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YC Graveyard: 821 inactive Y Combinator startups

ycgraveyard.iamwillwang.com

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Re: YC Graveyard: 821 inactive Y Combinator startups

#61

Post by YetAnotherNick »

smallerfish wrote: post #58
jbverschoor wrote: post #52

Earlier quoted context omitted.

That’s not what a lifestyle business is. Unless your lifestyle is eating ramen

Sure it is. If your business nets 3 million a year, it takes 5 people to run it, and your customer base is steady, that's lifestyle. Sucks for investors, pretty nice for you if you can keep it running.

3 million a year for 5 person is something like 400k/person after corporate tax. Which is pretty high and low at the same time(unless it is just freelancing). High in the sense that there would be competition and the other company will have more budget to reduce the price and make the entire segment unprofitable till you die. Low in the sense that you would likely make the same or higher in corporate if you are that skilled to net 3 million/year.

Re: YC Graveyard: 821 inactive Y Combinator startups

#62

Post by oefrha »

normie3000 wrote: post #60
that_guy_iain wrote: post #57

Earlier quoted context omitted.

Enough money to keep going doesn't mean just enough money to cover the costs. It means being able to continue paying yourself and all your employees their salaries, meet costs and make a small minimum profit.

Aren't salaries considered to be part of the costs?

Employee salary is definitely cost. Founder/owner salary is more complicated.

Re: YC Graveyard: 821 inactive Y Combinator startups

#63

Post by jasode »

robocat wrote: post #27

I'm onehundertpercent pissed off with YC: * The modal win for a founder is $0.00 * PG makes big talk about winner's average returns... Yayyyyy..... However YC gets preferential shares; YC is not aligned with the common shareholders (founders; builders). YC builds a story that they support creators however YC doesn't sit on the same table-side as creators. * I actually believe YC is worthwhile, but I wonder if Ize jus…

>However YC gets preferential shares;

It's not that YC specifically gets "preferred shares" -- it's that investors in general insist on liquidation preferences when buying non-liquid shares in unproven private companies.

How would an alternative scenario of investors buying common shares of illiquid stock in a private company actually be realistic? Maybe the startup founders could hypothetically insist on selling only common shares and never preferred shares as a condition of investment?!? But what investors (other than family relatives) would put in money in that case?

Or put another way, let's say we create a brand new VC fund to invest in startups and one of the novel concepts is that the fund only buys common shares to be more "founder friendly". The problem is that hypothetical VC fund will attract no rational limited partners with money because they know that startup founders can just take their invested dollars with no payback protection. Such a VC fund with no investors and no money to invest would be a moot point. The general partner of such a VC fund would be considered a "financial idiot" for buying common shares in startups.

In the end, the "preferred shares" is the market's "risk premium" that investors charge as an offsetting factor for losing 100% of their money. If startup founders can't find a way to convince investors to accept illiquid common stock instead of preferred shares, they need to avoid investors altogether and self-fund via bootstrapping.

Re: YC Graveyard: 821 inactive Y Combinator startups

#65

Post by dustingetz »

jasode wrote: post #63
robocat wrote: post #27

I'm onehundertpercent pissed off with YC: * The modal win for a founder is $0.00 * PG makes big talk about winner's average returns... Yayyyyy..... However YC gets preferential shares; YC is not aligned with the common shareholders (founders; builders). YC builds a story that they support creators however YC doesn't sit on the same table-side as creators. * I actually believe YC is worthwhile, but I wonder if Ize jus…

>However YC gets preferential shares; It's not that YC specifically gets "preferred shares" -- it's that investors in general insist on liquidation preferences when buying non-liquid shares in unproven private companies. How would an alternative scenario of investors buying common shares of illiquid stock in a private company actually be realistic? Maybe the startup founders could hypothetically insist on selling onl…

preferred shares prevent cookie cutter founder fraud. Founder raises $1M at 10 post. Founder decides to sell 6 months later for 2 mil. Investors get 200k back founder gets 1.8 mil. Now run this math for AI unicorns.

Re: YC Graveyard: 821 inactive Y Combinator startups

#66

Post by smallerfish »

YetAnotherNick wrote: post #61
smallerfish wrote: post #58

Earlier quoted context omitted.

Sure it is. If your business nets 3 million a year, it takes 5 people to run it, and your customer base is steady, that's lifestyle. Sucks for investors, pretty nice for you if you can keep it running.

3 million a year for 5 person is something like 400k/person after corporate tax. Which is pretty high and low at the same time(unless it is just freelancing). High in the sense that there would be competition and the other company will have more budget to reduce the price and make the entire segment unprofitable till you die. Low in the sense that you would likely make the same or higher in corporate if you are that…

Once the competition has initially shaken out in a new category, minority players can hang on for years. Their product could be perfect for their customers in ways that the big guns don't accommodate.

Re: YC Graveyard: 821 inactive Y Combinator startups

#67

Post by adastra22 »

jjcob wrote: post #31
adastra22 wrote: post #24

Earlier quoted context omitted.

There were plenty of ways to get paid on the internet before stripe. On paper it didn’t look like they were doing anything new. They just did it better. Airbnb… idk. Who wants to rent their house out to total strangers? I wouldn’t. I wouldn’t have thought it would take off like it did.

Airbnb is mostly commercial listings that are basically unlicensed hotel rooms / appartments. I don't think people renting out their personal living spaces is a big part of their income. It's just a story they use to get around regulations.

None of that existed when they first started. The pitch was to rent out your house while you're out of town.

Re: YC Graveyard: 821 inactive Y Combinator startups

#68

Post by xenospn »

tinco wrote: post #59
sebmellen wrote: post #47

Earlier quoted context omitted.

I know some (YC and others) who float around doing nothing on $200k a year in salary because no investor cares enough, or has the legal right, to get their money back. Not sure what their long-term game plan is. The others end up at another Series B+ startup or go to a MANGA company if they can grind leetcode for a bit and get an interview.

They pay themselves 200k/y in a pre-market fit startup? That's insane and I guess on the investors for going over the traditional preseed amounts. Or do you mean that they're zombie startups that make enough to pay the founder 200k/year?

I think a lot of gen z founders see nothing wrong with paying themselves a FAANG salary. My generation, not so much (I’m 45).

Re: YC Graveyard: 821 inactive Y Combinator startups

#69

Post by xenospn »

netsharc wrote: post #45
noduerme wrote: post #28

Earlier quoted context omitted.

I don't think a lot of founders actually write code , but I did, I just realized my startup was probably going to be illegal soon and also that it wasn't going to get the funding it needed. I just kept writing code for whoever wanted to pay. It's fairly lucrative. Looking back, maybe I should have just done the illegal thing and gotten pardoned.

Gotta love the jumping on the criminality bandwagon... Louis Brandeis says hello. https://www.azquotes.com/quote/1062178

Fun fact: my kibbutz is named after him. He bought the land from the local Palestinians.
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