Y Combinator has lost its soul: A YC founder's perspective
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The smaller class size issue is probably fair, but reducing check sizes as a filtering method will absolutely filter out socioeconomically disadvantaged people. Just a terrible suggestion from somebody who I would wager heavily is not unsure of where his next meal is coming from.
Larger checks certainly attract the 'free sabbatical' folks that the author seems to dislike so much, but it also enables entire classes of potential founders to have access to capital that enables them to focus on their business rather than their kids' stomachs.
That being said, I have significantly more insight (due to experience) than I did when I was more free and willing to work 60+ hours a week and was willing to live off of 20k a year.
Seed money used to be a godsend because you had a good idea that wasn't at a scale enough to interest traditional VC and you didn't know an angel. YC was particularly great because it had the emphasis on the network and the larger number of investments allowed it to distribute risk across the class.
They purpose was not to build a company or make a good living, it allowed you to create a company you wouldn't have been able to, otherwise. I agree with the gp post, the goal is not to fund a sustainable company, it's to get one off the ground.
Forcing entrepreneurs to risk devastating personal bankruptcy just isn’t kosher, and there’s zero evidence that it creates healthy companies. It just encourages founders to take even more risks, which aren’t always ethical (i.e. Instacart’s predatory pricing and tipping model).
Founder ID,
Founder bank account balance average during company's first year,
Founder health metrics array [acute visits to hospital or clinic for diet/mental health issues],
Outcome of company
---
If we notice that founders with low bank balances, lots of health events in their life, and unsuccessful business outcomes are popping up in the data, and then conversely founders with 100k in their personal bank on day 1 are never visiting the hospital and their companies are doing fine, then I think we could call check size a definitive contributing factor. This would fly in the face of "ramen profitability" as a virtue.
EDIT: and i think there are enougg startups out there (40,000 probably??? ask crunchbase) to have a meaningful sample size
Saying someone "needs" something (ie paid PR) in order to succeed could also be deemed terrible advice.
A good PR firm can you get a national audience for pennies compared to paying for ads.
The founder could probably get a 300k salary at Google or a six-figure stipend with another investor. If Y-Combinator wants to compete they have to provide something that outweighs that.
What are the founder's other alternatives? What are there other early stage & incubation options? YC simply does have to compete with that.
I mean, look. Take your idea to the extreme - why do they pay a stipend at all? Why not force the founders to sleep in tubes above the office/outside on the street and supply just enough soylent, huel & low-dosage amphetamines to keep their brain working?
I must be misunderstanding you; I read that as you stopped reading the entire thread because there was a single point you disagree with. Is that what you mean?
Overlooking the fact that if I attempted such a thing it would be amusing as hell. Imagine somebody taking that idea very seriously.
Admittedly, I'm not sure that's universally true (we all have a limited amount of time, and it's reasonable to focus that time in places where it is going to give us the most benefit), but I'm pretty sure I see where the commenter is coming from.
Responding further upthread: this is an illustration of a "time waster." They exist on both sides (investors / founders, salespeople / customers, etc) and recognizing them is an important skill. Time is your most valuable resource. Use it wisely.
See, there are no bad companies, all companies can pivot. In fact the original idea doesn't matter at all. Hurr durr buy my startup book
http://paulgraham.com/startupmistakes.html
He does list having both too little money and too much money.
I agree, maybe the $25k made sense back before life in California was more expensive than living in Manhattan, and it should be enough to cover more living expenses.
Maybe alternatively, YC could provide less money, but basic housing and needs so founders minimals could be met, while also providing them a collaborative environment?
What about a YC building complex a bit outside SF? Maybe one close to NY too, and ... two in Europe, two in ... each continent? :- )
"Ycplex"? "Hackerplex"?
There could be a gym so people could stay healthy (and what about child care & school?).
Especially if he has a larger pool of capital than when he started (which he should unless he is doing it wrong), smaller checks /and/ wanting more personal attention and less canidates. That just cannot scale up to larger ammounts of money by definition, even if it would yield a better rate of return on investment in dollars. Diversification is another option for fund self-perpetuation but it will likely not have the same yields and cause total portfolio growth to decline with size.
As for motivations I guess either trying to eat his cake and have it too.
I think, as a point of failure, that most would agree that a system that allows a few people a 'free sabbatical' but also provides security for those founders who would not succeed without it, but who will with it is a good thing.
You have to work a second full-time job that isn't the startup.
Probably during the day, so you can't do daytime things with your startup.
You have to borrow on credit cards to pay the rent, bills and food.
You get evicted if you don't.
You don't eat much so you can't think as clearly.
You lose your computer when the bailiffs come to collect.
You have to have a borrowing facility, and it has to not be declined all the time.
If you hit a limit, you have to pause the startup and work elsewhere, probably for months.
You can't go personally bankrupt otherwise your startup will be liquidated as well.
You literally don't have as much time, energy and mental capacity to put into the startup.
Saying that every company does this at founding is false. For those with better savings, better support buffers, they do not have the same amount of the above problems. In particular they can eat and have somewhere reliable to sleep.
For those without, they literally cannot put as much time and cognition into the startup.
https://www.thestreet.com/technology/what-are-fang-stocks-an...
This is also why other accelerators are emerging that aim to capture the YC essence of old (OnDeck & Jeff Morriss Jr.'s new initiative)
It's interesting how the best incubator found that smaller checks out of the gate is beneficial, but you can raise a 30-50 million series B and founders can take a few million off the table, which is also good, so they can go long.
Had Reddit not sold for pennies on the dollar to Conde Nast, that alone would have probably paid for the extra 100k for every YC startup since.
There are lots of people with great ideas and the ability to execute on them who also have a deep sense of financial responsibility that precludes them from going 50k into credit card debt.
when you do, it's often quite heartbreaking. have read a few online, and knew one personally - kept going in to further debt, ended up getting divorced and creating a huge rift in his family, etc.
Yeah. The implicit assumptions of the "live in poverty" of the OP, are wrong.
I'm 54, and I was financially wiped out at 51. I will not ever recover from this. No family wealth to fall back on. I do not believe I will ever be able to retire. And noting that there is a bit of ageism in this space, makes the threat of potential long term unemployment even worse for folks like me.
Sort of an inverse Ozymandias. Gaze upon my flaming cratered company, and beware. Here be demons. That you cannot control.
