the money that likely will move the needle on valuation.
- pbreit 11y ago
  Absolutely. Once you raise, you're practically praying for the economy to tank. All of your poorly funded competitors go away and everything gets way cheaper (primarily, labor).
  - mcintyre1994 11y ago
    Does this hold if you're selling a luxury good like holidays?
    - pbreit 11y ago
      I'm sure there are exceptions but very few. And not that one. A well-capitalized player could go a long way towards sewing up the entire market.

patio11 11y ago

Is YC incrementally losing it's value to startups with every class that starts (and grows)? Would you rather have the deal that Airbnb got from YC or the deal that the next three kids with a gleam in their eye will get from YC? Airbnb vintage YC deal: Here's $15k for 7% of your company. Also, welcome to the club! Nobody has heard of us, but we're still a club. Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too!

7Figures2Commas 11y ago
> Next YC deal: Here's $120k for 7% of your company. Also, welcome to the club! People have heard of us! You now have social permission to tap the resources of several hundred companies, some of which are worth billions of dollars. You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing. You have preferential access to every connection which matters in Silicon Valley, including top-tier VC firms, a pool of interested employees, potential acquirers, and vendors who you need good relations with. Comes with one free TechCrunch article, too! Sigh. YC has a lot of cachet and no doubt opens certain doors, but founders should never drink too much Kool-Aid. For all of the wonderful things YC provides, the success of YC startups basically follows the same power law distribution you see across the Valley and no founder should delude himself or herself that being part of a "club" guarantees success in today's market. Just look at the experience of the founder of Dating Ring (YC Winter 2014)[1]: And so we focused on growth. For a year, my cofounders and I worked 100-hour weeks, all major holidays and weekends. We gave up social lives and had one of the most impressive graphs at the crazy 78-company Demo Day YC hosted – 60% MoM revenue growth, with 25k in revenue for March. We had more press and name recognition than any other company there, and my pitch was named as one of the top 8 by TechCrunch. Out of the 500 investors there, only one invested. [1] http://advice.datingring.com/fundraising-while-female/ http://advice.datingring.com/fundraising-while-female/

nostrademons 11y ago

I assume that the money is going to Airbnb ads on TV (and on airline seatbacks, and on Facebook, and everywhere else). When you have a model that works and is proven profitable on a unit basis, it makes sense to cram as much money as possible into distribution channels to make sure that it gets in front of everyone.

untog 11y ago
When you have a model that works and is proven profitable on a unit basis, it makes sense ...to IPO. In the normal world.
- nostrademons 11y ago
  Post Sarbanes-Oxley, it never makes sense to IPO, ever. You incur costs of several million dollars for compliance. Meanwhile, the ostensible purposes of an IPO (to provide liquidity for shareholders, and to provide access to public capital markets for the company) have had other solutions crop up. There's now an active secondary market for employee stock of private companies, and the vast majority of the money that would go into the public markets is now managed by the same large investment firms that do these late-stage private rounds. I remember back when I was a countercultural libertarian hacker, we had a saying: "The Internet treats censorship as damage and routes around it." Well, the financial markets treat regulation as damage and route around it.
  - patio11 11y ago
    Post Sarbanes-Oxley, it never makes sense to IPO, ever. Let's go with, maybe, "Pre-SOX, you could reasonably IPO on revenue in the tens of millions with a valuation in the hundred of millions. SOX decisively removes that option. We now have economically viable alternatives to IPO, for high-growth tech companies, at valuations into minimally 'the tens of billions of dollars.' It may make sense to IPO if one is not a high-growth tech company or one desires a valuation higher than 'tens of billions of dollars.'" (Context: Uber is $25 ~ $50 billion, Microsoft is ~$375 billion.)