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Comment by olivercameron | Hacker News Reader

I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even if people are saying "it's a stupid idea". I know a lot of founders who, after being told by many of the Valley's finest angels that their idea is no good, would just give up.

It just goes to show that you can create a $1 billion company, even if no one really gets it in the beginning, and in my eyes at least, they are actually justifying it (making a lot of money in a lot of different places).

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I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand.

There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise decision to give up. While angels are far from being 100% accurate in choosing what to invest in, overall they have to have some sense of what's a good idea in order to sustain themselves. If they're all passing, better off hitting the drawing board.

I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.

Why are you more likely to be able to accurately judge a startup than other potential investors?

Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.

I have so much more data. I've been watching their trajectory for 4 months, while other investors (especially those that chose not to invest) may only have seen them for a few minutes at Demo Day.

But without something as quirky as the cereal story, you would have rejected them?

No. We liked them as people. The cereal story was just evidence of the qualities we sensed when we met them.

Many investors view a company based on how much of a multiplier it can offer them on their investment. Is this a 2x money maker for me or a 10x? If I'm only interested in the 10x home runs then a 2x company may look like a bad idea to me.

> we can tell people candidly whether we think it's the investors who are wrong, or the startup.

If YC chooses to invest in an applicant, it probably offers great advice to the start-up. If it chooses not to, would you consider that rejection candid advice that the start-up is wrong?

I got extremely candid advice when I was not selected after interviewing for the w2011 group. It was both unexpected and good feedback.

Sometimes yes, sometimes no. Sometimes we're just not sure. We try to distinguish in the email we send after the interview.

Yet, you (reportedly) weren't fond of the idea, either ...

We weren't. This is a good illustration of why you want to invest based on the founders rather than the idea. The founders we liked immediately.

Also, the idea was different initially. Initially they expected the host always to be there.

"Because otherwise who will cook the breakfast???", Brian asked once...

I also remember someone talking about airbnb airlifting breakfasts for the guest. That seemed like a weak link.

I am kind of surprised that you didn't buy in the idea. Couchsurfing.org has been very successful

Yet that candid advice didn't break through to someone like Fred Wilson. I wonder if more visionary ideas are harder for investors to truly recognize with their templates of "experience".

Ebay for Spaces is a very clever shorthand, but it seems just abstract enough to question without a concrete instance. Now, of course, it is one of those brilliant with hindsight instances that seem easy but require immense dedication.

You're assuming that you're more likely to be right than other investors.

There's an adjective for that kind of thinking, which I won't use because in context of hn it would be downvote suicide.

And yes, I know you're THE pg, but other investors, like Fred Wilson, John Doerr or Marc Andreessen are also THE investors.

The argument that I would find more persuasive would be that YC can help because it's willing to take more risks on "out there" ideas due to dramatically lower investment in any one startup and higher number of startups it funds.

Did you not see this? http://news.ycombinator.com/item?id=2600286

I think it matters who tells you it's a stupid idea. If it's investors, you can safely ignore them; they aren't looking for what you're selling anyway. If it's potential customers, however, you probably have a problem.

In AirBnB's case, they had already validated the market. They had their first 3 customers before they even thought it could be a business. If people are willing to pay you money for your idea, it really doesn't matter what investors think.

Yes, it's quite inspiring to see how much it succeeded despite the overwhelming negative feedback. Just goes to show that judging the viability of ideas is hard, no matter how many experts there always seems to be in the TechCrunch/HN peanut gallery. I've really tried to train myself to answer "do you think this is a good idea?" with "I haven't a clue."

I don't think anyone can predict what's going to be big, and what isn't, and that's why bad VC/investor/coach advice is so pernicious.

Let's look at the progression: Google shows up, makes a big splash among the tech elite but attracts little attention in the popular market until their obscene IPO, and investors collectively say, "Damn, well, I don't want to miss out on the next Google!" Then there was Facebook, and again, investors collectively say, "Damn, well, I don't want to miss out on the next Facebook!" Now there's Airbnb, and investors are saying what now?

(I'm skipping over a ton of other big to almost-big examples in this progression; hopefully someone more knowledgeable will fill in some gaps, but I don't think it will diminish the point.)

The thing is, Facebook wasn't the next Google and Airbnb wasn't the next Facebook. None of the breakout hits have been entirely original ideas, nor would an early-stage pitch have been compelling to anyone with the ability to be a significant early investor. There were zero signals that would have worked as a strong early indicator of future success.

The more I observe this industry, the more it strikes me that any investor that's investing in the hopes of being part of The Next Big Thing is simply gambling. Just as in gambling, if you study the game and the rules carefully enough, you can tip the odds in your favor a bit, but there's still no such thing as a guaranteed win. When I hear people say, "We're looking for the next X," my eyes roll back into my head a bit.

Airbnb joins a long line of startups that became big in spite of initial rejection. In fact, it almost seems that a necessary - though not sufficient condition that your idea maybe the next big thing, is that it is initially rejected by everyone you pitch it to!

Totally agree. Ultimately the only test for your startup idea is market acceptance and resonance - and experience repeatedly shows that no amount of prior experience and knowledge helps in predicting correctly what the next big thing will be. After the fact, it is easy to look back and rationalize and attribute certain factors for all the big successes - but no matter how many times this happens, we always miss the next big thing. Market resonance is very hard to predict - since there are so many parameters for success.

The success of Airbnb and many others like it raises the interesting question - How many other billion dollar ideas, never got off the ground because investors thought they were awful ideas? We may never know. But it should give every entrepreneur something to think about and not be discouraged by rejections. Your idea does not need to be accepted by investors - only by the market! So if you really believe in your idea launch it and see if the market accepts it. If not tweak the parameters till it does. Build a minimum viable product and try to fail cheaply. If it works, investors will come running to you. A good way to look at it is that your startup is like an experiment and your product/service is the hypothesis you are testing. If it fails, your hypotheis is wrong - so change it and try again.

Taking it the other way around, most startups put too much weight on their valuation, which is a quantification of what investors think about their company. Of course assuming their primary goal is to really make a difference, instead of just selling out as soon as possible.

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