I had skin in the game. And I lost it.
I did say, you have to be at the right place, at the right time. And be lucky. We got 2 of 3. Luck eluded us.
[2] https://scalability.org/2017/03/requiem/
[3] https://scalability.org/2005/10/venture-capital-and-high-per...
I still write, albeit less frequently, and I have to keep to a narrower range of topics.
We've been in similar situations several times. We're serving a niche, but this niche is a core piece of our customers business. Without software like ours, their whole operation stops.
Anyway, we'd have demos. Department heads were on fire, wondering if we could install same day we had demo, all smiles, everything looked great. And then we lost because someone higher up decided we were "too small". We're small, but we're pretty much the best in our niche and we have had very solid financials for decades.
Those we lost went with bigger, supposedly "safer" competitors and had some very sub-par years with them before they had to pay their way out of those contracts and come back to us.
My response was simple. No.
I invited them to throw away the crap they bought and buy the right thing from us, but that was politically untenable. Turns out spending multiple millions of dollars for crappy half baked "solutions" versus a lower sum of money for something that actually worked, would likely get some people fired.
The world isn't fair, and sometimes not even sane. The people who made these decisions, despite being disastrous ones, were promoted. Enough of these built up that we couldn't survive.
Incredibly frustrating.
You need a fighting spirit to achieve great things. Many people have overcome far greater problems. Never give up you are only one transaction away from financial success. Good luck
Thanks. I'm aware of others struggles. I figure that my story could be a cautionary tale for some, and others may take lessons from it.
When I say in other fora, never, ever take debt financing of anything if you can avoid it, this is coming from personal agonizing experience.
If I go back into the startup world, I'm going with a very clear perception of what is what. No rose colored glasses. No "if you build a better mousetrap" mentality. I know how things can go horribly wrong. I know where the traps and mines are.
In the vast majority of circumstances that's an extreme exaggeration.
Speaking from past personal experience with poverty (ie being "poorer folk"), you can default on every possible type of debt - wait about seven years (can vary slightly by state, but it's typically around that), and you're free from it. My credit rating went from 800, to 480, back to 760 in that process over eight years, without requiring any special effort. I defaulted on numerous credit cards, I defaulted on medical debt; it all vanished, one after another as time ticked by, and my credit rating jumped as each item fell off. Every negative mark falls off your credit report after N years.
It's very unpleasant to have your credit rating wrecked for years. To say that it will ruin you for decades, that's reaching into the land of absurdity. I'm sure it happens, some people get stuck in a vicious cycle for ... decades, however it's not rocket science to properly utilize the negative mark credit cycling to your advantage and reboot. It doesn't take more than an hour or two of reading to self-educate at zero cost about how the system works.
I really hate this condescending "if you really wanted it the money shouldn't matter" coming from millionaires.
I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky.
Really, I hate to deflate many many bubbles, but being at the right place at the right time is often the deciding factor for success or failure. IMO moreso than the product, the product market fit, etc. You have to be seen as the sole provider of something the people deem important. Even if this isn't really true. You need influencers to drive carefully staged hype, and then you need to be able to convert small victories into evidence the hype is real.
This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best.
The greatest lie ever told to entrepreneurs like me is "build a better mousetrap and the world will beat a path to your door." There is soooo much more than that. And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be.
If you are lucky, you will have a reasonable exit. Most of the time that doesn't happen.
But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried.
To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.
But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals.
Do I regret my time building some of the insanest things in market (at the time)? No.
It was an itch, I had to scratch.
this 1000 times.
Then big orders started hitting.
Before I knew it, we were at $3MM/y sales, growing about 33% yoy.
And then we crashed. We needed more capital. Those who wanted to put money in via convertible notes demanded terms that would have killed the company's ability to raise capital going forward. Our lawyers told us that it appeared that the large company wanted to buy us on the cheap, and these terms enabled that.
I've replayed that in my head many times. It was a crappy deal, and they weren't willing to budge. But I would have had a sort-of-exit had they exercised one of the convertible clauses, to basically demand payment in full if we couldn't raise more money.
If someone tells you corporate VC is less slimy than the regular version, don't believe them. Different type of slimy, but still slimy.
Put bluntly, that model, the consulting bit, is not for the faint of heart. It is just as hard, as in you absolutely have to hustle hard this whole time, to get business. Leaving you with precious little time to develop your ideas.
I've lived it. I don't recommend it, without a partner with a strong income. My wife was a stay-at-home mom for part of this time, and worked at a school as a teacher. Not sufficient income to live off of for 1 person in a house with a mortgage. Nevermind a family.
Even being Early (or in our case the first to do something) doesn't always work, we had to give our services away for free, or at a significant loss when operating costs were accounted for, because we were using technology that was not really understood (much less by our demographic) and had not been attempted in the past to facilitate or service the Industry we chose. So we had to engage our future paying customers in a way that they relied on us for something they found useful and pay for it in the future, so I boot-strapped and fell back on my other skill-sets, that ultimately took time from further development that could have otherwise yielded a better product in less time, but again... uncharted territory means you are make the Map as you go along, with all the mistakes and hidden landmines along the way.
> This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best.
I'd say Bootstrapping is a Pyrrhic Victory, because on a financial level, had I decided to stay on the sidelines and just DCA while trimming the fat from my budget working a normal day job, as so many now in this space did, I'd have an ROI way better than my Startup, and most ever created in that space for that matter, ever was. They thought they were geniuses, when in reality they were just 'free-riders' that directly benefited from the work done by risk takers and people who actually did the heavy lifting to get the project to where it was and currently is. But ultimately looking at our holdings and net-worth on paper wasn't the point for some of us, it was to bring our vision into existence and prove a technology could solve far more problems than even it's core developers and even the greater community at large could ever think it could and bring about a desirable change to the Enviorment. And for that it takes a lot of sacrifice, which ultimately made me understand that 'disruption isn't always profitable' is a very true statement in a financial sense, but can be very profitable if you're goals are to do more than that. It's just how you quantify it.
> And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be.
Agreed. Still dealing with that to this day. Just my Physical Therapy costs alone have been something I didn't anticipate to be so expensive in every sense of the word.
I can't give details, but I can tell you that the $80K would not have made a difference. What would have made a difference was a small seed of a few million, which YC is pretty good at getting for companies these days.
