How come most "successful" Y Combinator startups lose hundreds of millions of dollars per year, every year.
Well, they suffer no consequences, and get more money to lose, so that's success, I guess.
On $600B of Y Combinator startup success
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Re: On $600B of Y Combinator startup success
#12> data-driven approach to our investments This is as absurd as saying "data-driven approach for finding out successful humans". I am kind of aggravated to see drivel like this from VC's. This is similar to algorithm trading on stock market and not funding deserving startups. This 'data-drive' garbage is how you end up with more grocery delivery, food delivery and pet walking startups.
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Re: On $600B of Y Combinator startup success
#13Seems like every public YC company has fallen 50%+ within the last 12 months. I'm sure the private ones are even worse off. I'm hoping the definition of success changes. I'd like to see "rational valuations", "cash flow positive", or "a sustainable business model" as metrics in the future.
This is success because the fund’s cost basis is so low specifically because of the financial engineering involved when they were private companies. The valuations of the public companies could fall 99% and still be highly profitable bets for the angel/seed investor.
Re: On $600B of Y Combinator startup success
#14Personally, I want to know how much Y Combinator companies have lost in Market Cap in the latest route. Many are trading below their IPO prices and have lost a huge amount of value.
Re: On $600B of Y Combinator startup success
#15How come most "successful" Y Combinator startups lose hundreds of millions of dollars per year, every year. Well, they suffer no consequences, and get more money to lose, so that's success, I guess.
Sometimes losing tons of money is an intentional decision, so if the board/investors are OK with it, it's not a failure. Certainly not the best way to run a company though...
Re: On $600B of Y Combinator startup success
#16Seems like every public YC company has fallen 50%+ within the last 12 months. I'm sure the private ones are even worse off. I'm hoping the definition of success changes. I'd like to see "rational valuations", "cash flow positive", or "a sustainable business model" as metrics in the future.
Yes it's probably going to round trip back to $300B given AirBNB and DoorDash have taken their hits as of late. That said - I do think since the lock-up periods have probably expired on the big ones - the pre-IPO investors like YC/founders/VC probably made it out just fine already. It's really a message to those of us retail investors buying the IPO or post IPO shares of YC companies that need to be aware of the trac…
Indeed. The market cap of YC backed companies has tanked in the last few months, even days.
Re: On $600B of Y Combinator startup success
#17Personally, I want to know how much Y Combinator companies have lost in Market Cap in the latest route. Many are trading below their IPO prices and have lost a huge amount of value.
You're looking for rout, not route :)
Re: On $600B of Y Combinator startup success
#18How come most "successful" Y Combinator startups lose hundreds of millions of dollars per year, every year. Well, they suffer no consequences, and get more money to lose, so that's success, I guess.
A "dumping" period where your business gains marketshare and undercuts competitors to drive them under is an essential part of establishing monopoly power.
Re: On $600B of Y Combinator startup success
#19> data-driven approach to our investments This is as absurd as saying "data-driven approach for finding out successful humans". I am kind of aggravated to see drivel like this from VC's. This is similar to algorithm trading on stock market and not funding deserving startups. This 'data-drive' garbage is how you end up with more grocery delivery, food delivery and pet walking startups.
Absolutely! Looking at the success in hindsight is not data driven. Just because the most of the past YC unicorns have been in industry X, doesn't mean the next ones are going to be like that. This is even more pronounced when it comes to the year of the batch, which is already past. Unless he wants to suggest companies in batches of the years with even numbers achieve higher valuations.
Re: On $600B of Y Combinator startup success
#20Earlier quoted context omitted.
Yes it's probably going to round trip back to $300B given AirBNB and DoorDash have taken their hits as of late. That said - I do think since the lock-up periods have probably expired on the big ones - the pre-IPO investors like YC/founders/VC probably made it out just fine already. It's really a message to those of us retail investors buying the IPO or post IPO shares of YC companies that need to be aware of the trac…
Why would this be specific to YC IPOs vs other IPOs?
I agree - It isn't specific to YC IPOs - it applies to all IPOs.
I think the point is that YC perhaps is a good early stage VC in maximizing the IPO price for the benefit of LPs and founders and unloading at the right time onto the market.
Perhaps its less clear given the current state of things whether their companies are good for long term earnings performance for long term ownership by retail investors.