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Y Combinator narrows current cohort size by 40%, citing downturn and funding

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Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#161

Post by spoonjim »

i_have_an_idea wrote: post #142
spoonjim wrote: post #104

Earlier quoted context omitted.

Why would they? They are buying into these companies at a $2m valuation which is absurd. It's a no-brainer move and almost nobody can rationally say no since YC is so powerful

> since YC is so powerful How are they 'powerful'? Right now, it is a conveyor belt accelerator. I used to be impressed to see a YC company, now that signal means nothing, there are so many of them. If anything the signal is that the founders were too willing to give up significant equity for not a lot in return.

It still boosts investor interest 100x. Whether it should or not is a different story.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#162

Post by samatman »

arcticbull wrote: post #138
rmbyrro wrote: post #97

Earlier quoted context omitted.

Well, in that case, everything is indirectly funded by debt

Debt is where money comes from.

I learned a lot from Graeber's book, this particular claim I later unlearned.

If anyone would like to follow that lead, start here https://fermatslibrary.com/s/shelling-out-the-origins-of-mon...

The tl;dr is that humanity has at least an 80,000 year history of goods which are fungible, collectible, portable, scarce, and made to an exact standard, traded between people who may not speak the same language for any other sort of trade good. The familiar example is wampum, but the practice predates the colonization of the Americas by many multiples.

Debt is where state money comes from. But shell and hunk money is where states got it from, and the systems coexisted into the late 19th century.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#163

Post by yunohn »

blagie wrote: post #108
yunohn wrote: post #99

Earlier quoted context omitted.

+1, “are we manifesting a recession”: https://kyla.substack.com/p/the-vibecession-the-self-fulfill...

It's a good set of thoughts. My own opinion is that COVID19 ground the economy to a halt. We had two choices for dealing with the lost productivity: a) About 2x inflation of currency (long-term -- e.g. 15% for five years). At the end, currency is worth less. b) Structural damage (e.g. businesses going bankrupt, people losing mortgage, people fired, etc.) And a bit of a spectrum in between. We chose much closer to (a)…

> Personally, I feel like we should all just accept that money is worth less today

Maybe for your situation that’s fine, but it affects me and almost everyone else quite a bit. It’s hard earned money.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#164

Post by tfehring »

lumost wrote: post #9
tfehring wrote: post #3

Earlier quoted context omitted.

$125k * 400 companies/batch * 2 batches/year = ~$100 million/year deployed just during the batches. On top of that, they often participate in later funding rounds to maintain their 7% stake. Also, it takes a long time for those investments to generate cash. Many of the most valuable YC-funded companies are still private, and even for the public ones I doubt YC unloads its whole stake as soon as it can post-IPO.

Isn’t there also a large risk to YC in the event their private unicorns see substantial valuation revisions?

There's definitely risk in the sense that YC invests in relatively risky companies, and anything that negatively impacts the long-term value of those businesses ultimately impacts YC. From, like, an accounting perspective, I have no idea when YC marks gains or losses to market or whether that timing coincides with other market participants or the companies themselves.

Either way, in the context of the top-level commenter's question, it's worth emphasizing that a change in valuation isn't a cash flow. YC doesn't get an influx of cash to invest when the value of its portfolio companies goes up, and it doesn't have to give up cash that it could otherwise invest when those companies' valuations go down.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#165

Post by rmbyrro »

shmatt wrote: post #139
rmbyrro wrote: post #97

Earlier quoted context omitted.

Well, in that case, everything is indirectly funded by debt

Correct. Even the worlds richest man can't buy an internet company without going into debt (or crashing the stock which their "richness" is derived from) In the U.S at least, holding cash is considered the worst thing to do if you have wealth. Which then leads people to use debt

Anywhere in the world holding cash and cash-based investments is a bad idea.

The government and banks will rip you off through inflation.

You can use debt to benefit from inflation, but it also carry its risks.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#166

Post by CamperBob2 »

drdrek wrote: post #131
sokoloff wrote: post #89

Earlier quoted context omitted.

Sequoia https://www.slideshare.net/eldon/sequoia-capital-on-startups...

Its actually pretty sober and to the point, and pretty relevant today. I think its just the first slide that is ingrained in peoples minds.

I don't know. Someone who took action under the assumption that the trends in that presentation were going to drive the economy over the next 10 years would have lost a LOT of money.

Notice the conspicuously-missing X axis label on page 42.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#167

Post by solarmist »

yunohn wrote: post #33
solarmist wrote: post #6

Earlier quoted context omitted.

It’s $500k now.

No, it’s still 125k for 7%, with an option for an additional 375k on an uncapped safe. Source: https://www.ycombinator.com/deal/

"You are technically correct, the best kind of correct."

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#168

Post by icey »

wheels wrote: post #69
tptacek wrote: post #15

Earlier quoted context omitted.

As someone who was on the outside looking in on this until pretty recently, but also has spent much of the last 10 years working with a variety of different YC companies, this is pretty overblown. Moreover: there are so many YC companies at this point, the rate of increase is not an especially interesting marketing fact. For what you're saying to be true, the norm would have to be selling to your batchmates , which..…

Still, I found it staggering that there were 414 companies in the recent batch. When we went through 13 years ago (crazy that it's been that long) we knew pretty much everyone in our batch. It was like 50 people. I had conversations with most of the speakers. A batch of 414 companies (or even 250) sounds like a completely different beast.

We went through S21, which was a large batch (400 or so). While we made great connections with folks in our little corner of the world, we definitely did not make a ton of connections broadly across the batch. In fact, we still meet people who are in our batch and we had no idea. Same for conversations with speakers - just not feasible given the size of the program.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#169

Post by huijzer »

shmatt wrote: post #139
rmbyrro wrote: post #97

Earlier quoted context omitted.

Well, in that case, everything is indirectly funded by debt

Correct. Even the worlds richest man can't buy an internet company without going into debt (or crashing the stock which their "richness" is derived from) In the U.S at least, holding cash is considered the worst thing to do if you have wealth. Which then leads people to use debt

Although Warren Buffet isn’t the richest, he surely can buy things with cash. In his last annual report, Berkshire reported 33 trillion in cash if I remember correctly. They didn’t find anything interesting to buy for a fair price so then they’ll just sit on their hands.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#170

Post by s1mon »

mojuba wrote: post #156
s1mon wrote: post #146

Earlier quoted context omitted.

Many decisions are made in seconds based on an impression from an ad, or walking by a product in a store. Sure some purchasing decisions may linger for days, months or years, but even with such long times to ponder a final decision, there are likely a huge list of options that were thrown out in seconds because some aspect of the product message didn't resonate.

> Many decisions are made in seconds based on an impression from an ad You are talking about click decisions, not purchase ones. There's no evidence ads can affect consumers' purchasing behavior, in fact quite the opposite.

Plenty of people see an ad for something and will then discount it in an instant as a possible option based on bad messaging, or design.

Do you have something to back up the idea that the ad industry doesn't affect purchasing behavior? Seems like a $837 billion industry must manage to accomplish something.

https://www.statista.com/statistics/236943/global-advertisin...

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