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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

by 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/
- tptacek 11y ago
  Read a little more carefully. He didn't say YC guarantees success, nor does he believe that. (I'm one of his cofounders, and this came up).
  - amirmc 11y ago
    You're correct that patio11 didn't say that but I think it's helpful to remind people that the power law still exists. It's really easy to fall into the trap of survivorship bias and I'm sure there are plenty of folks out there who would benefit from being reminded that "... no founder should delude himself or herself that being part of [YC] guarantees success ..."
  - larrys 11y ago
    A denial worthy of a top flight attorney. He implied that by this paragraph: "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!" So we have: "mortal lock" "make angels weep" "preferential access to every connection which matters" "top tier VC firms" "one free TC article".
    - tptacek 11y ago
      What an oddly noisome comment.
      - larrys 11y ago
        Nice SAT word (I didn't learn that at the school that I attended). You find being called a top flight attorney offensive?
        tptacek 11y ago
        As a Level 15 message board arch-nerd, I love that word, because it's a sort of two-fer: it suggests "noisy", which is really what I'm getting at, but actually means "annoying" --- "noise" and "annoying" having apparently different roots. I felt like my response was dispositive. I'm telling you straightforwardly that's not what he meant, and I have good reason to believe I'm right. Your rebuttal actually ignored the substance of my comment and instead launched into a tedious semantic tea-leaf-reading exercise. "Noisome" seems like the right word. :)
mattmaroon 11y ago
To be fair, most of those benefits were there early on. Everyone in the industry definitely knew about YC already when I started (S07). All major angels/VCs were reachable through the network already. Valuations were good (for back then). But the network effect does make the club worth more.
timr 11y ago
"You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing." While I concede your greater point, you're really overstating this part of it.
- patio11 11y ago
  My ex-ante expectation of a YC company in the current class raising successfully conditional on them being a going concern as of Demo Day is > 95%. With regards to valuation, I was joking -- the discursive market for it was the "angels weep" wordplay but it belatedly occurs to me that for people whose primary association with the term "angel" is "angel investor" that is less obviously intended to be a joke than it is with the rest of us.
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larrys 11y ago
Competition to get "the next YC" deal is much greater now than it was back when "nobody has heard of us but we're still a club" but did provide value. [1] If you don't get into the club and haven't passed the filter (which almost certainly has become more difficult) then you don't have anything. [1] Also the resources are most certainly stretched much thinner than they were "back then". Even though there are more resources to tap.

by patio11 11y ago

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/

tptacek 11y ago
Read a little more carefully. He didn't say YC guarantees success, nor does he believe that. (I'm one of his cofounders, and this came up).
- amirmc 11y ago
  You're correct that patio11 didn't say that but I think it's helpful to remind people that the power law still exists. It's really easy to fall into the trap of survivorship bias and I'm sure there are plenty of folks out there who would benefit from being reminded that "... no founder should delude himself or herself that being part of [YC] guarantees success ..."
- larrys 11y ago
  A denial worthy of a top flight attorney. He implied that by this paragraph: "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!" So we have: "mortal lock" "make angels weep" "preferential access to every connection which matters" "top tier VC firms" "one free TC article".
  - tptacek 11y ago
    What an oddly noisome comment.
    - larrys 11y ago
      Nice SAT word (I didn't learn that at the school that I attended). You find being called a top flight attorney offensive?
      - tptacek 11y ago
        As a Level 15 message board arch-nerd, I love that word, because it's a sort of two-fer: it suggests "noisy", which is really what I'm getting at, but actually means "annoying" --- "noise" and "annoying" having apparently different roots. I felt like my response was dispositive. I'm telling you straightforwardly that's not what he meant, and I have good reason to believe I'm right. Your rebuttal actually ignored the substance of my comment and instead launched into a tedious semantic tea-leaf-reading exercise. "Noisome" seems like the right word. :)

mattmaroon 11y ago

To be fair, most of those benefits were there early on. Everyone in the industry definitely knew about YC already when I started (S07). All major angels/VCs were reachable through the network already. Valuations were good (for back then). But the network effect does make the club worth more.

timr 11y ago

"You're a mortal lock on raising a round subsequent to Demo Day at a valuation which will make angels weep while happily investing." While I concede your greater point, you're really overstating this part of it.

patio11 11y ago
My ex-ante expectation of a YC company in the current class raising successfully conditional on them being a going concern as of Demo Day is > 95%. With regards to valuation, I was joking -- the discursive market for it was the "angels weep" wordplay but it belatedly occurs to me that for people whose primary association with the term "angel" is "angel investor" that is less obviously intended to be a joke than it is with the rest of us.
- deleted 11y ago
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deleted 11y ago

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larrys 11y ago

Competition to get "the next YC" deal is much greater now than it was back when "nobody has heard of us but we're still a club" but did provide value. [1] If you don't get into the club and haven't passed the filter (which almost certainly has become more difficult) then you don't have anything. [1] Also the resources are most certainly stretched much thinner than they were "back then". Even though there are more resources to tap.