He could pour all his money into his start-up because if he'd lost every dime he could have moved back in with them. He'd have his own bedroom, bathroom, and a fresh-cooked meal every night. He could have stayed with them as long has he wanted. Very few people have that kind of soft-landing.
Because looking at country level data, USA, with it's terribly scary and risky path of entrepreneurship completely outperforms welfare state countries like the Nordics.
You could say the difference is from capital markets, but still even the difference in startups that are not successes is humongous.
I don't either way. But I have run across the counterintuitive fact that Nordic countries outperform the USA on how many people per capita are worth at least $30 million. And at least some of them got there through entrepreneurship.
or maybe it's worse than you suggest: taking a risk on a startup is the only opportunity to earn any income, where "welfare state countries" take basic income out of the picture. And, according to which mesurement are these welfare states being outperformed? and is it relevant to the humans involved?
Apparently according to some traveler's accounts Ukraine has a lot of "side hustles" due to lower wages of day jobs and lack of consolidation.
I suspect it may be both and a result of culture shaping actions shaping culture. Essentially a more risk adverse culture is more likely to support a strong safety net and a culture with a strong safety net is in itself incentivised to not encourage have people take stupid risks even if the nominal purpose is to allow those risks. (That sort of left hand vs right hand thing crops up every organization large enough with distinct duties.)
Then there is the whole Maslow hierarchy of needs aspect where they would ironically need to be better off before considering anything collective. Revolutions have been lead by disgruntled college students far more often than the desperately poor.
I started a company after the first dot.com bust, because I had almost nothing to lose. But I also had no dependents to hurt. So it can cut both ways, but I don't think many folks take the path I did by choice.
[1] One had a spouse with a chronic medical condition, losing insurance was not an option; one had a large student loan debt and didn't want to risk defaulting. I've heard other stories.
Here are a couple of the most relevant: http://www.andrewoswald.com/docs/entrepre.pdf and https://www.nber.org/papers/w19276.pdf
is Harvard good enough?
https://news.harvard.edu/gazette/story/2016/07/public-progra...
https://www.nber.org/papers/w18441.pdf
> looking at country level data, USA, with it's terribly scary and risky path of entrepreneurship completely outperforms welfare state countries like the Nordics.
False.
>> The U.S. likes to think of itself as the world capital of start-ups. But America doesn't lead the world in actually starting new businesses. By various measures, it's behind Canada, Denmark, and Norway.
https://www.inc.com/magazine/20110201/in-norway-start-ups-sa...
It's the privilege argument that I'm sure you're sick of arguing about. The world is set up well for perfectly ordinary middle class educated kids with working (or wealthy) parents. That's not everyone.
If you're somewhere in the lower or middle "middle class", the world still isn't set up very well for you.
Being of the "cultural upper middle class" (born into a professor, scientist, engineer, etc. family) is also an advantage.
I also didn't mention location, but my relative's parents are withing spitting distance of the valley. Someone who has to move from Mountain View to Omaha is going to find it really hard to get back into the thick of things.
People growing up in Omaha are at a severe disadvantage vs people who grow up in Mountainview.
And if your parents are in Mountain View or nearby, you can stay with them a few extra years after you get your first job to save money for a downpayment on your own house.
A person without that option may spend a decade paying rent and trying desperately to save up enough for a down payment.
I think this comment is (no offense intended towards you specifically) very indicative of how insulated and lacking in diversity tech is.
A room and a meal indefinitely with absolutely no pressure to leave or contribute? With the freedom to find the next job or opportunity that fits, not just desperately throw out their resume and accept the first offer? Not so much.
40% of young adults in the USA do live with family, and it’s a good bet that a large fraction of the rest could. It’s certainly not universal by any means, but it’s also far from some great rarity.
https://www.cbsnews.com/news/percentage-of-young-americans-l...
I’ll grant that the original comment talked of having “his own bathroom” and that is reasonably rare, but it’s the least important part of the package compared to a room and shared meals.
Like I said in another comment even in the poorer European countries it's possible to move back with one's parents. And in fact people do live with their parents into their twenties.
The fact is, having parents with a place you can crash at is perfectly normal. If your parents weren't complete degenerates or very unlucky, they have a couch you can sleep on. Anybody who's startup founder material can at that point find themselves a job.
For so many families, the only way they can afford to support their children even in their childhood is government aid, which gets cut off when the child reaches 18.
B. For immigrants, moving back to one's parents is a much more difficult process. You may have to move to another continent. You have to give up on trying to find a job or settle down in the US. Moving back to the US afterwards would not be exactly easy either, because being away from the US for extended periods of time may mean losing your green card.
So yes, if the family is reasonably well-off (owns their home, has savings and good income, have a margin of safety in their finances) you can depend on them as your safety net. If they are not, you cannot or cannot in good conscience.
33 percent of 25-29 year olds live with their parents today: https://qz.com/1248081/the-share-of-americans-age-25-29-livi... It's not rare at all.
For children of immigrants, B is absolutely not a problem, in general (of course there are exceptions). In my experience there is far less stigma attached with living with your parents well into adulthood for children of immigrants than natives. It's even culturally common to remain with your parents until you're married. Of course first generation immigrants have it more difficult. That is part of the inherent risk of moving to a different country.
In most places in the United States, extra space is a premium that requires consistent stable work at or above the median household income in a single field of work over extended periods of time.
From this alone we can rule out those who work minimum wage jobs, most of those who do not have an established field other than "Service Industry" and many of those who specialize in an "unskilled" trade, e.g. forklift operators.
Those who do manage to purchase a home with the requisite space often don't live in posh neighbourhoods with comfortable amenities, and generally are not swimming in excess income.
Additionally modern society, with its' inundation of appealing marketing campaigns and easy credit, has rendered even your "middle class" families cash-poor, stretching their budgets thinner and thinner with each additional monthly payment.
When you culminate all of these things together with a fundamental breakdown in nuclear families and rising divorce rates, "going home after a rough patch" is not an outcome most are able to, much less willing to, consider.
Do you mean an extra bedroom with two or more beds for your kids or an extra bedroom per kid? That makes the difference and it is more uncommon.
One has to be either dirt poor or very unlucky not to he able to move back with relatives. This sound like an excuse.
Yes - most people might be able to move back in with relatives, but among those people who can't, minorities are almost certainly going to be overrepresented, which was OP's point.
