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I Don’t Understand Y Combinator Hate

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Re: I Don’t Understand Y Combinator Hate

#11

Post by 13ren »

cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

There are some ways to separate the selection process vs. YC input:

The startups offered YC-funding, who declined it... how did those guys work out, in comparison? (although the offer itself is an important YC input).

Also, the YC guide says they they decline funding to many very good applicants (because YC has limited places and they go to the very very good applicants). It sounds like these guys would have been selected, in some other batch... YC knows who the "almost selected" guys were and could do a comparison.

Re: I Don’t Understand Y Combinator Hate

#14

Post by volida »

pg wrote: post #9
cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

I think the explanation usually is more emotional and less analytical. People start to dislike anything that gets a lot of publicity. Everyone is susceptible to this to some degree, but some people more than others. As for the question of whether we help people or not, I don't think many people who know what goes on inside YC would argue that we didn't improve startups' prospects by 6.4%, which is what we have to do…

"People start to dislike anything"

In the case when journalists are those who "dislike" and not people, someone could think that their motives to write something bad are not so innocent, if not directed by someone who pays to create a bad impression.

Although to be honest the majority of press I see about YC is really positive.

Re: I Don’t Understand Y Combinator Hate

#15

Post by 13ren »

Most YC companies seem not to be technically revolutionary, but applying existing technology to solve real problems (not a criticism, an observation - after all, there is great opportunity there for making money).

- Are there any technology-based startups funded by YC?

- A proxy could be patent applications: how many YC startups have filed for patents?

Re: I Don’t Understand Y Combinator Hate

#16

Post by shafqat »

pg wrote: post #9
cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

I think the explanation usually is more emotional and less analytical. People start to dislike anything that gets a lot of publicity. Everyone is susceptible to this to some degree, but some people more than others. As for the question of whether we help people or not, I don't think many people who know what goes on inside YC would argue that we didn't improve startups' prospects by 6.4%, which is what we have to do…

PG - I think no matter how well or how often you try to explain this point, the real haters don't understand the derivation nor the impact of the 6.4% figure. If they did, it would be a moot point!

Re: I Don’t Understand Y Combinator Hate

#17

Post by volida »

cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

when two companies (zenter, omnisio) get bought off Google, another one (reddit) got an acquisition offer from them, others get funding from Sequoia, others from Atomico etc I think the role of YC it's pretty obvious and enviable from competitors, and although the statistical increment for success due to their aid may be 6% I think for better ideas/execution is really a lot higher.

none the less it's obvious by now that YC at least acts as a proven talent filter which I think is highly desirable by VCs

Re: I Don’t Understand Y Combinator Hate

#18

Post by dcurtis »

"Remember, these startups are usually 2-3 people with little more than an idea. Generally speaking there are few other investors who will be willing to invest in them until they have some sort of code written or an initial product out the door."

That's not exactly true. I think majority of the startups were launched or had extensive prototypes before they joined YC.

This makes sense, because it filters out the people who are too lazy or not motivated enough to build an amazing product. (But it also filters out very smart and motivated people with awesome ideas who are too busy, as many smart people are.)

In any case, the risk that YC takes isn't quite as big as investing in two kids with a pipe dream. All of the founders seem to be carefully selected for their propensity towards success.

Re: I Don’t Understand Y Combinator Hate

#19

Post by maryrosecook »

cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

The test you propose isn't entirely valid. If the "winning" teams who don't get funded by YC are told they "won", that would affect their control status because they would get a big boost in confidence. If they aren't told, again their confidence would get affected, but this time negatively.

Re: I Don’t Understand Y Combinator Hate

#20

Post by robg »

pg wrote: post #9
cperciva wrote: post #6

I think part of the reason for the Y Combinator hate is that the valuations YC offers are so low and it's not clear whether YC significantly helps the teams it funds. Wait, don't throw those tomatoes, let me explain! The valuation YC offers -- a median of 250k for a two-person team -- would be absurdly high if it was being offered to any team of two recent college graduates; but YC doesn't make offers to just any tea…

I think the explanation usually is more emotional and less analytical. People start to dislike anything that gets a lot of publicity. Everyone is susceptible to this to some degree, but some people more than others. As for the question of whether we help people or not, I don't think many people who know what goes on inside YC would argue that we didn't improve startups' prospects by 6.4%, which is what we have to do…

Do you think these folks understand the math behind improve startups' prospects by 6.4%? It seems the emotional reaction is usually driven by a basic misunderstanding - "$5k per founder for 10%!? OMG!" even when they're wrong on the basic facts. MA does a nice job clearing up the valuation "paradox" but it seems it's worth repeating over and over again, esp for newbies to investment equity who encounter YC and shudder at the "terms".

EDIT: Just reading the TC comments, it amazes me how often this basic misunderstanding comes up, even after an article that explains it.

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