YC Stats • Hacker News Board

Re: YC Stats

#131

Post by eachro » Thu, Aug 27, 2015, 3:51 AM UTC

cbr wrote: post #34

cm2012 wrote: post #17

Considering there is probably a vintage effect, and currently 5% of YC companies are worth over $100 million, that means that most likely 5-10% of founders that join YC will become millionaires over time. That's pretty impressive.

That's not a super high bar. Most of these founders could get $200k jobs at top tech companies, invest $100k/year, and be a millionaire in ~10 years. Much better than 10% odds!

Investing 100k/year seems a bit much. With ~40% tax, the take home is closer to 120k. Add in Bay Area rent, leisure, random fixed costs(car insurance, significant others expenses, pets, etc) and its probably closer to 80k at best.

Though, I do wonder, how feasible would it be to end up with a 2+mill nest egg(or however much you need to live off the gains) by ~35 and retire right then and there.

Re: YC Stats

#132

Post by downandout » Thu, Aug 27, 2015, 4:25 AM UTC

>This includes Twitch, which Amazon bought for ~970MM plus an earn-out.

These kinds of companies with massive bandwidth costs rarely become profitable, and even if Twitch bucks the trend, Amazon could easily use Hollywood accounting to avoid any payments on the earn-out (for example, it could charge Twitch retail rates for use of AWS services). It strikes me as a bad decision to accept an earn-out when the overwhelming likelihood is that the clause will result in exactly $0 going to the former owners.

Re: stats, 40 out of 940 are worth more than $100M. Dozens more are probably worth at least $25M. That is an insanely high success rate. The YC system works!

Re: YC Stats

#133

Post by randall » Thu, Aug 27, 2015, 4:39 AM UTC

mhartl wrote: post #72

Interesting to hear that eight YC companies are worth over $1b. I count Airbnb, Dropbox, Stripe, and Twitch for sure, and probably Weebly makes five. Any thoughts on what the others are?

no inside info but i bet memsql is a lurker in that club.

Re: YC Stats

#134

Post by patio11 » Thu, Aug 27, 2015, 5:00 AM UTC

downandout wrote: post #132

>This includes Twitch, which Amazon bought for ~970MM plus an earn-out. These kinds of companies with massive bandwidth costs rarely become profitable, and even if Twitch bucks the trend, Amazon could easily use Hollywood accounting to avoid any payments on the earn-out (for example, it could charge Twitch retail rates for use of AWS services). It strikes me as a bad decision to accept an earn-out when the overwhelmi…

That particular example aside, useful information for many HNers: Earn outs in tech are routinely earned out. They're negotiated with the assistance of very smart, very highly paid specialists, too.

A fairly common outcome (anecdata from friends) is that the earnout is virtually in the bag at the 50% point and after that they are mildly frustrated with thumb-twiddling while waiting for the clock.

Re: YC Stats

#135

Post by qq66 » Thu, Aug 27, 2015, 5:39 AM UTC

downandout wrote: post #132

>This includes Twitch, which Amazon bought for ~970MM plus an earn-out. These kinds of companies with massive bandwidth costs rarely become profitable, and even if Twitch bucks the trend, Amazon could easily use Hollywood accounting to avoid any payments on the earn-out (for example, it could charge Twitch retail rates for use of AWS services). It strikes me as a bad decision to accept an earn-out when the overwhelmi…

YouTube has massive bandwidth costs, and it became profitable. Bandwidth keeps getting cheaper, user attention maintains its value or gets more valuable over time.

Re: YC Stats

#136

Post by downandout » Thu, Aug 27, 2015, 6:20 AM UTC

qq66 wrote: post #135

downandout wrote: post #132

>This includes Twitch, which Amazon bought for ~970MM plus an earn-out. These kinds of companies with massive bandwidth costs rarely become profitable, and even if Twitch bucks the trend, Amazon could easily use Hollywood accounting to avoid any payments on the earn-out (for example, it could charge Twitch retail rates for use of AWS services). It strikes me as a bad decision to accept an earn-out when the overwhelmi…

YouTube has massive bandwidth costs, and it became profitable. Bandwidth keeps getting cheaper, user attention maintains its value or gets more valuable over time.