Regardless, "smart, sustainable work that will support my family" doesn't really map to the intentionally-accelerated make-or-break pace of most incubators and funds. Nor do those programs naturally align with founders who want to create a solid long-term business working from sound operating fundamentals (positive cashflow, measured and even conservative hiring, working to the team's strengths) instead of chasing the next exploding market and "faking it until you make it".
Coincidentally those safer, longer-term plays are also the ones most likely to actually build generational wealth and financial independence for people starting without either. The lack of a safety net (or the presence of one that you're thoroughly entangled in for others' sake) makes all-or-nothing, giant bets far less tenable when you aren't effectively free from having to worry about mundane details like housing or medical costs. That in turn discourages if not de facto shuts out both the least privileged and those with meaningful resources but too much to lose if it all goes wrong.
This is the right time to shudder, much as I'm happy that you're in a situation where it seems hard to imagine (or empathize with).
I think that the 10-20% group you are talking about is likely to have more than its share of not-white people. Maybe it's a small divergence, if we imagine the population of the US to be 50% white and 50% not white, maybe the group of people who can't go back and crash with their parents is 49% white and 51% not white.
OK, so imagine there's a different imaginary incubator with a rule that every applicant has to roll a 100 sided die. If they're white they have to roll a 50 or higher to get in, and if they're not white they have to roll a 51 or higher.
I wouldn't like the "roll a die" rule, I think a lot of people probably wouldn't, but it's ultimately not a heck of a lot different than the "crash with your parents" rule. You are still more likely to fall afoul of both rules if you are not white- or (if you change the dice game) gay, or poor, or marginalized in other ways.
(yes the probabilities are different, not the point)
I think the point is that it is rare for people who don't have this fallback option to put all their time and resources behind entrepreneurship (the same applies to post-secondary education), because to do so is actually risky for them. It's not that they're worse at business or have less ambition, which is an extremely common sentiment expressed widely in the US.
And of their parents threw them out or don't otherwise like them that's just bad luck. Some people will not have an easy life, I don't see why we have to make those with loving families feel bad about it.
It's not their fault that there's so much misery in the world, nor do they have an obligation to fix it.
There are parents with little extra cash and homes without space for permanent guests who are going to accept their children back with some disappointment and disapproval for taking large risks and failing.
Children of the first set of parents are just going to be more comfortable going out and taking chances.
There are parents with little extra cash and homes without space for permanent guests who will welcome their child with open arms, proud of them for risking everything on a start up and encouraging them to try again.
* having a place to live if you go broke
* a place within some manageable travel distance ( i.e. same state/country/continent )
* a place where you will feel a warm sense of welcome
* a place where you will have creature comforts: a comfortable bed, a private room, an bathroom with minimal wait times
* a place where you don't need to contribute to living expenses, at least not right away and not until you can get back on your feet
* a place which is a good launching point for your next career
* (US) health care
Successful founders I know have all of these - every last one.
It seems to me that you're just taking the logical argument of better safety net --> lower overall risk --> better performance.
In reality the flow I've seen throughout the years is more like:
Big risk of failure --> additional motivation to succeed --> world changing technology.
If you have a safety net and your life is stable, why even take such a big risk like entrepreneurship?
https://www.theatlantic.com/family/archive/2020/07/pandemic-...
https://www.newsobserver.com/news/coronavirus/article2434685...
Don't we want, as a society, to encourage parents to do these things for their kids? Isn't that a net win for society as a whole?
The alternative would require a near 100% estate/death tax, wouldn't it?
Their problem was their mental model where their child's success was entirely due to their child's talents and drive, and that since they ( the parents ) had not provided any seed money, they had nothing to do with their child's success.
Myself, with family, mortgage, etc. I would never be able to achieve that kind of velocity if I were accepted to YC.
So, even if I had incredible ideas, as people around here keep saying, and PG makes clear in his Viaweb essay, it is not about the ideas but about execution.
Thus, the economic filtering for those who are unencumbered and thus can really execute on their idea or something that YC comes up with makes a lot of sense.
You do realize that by having a family and owning a house, you're pretty much on a completely different financial and stability level than a single young male.
And, if someone has family, house, etc. to provide stability do they need YC financial assistance?
Maybe I am missing something here, but why can't women do that too?
There are many founders of various social identities who are not rich yet have managed to succeed with bootstrapping or small seed/accelerator investments because they are capable.
To assert that some people are inherently advantaged or disadvantaged as founders and/or entrepreneurs based on such factors as race and gender is the definition of prejudice.
There were pretty obvious, observable backgrounds/personality types that were starting businesses in my circle. Mostly SMBs like trading/retail firms, personal services, etc.
Well do to people assume that the masses are a bunch of hardscrabble foster children. Those folks exist. But the reality is that most people have families and have support systems to fall back on -- perhaps not as comfortable a fall-back as the kid where mom and dad are dentists or F500 executives, but not intolerable.
Startups aren't really businesses, so maybe they are different. Optimizing for successful venture funding cycle is a different problem.
If you're unsure where your next meal is coming from, then you probably aren't currently a good candidate to be a founder. Maybe later you will be, but first things first: accumulate a bit of wealth. Venture capital isn't a government welfare program. You might get YC or others to pay a sort of a social tax by providing a sort of welfare, but the founders won't be owners (see above).
If you're unsure where your next meal is coming from, you may still have a great idea and the ability to execute on it. If someone gives you enough money that you have the leeway to do those things, then everyone wins.
Obviously venture capital isn't welfare... no one has begun to suggest that it is. VC puts money into companies in exchange for equity because those companies need money. If the companies didn't ever need money, there would be no need for VC. The idea that VC should only fund people who already have plenty of capital available to them fundamentally misunderstands the entire model.
So whatever bizarre first-principles argument you're trying to make, which I am not really following, already doesn't match the current reality.
In that light, SF is the wrong place because the rents are so high.
Rich, young, socially connected, white, dudes. That's a full Bingo card.
The reality is that millions of white people come from impoverished backgrounds. And millions of Indian, Asian, and yes even Black and Latino people are from wealthy backgrounds.
Polices designed to help economic diversity will necessarily and disproportionately help certain racial minorities and that’s all for the good. If you want to actually help the world stop making it about race when it is not. And feel free to make it about race when it actually is.
But also, most of the data in VC does suggest that racial/gender diversity is seriously lacking.
