I didn't realize how poorly YC startups were managed until I joined one.
It's mostly a ponzi scheme, where unprofitable companies pass their books off to non-technical investors that love hype.
> 1 slide. 1 minute pitches. 1 speaker.
This is why YC has such poor results. They're more interested in "1 slide" vs actual financials.
> Vertical AI was all over the place. Cursor for X was also prevalent.
No thought leadership at all.
YC is very similar to a university. There is a small group of companies that create the reputation on which everybody lives. The results are extremely exponentially distributed. So yes, it makes sense you joining some arbitrary YC startup was a bad experience. The average performance of a YC company is __phenomenal__, the median performance is poor.
> YC is very similar to a university
No it's not. It's not even remotely comparable.
> There is a small group of companies that create the reputation on which everybody lives
Also called luck. YC investors cannot articulate what made them successful, or else they'd have better results.
Universities have decades of sustained output. They are not comparable.
> you joining some arbitrary YC startup was a bad experience
I am at a YC unicorn. We are one of YC's most successful startups.
> The average performance of a YC company is __phenomenal__
It absolutely is not. It doesn't even beat the SP500. The __vast__ majority of YC companies are unprofitable failures.
You could flip a coin and beat YC.
You're wrong. YC's returns far exceed the returns of the S&P 500. This is why LP's throw money at YC's funds. And secondly, I've been through YC. It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not. You are correct the vast majority of YC companies are failures. However this does not preclude that the *mean* of YC outcomes is very very good. If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.
> You're wrong
You thought YC was comparable to a university
> This is why LP's throw money at YC's funds
Yeah, we know hedge funds that throw money at things usually beat the SP500.
> It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not
Group office hours and not actual revenue. Proving my point!
> However this does not preclude that the mean of YC outcomes is very very good
It absolutely does, lmao.
> If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.
Yes, one person being successful, the rest failures would skew the results! Way to prove the point I'm making, lmao.
You agreed with his rephrasing of his original assertion
> There is a small group of companies that create the reputation on which everybody lives
>> Also called luck.
Startup skill is a necessary but not sufficient condition for success. You also need luck. I doubt YC would claim otherwise.
Let's say each startup is a planet. Whoever gets hit with the most asteriods wins. Every conscious right decision and technical prowess that constitutes skill increases the size of the planet. The bigger the planet the more likely that more asteriods hit it. But space is a hig place, the largest planet is not guarenteed to have the most asteriod hits. A smaller planet could actually win. So it is with luck.
>YC investors cannot articulate what made them successful, or else they'd have better results.
Again, I doubt YC would contest this. But the power law so far has allowed them to be successful without having to guess correctly who in their pool would become the unicorn.
>You could flip a coin and beat YC
Where are you flipping this coin exactly? Are you flipping a coin in a pool containing all the startups in the world? If that's the case I'd like to see you take that bet. But if you flip a coin on Demo day, I'm sure you can beat some YC partners who additionally invest in a personal capacity.
These returns outperform the S&P. Maybe these aren’t typical, but it’s pretty far from “you could flip a coin and beat YC”
Why is this top post on hn within one minute of posting?
I'm guessing the speed with which it received its initial few votes.
It's a threadbare article with little or no meat on the bone. So it is a little strange.
Carl Weathers
It had literally two votes. Anyway looks like I shouldn't have brought this issue up, getting downvoted
Yeah, you're supposed to email hn instead of posting if you think it's an issue.
I've seen 3 point new posts up near the top before so I assumed that's what it was. 2 points top of the page is pretty aggressive tho, it might have been a near instant upvote by someone who was interested in the topic.
I don’t know how or why, but I have seen this happen many times. Many of my submissions appear at the front within minutes of receiving 2-3 votes. I have no affiliation with YC, nor are my submissions.
But otherwise, makes sense - get rid off all the flash and this is what demo days/etc are about
Sounds more like a cattle auction than a place where partnerships are formed to deliver meaningful value to consumers.
If you aren't already connected beforehand these rituals are a waste of time.
Painfully true!
This is market efficiency. That's the very definition of delivering meaningful value.
The more efficient the capital allocation is, the greater the benefit to the whole market.
The only weirdness is that these are companies led by founders with "personalities". That's a weird variable to correct for.
How much more efficient is it to allocate capital to a group individuals who have been educated at institutions that produce an increasingly rigid type of thinker, who are all making the same hype driven products?
That's one type of signal and gradient. There are lots of others. One of the best is traction with paying customers. The great thing is that investment capital can try many strategies at once. As can innovation capital and labor.
Collectively we are water, filling all the cracks. Marbles, exploring all the slopes and curves. The fitness gradients of the universe are all in front of us. Follow the ones that make sense and that pull at you. We're all programmed differently enough that the whole space is being sampled, even in the weird places, the well-worn yet unweildy paths, and the completely non obvious domains.
The algorithm focuses energy when certainty crystalizes.
"2 on 20" Am I understanding correctly? If every YC startup is shooting for a 20 million USD valuation, that's amazing. Even if not all will make it.
Nobody ever pays too much or too little for a startup. Because either you __really__ make it, or you don't. It is statistically more likely for your YC startup to be worth more than $1 billion, than it is to be acquired in a cash deal for $80mm. It is because of this fact that $2/22mm is not unreasonable. However, most of the hot companies during the batch will fetch $3-4mm/30-40mm valuation. The average raise during demo day is close to ~$3mm, the median <$800k.
I didn't realize how poorly YC startups were managed until I joined one.
It's mostly a ponzi scheme, where unprofitable companies pass their books off to non-technical investors that love hype.
