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A New Standard Deal

blog.ycombinator.com

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Re: A New Standard Deal

#31

Post by Chris2048 »

tlb wrote: post #13
headcanon wrote: post #4

Earlier quoted context omitted.

If cost of living is so high, I wonder why they wouldn't invest in a dorm-like living space for founders? I'm not familiar with the area, so I imagine there's reasons for it, but being able to focus on work instead of life-maintenance details seems like it would benefit the organization.

(a) It's not clear why YC could run an apartment complex better or cheaper than the many companies who already do it (including some YC-funded startups like https://zeusliving.com ) (b) Founders tend to be independent-minded people who like to do things their own way.

> better or cheaper than the many companies

why would existing companies be offering cheaper? The price will be set by the market, and any saving will be taken as profit, not passed on to the tenants.

The easiest way to insure against rent increase is buy a big chunk of local land. Actually offering it to your own startups just means they reduce overheads a little, provide an extra perk, and a small competitive advantage.

Re: A New Standard Deal

#32

Post by tanilama »

headcanon wrote: post #4
vikramkr wrote: post #2

A big reason they said they were raising the deal previously was the cost of living in the bay area and increased cost of starting a company today[0]. Are they anticipating that those costs are going to come down now? They suggest that this decreased amount will allow them to fund more companies, and hint that it has to do with economic conditions as well. But, if that amount of money is still needed to live in the b…

If cost of living is so high, I wonder why they wouldn't invest in a dorm-like living space for founders? I'm not familiar with the area, so I imagine there's reasons for it, but being able to focus on work instead of life-maintenance details seems like it would benefit the organization.

Maybe because the plan is to ditch Bay Area in the future? Why would people come to a specific place to found an internet company?

Re: A New Standard Deal

#33

Post by joshpadnick »

Our startup is profitable, scaling, and in the single-digit millions of revenue per year. We don't have any investors but are still capital constrained. The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us, nor do we want the requirement of having to meet with other startups once a week since we're already quite busy.

Does YC have a "funding offering" for startups at our stage?

Re: A New Standard Deal

#34

Post by vmception »

dmor wrote: post #16
vikramkr wrote: post #2

A big reason they said they were raising the deal previously was the cost of living in the bay area and increased cost of starting a company today[0]. Are they anticipating that those costs are going to come down now? They suggest that this decreased amount will allow them to fund more companies, and hint that it has to do with economic conditions as well. But, if that amount of money is still needed to live in the b…

Rents in San Francisco’s SOMA neighborhood dropped 9% in May https://www.google.com/amp/s/sf.curbed.com/platform/amp/2020... My guess is that the departures will continue as unemployment rates grown and that when federal and state payments run out we will see a further decline. I think companies will soon have to justify why they can afford to have an office with remote as the better (and cheaper option). Other than…

Rents dropped 9%

but landlords are also offering 8 weeks free

Which really means an annual lease has dropped 25%

quite steep, you could probably offer something closer to 38% lower.

Re: A New Standard Deal

#35

Post by gustaf »

ipnon wrote: post #8

How many YC companies are "remote"? What is the optimal deal if the cost of Bay Area located startups is balanced with the cost of distributed startups?

In the Summer 2020 batch every company is remote. My guess would be that 25% of the companies in the batch are currently based in the bay area.

Re: A New Standard Deal

#36

Post by alehul »

joshpadnick wrote: post #33

Our startup is profitable, scaling, and in the single-digit millions of revenue per year. We don't have any investors but are still capital constrained. The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us, nor do we want the requirement of having to meet with other startups once a week since we're already quite busy. Does YC have a "funding offering" for startups at our stage?

In this case, why would you be interested in YC? What would it offer you?

It seems disappointing that YC's value is no longer qualitatively good advice for early-stage founders and a close-knit community of hackers.

Maybe I'm just jaded, but it appears increasingly corporatized every year. Sometimes it feels like YC might as well be a certificate — just a stamp of approval that provides access to a network of investors and clout. (I'd love to be wrong on this).

Re: A New Standard Deal

#37

Post by ska »

Chris2048 wrote: post #31
tlb wrote: post #13

Earlier quoted context omitted.

(a) It's not clear why YC could run an apartment complex better or cheaper than the many companies who already do it (including some YC-funded startups like https://zeusliving.com ) (b) Founders tend to be independent-minded people who like to do things their own way.

> better or cheaper than the many companies why would existing companies be offering cheaper? The price will be set by the market, and any saving will be taken as profit, not passed on to the tenants. The easiest way to insure against rent increase is buy a big chunk of local land. Actually offering it to your own startups just means they reduce overheads a little, provide an extra perk, and a small competitive advan…

What is the opportunity cost of that land investment? Is YC really better off getting into the landlord business rather than using the same money to fund more companies?

Re: A New Standard Deal

#38

Post by Naac »

PragmaticPulp wrote: post #14
phkahler wrote: post #10

I figured the increase to over 100k is when non-technical people started doing it. They hire people to make their MVP instead of the founders themselves. Or am I wrong about that?

$100K won't buy enough professional services to build, launch, and operate an MVP unless the app is very simple. If it's simple enough that anyone can drop $50K-100K on design services and have your business cloned, it's not a very defensible startup idea. There are occasional exceptions, but typically the founding team must have the majority talent and skills required to launch the MVP.

That doesn't seem right.

In what timeframe?

By looking at plenty of the "Show HN:" posts we can see many examples of more than just "simple" services that were made on a much smaller ( or $0 ) budget.

Re: A New Standard Deal

#39

Post by rsweeney21 »

This is great for YC, not great for YC backed startups.

By giving each company $25K less, they can now place bets on 3,000 more companies. Less money for you, less risk for them.

I wonder if their success rate has declined as their batch sizes have gotten larger.

YC has become less and less attractive to me over the years. Is it just me?

Re: A New Standard Deal

#40

Post by joshpadnick »

alehul wrote: post #36
joshpadnick wrote: post #33

Our startup is profitable, scaling, and in the single-digit millions of revenue per year. We don't have any investors but are still capital constrained. The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us, nor do we want the requirement of having to meet with other startups once a week since we're already quite busy. Does YC have a "funding offering" for startups at our stage?

In this case, why would you be interested in YC? What would it offer you? It seems disappointing that YC's value is no longer qualitatively good advice for early-stage founders and a close-knit community of hackers. Maybe I'm just jaded, but it appears increasingly corporatized every year. Sometimes it feels like YC might as well be a certificate — just a stamp of approval that provides access to a network of investo…

> In this case, why would you be interested in YC? What would it offer you?

It's a fair point. The irony is that because our startup is doing well, we'd rather spend our time talking to customers and building the product than pitching to investors. Maybe what we're really looking for is a next-gen take on capital that would look something like this:

* Minimal time needed by us to reach a decision on whether they'd like to fund us

* Known good terms (preferably open source) that we don't have to spend time digging in

* No board seat

* Minimal equity take

* Minimal reporting requirements. We already share financial statements and KPIs with the whole company. We're happy to share those but don't want to spend a bunch of time writing an "investor update."

* Minimal distraction from running the business

* Access to advice from credible individuals

* Access to resources that can help us do things like recruit, setup security policies, etc.

In other words, we want reasonably priced capital, support and advice with the minimum possible overhead. We're happy to share in the upside (by granting equity), but want to spend our time with customers, not investors.

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