"I believe in this idea so much I am willing to gamble my short-term financial future on it" is a great way to find out what people really care about.
The diversity issue is real though. As is the broader issue of wealthy people being able to take on much more risk than normal people, leading to a reinforcement cycle (winners keep winning) and a winner take all outcome.
Which, now that I think about it, pretty much describes US capitalism perfectly.
Investors are trying to sell money, companies are selling a possibly enormous return on that money, it's a win-win and founders should be treated like the professionals they would be in industry.
Start ups have basically unlimited upside risk for investors and totally limited (to the amount of money invested) downside risk for them (and in the UK very healthy tax breaks for investing), the founders on the other hand loose years building a product that may prove worthwhile, don't make them carry years of financial pain and repercussions because they tried to grow your $5-$100K.
I think there's no real way for reducing checks to have meaningful impact at this point.
Is there any reason you included "white"? Are black people not able to be rich, or are white people more interested in tech, or are black people discriminated against by YC, or... what?
I've spoken to a half dozen YC founders this morning -- no one disagrees except the check size debt thing. Mostly "that is dumb" for that one.
For those who worked at startups when they were small (5–20 people), the difference between then and when they grew to be 100 or 200 people is night and day. Very real difference.
For those who haven't, think of class sizes. Do you think a uni class with 18 people in it will be the same as a survey with 200? Course not.
Three founders in my batch (early 2010s) have started companies in the past year and opted out of YC b/c of 1. batch size 2. YC doesn't mean to investors what it once did. The brand is heavily diluted.
YC is a broad based investment fund. The partners cannot handle the size of the batches or give the attention they once could. The partnership simply hasn't scaled.
Somewhat informed guess: partners don't want to give up their own returns by splitting it with more partners. Understandable -- human nature. But not good for YC as a whole.
Its also impossible if you have any health problems, or need to save for retirement or have student loan debt.
Its really only possible if you're young and healthy, so this would filter out probably 80% of adult population
It is a filtering function and it's the wrong filtering function. Like others have said, it filters out anyone with a great idea who is unwilling to put their lives in danger, or more importantly the lives of people dependent on them.
I agree nobody needs a cushy lifestyle when starting a company but as a single adult in the Bay Area you need at least $2k/month after taxes to live. And somehow you need to get someone to rent to you with an income that low. Not everybody is lucky in having a nearby relative they can live with for free.
A deadline is useful to help ensure work gets done. If the deadline is set to 3 hours from now, however, and realistically you need 4 or so to get it done, the pressure is going to have the inverse effect. It would likely just demoralize the team.
pg once coined the phrase .. ramen profitable.
I deeply agree with that concept. Cover bills but all those frills and cushy "living wage" nonense needs to go while the startup is finding its feet.
It's a lot harder to start a startup once you get to that stage of life because of this and other reasons.
Changing this focus -- to focus on older more experienced invidividuals is changing YC imo. Less social justice more hackery/building stuff people might like would be a positive move for YC and the audience. I don't think we're in such a climate to discuss this though.
So yeah, it's in their best interest to care.
This means that it's naturally a filtering function for people who have such safety nets already. It means that there are people who would be putting their lives and the lives of their dependents at risk in order to make the YC gamble.
It might be a filter that "works," but it will inherently be an uneven filter, doing very little to filter founders who already have the means, while effectively barring many potential founders from being able to participate at all, at least not without dire personal consequences.
It's very hard to focus on building a successful business when the cost of failure is potentially life-ruining.
I'm not sure what your point is -- that people who have kids should be given special exemption where they make more money from sales and inventment oportunties to compensate for choices they made?
Corollary: startups can only be started by people in a position to consume [sic] the risk.
Do we, as a society, or even just an economy, really want that?
And the point was not a "special exemption for people with kids". It was that "consuming the risk" when you have no safety net (e.g. move back in with family etc.) is a much bigger issue than if you do.
My point is these are the same. One individual has a different risk profile because (s)he made different choices and thats fine. If you have kids -- it will negatively affect your capacity to start a company.
>Corollary: startups can only be started by people in a position to consume [sic] the risk.
>Do we, as a society, or even just an economy, really want that?
That Corollary is fine with me. Startups are inherently risky.
I'd rather not have new ideas for businesses filtered through "can afford zero income for N months".
There's nothing wrong with choosing to have a family and raising kids, but that is a choice. No matter what conditions are set, the person who makes the necessary tradeoffs is going to be in a better position to succeed and YC as a business entity can do nothing to level the field for people who are willing to go all-in versus people who prioritize a comfortable home life.
Again, startups are privilege that form out of the security of societal infrastructure and excess of wealth. Nowhere in society is it prescribed that everyone should be able to forego having a job and drain their savings to gamble at a chance at massive wealth. How is it reasonable that we've come to expect this as some sort of entitlement?
The top comment makes a dismissive remark about "rich white men," and YC being against inclusivity and diversity. The natural response to this is that YC is not racially exclusive, but that they exclude based on those who can assume risk. Yes, but white people are rich so they can consume risk and black people are poor, therefore YC is in reality discriminative against blacks. The simplification of this kind of argument and its decontextualization from reality should be self-evident. Unfortunately, it's emblematic of the kind of emotionally reflexive and broadly appealing arguments we see thrown around instead of practicing any form of intellectual sophistication or nuance. It's far easier to make a glib side-remark suggestive of racial privilege. It's even easier when this is politically and socially trendy, even expected, and the individual making the remarks is protected from backlash by the insulation of a particular ideology.
It's about number of people who can take risk of having zero income for N months. That is such a small group of people, and this narrows the pool of people who might found a startup that could change the world (or part of it). It means that all the ideas for startups are coming from people who have (at least) one thing in common. Maybe it's not the optimal thing to have in common?
ps. I did the startup thing with a wife and a daughter. These days you know it as Amazon.
YC is a business entity not a non-profit organization dedicated to wealth distribution. You're asking it to do a job outside its core responsibility (profit, survival). If you want to make the argument that YC should up it's funding, that argument has to establish itself as being strongly in the interest of YC, otherwise it doesn't make much sense.
YC isn't under an obligation to do the best it can for society. But if it wants to do that, or even to approximate it, the filter functions it uses implicitly and explicitly need to be considered carefully. YC has said a variety of things that indicate that it does have some desire to trend in this direction, at least in the past.
