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Comment by tptacek | Hacker News Reader

Isn't 80% already a warning signal? Do you think you turn teams down because their ideas are too ambitious? Or that you tend to talk them down from crazily ambitious concepts?

(Don't get me wrong, the number of business you get on their feet is one of the things I admire about YC.)

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I don't think that stat is too worrying. Remember, we're not talking about actual success yet, just that people manage to raise more money. In general the startups working on crazy-ambitious ideas do manage to. Maybe not from VCs, but at least from angels.

We definitely don't turn down people because their ideas seem over-ambitious. Nor do I think we ever talk people out of them. We like ambitious ideas. At most we get founders to think about what to launch first. But they should keep the big idea in mind-- not just as something to aim at, because investors want to hear about it.

The sort of risk I don't want to stop taking is not a risk on ideas, but on people. E.g. I don't want to stop accepting young founders, who tend to have a sharply bimodal distribution of outcomes.

In my experience, we were encouraged to be more ambitious with our ideas than we had been before starting YC, while working to launch the first version as quickly as possible.

Do you think you turn teams down because their ideas are too ambitious?

I think YC has been shifting focus to evaluating teams rather than ideas. If there is a solid team with a wacky idea, they might be accepted based on the strength of the team alone.

80% is a really high rate. About 51% of new business started will make if five years or more. http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24

Tech startups are a special breed of company in that they are very inexpensive to start (sometimes all you need is a laptop, a server, and an internet connection), they can run leaner than other types of businesses (ramen, hosting, and lots of Mountain Dew), and they can scale very easily from a handful to hundreds of thousands or millions of customers (open source and Amazon AWS).

Contrast that with other business types included in those SBA figures, like restaurants and liquor stores. Those businesses start out in debt because of leasing costs, equipment purchase, payroll, licensing, insurance, etc. It is also much harder to scale a restaurant than a website or app (because of geography).

The ready availability of funding plays a role as well. The 80% figure isn't for startups that actually achieved profitability, but for startups that achieved more funding. VCs aren't as willing to fund unprofitable restaurants.

Whether that's due to real promise of future profitability, versus a funding bubble, is something to judge in hindsight. ;-)

80% of Winter 2010 .... so the ones that have made it a few months.

I think that when you combine it with their 0.5% acceptance rate it's not too conservative. The only recourse would be to fund more startups.

Damn, that low.

Is that the official number, and if so does it include everybody who sends an application or just those who gets an interview?

I believe it's for applications. They funded 36 (?) startups last term, so call it 500-1000 applicants. Sounds reasonable?

No, not that low. It's usually around 3%.

Thanks for the clarification, pg!

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