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YC Graveyard: 821 inactive Y Combinator startups

ycgraveyard.iamwillwang.com

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Re: YC Graveyard: 821 inactive Y Combinator startups

#111

Post by rchaud »

aswegs8 wrote: post #36
robocat wrote: post #27

I'm onehundertpercent pissed off with YC: * The modal win for a founder is $0.00 * PG makes big talk about winner's average returns... Yayyyyy..... However YC gets preferential shares; YC is not aligned with the common shareholders (founders; builders). YC builds a story that they support creators however YC doesn't sit on the same table-side as creators. * I actually believe YC is worthwhile, but I wonder if Ize jus…

Welcome to capitalism. Of course there is an asymmetry between individual founders and one of the, if not the most famous VC firm on the planet. It's an individual decision to determine whether YC is worthwhile. If it wouldn't be, it wouldn't work.

Silicon Valley is not capitalism, it's financier-ism. It isn't about finding a gap in the market and providing a profitable service, but bandwagoning behind the latest trends so as to chase "scalability" and later using financial/political muscle to weaken regulations so as to better "disrupt" the market. Profits? That's a problem for whoever they manage to dump their shares on.

Re: YC Graveyard: 821 inactive Y Combinator startups

#112

Post by withinboredom »

threeseed wrote: post #39
smt88 wrote: post #5

Earlier quoted context omitted.

It's certainly much worse. It's often difficult to tell when a company is dead unless they announce it. Many other failures (likely most of YC's portfolio) will have died by being acquired for less than the most recent valuation, meaning YC lost money on the deal. These sometimes look like successful exits unless you know the details.

> will have died by being acquired for less than the most recent valuation, meaning YC lost money on the deal Does YC really lose money on all acquihires ? Because it seems like most of the batches look to be purpose built for it.

I'm sure they build the investing deal where they get all the money and the founders get a token amount.

Re: YC Graveyard: 821 inactive Y Combinator startups

#113

Post by AbstractH24 »

baxtr wrote: post #103
idlewords wrote: post #72

Earlier quoted context omitted.

In other sectors that's just called a "small business" and celebrated as the fullest expression of the American dream. I've always found it funny that tech treats the idea of a going concern with such distaste.

I know a guy who sells kitchens for a living and makes around $2-3 million per year with a profit margin of 60% or so. But he didn’t spend 10s of million dollars to get there.

Even if he did, that’s not such a bad deal.

Particularly if the brand has value when he’s ready to move on and can be sold.

Re: YC Graveyard: 821 inactive Y Combinator startups

#114

Post by erikerikson »

baxtr wrote: post #103
idlewords wrote: post #72

Earlier quoted context omitted.

In other sectors that's just called a "small business" and celebrated as the fullest expression of the American dream. I've always found it funny that tech treats the idea of a going concern with such distaste.

I know a guy who sells kitchens for a living and makes around $2-3 million per year with a profit margin of 60% or so. But he didn’t spend 10s of million dollars to get there.

Or bar owners pulling down similar amounts.

Re: YC Graveyard: 821 inactive Y Combinator startups

#115

Post by persnicker »

jll29 wrote: post #51

There are not just startups that become unicorns and startups that fold. Investors' worst nightmare is if you just make enough money to keep going, but you don't grow ("lifestyle business" as they use it is a derogatory term). That's because they prefer a sudden death where they can write down the investment and deduct their loss from taxes than an investment where they never see any money again. And then there are "…

"Investors' worst nightmare" seems very off. Most SAFE notes give you dividends that are on par with how corporations issue dividends. Assuming there is cash flow, you should be getting dividends.

If the dividends are so low that you will never be reasonably paid back you can often negotiate to get out in some form. Very low cash flow only with no growth seems to be the only exception...which I'd guess would only exist if something such as high revenue or some unique IP existed to make the equity very valuable and therefore the company worth running.

With a convertible note as opposed to a SAFE, you either need to extend the maturity date or get paid back your note with interest.

Both SAFEs and convertible notes seems to have a path to exit in some reasonable form.

The only time I've seen "nightmare" situations occur is when the investor themselves makes it a nightmare i.e. https://www.cnbc.com/2025/01/07/tech-investor-denis-grosz-or...

...and that's a nightmare for the company, not the investor.