Absolutely mind-boggling when YC literally exists to support and incubate startups so founders don't have to take on life-ruining risks.
I think it is worth pointing out that the lower levels of support mean there will be fewer successful startups, and those startups will be founded and started by people that have a safety net of some kind. If the goal is efficiency of investment, this is fine, if there are other goals, it's worth noting how this policy impacts the other goals.
Debt will creep up and crush you eventually, do not go into debt to "fund" your startup.
I also disagree that YC is not funding interesting ideas. Our batch had quite a few. Someone was making a rapid cargo ship. Someone else was making a fully distributed cell network.
The only real copycat ideas were the ones duplicating successful startups for international markets. In my opinion these were obviously good investments.
The social climber phenomenon was real. I think anything that becomes elite will attract them. I’d say, I was impressed that half the batch did not fit this profile.
My sense was that YC actually went out of its way to fund more interesting ideas. I’m sure my startup would not have gotten in, based on our traction and backgrounds, if our idea wasn’t out-of-the-box. (We are bottomless.com, a smart coffee subscription that uses a WiFi scale to ship at the perfect time).
I’d even venture to say that there appeared to be a negative correlation between interestingness and outcome in our batch. It’s possible YC should fund more boring companies, not fewer.
My Bottomless scale has been an essential part of my transition to WFH, cheers!
Incidentally, a great talk that includes that point here: https://www.youtube.com/watch?v=SO_00POR-Po
Companies in YC are maniacally focused on their own goals and generally don't have the time and energy to adopt products just as a favor. They also tend to have NIH syndrome. They'll try it and give you feedback, but getting them to really use it is still very hard and requires that you're truly solving a problem.
I think a lot of companies start YC with this idea that they'll just sell to other YC companies, then quickly change their minds when they see how hard it actually is. Other early stage startups are not great customers for most b2b companies.
I needed the reminder that the technology isn't what's important, rather solving a problem that people will pay money for is what matters.
Obviously the interesting companies are being funded as a loss leader to maintain YC's image against the fact that startups are now mainstream and the fundamentals of the economy are unavoidably entrepreneurial.
I have a grinder with a built in (sealed) hopper where I store my beans. I assume from the setup, the grinder would have to sit on it for ease of use.
The scale can be zeroed out with anything up to 2kg. If your grinder is reasonably lightweight, this would work fine. Most people keep the coffee on the scale, then dump some into the grinder every few days.
I've found some creative people tackling big ideas, but they are exceedingly rare and largely unsupported by the community. I've met a lot more people who moved out here with big ambitions and have been railroaded down the route of conformity, which makes the most money for VC's. It leaves them without fulfillment or purpose as they grind on products they care little about. SV will continue to produce billion dollar software companies, but I doubt they will produce real innovation over the next few decades. The bay area has conspired to railroad its' potential for greatness towards profitable mediocracy.
I think people love to use "The Bay Area" and "Silicon Valley" and conflate that with "software startups that raise VC funding".
Silicon Valley still produced most of the internet (for better or worse) and the only new American mass production car company in my lifetime. Let's not overlook the successes while we are busy complaining about the average (especially because the VC model assumes 900+ failures for every 1-3 unicorn IPOs).
Not sure what the next few decades will bring (I'd be pleasantly surprised if the USA doesn't go through an actual revolution), but I'd wager that "real innovation" is still more likely to happen in Northern California than almost anywhere else in this country, even if the establishment VC club doesn't get disrupted.
The point is valid - startups are a risk, and so if all the risk is removed, it will increase the number of people who are coming to YC for status vs. coming because they believe in their idea.
As good at interviewing as the YC partners may be, interviewing is no substitute for the harsh reality and incentives imposed by taking a great risk.
I suppose it depends on what YC wants to optimize for. You can risk giving money to not so serious founders or risk excluding ones who want to cap their risk.
I don't get why they would want to ban dev tools and SaaS. The latter especially is a huge segment. Many enormous companies like IBM and SAP are built around those types of offerings.
People who were there at the beginning feel that something magical has slowly been corrupted by success and all the bigness issues that come with it. They aren't totally wrong. But people who get there later still find something of value, and everything is now sturdy enough to support wider participation.
I'm okay with seeing it both ways.
I have no doubt that there's some obscure, ramshackle accelerator out there that will someday be as prestigious as YC, just like there is some small, tight knit festival that will eventually become as huge as Burning Man.
But taking part early also means foregoing the prestige factor, and accepting that this obscure accelerator/festival will most likely never get big or cool. You can't have it both ways.
I filled up YC applications last year, but not sure how to answer question whether my idea is worth a billion. I will be satisfied if my SAAS business can make $5k MRR. If I have more than that, it will be a blessing.
Should YC remove questions that favors those social capital? I mean, YC can have a simple leetcode question to prove you are smart enough. Then, run a lucky draw to pick which ones selected.
$5k MRR is a great goal, but you shouldn't expect investors to give you money if you there's no potential upside for them.
In addition, I think YC partners also have a non-financial desire (e.g. first footnote in that same essay) to encourage entrepreneurship more broadly. Hence the larger YC batches and experiments like YC Fellowship [1] and online Startup School [2].
In fact, the whole cultural phenomenon of paying attention to what people tweet is deeply disturbing. Twitter is not designed to support rational argument supported by data, it's designed to be a morphine drip of novelty, a machine that dispenses mental M&Ms. People who follow twitter are like lab rats pressing a lever in exchange for a drop of sugar water. It's troubling to see this phenomenon invading HN.
It's nice that the commenters have pointed out most of the wrongness though.
Some are working on cool things, but the founder who has a PhD in that topic will be doing the interesting work and they are hiring for infra or interface.
One company was a great match for my skill set but the equity was so low for early hires. I get that 1% can be huge for a FB scale exit, but 180k and 1% is generally just a paycut. In this case the founders were undergrad dropouts and not SMEs. It just seems like a really inflexible ecosystem when you can't give 5%-10% to an early hire when they would be the SME and core engineer.
If there's money basically just lying all over the ground, why wouldn't you pick it up?
You can also just not do a shitty job of modernizing an old thing, and end up creating a product like Netflix that front-end devs fawn over, learn from, and emulate. It doesn't have to be uninteresting.
>just new web frontends on existing industries
The gig economy is just some subset of that.
