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Sam Altman: ‘Too many’ Y Combinator companies raise money

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Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#111

Post by abritinthebay »

dmitrygr wrote: post #87
TuringNYC wrote: post #77

If the artificially-created real estate "shortage" problem in the Bay Area was solved, lots of other problems would be solved. - Companies raising money just to pay inflated (yet still insufficient) labour costs - People who would love to work for startups but realize that most startup salaries barely gets you a studio apt, pretty cool until you have a family - Companies who "cant find" talent Is it any surprise comp…

> Companies raising money just to pay > inflated (yet still insufficient) labour costs This does not match reality since most startups in SV pay very very very little. In many cases barely enough to live with roommates (and forget having a family)

Based on nearly 15 years of working at startups: wut?

This is absolutely not true in any way. They sometimes pay less because they try to trade options for salaries but that’s becoming less popular given the lack of cashing out and people’s better understanding of the economics of it.

You can get low to mid six figures at a startup easily... which absolutely does not match your description

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#112

Post by newaccount4434 »

JSONwebtoken wrote: post #52
jpao79 wrote: post #10

Was just thinking the other day, it'd be super interesting if YC ran some YC Equity/YC UBI experiments within its own network. Basically in joining YC, each YC member would be granted a percentage of YC's 7% stake in all of the YC companies which would reduce their need to fundraise. In theory, YC members should all be highly motivated achievers and use that percentage stake to move their diverse set of businesses fo…

Wow imagine a UBI concept that has a barrier to entry dependent on one's merit and qualifications and stipulates that the recipient contributes a certain number of hours per week to a pursuit that generates a positive economic input. This is a brilliant idea, if only somebody had come up with this earlier.

Communism.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#113

Post by nwenzel »

chrishacken wrote: post #76
njarboe wrote: post #67

Earlier quoted context omitted.

If you know you are a likely to get between $100k and $1m in ten years, then there is a lot less financial risk of not putting any money in a 401k for a few years when creating a startup that eventually fails. I think this is a really cool idea. It would also will bind the group together even more (if you think that is a good thing).

Does anyone running a startup actually put money in a 401k? (Serious question.) I do not, nor do I know anyone else who does. I also don't see how that's enough money to tip the scale.

I do. So do my cofounder and many of our employees. We made the 401k available around 15 employees (I think). The tax savings of the 401k offsets the cost of providing the 401k, so its basically free-ish to offer... without matching.

For reference, we started offering the 401k before our A round. At that point, we had raised $2M and were still under $1M ARR run rate. Based in the Bay Area.

I don’t get the narrative that startups pay very little or don’t offer any benefits. We pay competitive comp and offer good benefits to get great people. We’re an enterprise SaaS company, so maybe pre-revenue or consumer or hit-based companies are different. But even our first employee was well compensated. Though at that point, my cofounder and I were paying ourselves well below market and were living off savings.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#114

Post by newaccount4434 »

jacquesm wrote: post #44
cperciva wrote: post #37

This seems like a signalling problem. If a YC company looks for funding at some point after demo day, the first question VCs ask is going to be "why didn't you raise money at demo day?" -- so there's going to be an incentive for companies to go after money at demo day even if they're not ready simply because it will be much harder if they wait. I wonder if it would be effective to tell YC companies that they can part…

Ironically it might be a lot easier to raise money as long as there is less substance to the company. Dreams of getting in on the ground floor work so much better to woo investors with visions of Dropbox and Airbnb in their heads than a year old start-up without traction. Besides that after that year the start-up will likely be out of runway and so in a much harder position to negotiate from. If I were to run a YC ba…

Listen to the AirBnB story on the podcast "How I built this". Before YC, nobody wanted to invest in AirBnB and the company wasn't profitable. YC is how founders find ideas (in the case of Reddit) or refine them. (in the case of AirBnB) In the end, the short time offered in YC allows founders to create the minimum viable product and start to or continue to gain users. The fact that so many companies gain some form of investment shows that YC is a success! Some companies may eventually fail, but YC is a success.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#115

Post by usaar333 »

killjoywashere wrote: post #103
TuringNYC wrote: post #77

If the artificially-created real estate "shortage" problem in the Bay Area was solved, lots of other problems would be solved. - Companies raising money just to pay inflated (yet still insufficient) labour costs - People who would love to work for startups but realize that most startup salaries barely gets you a studio apt, pretty cool until you have a family - Companies who "cant find" talent Is it any surprise comp…

San Diego's real estate is quite reasonable. So, kindly, stay in the Bay area. Please.

Except it has much lower income levels than the Bay Area - so it's only marginally better. In fact, SD is in the top 10 least affordable metro areas: http://www.nusinstitute.org/assets/resources/pageResources/E...

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#116

Post by perfmode »

usaar333 wrote: post #106
perfmode wrote: post #91

Earlier quoted context omitted.

