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Paul Graham's Letter to YC Companies

news.ycombinator.com

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Re: Paul Graham's Letter to YC Companies

#111

Post by markmm »

veyron wrote: post #6
zinssmeister wrote: post #4

I am not sure what will cool the investment climate more. The fact that facebook's IPO was a disaster or that PG sent this letter and recommends to be cautious.

Facebook IPO disaster, coupled with Yelp and Groupon and the others, is the real death knell. PG's letter merely states the obvious. The goal of the VC game is to get 10x+ returns. That only happens for early or mid-stage investors if there are investors down the line investing at higher valuations. Those late stage investors depend on the IPO exit. If the late-stage investors lose confidence (which is what appears t…

But PG's argument is the Facebook IPO will put off investors investing in __startups__, this is the very definition of early investors, which for facebook has made a few billionaires and many millionaires.

Re: Paul Graham's Letter to YC Companies

#112

Post by silentscope »

pbiggar wrote: post #108
wavephorm wrote: post #105

Earlier quoted context omitted.

Only the Social Network bubble is popped -- which is the majority of companies that YCombinator funds. Social network websites that can be built in 3 months and have zero paying customers or any potential profitability really shouldn't have existed in the first place.

I'm not sure where you get your information, but it looks like you didn't read pg's email or my comment.

catty

Re: Paul Graham's Letter to YC Companies

#114

Post by rehack »

kamaal wrote: post #104
rehack wrote: post #64

Earlier quoted context omitted.

>Changes to Facebook are like fluctuations in gas prices though. People grumble and complain, then just go ahead and don't change their habit. IMO, its like this. We spend a lot of time here on HN. Just like a whole lot more people do on Facebook. But we come to HN for a specific purpose to engage in these kind of discussions. Just like it will be difficult for PG to convert this into something else which makes more…

FB has insane guaranteed users. Imagine a 'search the internet' or 'search videos' bar somewhere in the Facebook homepage. Even Google knows that's dangerous.

One's local circle of friends on FB makes for perhaps 1%, in terms of its quality & value, of the overall number of signals(200?), that Google uses for its search.

Just like we come to HN for discussions, which our social circle on FB is not able to satisfy. Similarly, people will continue to go to the best search engine for searching for information.

Even today, if you want to get an overall sense of what people are thinking in general, you go to twitter search. Facebook you mostly search for persons, and what they are doing. It will be very difficult to change that.

PS: I realize my first para is speculative. And the rest is opinion.

Re: Paul Graham's Letter to YC Companies

#115

Post by philwelch »

pedalpete wrote: post #91
philwelch wrote: post #87

Earlier quoted context omitted.

Certainly the path to IPO is so long that someone seeking VC funding today won't be in a climate defined by Facebook. For all its faults, SOX did kill the "retail VC" style of IPO popularized in the last bubble. Getting to IPO now is a very long road.

If people investment was purely logical, you'd be right, but I suspect it is the negative news surrounding the valuations of Facebook and Zynga that will put a bit more fear into the investors willingness to take risks.

You know, you'd think someone who had a real job investing other people's money would be at least as rational as some guy on a message board....

Re: Paul Graham's Letter to YC Companies

#117

Post by philwelch »

alex_marchant wrote: post #46
jcitme wrote: post #27

Earlier quoted context omitted.

> I think Facebook as a company is in a strong position. Just curious, but I'd like to hear your opinion on why this is the case, vs all the naysayers that are betting against the company now. Do you have any specific point you find that Facebook can leverage to maintain success?

I think many people misinterpret the IPO crash. It's not that the market thinks Facebook is a weak company, or in a weak position. I don't think there are many financial analysts that would say Facebook as a business is on the decline (a la RIM). The return was simply not worth the price at the previous valuation.

Agreed. It's bullish on Facebook to value it at half of, say, Amazon. It's absolutely ridiculous to value it equivalently to Amazon.

Re: Paul Graham's Letter to YC Companies

#118

Post by dm8 »

With the risk of getting downvoted; why this letter was made to public? I think it was meant for YC companies only. FB IPO has nothing to do with early stage investing. It may be a good thing that IPO didn't pop. We've averted a major bubble. But making this letter public made situation even worse. Now all the investors will rethink their investments. Why? Because PG (of all the investors) has said it will be hard to raise money.

And expect Business Insiders, Venture Beats of the world to spread doom and gloom. After all it will attract more eyeballs. RIP good times indeed.

Edit: grammar and minor changes

Re: Paul Graham's Letter to YC Companies

#119

Post by silenteh »

This is not necessarily a bad thing for the new startups, in my opinion. I want to quote PG from his essay: The top idea in your mind (my favorite one btw)

{...} I'd noticed startups got way less done when they started raising money, but it was not till we ourselves raised money that I understood why. The problem is not the actual time it takes to meet with investors. The problem is that once you start raising money, raising money becomes the top idea in your mind. That becomes what you think about when you take a shower in the morning. And that means other questions aren't. {...}

This is actually how it works, and more or less always worked here in Europe. No investments, no money raising, only part of your daily job salary invested in your startup ideas, and endless nights learning, coding, failing in a loop....till you succeed and you start to make money.

Re: Paul Graham's Letter to YC Companies

#120

Post by kamaal »

rehack wrote: post #114
kamaal wrote: post #104

Earlier quoted context omitted.

FB has insane guaranteed users. Imagine a 'search the internet' or 'search videos' bar somewhere in the Facebook homepage. Even Google knows that's dangerous.

One's local circle of friends on FB makes for perhaps 1%, in terms of its quality & value, of the overall number of signals(200?), that Google uses for its search. Just like we come to HN for discussions, which our social circle on FB is not able to satisfy. Similarly, people will continue to go to the best search engine for searching for information. Even today, if you want to get an overall sense of what people are…

>>Similarly, people will continue to go to the best search engine for searching for information.

There is no reason why Facebook can't become that. If Apple can make phones and Google can make phone OS. If Microsoft can make gaming consoles.

There is nothing stopping FB from doing it.

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