In reality, 'just new web frontends on existing industries' describes the majority of the demand for software development right now. It's not good or bad, though some of the actors and some of the businesses will be good or bad. It's not boring or interesting, though some of the applications and implementations will be boring or interesting. It just is.
Out of all the VC money raised in 2019 how much was for this and how much was for things like Quibi, We-Work, gig economy, etc. ?
From your description, wanting to be the SME, early engineer, substantial equity - maybe you would be better off as a founder?
These numbers look more typical to me: https://www.holloway.com/g/equity-compensation/sections/typi.... The article mentions that hire #1 typically gets 2–3%, and only more when it comes with a low salary.
If you want to do better than that, you'll likely have to be a cofounder, not an employee. I read PG's essays in the early 00s, prior to the creation of YC, and his whole shtick was that ambitious employees can't hope to capture the value of their work, that sharp and hard-working tech folks should fund startups to truly capitalize on their efforts.
I am not chasing starting or being part of an early stage company so hard now though. After being miserable in my last role (Google) I stepped back and looked at the problems that keep me engaged (R&D). Found a company in that space and am very happy with what I do now (DARPA contracts!). If I ever have a side project that lands then I'd pursue it, but I'm not hunting for ideas like I used to. Just trying to find that happy life groove.
If startups are coming into YC with a more mature product than in the early years (and it seems that way), then adjusting the focus towards fundraising actually makes sense.
Not to repeat what's been said in other comments, but to say that founders should be willing to put themselves in deep financial risk to prove their drive...that just comes from an incredibly privileged mindset.
It reminds me of the people saying that if their school is going online-only, students should instead take gap years to build something, incorrectly assuming that no one needs that student loan money for living expenses.
Without knowing the metrics for how YC judges the performance of its intake and their future objectives, there's no way of making sensible recommendations for how (or if) it should change.
I chalk it up to a pretty typical nostalgia. Everybody is biased towards thinking the experiences of their youth were perfect, and any change is detrimental.
There are so many reasons why all this is, including the fact, these applications heavily bias towards 'solving a big problem that the interviewer CAN grep', and so many of those readers and interviewers are themselves from SAAS backgrounds.
Anecdotally, within female founders, it is quite understood that if you are a female founder with a consumer startup, good luck getting an interview whereas if you are FANG employee with event hint of an idea, you get an interview!
I think this makes sense too – YC is in the business of picking will-be billion dollar companies. The number of consumer startups that make it this far is probably significantly lower, percentage-wise, than B2B SaaS companies.
* pick something famous * say it's dead * cherry pick the worst things about it * get your 10 minutes of fame
All it costs you are some burnt bridges. I've met several really smart founders from recent batches who are building something interesting. Making blanket statements like this is not particularly helpful to YC.
Famous institutions always attract climbers. That's inevitable, but it doesn't invalidate the institution.
My last company had a technical cofounder who by all means was highly sought after and managed a team of 15-20 other developers in their primary dev consulting company meaning not only did they rock technically but also had biz acumen.
That individual worked FOR FREE for 3 years 25 hrs/week before collecting any money.
Don't ever think you have to pay a developer some market salary (or any salary) upfront. If the idea + company + team is legit, they will jump at the chance to be involved.
"A developer" should definitely be paid market rates, otherwise they are a founder and should be rewarded accordingly with equity. I think this mindset of "getting work for free" is very damaging to the person holding the short end of the stick.
Someone who already has a well paid job, is willing to do a startup on the side, and actually be effective at it is extremely rare. What you'll usually find is someone at the beginning of their career that doesn't really understand what they are getting into.
Of course - as they were. My point was on cash money comp. Never said they worked for free hence their title of technical cofounder which implies equity.
"...and actually be effective at it is extremely rare. What you'll usually find is someone at the beginning of their career that doesn't really understand what they are getting into."
The onus is on the founding team to be sufficiently compelling to attract such a rare breed and if they execute correctly there is no short end to the stick to be had.
Also, the individual in reference wasn't the of the gender you're assuming.
> The availability bias is the human tendency to think that examples of things that come readily to mind are more representative than is actually the case.
Ahh, my apologies, and thank you for the correction on gender.
pg kept the entire system small and personal on purpose.
but sam wants trillion dollar funds. sam approaches everything from "how can sam altman own the entire galaxy?"
now YC is an endless low effort 90s-era "groupware for groupware nerds" fund" --- https://twitter.com/mattsta/status/1285988679958138881 this retweet is also true
In other words, much larger batch sizes were guaranteed as YC grew. How pg and the original founding team might have gone about it, compared to others, is a different question—but certainly not by "keeping the entire system small". Whoever wrote that is speaking from ignorance, which fits with the personal smear against Sam.
If the experiment is no longer working as well as it was, it's time to change the parameters. That's how experiments work.
Point #3 doesn't seem to be talked about in this thread yet, so let me bring it up:
> Free SaaS and Dev tools...IMO YC should ban them
YC's #1 investment of all time (https://www.ycombinator.com/topcompanies/) is a SaaS/dev tools company (Stripe), and nearly 50% of their top 20 fit this category. Also, ViaWeb fits that category as well. Are you suggesting they should stop investing in their most successful category, the category they know best?
Also, his suggestion is to block the startups that are most likely to succeed (the ones who can validate and gain traction from within YC network). And the reason for that is... a sense of nostalgia when B2C was a majority in YC? He assumes B2C is the spirit of YC and that should be reason enough to make a decision that will make YC select companies less likely to succeed at YC?
Reducing batch size is the only idea there that make any rational sense at least (which doesn’t mean it is correct).
That assumes massive personal debt is even an option.
A lot of poorer people are turned down for personal debt with respectable institutions.
They go to the bank, credit company or whatever, and the answer is a straight no, we have nothing for you. Maybe if they're lucky they can have a small overdraft, worth less than a month's rent. Not enough to move the needle. Loan sharks exist but that's a terrible idea.
I mention this because I have the impression some people, who are used to easy credit (especially credit cards), don't realise there are a lot of people who can't get any.
"Having to take considerable financial risk definitely sucked, but it was also was a great filtering function. If you didnt have conviction in yourself or your product theres no way you would have been there. For those who made the leap, it made success the only option."
Isn't it $125k/7% ? Which seems OK for pre-mvp or even pre-revrnue ? Worth it just for the network value?
