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Black Swan Farming

paulgraham.com

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Re: Black Swan Farming

#81

Post by ten_fingers »

ten_fingers wrote: post #67

PG, In part you are correct, but you are making some huge mistakes and, in a saying from my past, are "straining over gnats and forgetting elephants". > That's made harder by the fact that the best startup ideas seem at first like bad ideas. I've written about this before: if a good idea were obviously good, someone else would already have done it. That's likely true from what you and Silicon Valley see, but that's j…

Okay, you dirty, filthy, rotten chicken bastards, ANSWER with THOUGHTS or STOP the voting attacks, you dirt bags.

Re: Black Swan Farming

#82

Post by cperciva »

mnutt wrote: post #68
cperciva wrote: post #13

Quoth pg: It would hurt YC's brand (at least among the innumerate) if we invested in huge numbers of risky startups that flamed out. Paul, you're sounding like a venture capitalist who is worried about whether he can find investors for his next fund. I would posit that the people whose opinions you should care about are potential founders ; and that their primary concern is themselves , not the performance of a fund…

It would hurt founders' perceptions but wouldn't actually decrease any individual founder's chances of success. YC would just accept a bunch of people who aren't likely to get funded. What would happen if you split up the batches into two groups, YC Classic and YC Black Swan, and placed founders into the groups post-interview? People who were placed in YC Classic could continue to have the expectation of ~100% demo d…

It would hurt founders' perceptions but wouldn't actually decrease any individual founder's chances of success.

In a world where potential founders are making a choice between YC or doing the startup anyway without YC, sure. But the world is more complicated than that, and I'm sure there are plenty of potential founders whose decisions are informed by what they hear from YC.

[...] split up the batches into two groups, YC Classic and YC Black Swan [...] People could take the Black Swan offers as rejections if they wanted.

This sounds like a very good model, in that it would separate the "is this something YC wants to invest in?" axis from the "does Paul Graham think that I'll succeed?" axis.

Re: Black Swan Farming

#83

Post by loumf »

hiddenstage wrote: post #64

Dropbox and AirBnB may currently have the biggest valuations, but I imagine it would be difficult to say they are YC's biggest successes (both in financial and historical terms). If YC had funded Paypal, they would have made a nice return with the $1.5B eBay acquisition. But their valuation would've ended there. In reality though, they currently make up 44.9% of eBay's revenue. eBay is a $63.45B company. I don't know…

eBay and Google stock is available for anyone with cash. You'd have to get acquired with pre-IPO stock for it to make a difference.

Re: Black Swan Farming

#84

Post by asmithmd1 »

mikeleeorg wrote: post #4

History tends to get rewritten by big successes, so that in retrospect it seems obvious they were going to make it big. For that reason one of my most valuable memories is how lame Facebook sounded to me when I first heard about it. As a thought experiment, I would love to hear what pg and team would have thought about the following companies, had they applied to YC before they grew in popularity (assuming YC existed…

Here is what Bessemer said about PayPal when they passed:

"Rookie team, regulatory nightmare"

http://www.bvp.com/portfolio/antiportfolio

Re: Black Swan Farming

#85

Post by cperciva »

pg wrote: post #59
thaumaturgy wrote: post #55

Earlier quoted context omitted.

Off-topic, but something I've been chewing on lately: what's it like to have your every written (or spoken!) word analyzed by a bunch of people? Esp. people that you end up having some form of contact with. It seems like it would be difficult to just have a public conversation about a topic. Do you think about that much when you write?

It's pretty grim. I think that's one of the reasons I write fewer essays now. After I wrote this one, I had to go back and armor it by pre-empting anything I could imagine anyone willfully misunderstanding to use as a weapon in comment threads. The whole of footnote 1 is such armor for example. I essentially anticipated all the "No, what I said was" type comments I'd have had to make on HN and just included them in t…

Having people pick over every detail of what I write is something I like about HN -- it forces me to think more carefully about what I'm saying, and on a few occasions (tptacek, I'm looking at you) has even prompted me to go back and write further blog posts about specific points.

