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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

#51

Post by johncarpinelli »

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…

FB is a strong company and they'll probably get back to a $100bn valuation in a few years. However, I don't think FB is the source of the current tech boom. It is driven by smart phones and app stores. Suddenly, there are a billion people walking around with internet tablets in their pockets. FB benefitted from this new platform just like Instagram, Dropbox, Airbnb etc.

Re: Paul Graham's Letter to YC Companies

#52

Post by bfe »

jcitme wrote: post #27
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.

> 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?

Just for perspectives on "all the naysayers that are betting against the company", the percentage of stock on loan (e.g. for shorting) for Facebook was about 1% versus 5.3% for Zynga and 4.1% for LinkedIn as of May 23rd (the most recent I have data for) per Bloomberg.

LinkedIn for one, despite way more short-sellers than FB and despite the past month or so, still seems to be doing okay despite "all the naysayers that are betting against the company". Facebook is complicated, but undoubtedly is well-positioned for a lot of potential upside.

(Disclosure, I don't have positions in any of the companies mentioned here nor do I intend to initiate any in the next 72 hours.)

Re: Paul Graham's Letter to YC Companies

#53

Post by petercooper »

jayzee wrote: post #32

So here is an idea for an email feature/gmail plugin: 'Semantic Scramble' Basically, any sensitive email that you send to a bunch of people is automatically scrambled (retaining original meaning/correct grammar, just a small shuffling of words) so that each person gets a unique email. Easy to find out who leaked it. You could add a similar unique jitter for sensitive photos/images...

But there's another idea: when you want to share a sensitive e-mail, you run it through a 'Semantic Scramble' so it can't be detected that you specifically leaked it.

Re: Paul Graham's Letter to YC Companies

#54

Post by anon808 »

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…

Ahhhh yes the famous cash faucet that just needs to be turned on. Why would anyone that could have been making more money not made it before? Growth and profit are not mutually exclusive.

Re: Paul Graham's Letter to YC Companies

#55

Post by 9oliYQjP »

rehack wrote: post #44
pg wrote: post #35

Earlier quoted context omitted.

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…

But I think, its now going to be all the more tough for them to figure out how to improve their ARPU dramatically, as they don't have the benefit of obscurity. For example, even slight change to the feeds, like inserting what vaguely seems like an Ad, raises a huge uproar from people. In contrast Google had got Adwords figured out (but it was not as widely known) before their IPO.

Changes to Facebook are like fluctuations in gas prices though. People grumble and complain, then just go ahead and don't change their habit.

I'm pretty conspiracy-theorish on the whole Facebook thing. A part of me wants to believe Mark managed to hack the entire system. He got the maximum amount of money out of the IPO to build up a huge cash reserve for his company. He made his big acquisition before the IPO; future acquisitions may be harder now that the share price is what it is. But he has also sent a shock wave through the entire eco-system. If things cool off a bit, he'll be able to find more talent to work at Facebook at more reasonable prices. He won't have current employees looking to run off and start a bubbly startup. It just seems like a brilliant hack :) I'm probably reading far too much into the whole situation.

During this cooling off period, Facebook can disregard their short term share price and experiment wildly until they figure out something that works. There's not an investor alive who thinks there's anybody more capable than Mark Zuckerberg for Facebook CEO. Nobody will oust him in the short- to medium-term.

Facebook is a very much in the same position that Amazon.com was in around 2001. They have the means to figure this out. Other startups trying to follow suit don't have this luxury any more. But Facebook sure does.

EDIT: For context, this was a contrarian opinion of Amazon.com in 2001 http://money.cnn.com/magazines/fortune/fortune_archive/2001/...

Re: Paul Graham's Letter to YC Companies

#56

Post by dmor »

cdixon wrote: post #34
jayzee wrote: post #32

So here is an idea for an email feature/gmail plugin: 'Semantic Scramble' Basically, any sensitive email that you send to a bunch of people is automatically scrambled (retaining original meaning/correct grammar, just a small shuffling of words) so that each person gets a unique email. Easy to find out who leaked it. You could add a similar unique jitter for sensitive photos/images...

The canary trap.

PR people do this, it works

Re: Paul Graham's Letter to YC Companies

#57

Post by rdl »

limeade wrote: post #24

Can someone explain the perception that Facebook's IPO was a disaster? Doesn't the fact that the stock has not risen mean that the offering had the correct price?

Opening at 38 and staying in the high 30s/low 40s would be reasonable. Maximum value for FB, Inc., stable price.

Dropping to 26, not so much.

Re: Paul Graham's Letter to YC Companies

#58

Post by ericfrenkiel »

malandrew wrote: post #48
ericfrenkiel wrote: post #10

I read this with a heavy heart, especially after working at Facebook before my current startup. Facebook is an amazing company with some of the best people in Silicon Valley working to make Facebook a once-in-a-generation company. But if Google debuted at $25b, and grew into a $200b company, how can Facebook grow by a similar multiple starting at a $100b valuation? In my opinion, opening at $38/share sucked all the o…

I think the thing that people need to remember is that Facebook really only IPOed because the had too. If Google had tried to wait things out as long as Facebook did, then it's quite possible that it would have IPOed near $100b (Sep 2005) and grown to the $200b they are at today. The money that was there to be made in the Facebook IPO was made before Facebook went public in the secondary market. For professional inve…

true wrt filing, but still doesn't change that the market doesn't value Facebook at $100b. The current P/E is just too high.

Will Facebook get back to $100b and beyond? yes as soon as it starts making more money.

Re: Paul Graham's Letter to YC Companies

#59

Post by cperciva »

because "down rounds" not only dilute you horribly...

I'm missing something here. What makes "down rounds" so dilutive? I'm assuming we're talking about a larger effect than the obvious "lower valuation = handing over more stock to raise the same amount of cash" effect.

Re: Paul Graham's Letter to YC Companies

#60

Post by [deleted] »

Smerity wrote: post #45
jayzee wrote: post #32

So here is an idea for an email feature/gmail plugin: 'Semantic Scramble' Basically, any sensitive email that you send to a bunch of people is automatically scrambled (retaining original meaning/correct grammar, just a small shuffling of words) so that each person gets a unique email. Easy to find out who leaked it. You could add a similar unique jitter for sensitive photos/images...

Considering PG didn't strike down the story I presume to think he expected it to leak out or didn't ask it to remain confidential. Re: "Semantic Scramble", this was/is used quite successfully in a university course I tutored. Students are supplied with Java code featuring a unique comment style (/ * */). So many students blindly copied code out of another student's assignment and submitted it as their own that we cou…

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