Or is the selection so hard that most teams already have real traction ?
Is the author's YC company's success somehow contingent on YC not having these types of founders?. If so, I have grave concerns about their company anyway. If not, like, what are you complaining about? YC's decision to accept people who match that profile literally has nothing to do with you.
> Like... 2 people raised their hands and everyone else laughed hysterically.
Are B2C inherently better than B2Bs? What's his argument here?
I, for one, was never one to enjoy B2C products (matter of fact, I think most of them are stupid), so I don't understand his disdain for everything not B2C
Ebay, AirBNB, Apple, Uber, Github, heard of any? It's too bad you were never able to enjoy B2C products, because these products are worth trying.
That's not to say they don't provide value. Same thing on the B2B side. They provide a ton of value, so no reason to think one is better than the other.
Why not just say you focus solely on B2B companies? That's a lot more reasonable than trying to argue that B2C is 'stupid', because the market caps of these companies would strongly disagree.
Same thing on loop. After the prestigious internships and summa cum laude, they graduate into a FANG job at 21.
I think the criticism is that these people are conformists. They're good at following an obvious system to the T but has never innovated or taken risks in their life.
And btw I agree with you - not the path the an enriched life!
> People that have no soul or connection to the product they build because they see everything they do as a checklist to get to the C suite level in some Series A/B/C company
[1] https://twitter.com/vcknowledgekit/status/128578661447247052...
...and also fail to be white men from a middle-class background, as far as I can tell.
None have massive houses in the Hamptons, but generally they have all found good jobs and are in the management ranks (aside from one who just decided that he did not want to go that route) at decent companies. It seems to me that if you took a decent stab and didn't completely flame out with some obviously poor idea or execution, you really tend to fail "up" in the end.
The problem (at least for me, who started off in FAANG initially) is that the longer you're in the start-up world, the more you hate the idea of going back to a corporate job.
So in my previous start-up I went all-in, racked up tens of thousands in CC debt and would have sold every single one of my possessions before letting it happen. When I missed my first rent payment, I ended up reluctantly selling the company and only accepted the offer on the condition that my transition period would be one month or less (i.e. I don't actually have to work for the acquirer).
Throughout that time, my previous coworkers/managers from the companies I originally worked for kept trying to convince me to come back.
Nowadays being a founder is only for those who are already rich, well connected, and have a safety net to fall back on. It's super sad because I think it means the end of the great SV meritocracy as we used to know it.
I think it's just a matter of time before another country comes along and takes the reins from the US as the leader in terms of innovation. The entire country feels like a failed state right now.
[0] http://benjaminrosshoffman.com/approval-extraction-advertise...
My conclusion is PG's "I can lay out what I know to be the right thing to do, and still not do it."
In 2019 the best business model was selling pitchforks to gold miners in San francisco, in 2020 the disruption happened. Big cities have a competitive advantage in terms of exploiting the Bezzle, but when that is gone then what?
Back enough companies and hopefully some will be winners.
Why not just say "rich dudes" ? That is the qualifier. The race might be true too, but it's not what defines the argument.
[1] https://www.businessinsider.com/most-millionaires-dont-think...
[edit] Jesus, this is a real issue one has to look out for when writing and speaking: falling into using easy, worn phrases when they’re less effective at communicating what you’re trying to say than an alternative, and often explains these cases of overreach or somewhat “off” usage with cliché phrases, which was what was asked about. It’s very easy to let one’s fingers type right through a worn rut, once one starts into it, when some reflection might reveal that was a bit off. Struck a nerve for some reason, I guess? I have exactly no idea why.
https://www.pewresearch.org/fact-tank/2017/11/01/how-wealth-...
https://hbr.org/2018/05/asian-americans-are-the-least-likely...
Also, stuff like this is problematic for diversity - you're pretending that race is somehow irrelevant in discussions of socioeconomic status, when in fact it is very much so. "It doesn't matter that they're white, it just matters that they're rich" very much misses some highly relevant big picture info.
They can’t stop working their shifty job to participate in YC if they lowered their investment. A wealthy black founder very obviously could. Clearly the deciding factor is socioeconomic and not race.
So you’re just wrong to talk about racial diversity when the issue is clearly socioeconomic diversity.
The absolute proof is that increased economic diversity necessarily results in increased racial diversity. Contrarily, increased racial diversity does not necessarily result in socioeconomic diversity.
Because one is the root cause of the other.
Your thinking is what leads to “diverse” organizations where many racial and gender groups are represented but they’re all rich people that attended Ivy League schools. And that is not diversity by any meaningful definition. It does nothing to alleviate systemic unfairness.
That's the problem - you're talking in theory (obviously there are rich black people and they have resources) while ignoring practical reality, which is that race and socioeconomic status are highly correlated to the point where you can't just magically ignore the latter and somehow equitably deal with the former.
Why do you think that race and gender = diverse? They just have different races and gender, but might think the same way = not diverse.
Certainly, but black people are disproportionately less wealthy than white people, so are far less likely to be in that position.
> A poor white person cannot use their whiteness to pay the bills.
This is also true, but they will not face the structural racial discrimination that a black person of their socio-economic standing would.
The trouble with reducing issues of inequality to class alone is that it obscures the systemic biases that make it easier for white dudes to become rich in the first place.
By the new definition of 'middle class' (which now includes people up to their eyeballs in debt), the middle class would call me a 'rich dude' even though millionaires would tolerate my presence at an event but not be that happy about it. I see this every time I am given bad news about a large bill for the vet or repairs and they are visibly surprised when I just reach for the wallet instead of argue. You are a rich dude, dude.
But I've noticed that I am comfortable in other situations where my white dude peers are not and it's because I belong to other privilege groups that they don't. Like physicality. Which I think speaks to how people react when you point out their privileges, because there is always somebody who has it better off and if you are jealous of other people, it rots your brain. Sympathizing with people who are jealous of you while you are insanely jealous of others takes some internal work that people don't want to do.
When winning leads to more winning - groups that have won disproportionately in the past (white people) will continue to win more and more unless we find a way to counterbalance.
This is why almost every sport includes some kind of catch-up model for their franchises (better draft picks for performing teams, salary caps) to encourage balance and competitiveness. We accept this in sports and know that it helps, but we don't want to believe it is needed in our economy, which is the most important competitive sport played in the world.