Investor Day
blog.ycombinator.com
blog.ycombinator.com
1) A lot of scheduling friction will disappear. The week just after demo day is usually crazy because hundreds of founders and investors are all trying to schedule meetings with each other, and there are inevitable race conditions that lead to a lot of rescheduling and wasted time. (E.g. I email three founders with 5 possible time slots, and they all reply and ask for the same time slot.)
2) I think this will be great for investors who act quickly and go by their gut. There are plenty of investors out there -- especially those who write smaller checks -- for whom 20 minutes will be enough time to make a quick decision.
3) I'm not sure if this will be great for investors like me that approach investing more methodically rather than with their gut.* I love 1-hour meetings because that's plenty of time for both sides to dig in and learn a lot about each other. Twenty minutes feels very short to me, and I'm not sure if a 20-minute meeting is more likely to save me and the founder from an unnecessary 1-hour meeting, or if I end up having just as many 1-hour meeting -- but now with an extra 20 minutes tacked on.
That said, I don't want to judge this process before I try it at least once, and I'm looking forward to trying it out in August.
* FWIW, there are great gut-based investors and great methodical investors, and I'm not implying either approach is better.
This is the homework we do:
https://www.zillionize.com/data/
>>do you feel like you can complete that homework prior to demo day
Yes the time is very tight so we have built an app to automate that.
Two ideas related to Investor Day that I'd be interested in:
- let investors ask for one or two consecutive 20-minute slots. Founders can just allocate one slot to someone asking for two, but asking for two slots would be a good signal of investor interest and/or investing style.
- don't automate scheduling, but instead host all founders at a single location for a few days, and make it easy for investors to book slots on founders' calendars once those founders opt-in to meeting up. Maybe this could use something like https://calendly.com/
If our original scenario is:
Scenario 0: 25 1-hour meetings over the course of a few days. Investments = 25-n
You seemed to be suggesting in an earlier comment you might end up with:
Scenario 1: 25 20-minute meetings followed by 25 1-hour meetings. Investments = 25-n
I think you'll actually end up with:
Scenario 2: 25 20-minute meetings, eliminate x companies, (25-x) 1-hour meetings. Investments = (25-x)-n.
Saves you and the founders some unnecessary hour long meetings.
The way I think about the math: Current scenario: 25 1-hour one-on-one meetings -> 10 full-partner meetings -> 2-3 investments.
Worst case for Investor day: 25 20-minute meetings -> still don't have enough info -> 25 1-hour one-on-one meetings -> 10 full partner meetings -> 2-3 investments.
Good case for Investor day: 25 20-minute meetings -> 10 companies don't seem like a fit -> 15 1-hour one-on-one meetings -> 10 full partner meetings -> 2-3 investments.
Best case for Investor day: 25 20-minute meetings -> I get all the info I need -> 10 full partner meetings -> 2-3 investments.
These four cases represent 25, ~33, ~23, and ~8 hours of one-on-one meeting time, respectively.
40-min meetings might be a little awkward because usually the first 5-10 minutes of a meeting are social / chit-chat, so it might feel a little weird to immediately start a 2nd meeting exactly where you left off on the first meeting. Also, most of the time a 40-min meeting still takes up a full 1-hr time-slot since most people schedule meetings on the hour.
As a CEO, I've eliminated at least 25% investors in that time period. Given that most meetings start with the company pitch, my guess is 20 minutes would be enough to winnow down the list of hour meetings.
I've found https://calendly.com/ super useful for eliminating race conditions in scheduling, especially across time zones.
These seems to be an attempt to reinforce FOMO to force key people to attend demo day. Resorting to these tactics implies a pretty big perceived power imbalance... Eg. is this a reaction to senior partners sending their underlings because of DDay burnout? If so, this could backfire. The senior partners might just not show up (still), and force founders to attend offsite meetings later anyway (in addition to the new DDay meetings). In other words: This might just be a net increase in founder effort without changing the investor-founder DDay dynamic. After all: What do the senior partners gain / lose by this new situation? Not much (aside from FOMO), I'd guess. But the best investors will always be in demand anyway -- whether they attend DDay or not.
We are relaxing this restriction and allowing partners to bring associates to Investor Day, but only if they come themselves.
Seems like a well-reasoned hypothesis and contributes to the overall discussion. Has HN become that critical of different opinions that downvotes are used to punish dissent rather than using upvotes to indicate agreement?
Downvotes (for whatever reason) mean that more people vote down than vote up (duh). As a result they can change simply because of the people that are reading a particular comment stream. Same comment on a different post could have entirely different results vote wise (at least when it's an intelligent comment as yours was).
If you are looking for social feedback you will never get far on startups.
I can imagine many firms go into demo day with the resources and willingness to fund 10-20 ventures, whereas others are looking for only one or two.
