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Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

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Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#71

Post by skrebbel »

mibbitier wrote: post #69
skrebbel wrote: post #66

Earlier quoted context omitted.

Essentially, my complaint is exactly that: he just reported the numbers. In a more mainstream financial magazine, I would've expected the author to also do his best trying to find out what those investments are doing . Basically, what I find an interesting question is "Ok, so $1B has been invested in YC companies. How much are those worth now? Of those which exited, how much did they exit for?". Essentially: how heal…

Surely also the big question is how much real long term value has been created, versus how many photo-sharing apps aqui-hired. I bet that $1b could do a lot of good finding cures for diseases, rather than pumping up web startups to be sold on. But I guess there's not so much profit in that. Note that I'm not beating up on YC here, I'm just stating an opinion on web-startups in general and the ridiculous valuations of…

A lot of $1b's are invested into finding cures for diseases, you just don't read about it on HN. It's nearly entirely done by the relatively small number of very large farmaceutical companies in the world.

I forgot the numbers, but getting a single new medicine on the market is frighteningly expensiv (and it's being done anyway).

Personally, I think it's fine that meanwhile some other people are investing in companies that allow me to easily sync my files across devices.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#72

Post by prpx »

pbreit wrote: post #65
tptacek wrote: post #63

Earlier quoted context omitted.

I love startups. Worked at them my whole career. At my practice, I've worked with a bunch of YC startups. Uniformly enjoyed the experience. I'm wary of venture capitalists. I've watched them do skeezy things firsthand. More importantly, every time I see people cheerleading some startup for raising 50MM, all I can think is, "that poor team isn't going to be able to exit unless they can beat 150MM". It's very hard to d…

True. But it's also hard to exit at $150m+ without a $50m raise. The lean startups and bootstraps simply don't have big exits like their well-funded counterparts.

But there's also less of a need for a big exit.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#73

Post by hef19898 »

pg wrote: post #39
skrebbel wrote: post #5

How very Silicon Valley of the author to treat these numbers almost like they're profits, or any reasonable sort of "income" at all. The real question is: how much of that money has already been multiplied tenfold, through exits, IPOs or exorbitant profits?

What on earth did the author say that conflated fundraising with revenues? All he did was compute an average and list some individual amounts raised. Also, a 10x return is the sort of target a VC will have for a series A round. Investors in later stage rounds have lower expectations. And since later stage rounds are much bigger, that means most of the money invested in a successful startup is done with the expectatio…

Somewhere further down in this discussion raising money was called an interessting way to pay salaries (or something along these lines). And for me there lies some truth in it. For a certain growth rate one needs external funding to keep the business running in a pace that wouldn't be possible on income alone. The problem is, at least from my point of view, that it's a tempting idea to do all the growth on funding instead of income. And then it's only a small step to hold funding in a higher esteem than income and profits. A view I for my part I see kind of reinforced by the tone of the TC article.

Again I agree that to build the next Google or whatever funding is necessary. But focusing in funding as the only source of cash for a business and as an IPO as the only way to make a profit is equaly dangerous.

But I think you that's more or less in line with your essays on fund raising. If not I understood them wrong, so feel free to correct me!

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#74

Post by hef19898 »

skrebbel wrote: post #71
mibbitier wrote: post #69

Earlier quoted context omitted.

Surely also the big question is how much real long term value has been created, versus how many photo-sharing apps aqui-hired. I bet that $1b could do a lot of good finding cures for diseases, rather than pumping up web startups to be sold on. But I guess there's not so much profit in that. Note that I'm not beating up on YC here, I'm just stating an opinion on web-startups in general and the ridiculous valuations of…

A lot of $1b's are invested into finding cures for diseases, you just don't read about it on HN. It's nearly entirely done by the relatively small number of very large farmaceutical companies in the world. I forgot the numbers, but getting a single new medicine on the market is frighteningly expensiv (and it's being done anyway). Personally, I think it's fine that meanwhile some other people are investing in companie…

Wrong target populace for that kind of news I think. These investments are (without regarding the amount of it) are business as usual, in Start-Up land as well as in Big Pharma land.

What makes the one billion interessting for HN are 1. it quite a sum 2. from an investment point of view a good indicator for success (only since you can estimate the overall value of the portfolio, success for the individual companies is something completely different) and last but not least it's pg and YC companies.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#75

Post by debacle »

tatsuke95 wrote: post #64
pbreit wrote: post #34

Earlier quoted context omitted.

Why are HNers so dense when it comes to fundraising? No, the treatment doesn't come off at all sounding like profits or income. Yes, fundraising is definitely a point of success. Why do HNers have such a hard time with this? Money is an important resource for growing companies! Sheesh.

> "Yes, fundraising is definitely a point of success." Really? When your bank gives you a mortgage, do you deem that a "success"? The fact that there are people who see raising funds as a sort of "end game" is a problem, at least in my opinion. Pets.com, Kozmo.com and Webvan all raised lots of money. So did Enron and Worldcom, in a different way. Success occurss when you produce net economic gains to society.

Actually, for most people, the bank giving them a mortgage is deemed a success. It means that the bank believes that you, as a person, are responsible enough to pay back a massive loan. It is a huge personal validation for a lot of people.

