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Comment by tyre | Hacker News Reader

I'm not saying that ZP was an obvious winner when you funded it, because you didn't even fund it!* And that's kind of the point.

The companies that get into YC are often speculative in their ideas. Maybe it is devaluing the idea over the execution. Maybe it is the belief that getting in early to a growing trend is more valuable than reinventing an existing idea.

Regardless, the result is great teams of founders who think the key to success is a crazy idea. Sometimes crazy ideas work (AirBnB was kinda nuts at the time) but there seems to be a heavy weight in companies funded towards those types of investments versus the ZenPayrolls. Which tends to attract the same.

* They were Switchboard Labs at the time, doing something totally different.

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Actually, I did fund it. I personally invested shortly after the ZP pivot :) (and it still wasn't clear they would be successful)

Nevertheless, the fact that yc invested pre-pivot only reinforces my point, as ZP wouldn't even exist had YC not taken a chance on the team and then helped them find a more promising idea.

Sorry I was unclear, I had meant YC didn't fund that idea because it didn't exist until they were already accepted.

I see your point, that the team is the most important part and YC invested in that. My feeling is that YC can be more effective at funding those types of ideas and teams. That the hit rate can be higher by focusing on a different class of idea. Perhaps that means more pivots or different ideas accepted at the start. I'll try to flesh this out more.

P.S. Unrelated, but thank you for sharing your thoughts. I appreciate it

YC's IRR outstrips that of all but a tiny handful of venture funds. (Sequoia, maybe?)

There's always room to improve, but it's likely they are making fewer mistakes than you think.

I don't think AirBnB was ever even slightly nuts. VRBO had been around forever and couch surfing already existed.

It's all easy with hindsight. It was much less obvious at the time: https://medium.com/@bchesky/7-rejections-7d894cbaa084

AirBnb was almost dead when they got into YC. Nobody would fund them, and Nate had moved to Boston to get a real job.

Sure, but those were very far from being mainstream.

Airbnb is actually still nuts. They probably aren't even to the half-way point in terms of where they need to be to be actually mainstream.

Even after YC and with the full support of PG himself, AirBnb was turned down by one of the top VCs in the country:

http://www.paulgraham.com/airbnb.html

And that's just one public example. (Chris Sacca also turned them down.)

Empirically it would be shocking if they were the only 2 investors who had the opportunity to invest but didn't.

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