> 1 slide. 1 minute pitches. 1 speaker.
This is why YC has such poor results. They're more interested in "1 slide" vs actual financials.
> Vertical AI was all over the place. Cursor for X was also prevalent.
No thought leadership at all.
YC is very similar to a university. There is a small group of companies that create the reputation on which everybody lives. The results are extremely exponentially distributed. So yes, it makes sense you joining some arbitrary YC startup was a bad experience. The average performance of a YC company is __phenomenal__, the median performance is poor.
> YC is very similar to a university
No it's not. It's not even remotely comparable.
> There is a small group of companies that create the reputation on which everybody lives
Also called luck. YC investors cannot articulate what made them successful, or else they'd have better results.
Universities have decades of sustained output. They are not comparable.
> you joining some arbitrary YC startup was a bad experience
I am at a YC unicorn. We are one of YC's most successful startups.
> The average performance of a YC company is __phenomenal__
It absolutely is not. It doesn't even beat the SP500. The __vast__ majority of YC companies are unprofitable failures.
You could flip a coin and beat YC.
You're wrong. YC's returns far exceed the returns of the S&P 500. This is why LP's throw money at YC's funds. And secondly, I've been through YC. It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not. You are correct the vast majority of YC companies are failures. However this does not preclude that the *mean* of YC outcomes is very very good. If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.
> You're wrong
You thought YC was comparable to a university
> This is why LP's throw money at YC's funds
Yeah, we know hedge funds that throw money at things usually beat the SP500.
> It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not
Group office hours and not actual revenue. Proving my point!
> However this does not preclude that the mean of YC outcomes is very very good
It absolutely does, lmao.
> If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.
Yes, one person being successful, the rest failures would skew the results! Way to prove the point I'm making, lmao.
You agreed with his rephrasing of his original assertion
> There is a small group of companies that create the reputation on which everybody lives
>> Also called luck.
Startup skill is a necessary but not sufficient condition for success. You also need luck. I doubt YC would claim otherwise.
Let's say each startup is a planet. Whoever gets hit with the most asteriods wins. Every conscious right decision and technical prowess that constitutes skill increases the size of the planet. The bigger the planet the more likely that more asteriods hit it. But space is a hig place, the largest planet is not guarenteed to have the most asteriod hits. A smaller planet could actually win. So it is with luck.
>YC investors cannot articulate what made them successful, or else they'd have better results.
Again, I doubt YC would contest this. But the power law so far has allowed them to be successful without having to guess correctly who in their pool would become the unicorn.
>You could flip a coin and beat YC
Where are you flipping this coin exactly? Are you flipping a coin in a pool containing all the startups in the world? If that's the case I'd like to see you take that bet. But if you flip a coin on Demo day, I'm sure you can beat some YC partners who additionally invest in a personal capacity.
Garry Tan posted some data recently on performance investing in demo day: https://x.com/garrytan/status/1927946812364574912
These returns outperform the S&P. Maybe these aren’t typical, but it’s pretty far from “you could flip a coin and beat YC”
Why is this top post on hn within one minute of posting?
I'm guessing the speed with which it received its initial few votes.
It's a threadbare article with little or no meat on the bone. So it is a little strange.
Carl Weathers
It had literally two votes. Anyway looks like I shouldn't have brought this issue up, getting downvoted
Yeah, you're supposed to email hn instead of posting if you think it's an issue.
I've seen 3 point new posts up near the top before so I assumed that's what it was. 2 points top of the page is pretty aggressive tho, it might have been a near instant upvote by someone who was interested in the topic.
I don’t know how or why, but I have seen this happen many times. Many of my submissions appear at the front within minutes of receiving 2-3 votes. I have no affiliation with YC, nor are my submissions.
Maybe karma affects post visibility?
No, then he would keep posting whatever every day
https://billchambers.me/about/
This page on mobile made me laugh.
But otherwise, makes sense - get rid off all the flash and this is what demo days/etc are about
Sounds more like a cattle auction than a place where partnerships are formed to deliver meaningful value to consumers.
If you aren't already connected beforehand these rituals are a waste of time.
Painfully true!
This is market efficiency. That's the very definition of delivering meaningful value.
The more efficient the capital allocation is, the greater the benefit to the whole market.
The only weirdness is that these are companies led by founders with "personalities". That's a weird variable to correct for.
How much more efficient is it to allocate capital to a group individuals who have been educated at institutions that produce an increasingly rigid type of thinker, who are all making the same hype driven products?
That's one type of signal and gradient. There are lots of others. One of the best is traction with paying customers. The great thing is that investment capital can try many strategies at once. As can innovation capital and labor.
Collectively we are water, filling all the cracks. Marbles, exploring all the slopes and curves. The fitness gradients of the universe are all in front of us. Follow the ones that make sense and that pull at you. We're all programmed differently enough that the whole space is being sampled, even in the weird places, the well-worn yet unweildy paths, and the completely non obvious domains.
The algorithm focuses energy when certainty crystalizes.
"2 on 20" Am I understanding correctly? If every YC startup is shooting for a 20 million USD valuation, that's amazing. Even if not all will make it.
Nobody ever pays too much or too little for a startup. Because either you __really__ make it, or you don't. It is statistically more likely for your YC startup to be worth more than $1 billion, than it is to be acquired in a cash deal for $80mm. It is because of this fact that $2/22mm is not unreasonable. However, most of the hot companies during the batch will fetch $3-4mm/30-40mm valuation. The average raise during demo day is close to ~$3mm, the median <$800k.