Re: YC Graveyard: 821 inactive Y Combinator startups

#116

Post by AbstractH24 »

jll29 wrote: post #51

There are not just startups that become unicorns and startups that fold. Investors' worst nightmare is if you just make enough money to keep going, but you don't grow ("lifestyle business" as they use it is a derogatory term). That's because they prefer a sudden death where they can write down the investment and deduct their loss from taxes than an investment where they never see any money again. And then there are "…

Worse than becoming lifestyle company is becoming a zombie startup.

Zombie is when founders get rid of almost everyone except what they need to give the impression of effort, do little work, but draw an income and slowly spend down the money they raised until it’s gone.

I was one of the very few survivors at a startup that turned into a zombie in 2020 (went from 100+ employees to 10 in a matter of weeks).

In some ways it was a cushy job and a privilege, just wish I realized the founders didn’t truly care about success. Cause then I could have shared the mindset and better prepared myself and my skills for life after.

Re: YC Graveyard: 821 inactive Y Combinator startups

#117

Post by aaronblohowiak »

adastra22 wrote: post #24
riffraff wrote: post #15

Earlier quoted context omitted.

How do stripe and Airbnb not sound useful? "Need to get paid" and "find accomodation" are among the oldest business models on the internet.

There were plenty of ways to get paid on the internet before stripe. On paper it didn’t look like they were doing anything new. They just did it better. Airbnb… idk. Who wants to rent their house out to total strangers? I wouldn’t. I wouldn’t have thought it would take off like it did.

It was commercial version of couch surfing and/or web2.0 version of vrbo. I was highly skeptical of it taking off because it was “a copycat”! How wrong I was…

Re: YC Graveyard: 821 inactive Y Combinator startups

#118

Post by slashdev »

persnicker wrote: post #115
jll29 wrote: post #51

There are not just startups that become unicorns and startups that fold. Investors' worst nightmare is if you just make enough money to keep going, but you don't grow ("lifestyle business" as they use it is a derogatory term). That's because they prefer a sudden death where they can write down the investment and deduct their loss from taxes than an investment where they never see any money again. And then there are "…

"Investors' worst nightmare" seems very off. Most SAFE notes give you dividends that are on par with how corporations issue dividends. Assuming there is cash flow, you should be getting dividends. If the dividends are so low that you will never be reasonably paid back you can often negotiate to get out in some form. Very low cash flow only with no growth seems to be the only exception...which I'd guess would only exi…

If there’s enough money to pay the founders salaries, but not so much for dividends, this doesn’t help.

There are two direct ways to return money to the founders - salaries and dividends. In the U.S. there is a tax advantage to dividends, over an amount anyway. This is not true of all countries.

Re: YC Graveyard: 821 inactive Y Combinator startups

#119

Post by AbstractH24 »

jasode wrote: post #63
robocat wrote: post #27

I'm onehundertpercent pissed off with YC: * The modal win for a founder is $0.00 * PG makes big talk about winner's average returns... Yayyyyy..... However YC gets preferential shares; YC is not aligned with the common shareholders (founders; builders). YC builds a story that they support creators however YC doesn't sit on the same table-side as creators. * I actually believe YC is worthwhile, but I wonder if Ize jus…

>However YC gets preferential shares; It's not that YC specifically gets "preferred shares" -- it's that investors in general insist on liquidation preferences when buying non-liquid shares in unproven private companies. How would an alternative scenario of investors buying common shares of illiquid stock in a private company actually be realistic? Maybe the startup founders could hypothetically insist on selling onl…

Why is the risk being taken by investors greater than the one being taken by employees and founders?

If anything, employees are taking a greater risk because you can replace money far more easily than years of your life.

Re: YC Graveyard: 821 inactive Y Combinator startups

#120

Post by AbstractH24 »

dustingetz wrote: post #65
jasode wrote: post #63

Earlier quoted context omitted.

>However YC gets preferential shares; It's not that YC specifically gets "preferred shares" -- it's that investors in general insist on liquidation preferences when buying non-liquid shares in unproven private companies. How would an alternative scenario of investors buying common shares of illiquid stock in a private company actually be realistic? Maybe the startup founders could hypothetically insist on selling onl…

preferred shares prevent cookie cutter founder fraud. Founder raises $1M at 10 post. Founder decides to sell 6 months later for 2 mil. Investors get 200k back founder gets 1.8 mil. Now run this math for AI unicorns.

This is a valid concern. But shifting risk entirely to those without preferential shares (typically employees) is also unfair.
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