Of course, my blog posts don't get nearly as much attention as your essays, and I don't have the problem of having people try to draw attention to themselves in the hopes of being remembered when applications are considered for the next YC round.

Re: Black Swan Farming

#86

Post by a45l98 »

mixmax wrote: post #18

There's a pretty interesting lesson for potential YC candidates, particularly the ones that get turned down, here. When you interview a startup and think "they seem likely to succeed," it's hard not to fund them. And yet, financially at least, there is only one kind of success: they're either going to be one of the really big winners or not, and if not it doesn't matter whether you fund them, because even if they suc…

But you have to convey the sense that annual profits of one million is not your idea of "success". Because if that is your idea of success, you will not likely be the "big winner" that YC is looking for.

Put an evil twinkle in your eye and make internet VC think you want to rule the world and will lie, cheat and steal to achieve this, when truly you're just an honest kid with good morals who'd be happy living a modest but financially secure lifestyle.

Founder 1 Internet VC 0

Re: Black Swan Farming

#87

Post by ten_fingers »

ten_fingers wrote: post #81
ten_fingers wrote: post #67

PG, In part you are correct, but you are making some huge mistakes and, in a saying from my past, are "straining over gnats and forgetting elephants". > That's made harder by the fact that the best startup ideas seem at first like bad ideas. I've written about this before: if a good idea were obviously good, someone else would already have done it. That's likely true from what you and Silicon Valley see, but that's j…

Okay, you dirty, filthy, rotten chicken bastards, ANSWER with THOUGHTS or STOP the voting attacks, you dirt bags.

More attacks. No thoughts. WHAT a flock of bird brains.

Re: Black Swan Farming

#88

Post by pmarca »

mixmax wrote: post #18

There's a pretty interesting lesson for potential YC candidates, particularly the ones that get turned down, here. When you interview a startup and think "they seem likely to succeed," it's hard not to fund them. And yet, financially at least, there is only one kind of success: they're either going to be one of the really big winners or not, and if not it doesn't matter whether you fund them, because even if they suc…

> If your startup ends up making you a million dollars a year you will probably be very happy and rightfully call yourself a success.

I see this a lot from various corners of the startup ecosystem, particularly 37 Signals and their followers. The problem is that it's not really true, by which I mean there are not very many examples of it begin true, and there is an excellent reason to believe that it may never be true. Which is: you need to find a market big enough to support "lifestyle income" (or your million dollars a year) but not big enough that a startup or growth technology company that is really good at doing things at scale isn't just going to eat it, and kill you in the process.

One of the reasons Jason Fried needs to yell so loudly about 37 Signals being the model for lots of other companies is because it's really not -- it's really rare to find a lifestyle technology business.

Re: Black Swan Farming

#89

Post by EricDeb »

This article implies that many potentially successful start ups will not make the cut. Another reason not to get down if one's team doesn't make it in YC.

Re: Black Swan Farming

#90

Post by nostrademons »

pg wrote: post #39
markerdmann wrote: post #37

Did Dropbox appear to be a bad idea at the time? I seem to recall that the market was pretty crowded when Dropbox launched, and that everyone was expecting Google to announce a "GDrive". Or does PG mean that the idea can seem bad because the market is already very crowded? I remember talking to William Morgan about the early days of GitHub. He knew the founders from Powerset, and he told me that at the time he though…

Yes, Dropbox was in the Google category of bad ideas: there were already lots of similar things. Success turned out to depend on execution. Dropbox was the first application of its type that worked sufficiently well. But that sort of thing is hard to predict.

My recollection of Drew's YC app was that it was posted on HN before he applied to YC and it received wide acclaim, so I went and Googled it:

http://news.ycombinator.com/item?id=8863

Turns out my memory was only half right. DropBox had many people that loved the idea and thought it would revolutionize filesharing. It also had a large number of people who pointed out all the reasons why it wouldn't work.

I wonder if there's a lesson here in that good ideas that seem bad tend to be highly polarizing. I've recalled Paul Buchheit say here that GMail met a lot of internal resistance, with many Googlers saying it was a distraction and would never work. I also recall Larry saying that there was significant support for GMail at all levels of the company, going up to the founders, and many Googlers loved it.

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