In the same way, obtaining VC means that a fund believes that your team and your idea are strong enough to return on their investment, and anyone who isn't pissing their pants with joy about receiving an offer, even if they're not going to accept it, has a seriously deficiency in their Oh Shit Is This Really Happening receptors.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#76

Post by gaius »

pg wrote: post #48
pbreit wrote: post #34

Earlier quoted context omitted.

Why are HNers so dense when it comes to fundraising? No, the treatment doesn't come off at all sounding like profits or income. Yes, fundraising is definitely a point of success. Why do HNers have such a hard time with this? Money is an important resource for growing companies! Sheesh.

I think they're not so much dense as bitter. There's a subset of HN readers who regard startups as a whole as a sort of con game, and are angry that the participants get so much attention. There may not be that many of them, but their anger makes them disproportionately active as commenters and voters.

I'm neither dense nor bitter, I just think there's something[1] a bit wrong with a world in which SpaceX (a startup FWIW) can bootstrap a space programme from scratch for less money[2] than a photo uploader is apparently worth[3].

[1] http://www.theatlanticwire.com/technology/2011/04/quote-ad-g... [2] http://www.bbc.co.uk/news/science-environment-18108742 [3] http://www.theregister.co.uk/2012/04/09/facebook_acquires_in...

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#77

Post by harel »

pg wrote: post #42
harel wrote: post #14

And how much money have they generated to date?

Quite a lot, actually. While some startups (e.g. Twitter) take a while to generate significant revenues, it happens that the most successful startups we've funded were not of that type.

I'd still like to know the exact figure. its easy to find out how much was put in, but not so easy how much was generated. I'd love to know the total yc bottom line.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#78

Post by tatsuke95 »

debacle wrote: post #75
tatsuke95 wrote: post #64

Earlier quoted context omitted.

> "Yes, fundraising is definitely a point of success." Really? When your bank gives you a mortgage, do you deem that a "success"? The fact that there are people who see raising funds as a sort of "end game" is a problem, at least in my opinion. Pets.com, Kozmo.com and Webvan all raised lots of money. So did Enron and Worldcom, in a different way. Success occurss when you produce net economic gains to society.

Actually, for most people, the bank giving them a mortgage is deemed a success. It means that the bank believes that you, as a person, are responsible enough to pay back a massive loan. It is a huge personal validation for a lot of people. In the same way, obtaining VC means that a fund believes that your team and your idea are strong enough to return on their investment, and anyone who isn't pissing their pants with…

>"and anyone who isn't pissing their pants with joy about receiving an offer, even if they're not going to accept it, has a seriously deficiency in their Oh Shit Is This Really Happening receptors."

Of course you piss your pants with joy. But its more of a, "no matter what happens we're going to be okay" thing. There are many examples of that investment vaporizing, either in the startup stage or when they unleash the business on the public. It's happening with Zynga as we speak.

So, I can understand being happy about it, but calling it a business "success" is a stretch.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#79

Post by ubercore »

pg wrote: post #48
pbreit wrote: post #34

Earlier quoted context omitted.

Why are HNers so dense when it comes to fundraising? No, the treatment doesn't come off at all sounding like profits or income. Yes, fundraising is definitely a point of success. Why do HNers have such a hard time with this? Money is an important resource for growing companies! Sheesh.

I think they're not so much dense as bitter. There's a subset of HN readers who regard startups as a whole as a sort of con game, and are angry that the participants get so much attention. There may not be that many of them, but their anger makes them disproportionately active as commenters and voters.

I think we need to split "startups" from "startups that people will be angry and bitter about". I guess I'm an optimist, but I don't think that sentiments like that arise out of nowhere. There's a kernel of truth to the feeling, engendered by some of the excesses of the current startup environment. That being said, the real challenge is not to paint too broad a brush and lump all startups that you don't "like" with startups that are worthy of this kind of derision.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#80

Post by tjic »

gaius wrote: post #76
pg wrote: post #48

Earlier quoted context omitted.

I think they're not so much dense as bitter. There's a subset of HN readers who regard startups as a whole as a sort of con game, and are angry that the participants get so much attention. There may not be that many of them, but their anger makes them disproportionately active as commenters and voters.

I'm neither dense nor bitter, I just think there's something[1] a bit wrong with a world in which SpaceX (a startup FWIW) can bootstrap a space programme from scratch for less money[2] than a photo uploader is apparently worth[3]. [1] http://www.theatlanticwire.com/technology/2011/04/quote-ad-g... [2] http://www.bbc.co.uk/news/science-environment-18108742 [3] http://www.theregister.co.uk/2012/04/09/facebook_acquires_…

> bit wrong with a world in which SpaceX (a startup FWIW) can bootstrap a space programme from scratch for less money[2] than a photo uploader is apparently worth[3].

You're comparing apples and oranges:

1) what X is WORTH 2) what Y took as cash infusions

If you said "there's something wrong when a photo uploader is worth more than an orbital company", you'd be comparing apples to apples.

The mark of genius is that some people can take just a few apples and CREATE a stunning...uh...orange. OK, the analogy breaks down, but the point is: creating value is the POINT of a startup (or of any business, really), so we shouldn't be surprised that Elon Musk achieved a ton without that much cash input.

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