Which is why I said most companies with large bandwidth costs do not become profitable. YouTube eventually is one notable, glaring exception. But even they took years, billions of dollars in infrastructure investment and losses on bandwidth, access to a massive existing base of advertisers that already trusted its parent company, and arguably the best monetization team in the history of capitalism to achieve profitability.

Re: YC Stats

#137

Post by wattle_park » Thu, Aug 27, 2015, 10:58 AM UTC

kevin wrote: post #41

lordnacho wrote: post #10

Since applications are opening tomorrow, it would be interesting to have a breakdown of interviews/acceptances based on various criteria: sole founder, has revenue, has user, etc... It would allow prospective applicants to think about whether to apply, and hopefully keep the pile a manageable size for the people reading it.

Might be interesting, but the odds are the wrong way to think about this. Our wins come from the margins and we're looking for people to beat the odds. Most of the time we are surprised what ends up becoming big. The numbers reveal that it's hard, but startups were ALWAYS hard. It's still the hardest thing I've ever done and most founders say the same. As far as YC is concerned, we don't want people to try to make th…

I have admired YC from afar, and wish to be part of it. After much reading on PG essays, Sam A interviews and YC demographic (young male founders), the odds are against us. Last week's NY Times article on Amazon culture, reminded me of YC. There are few similarities in concepts (work life balance, female discriminations). YCF was targeted for young founders (Sam's interview mentioned low burn rate). I understand that startup life is hard, but thinking that older people will find it harder to cope is very naive. There are lots of new innovations that can be developed with the experiences and knowledges from older founders. True that there have been some young extraordinary unicorns. But I am sure that experiences and knowledges can help to build a better long lasting businesses.

Re: YC Stats

#138

Post by vasilipupkin » Thu, Aug 27, 2015, 1:02 PM UTC

7Figures2Commas wrote: post #84

vasilipupkin wrote: post #73

Earlier quoted context omitted.

why is market cap not accurate language? Even private companies have market caps. These market caps are set in the private markets. Market cap = # of shares outstanding * price of each share. Applies to both private and public companies

Please talk to somebody who works in finance. You will virtually never hear the term "market cap" used to describe the value of private companies. If you use this term in this context, it will be assumed that you don't know what you're talking about. There's a reason Sam updated the language in his post...

I work in finance :) true, the term is not often used for private companies. But that doesn't make it any less real.

Re: YC Stats

#139

Post by vasilipupkin » Thu, Aug 27, 2015, 1:23 PM UTC

001sky wrote: post #100

vasilipupkin wrote: post #70

Earlier quoted context omitted.

that's probably roughly right. But why did you expect higher? they are generating somewhere around 20-30% IRR. That seems massive in the current low yield low return environment

20-30% irr is not very high given the risk involved. a lower risk portfolio that is leveraged can give you this return quite easily (in a mechanical sense). in that case you have or take a low-risk low return investment and add risk and return by adding say 10x leverage to a 3% return. In this case, the more relevant number is $$ in and $$ out. and also the optionality to continue the business going forward. That is…

A leveraged portfolio is a bad comparison because you could also leverage this portfolio. Let's compare apples to apples. There is no unlevered investment right now that can give you such high returns, that I can think of.

Re: YC Stats

#140

Post by loumf » Thu, Aug 27, 2015, 1:39 PM UTC

patio11 wrote: post #134

downandout wrote: post #132

>This includes Twitch, which Amazon bought for ~970MM plus an earn-out. These kinds of companies with massive bandwidth costs rarely become profitable, and even if Twitch bucks the trend, Amazon could easily use Hollywood accounting to avoid any payments on the earn-out (for example, it could charge Twitch retail rates for use of AWS services). It strikes me as a bad decision to accept an earn-out when the overwhelmi…

That particular example aside, useful information for many HNers: Earn outs in tech are routinely earned out. They're negotiated with the assistance of very smart, very highly paid specialists, too. A fairly common outcome (anecdata from friends) is that the earnout is virtually in the bag at the 50% point and after that they are mildly frustrated with thumb-twiddling while waiting for the clock.

From my anecdata, the acquiring company is using the earn-out as more of a test that what you are saying at acquisition time is true. It augments due-diligence.

Meaning, if you are right about the business, these milestones are trivial to hit. If you don't accept the earn-out, it's a signal that something you are saying is either wrong or being misinterpreted.