Paul Graham: Handling Investors (talk at Stanford 11 April 07) | Hacker News Reader

Paul Graham: Handling Investors (talk at Stanford 11 April 07)

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34 pointsmattjaynes29 comments

Paul talks about the YC admission process. "At YCombinator we go through and rank all of the applications, then we take the top 30 for interviews."

I bet there are a few people around here who would like to know where they placed in the last round.

30 was just the number they invited for the Winter batch. It's not their standard cutoff number.

It seems like it'd have to be around that just for time constraints, though. If they give each interview an hour, 30 teams means 15 hour days all through the weekend.

The interviews are much, much shorter than an hour. Either they're really good at reading people, you just have to make the most of the short time you have, or both.

Trevor said that they have about 50 interviewees for this round.

We've been told that interviews run around 10 minutes per team. I'm not sure if this was the case for previous seasons.

This is fairly accurate as on-the-fly notes from a talk go, but certainly nothing like a transcription. There's a lot missing and a few things that have been misunderstood.

Yeah, I tried to make that clear at the beginning of the post. I guess not clear enough. I've added an update to my post including your comment. Yet another reason I prefer to podcast - way less work for me and much more accurate! I'll be sure to bring extra batteries with me next time, doh.

Nice write up and great answer to that question. I can't tell you how bummed out I am that my application was rejected. I'm debating whether it means there was something fundamentally wrong with my app or if it's something fixable. I know it's impossible, but I would have really liked to know what was (or wasn't) in my application that caused it to be rejected.

"I'm debating whether it means there was something fundamentally wrong with my app or if it's something fixable."

The only way to know, for real, is to build it and see if people come. No investor, nor even an entrepreneur, can tell whether an idea will work just by looking at an application. They can only judge which ones are likely to work.

Although not part of his talk, Paul had something interesting to say, when posed with the question about how anal investors are, about 'domain expertise' of the team they would be willing to fund.

The point to take home from Paul's response to this question was that, as long as the investors are convinced that the 'hackers' have enough domain knowledge to realize an important need and they have a relevant and popular solution to the problem, then the product/prototype/system should silence the critics/cynics, if any.

Paul used Mark Zuckerberg as an example as a facilitator of 'inter-personal networking' through facebook. The domain here being 'inter-personal networking' ;-) and how much Mark sucks at it!

Go HACKERS!!

Thanks for the notes. I was caught up in traffic and missed the first couple.

The best part was Paul imitating a giant cockroach riding atop an imaginary muzzled VC like a horse, furiously cracking a whip. Definitely one of those "had to be there" moments.

YOU WROTE: "When I did my app, I really liked the last question which was to tell about something 'surprising' or 'amusing' that you had discovered. So I asked if they had had many good answers to that one. Paul said that there were some really good ones, but that inexplicably many had left that question blank! Then he chuckled and said "Actually, there was a guy who submitted this wonderful algorithm for wiping his ass.""

My co-founder and I answered the question as follows. "timach notes that time is expanding between The Big Bang and The Advent of Human Consciousness. These are the opposite poles of existence. This means that the mathematical model of physical time using the complete ordered field of real numbers is a misleading metaphor. What is great about mathematics is that it is a tinkertoy of metaphor, and thus offers unlimited possibilities for new metaphors. Rigor is the window through which intuition shines.

erdos2 discovered an enumeration formula for a class of combinatorial objects (the "almost-injective" functions) with the following decomposition: the formula is a sum of two terms, the first of which has a closed form representation as fixed sum of generalized hypergeometric functions and which is asymptotically significant; the second is provably not representable in closed form (hence there is no closed form enumeration formula for the almost injective functions), and asymptotically negligible. Moreover, the significant term is asymptotically equivalent to a simpler hypergeometric function, from which a limit probability distribution for the almost injective functions can be derived."

I wonder if these responses are far less memorable than a high quality ass wiping algorithm.

Yeah, the ass-wiping algorithm might be more memorable because it's simple, concrete, and there is nothing 'abstract' about it.

For more on the 'stickiness' of ideas, check out this book:

http://blog.guykawasaki.com/2007/01/the_stickiness_.html

Sorry to threadjack, but what does this mean:

"timach notes that time is expanding between The Big Bang and The Advent of Human Consciousness. These are the opposite poles of existence."

