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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

#141

Post by sokoloff »

mtkd wrote: post #135
kamaal wrote: post #102

Earlier quoted context omitted.

>>"email me, I don't check facebook often" Facebook exists because I would not like 500 friends to email me every day about their photos or jokes. That sort of thing doesn't scale well with emails.

Social networks exploded because they created an interaction that previously wasn't possible. They have now become a tax on life - like email. A set of hygiene actions you have to perform every day. Do not underestimate how much the next generation does not want to conform to the restrictions of the previous generation. It's entirely possible future generations do not want to be tracked and targeted 24/7 - they may c…

Helping them pass the time certainly, and perhaps helping them get laid.

You're dead right that each generation wants to be in a social space that feels "theirs", but I don't think that precludes using the same infrastructure.

When I was a teen, I drove on the same roads and used the same telco and USPS as my parents, even at my most rebellious times. In Facebook's case, each user "feels" a tiny piece of the overall universe, and one which is vastly disproportionately populated with people they've mutually selected. That, coupled with meeting jwz's use case above, makes me feel that Facebook is pretty well positioned to succeed.

Re: Paul Graham's Letter to YC Companies

#142

Post by [deleted] »

no_gravity wrote: post #121
pg wrote: post #22

Note incidentally that I'm talking about the performance of the IPO, not the performance of Facebook itself. I think Facebook as a company is in a strong position. The problem is simply that Mr. Market ( http://en.wikipedia.org/wiki/The_Intelligent_Investor ) doesn't think so at the moment.

You say Mr. Market doesn't think Facebook is in a strong position. How do you evaluate that? Facebooks Market value is 70 Billion. Its P/E ratio is 86. If that isnt an appraisal of a strong position, what is? Where do you draw the line?

[deleted]

Re: Paul Graham's Letter to YC Companies

#143

Post by Tichy »

Isn't it the case that there simply is too much money and at the end of the day, people seem to be desperate to invest it somewhere? I think that is a reason why most stock market crises don't seem to last very long.

Re: Paul Graham's Letter to YC Companies

#144

Post by hdctambien »

mcosta wrote: post #136
jkahn wrote: post #134

Earlier quoted context omitted.

It's not about a Facebook acquisition no longer being an exit, it's about an IPO no longer being an exit.

Since long ago Facebook is too big to be adquired. Now even less. Who can pay so much money?

I believe he's referring to an acquisition by Facebook being an exit option, not an acquisition of Facebook.

Re: Paul Graham's Letter to YC Companies

#146

Post by dr_ »

Interesting but Facebook was absurdly valued to begin with. At nearly 100 times earnings, it seems to me that Mr. Market actually responded appropriately for now.

Facebook has already been monetizing using traditional revenue streams (ads) and there doesn't appear to be much left to do there.

They may have another ace up their sleeve, but it's not Wall Streets job to guess that they may.

Re: Paul Graham's Letter to YC Companies

#147

Post by agotterer »

po wrote: post #70
Alex3917 wrote: post #33

Earlier quoted context omitted.

Out of curiosity, why is it that Facebook's IPO would hurt early stage valuations, when all of Facebook's early investors made hundreds of millions or billions of dollars? I could see it getting harder to IPO at a good valuation for a few years, but that shouldn't drive down early stage valuations all that much. Also, to me the most interesting thing to watch (beyond Spain) is these new crowdsourcing laws going into…

I suspect it's because investors think that one of the few routes to 'exit' a company and cash out your investment just got closed down, at least in the short term. That increases the risk of investing and therefore lowers the valuation.

In the next few months Facebook will create over 1000 new millionaires. Is it to much too assume that many of them will get into inventing, which could actually cause the opposite affect of what you're suggesting where there is even more money available?

Re: Paul Graham's Letter to YC Companies

#148

Post by veyron »

markmm wrote: post #111
veyron wrote: post #6

Earlier quoted context omitted.

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.

You have to work backwards. The penultimate round of investors depend on future investors to buy in at a higher valuation. The third to last group depend on the second to last group. And you can walk this all the way back to the seed stage. If there are few people left at the end to buy up the IPO then the late stage investors dry up and the ripple works its way back to the seed and angel rounds.

Re: Paul Graham's Letter to YC Companies

#149

Post by njx »

pg wrote: post #35
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 don't think they've even tried to make money yet. They've just been focusing on growth. But they have so many users now that they could do whatever they want. Ideas that would entail a chicken and egg problem for anyone starting from scratch (e.g. marketplaces) do not for them. Plus Mark himself is such a fearsomely effective person. And so young; he's only a little older now than Larry and Sergey were when they st…

Actually they have tried to make money. The only thing that is working for them is ad-revenue. For 8 yrs, why would anyone think they haven't tried to make money? They are running out of time before they become a penny stock. In internet years it is a long time in existence and they better have some additional revenue streams.
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