I would much rather be the fifth choice of the former than third choice of the latter. If I knew my position in the stack I could figure it out for myself, or it could be calculated for me if YC is trying to avoid the negative consequences of making that transparent.
This doesn't hurt the big funds so much as it does the small ones. If I were an eCommerce or Logistics company, for example, there are a subset of niche funds which would be great strategic investors; but knowing they're only going to invest in one or two ventures would leave me disinclined to prioritize them when high-frequency investors are in the mix.
I don't want to kvetch here, it's a much better system than the current free-for-all. But since investors already get the first-mover advantage, it would be nice if entrepreneurs had more complete information.
To carry the theme of relationship analogues in this thread: knowing who's interested in me is great, but I'd rather be someone's dream girl than a fallback or fling.
Even better! You guys have really thought this through. :)
This algorithm is outlined by the stable marriage problem for those that are interested.
But regardless, I believe the algorithm is roughly the same as the NRMP algorithm: you run through multiple rounds where you look at each combination of company and investor. If both sides would prefer that they meet with each other, rather than the people they're already paired with, then you reassign them. Once you've done that several times you arrive at a stable state.
If the meetings are time sliced, let's say by hour, then run the algorithm for each time slice.
Investors would love it because they now have visual confirmation of who all are the "hot" matches. I bet everyone other than the Sequoias would be straining to look at who the hot startups are...and completely ignore the ones in front of them.
For the long tail of a YC batch - the ones that are not hotly contested - this could be a disaster. Previously, investors would be forced to actually look at a startup and decide in isolation. Now they can simply look at the Big VC.
I can completely see why investors would love this.
One might as well make public the interest match list and rank it by order of "likes" received.
People are perfectly capable of driving up and down the Bay Area. Guess what - we get a few free meals and coffees out of it.
EDIT: guess what, you can bring associates to tailgate Sequoia & A16Z investors.
EDIT2: what you guys might be trying to do is be helpful. For example, this lets you force-schedule investor meetings for startups that had no investor interest and term it as "the AI did it!". But I'm not sure if that will be really helpful ... at the cost of drastically reducing FOMO factor for most other startups.
Even if these were individual rooms, you would have significant tailgating behavior.
People don't realize this, but the most popular question of demo day is "who else is investing in you"
While earlier every deal was always evaluated in isolation.
1) can investors see that a startup is not at the venue or at a table all morning and get a feel for demand?
2) can investors gather any information from the matching results to get a feel for demand?
3) is there a chance for investors to send false signals by showing their interest in other startups artificially? Vice versa for startups at all (would require collusion so unlikely)
2 and 3 not so much but regarding number one, will physical observation of the meeting space introduce any signaling oppurtinities be it genuine or fraudulent by either party?
1) There are way more investors than startups and we anticipate a busy day for everyone based on past data. 2) Not the demand for a company. 3) No.
Series A, definitely.
If the algorithm used by yc to produce the matching for each slot is based on these, which algorithm is used? The one that gives priority to women's choices or to men's choices? A variation that doesn't give priority to any gender choices?
https://en.wikipedia.org/wiki/Stable_marriage_problem
The logical optimization target for YC is the total valuation of their companies, which probably means whatever approach creates the most competition among investors.
Edit: more active discussion on this topic at https://news.ycombinator.com/item?id=12051218
This is true under two conditions: 1. Marriages are heterosexual; and 2. Marriages are monogamous.
While startup/VC relationships are heterosexual (err, heterofinancial?), they are absolutely not monogamous, so the analogy to the stable matching algorithm already fails.
One of the biggest faults that looks like it might be replicated here (the article does not specify) is that once employers (VCs) rank students (startups), the students can't see the numerical ranking they were given.
For example, if I'm a student who was ranked by several companies, I cannot see the numerical ranking they gave me. This introduces a significant bias against students for no apparent reason; employers do not lose out if we can see how they ranked us.
This is one of the reasons that UWaterloo as a school is hugely overrated (although the students are generally as good as they are hyped up to be).
Isn't it better if everyone expresses their true preferences and then we do the best matching we can on that basis, rather than having students attempt to game the system in response to company ratings? Your description makes the system sound close to optimal to me.
Sounds like the backend of a dating site for startups and investors.
The downside I see is that if you are bad at meeting investors / need to iterate on your pitch, these meetings won't allow you to do that, as they'll be over before you can rethink it. But I think it's generally worth more / faster meetings.
*As another investor pointed out, 20 minute meetings may also be too short. I am not sure what the optimal meeting length should be. 30 minutes might be better. 1 hour is probably too long (you can always schedule a follow up meeting).
A study on speed dating showed an increased opinion from the person that approaches the other. Intentional?
Did you even win the Putnam, if not then please don't be bolder than the parent poster.