I don't understand what you're trying to say by "time is expanding". It also seems to me like a rather anthropocentric view of the universe to put human consciousness at one "pole of existence". We've only observed a thin slice of existence thus far. If you could explain this, maybe I'd understand your following assertion that "the mathematical model of physical time using the complete ordered field of real numbers is a misleading metaphor".

I don't understand erdos2's discovery either, but I'll chalk that up to my complete ignorance when it comes to math.

He's my cofounder and I don't understand what he is talking about either. As for what I am saying, the basic point is that only two interesting things have happened. One is The Big Bang, and the other is that we know it. All else is imaginary. The idea that "we've only observed a thin slice of existence" is falling prey to the metaphor to which I am objecting. There is no "existence" to slice up.

Sure, that's (arguably) true within our observation. But I don't think you can claim to know what's going on outside the observable universe -- or even in the galaxy next door. Your statement is also not self-consistent because of this... we don't know what all the products resulting from the Big Bang are. Sure, we do know that our consciousness is a part of that. But even if you were to union together the observations and insights of every human consciousness that's ever existed, it's still only observed one thin slice of the products of the Big Bang (well, existence really). Don't fall prey to an anthropocentric view of the universe! And if we are going to rank the "interestingness" of events, I'd put the happy accident that started this evolutionary process that stumbled upon a fitness gradient giving human consciousness as higher than human consciousness itself. After all, at that point it's "just" a matter of using the fitness metric to wander through the state space.

Anyway, thanks for the explanation! I'm not going to respond to this thread further since this isn't the proper forum for philosophical flamewars. :)

"He's my cofounder and I don't understand what he is talking about either"

That is so funny!

When I initially read your post two days ago, I was indignant at PG a la "throwing pearls (you) before swine (YC)".

Now I realize - and I dont know if PG would have had this insight - an entrepreneur needs to communicate ideas. I could not even read through your answers, much less understand them!!!

I still don't know what he was getting at, and neither does he. :)

So, are you his cofounder?!

So what is the ass-wipe algorithm mentioned in the article? It is not patented, or is it?

He he, nope - it's under GPL ;)

I created a new thread so others could add their answers. My answer is here:

http://news.ycombinator.com/comments?id=12495

Did anyone mention when someone's cell phone started to ring in the middle of Paul's talk? After 3 or 4 rings he realized that it was his own, in a bag, across the room.

Man that looked like an awesome talk. I love Atlanta but missing out on this kind of stuff really sucks. That couple of days for Startup School was refreshing.

"This is what VC's care about: A) traffic B) what other VC's think of you C) the quality of your team"

I had to stop reading. What about uuhmm...revenue?

The point he was making there was that while VC's claim team quality is the highest priority, it's not (and most VC's are unable to accurately evaluate team quality anyways).

Regardless: Are you claiming that all VC funded companies have revenue at the time of funding? To my knowledge VCs fund many pre-revenue companies. That would indicate that at least for those deals revenue was not an important factor. A lot of laundromats have more revenue than many early stage startups and VCs aren't knocking on their doors.

Do all VC funded startups have traffic? Do all VC funded Startups have a reputation among VCs? I was obviously not making a statement about "all" VC funded companies. If we're talking about what is important to venture capitalists when evaluating startups seeking early stage financing, I think revenue should have been a good candidate for that short list of qualities. If you can show in a small test market that your model is capable of generating revenue, and your model is scalable, this is going to look pretty appealing to your prospective financier. Not every startup involves some abstract technical concept, it is possible to build a company with revenues from the start.

That's a pretty good point. Some VC funded startups (namely ones that have not launched) probably have less traffic than some laundromats and that clearly does not mean traffic is not important. My guess is that buzz amongst VC firms is more of a uniform prerequisite, but point well taken.

Ultimately this list is entirely empirical. Paul's list seems to jive with other sources I've read/heard but, admittedly, I know relatively little about VC deals. If you've got examples where revenue was a big factor early on I would be curious to hear about them.

Did Paul use Zenter again?

No, not this time.

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