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Comment by pg | Hacker News Reader

"Y Combinator style built-to-flip companies?" Sigh. Does this guy not grasp how much less we make when a company gets acquired early than we would if it went on to become a big success? The real money in venture funding, for us as for all other investors, is in the companies that become Google, not the companies that get bought by Google. The returns can be literally ten thousand times higher.

We would always prefer it if founders turned down acquisition offers and kept growing the company. Any investor would. The reason some YC startups get bought early is not that it's the optimal outcome for us, but that we're willing to get less than the optimal outcome if that's what the founders want.

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I was storming into the thread to say the same thing. The other fantastic part about it is how YC will become madly rich at the cost of the 'gullible young naive programmers'[sic]. YC takes ~5%, those gullible fools only walk away with 95% which is clearly a horrible ratio compared to traditional VCs.

There is also the question of wether or not there would be a second (or new) offer. The Yahoo/Microsoft saga is a good example. Some (most?) founders aren't willing to risk it, specially when they have good technology but aren't doing too great on the business side.

That's my $0.02 anyway.

Are there any current companies that you think have a reasonable chance at pursuing an IPO within 12 months? 24 months?

I don't think there are many companies in the world that have a significant chance of doing an IPO within 12 months.

I do think there are several YC-funded companies that have as good a chance as any other startup at their stage. Loopt is obviously one. There's another that's almost as old but is building something so big that they haven't launched yet. More recently than that, it gets harder to say, but there are at least 5 more I wouldn't rule out.

Yeah, the IPO has (at least for now) ceased to be an indicator of success.

Are there any Internet companies at all that have done an IPO in the past 24 months? Or are planning to in the next 24? The answer is very few.

"In the past quarter, for the first time in 30 years, not a single tech company went public." (http://www.wired.com/techbiz/startups/news/2008/07/portfolio...)

By compressing the dull but necessary task of making a living into the smallest possible time, you show respect for life, and there is something grand about that. - last line of http://www.paulgraham.com/startuplessons.html

PG's article is about working very hard and then it's over, through some kind of exit (acquisition or IPO). This is what "built to flip" means to me. If founders "kept growing the company", they would just have more of the same very hard work and stress (by my interpretation of the article).

(To me), the alternative to a built-to-flip company is one Warren Buffet would like. It has an economic moat (durable competitive advantage), putting it in such a strong position that you don't need to work so desperately hard. You can continue to deepen the moat, it's no longer life-and-death stress.

I think I'm missing something - maybe PG's [8] footnote, that a startup is choice (a): you don't love building the company. It's just a means to an end, of financial independence.

I 'd like to do work I love, within my own economic moat.

He makes the mistake of assuming that the lack of a world changing YC company is strong evidence that the YC process is biased away from this result.

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