Consider how much of the pay of well-paid big Corp talent goes to real estate rentiers in the Bay Area. 30% of base? That’s almost greater than the US gov’t’s cut.

> 30% of base? From various data points I have, average is around ~33% post-tax, 22% pre-tax of base. > Consider how much of the pay of well-paid big Corp talent goes to real estate rentiers in the Bay Area. For sure, it's a lot - but when all these high payed folks have such high value of time, housing in areas near work/fun places are going to be bid up.

treating the problem as an inevitability is taking the easy way out.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#117

Post by bandrami »

cjf4 wrote: post #104
TuringNYC wrote: post #77

If the artificially-created real estate "shortage" problem in the Bay Area was solved, lots of other problems would be solved. - Companies raising money just to pay inflated (yet still insufficient) labour costs - People who would love to work for startups but realize that most startup salaries barely gets you a studio apt, pretty cool until you have a family - Companies who "cant find" talent Is it any surprise comp…

To me this leads to a question about the Bay Area centric techno-spehere: at what point do the prices become so high that companies/ecosystems in other parts of the country become relatively attractive? I understand that the SV network is a real and powerful thing, but holding all else equal (indulge me), wouldn't it make the cost of startups more attractive for all stakeholders if an alternative, viable network were…

There's a certain element of myopia in SV, I think, in that people there seem not to understand that places like Austin, Fairfax County, and the Rt 128 Corridor do in fact currently exist and are full of startups doing startup things.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#118

Post by in3d »

dzink wrote: post #94
olfactory wrote: post #92

Early YC: Small, gets disproportionate number of wins. Develops top tier reputation. Later YC: Expands significantly due to the added prestige, and now performs much closer to the mean. Today: Sam says that "too many YC companies are getting funded". Is this fundamentally different from a mutual fund that yields 25% above market for a few years in a row and then performs closer to the mean for the following decade? I…

Mutual funds and VCs have an incentive to increase fund size due to the 2/20 compensation. They make a 2% of funds under management win or lose, so it pays to up-size the bucket. With early stage that is not an incentive, and the merit lines are so much fuzzier (is the fund adding value) and for smaller funds - how do you maximize odds of finding and funding the few winners. With increased late stage funding, the ear…

I think you mean hedge funds not mutual funds with 2/20.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#119

Post by saryant »

nwenzel wrote: post #113
chrishacken wrote: post #76

Earlier quoted context omitted.

Does anyone running a startup actually put money in a 401k? (Serious question.) I do not, nor do I know anyone else who does. I also don't see how that's enough money to tip the scale.

I do. So do my cofounder and many of our employees. We made the 401k available around 15 employees (I think). The tax savings of the 401k offsets the cost of providing the 401k, so its basically free-ish to offer... without matching. For reference, we started offering the 401k before our A round. At that point, we had raised $2M and were still under $1M ARR run rate. Based in the Bay Area. I don’t get the narrative t…

I worked for a Techstars company that started offering a 401k at 1 employee (me). One of the founders told me it really wasn’t that expensive.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#120

Post by kovek »

cjf4 wrote: post #104
TuringNYC wrote: post #77

If the artificially-created real estate "shortage" problem in the Bay Area was solved, lots of other problems would be solved. - Companies raising money just to pay inflated (yet still insufficient) labour costs - People who would love to work for startups but realize that most startup salaries barely gets you a studio apt, pretty cool until you have a family - Companies who "cant find" talent Is it any surprise comp…

To me this leads to a question about the Bay Area centric techno-spehere: at what point do the prices become so high that companies/ecosystems in other parts of the country become relatively attractive? I understand that the SV network is a real and powerful thing, but holding all else equal (indulge me), wouldn't it make the cost of startups more attractive for all stakeholders if an alternative, viable network were…

A siblung comment writes:

> doing startup things

I believe the network in the Bay Area is valuable. However, I don't know concrete examples of benefits that being based in the Bay Area brings. From my perspective as an upcoming newgrad, the companies in the Bay Area are great, but their location is decided by the founders/stockholders/executives. I'll try to see what are the pros for these people.

Off the top of my head:

- Nice weather

- Proximity to LA, meaning access to nice events or parties

- Proximity to friends. People who you've met through events in the area

- Proximity to other startup executives to exchange thoughts on company matters. (The bigger the company to share thoughts with, the better)

+ Same for counselling investors

- Proximity to investors or possible investors

+ Tangent: if your connections can afford to live in the area and are relatively comfortable, then they might have many thousands of dollars to spare.

- Proximity to Stanford, Berkeley, and other big name universities

- Culture that appreciates tech, such that many people like to discuss new technology

I can't think of other big benefits of being based in the Bay Area from the perspective of the biggest shareholders of a company/founders/executives.

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