Paul Graham's Letter to YC Companies • Hacker News Board

Re: Paul Graham's Letter to YC Companies

#181

Post by ppop » Tue, Jun 05, 2012, 5:27 PM UTC

agotterer wrote: post #147

po wrote: post #70

Earlier quoted context omitted.

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?

At the rate FB is falling, there won't be 1000 new millionaires by that time

Re: Paul Graham's Letter to YC Companies

#182

Post by pbiggar » Tue, Jun 05, 2012, 5:27 PM UTC

Nelson69 wrote: post #177

pbiggar wrote: post #77

When I saw PG's email, I thought this was a self-fulfilling prophesy, even if it was only seen by YC founders. But now that every has seen it - it will be in Forbes and TechCrunch soon no doubt - it seems almost certain. If just YC founders see it, then they'll take less money, and get lower valuations, etc, leading the tone of the valley. But if everyone sees it, investors will close their wallets, people will decla…

I don't like this attitude. Sending that letter out is the honest thing to do. If you're gearing up to try and raise money, that is some important insight, your business is potentially in the balance right now. I've been trying to wrap my mind around the FB IPO for a while now. FB was ordained by the media. It was the next great Silicon Valley company, Zuck is the new Gates/Jobs/Dell/etc.. All the hype was about "big…

> I don't like this attitude. Sending that letter out is the honest thing to do.

I wasn't criticizing the sending of the letter (at least, I didnt intend to have that attitude). Indeed, I found it very useful to read. Much less happy that it was leaked, of course.

I hope the leak doesn't prevent pg from sending his honest advice to alumni, but if the honest advice leaks and has wider implications for his portfolio, well that would be pretty bad.

Re: Paul Graham's Letter to YC Companies

#183

Post by ppop » Tue, Jun 05, 2012, 5:31 PM UTC

Alex3917 wrote: post #33

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.

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…

We ran out of 401k money to buy IPOs

Re: Paul Graham's Letter to YC Companies

#184

Post by agotterer » Tue, Jun 05, 2012, 6:08 PM UTC

ppop wrote: post #181

agotterer wrote: post #147

Earlier quoted context omitted.

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?

At the rate FB is falling, there won't be 1000 new millionaires by that time

FB is still going to be worth $40B?. Its not $100B+, but there are plenty of people that are going to make a lot of money if they sell.

Also check out Fred Wilsons response (http://www.avc.com/a_vc/2012/06/some-perspective.html). He makes some good points about the returns still being pretty damn good.

Re: Paul Graham's Letter to YC Companies

#185

Post by dorkitude » Tue, Jun 05, 2012, 6:17 PM UTC

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.

Do you think this applies equally to B2C and B2B startups?

Re: Paul Graham's Letter to YC Companies

#186

Post by theoutlander » Tue, Jun 05, 2012, 6:36 PM UTC

agotterer wrote: post #147

po wrote: post #70

Earlier quoted context omitted.

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?

People won't start investing necessarily. Look at the 10,000 millionaires that came out of MSFT in the Redmond area...... only a fraction are investors.

Re: Paul Graham's Letter to YC Companies

#187

Post by jeffreymcmanus » Tue, Jun 05, 2012, 6:51 PM UTC

ppop wrote: post #181

agotterer wrote: post #147

Earlier quoted context omitted.

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?

At the rate FB is falling, there won't be 1000 new millionaires by that time

If you do the arithmetic, yes there will. At any rate, you don't need to be a millionaire to do venture investing.

Re: Paul Graham's Letter to YC Companies

#188

Post by ppop » Tue, Jun 05, 2012, 7:40 PM UTC

jeffreymcmanus wrote: post #187

ppop wrote: post #181

Earlier quoted context omitted.

At the rate FB is falling, there won't be 1000 new millionaires by that time

If you do the arithmetic, yes there will. At any rate, you don't need to be a millionaire to do venture investing.

At the rate FB is falling, it will be worth less than 12 billion in 3 months.

Re: Paul Graham's Letter to YC Companies

#189

Post by pg » Tue, Jun 05, 2012, 9:12 PM UTC

rst wrote: post #158

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.

Or perhaps Mr. Market thinks it's a solid, say, $25 or $35 billion company that was just way overvalued at the IPO valuation of $100 billion plus. There's certainly a whole lot of commentary along those lines in the financial press, like this example from a few days before the IPO: http://marketday.msnbc.msn.com/_news/2012/05/15/11702548-is-... That's certainly a defensible position: the company is stable and profita…

Mr. Market sounds pretty reasonable the way you describe him. But just 7 days ago he thought Facebook was worth 25% more than he thinks it's worth now. So he looks to me like the familiar Mr. Market portrayed in Benjamin Graham's book.

Re: Paul Graham's Letter to YC Companies

#190

Post by silentscope » Tue, Jun 05, 2012, 9:25 PM UTC

pbiggar wrote: post #179

silentscope wrote: post #176

Earlier quoted context omitted.

I was calling the comment above me catty, which it was. I'm not trolling, but trying to convey that sharp sarcasam doesn't really ad much to a conversation. If people want to downvote me instead of the sarcasm, that's cool (I just don't necessarily understand it).

Sorry, miscommunication. waveform was the troll, not you (though I dont think adding single word replies ever adds to the conversation on HN).

point well made. I could've been more elaborative.