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Sam Altman: ‘Too many’ Y Combinator companies raise money

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Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#121

Post by perfmode »

abritinthebay wrote: post #111
dmitrygr wrote: post #87

Earlier quoted context omitted.

> Companies raising money just to pay > inflated (yet still insufficient) labour costs This does not match reality since most startups in SV pay very very very little. In many cases barely enough to live with roommates (and forget having a family)

Based on nearly 15 years of working at startups: wut? This is absolutely not true in any way. They sometimes pay less because they try to trade options for salaries but that’s becoming less popular given the lack of cashing out and people’s better understanding of the economics of it. You can get low to mid six figures at a startup easily ... which absolutely does not match your description

We're all talking past each other in a way.

Startups are paying a lot because they're raising a lot of money.

Round and round we go.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#122

Post by WWLink »

bandrami wrote: post #117
cjf4 wrote: post #104

Earlier quoted context omitted.

To me this leads to a question about the Bay Area centric techno-spehere: at what point do the prices become so high that companies/ecosystems in other parts of the country become relatively attractive? I understand that the SV network is a real and powerful thing, but holding all else equal (indulge me), wouldn't it make the cost of startups more attractive for all stakeholders if an alternative, viable network were…

There's a certain element of myopia in SV, I think, in that people there seem not to understand that places like Austin, Fairfax County, and the Rt 128 Corridor do in fact currently exist and are full of startups doing startup things.

That myopia is so strong that my friends that grew up in SV seemed surprised that the bay area included anything north of Fremont or SF.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#123

Post by mrep »

perfmode wrote: post #121
abritinthebay wrote: post #111

Earlier quoted context omitted.

Based on nearly 15 years of working at startups: wut? This is absolutely not true in any way. They sometimes pay less because they try to trade options for salaries but that’s becoming less popular given the lack of cashing out and people’s better understanding of the economics of it. You can get low to mid six figures at a startup easily ... which absolutely does not match your description

We're all talking past each other in a way. Startups are paying a lot because they're raising a lot of money. Round and round we go.

They're raising lots of money because their competition for exployees (companies like Facebook and Google) pay even more.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#124

Post by mrep »

newaccount4434 wrote: post #114
jacquesm wrote: post #44

Earlier quoted context omitted.

Ironically it might be a lot easier to raise money as long as there is less substance to the company. Dreams of getting in on the ground floor work so much better to woo investors with visions of Dropbox and Airbnb in their heads than a year old start-up without traction. Besides that after that year the start-up will likely be out of runway and so in a much harder position to negotiate from. If I were to run a YC ba…

Listen to the AirBnB story on the podcast "How I built this". Before YC, nobody wanted to invest in AirBnB and the company wasn't profitable. YC is how founders find ideas (in the case of Reddit) or refine them. (in the case of AirBnB) In the end, the short time offered in YC allows founders to create the minimum viable product and start to or continue to gain users. The fact that so many companies gain some form of…

Is it? I feel like they get so many applications and the bar is so high now that most of the teams are already getting steady revenues before even getting in.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#125

Post by d--b »

jacquesm wrote: post #47
d--b wrote: post #32

This seems to fit a continuous change in YC and perhaps tech in general. YC doesn't seem so eager to fund 1000 startups so that 2 of them become unicorns anymore. It's more like they want to fund 1000 startups so that 100 are sustainable. We don't hear moonshot or billion dollar market depth or hyper growth as much as we used Anyone feeling the same?

> It's more like they want to fund 1000 startups so that 100 are sustainable. That's actually good, not bad. 100 companies that work out long term are much better for the founders involved than two that are unicorns.

I agree it's way better!

I think in PG times, the idea was: aim for the moon, it's hard but if it doesn't work out you'll find plenty of well paid jobs.

But now the market is so overcrowded that if you aim for the moon and fail, you'll mostly look like moron, and will have a hard time finding a gig.

Just gut feelings though, I have no numbers nor people to talk to.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#126

Post by pedalpete »

cik2e wrote: post #75
sillysaurus3 wrote: post #57

Earlier quoted context omitted.

This is one reason ICOs will hopefully disrupt VC strangehold. It's senseless for the fate of good companies to be determined by bogus social dynamics. I get the regulation argument, but protecting stupid people from themselves is a losing battle. Everyone will know not to mortgage your house to invest in a new startup the same way everyone knows not to do heroin. Some people will anyway. But they already can partici…

Looks like we have a disproportionate amount of VCs on HN. Luckily ICOs aren't going anywhere. Time to evolve or get left behind.

Seriously, I'm not a fan of ICOs, but the comment doesn't deserve down votes.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#127

Post by phamilton »

usaar333 wrote: post #115
killjoywashere wrote: post #103

Earlier quoted context omitted.

San Diego's real estate is quite reasonable. So, kindly, stay in the Bay area. Please.

Except it has much lower income levels than the Bay Area - so it's only marginally better. In fact, SD is in the top 10 least affordable metro areas: http://www.nusinstitute.org/assets/resources/pageResources/E...

But, in circling back to the origin of this comment thread, lower income levels translate to lower fundraising requirements for startups.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#128

Post by thaumasiotes »

abritinthebay wrote: post #111
dmitrygr wrote: post #87

Earlier quoted context omitted.

> Companies raising money just to pay > inflated (yet still insufficient) labour costs This does not match reality since most startups in SV pay very very very little. In many cases barely enough to live with roommates (and forget having a family)

Based on nearly 15 years of working at startups: wut? This is absolutely not true in any way. They sometimes pay less because they try to trade options for salaries but that’s becoming less popular given the lack of cashing out and people’s better understanding of the economics of it. You can get low to mid six figures at a startup easily ... which absolutely does not match your description

> You can get low to mid six figures at a startup easily...

Mid six figures? $500,000? If that's what's easy, what are they paying above-average people?

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#129

Post by ProblemFactory »

slyn wrote: post #95
olfactory wrote: post #92

Early YC: Small, gets disproportionate number of wins. Develops top tier reputation. Later YC: Expands significantly due to the added prestige, and now performs much closer to the mean. Today: Sam says that "too many YC companies are getting funded". Is this fundamentally different from a mutual fund that yields 25% above market for a few years in a row and then performs closer to the mean for the following decade? I…

There probably are deep insights that lead to the root cause of success in both situations. Once these insights are made public or more people discover and exploit them on a widespread level, the market inefficiencies that gave the possibility for outperformance then disappear. If you don't find a new edge, you revert to the mean (or maybe rather, the "mean" catches up to you).

Even if others don't discover and adopt your ideas - there is a limited market size for most investment strategies.

If you are good at picking winners for some specific type of startups, but there are only 10 of them per year, then you can't grow your fund from 10 to 100 investments per year and keep the same returns.

If you discover a clever arbitrage opportunity or market inefficiency, but there is only 1M of trades happening in that market, then you can't dump 100M into the strategy and keep the same returns.

Re: Sam Altman: ‘Too many’ Y Combinator companies raise money

#130

Post by crispytx »

d--b wrote: post #32

This seems to fit a continuous change in YC and perhaps tech in general. YC doesn't seem so eager to fund 1000 startups so that 2 of them become unicorns anymore. It's more like they want to fund 1000 startups so that 100 are sustainable. We don't hear moonshot or billion dollar market depth or hyper growth as much as we used Anyone feeling the same?

I don't think that's the case. Pretty sure they're still hunting unicorns and consider the rest of the companies a cost of doing business.
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