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kleinsch

Yea, I’ve found it interesting reading about YC companies from this batch that include:

- A scam MMO

- Terminal autocomplete as a service

- A Splitwise clone

- An app that puts your next meeting in your menu bar (for $10/month!)

YC gets 5K+ applications/cycle, accepts 1-3%, so they rejected 4500+ companies for these?

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I have some sympathy for the difficulty evaluating tech plays when "an RSS search engine" turns into twitter.

These ideas are the starting point, but it's difficult to tell what they might turn into. Quite possibly they evaluate the ability of the founders to shape the company into something interesting during the program.

But more than that, they're probability are trying to figure out how well the founders will perform at demo day, after they've helped them polish the play.

"Invest in the team" makes some sense when you're talking about bright people with a lame idea (RSS search engine, or whatever.) But in this case the idea isn't merely lame; it's a scam, and the team being invested in are a team of con-artists. What might they pivot to, if not another scam?

A key skill of con-artists is being able to make yourself resemble someone competent. If you go back to 5 years ago, YC probably wasn't on the radar for con artists yet, but starting about then, it was becoming clear that VCs had more money than there were good companies to fund. We are now seeing the results.

Unfortunately the con artists make funding harder for people who are not con artists. A con artist can spend 100% of their time and effort on polish and marketing, while someone trying to actually do something often has to make those things an afterthought. I’m sure the con artists have much better decks and web sites.

"Invest in the team" gets you Juicero.

Great ambition; they raised a bunch of money.

Great production; watch a tear down of the Juicero product itself, it is a mechanical work of art.

Great potential; a SaaS for a fruit drink? Lots of people love fruit drinks! They can buy our packets of delicious pre-made juice, people drinking juice is a huge Billion Dollar Market™!

Stupid Idea! You can just squeeze the juice out of the bag by hand, no fancy device needed. It is less convenient than pouring from a bottle! Does it really taste better than the delicious organic juice you can buy at any grocery store in every city for a lower price?

Lets put one hundred and twenty million dollars behind it and find out. Hahahahahahahahaha big swing and miss! Survey said? No.

You can of course have a great team with the smartest best credentialed people working on the idea motivated by tons of money. If the idea is bad they still fail, maybe they can pivot, but probably not.

YCombinator doesn't put in that much money though. I'm sure they don't intentionally fund scams or juiceros, but if they do, that's not the end of the world. It's a bigger deal to miss the dumb thing that turns out to be good then to accidentally fund a few dumb things.

Totally agree not trying to be critical of YC. Situations like Juicero, Theranos, this topic, et al scams, are interesting to observe.

The Juicero was very overbuilt, I know because I watched the AvE video, but isn't that a sign of amateur engineering? I'm thinking of the old saying that anybody can make a bridge that stands, but it takes an engineer to make one that barely stands.

Hah! It's totality overbuilt for a product that squeezes a bag of Juice! That being said the idea did work for Coffee: e.g Keurig; just not juice.

>it takes an engineer to make one that barely stands.

Engineers do not build bridges that barely stand. They build bridges that they reason will stand for an amount of time in the conditions they predict the bridge will be subject to versus the cost required to build said bridge. They build realizing that no bridge will stand forever but it must stand for a specified amount of time.

They build to "Correct",

Not "Perfect"

> "Invest in the team" gets you Juicero.

It can get you Juicero, or it could get you Android. That's the whole thing with investing, isn't it? It's rather uncertain.

I've been following YC companies closely for about 6-8 years of data. Before the last big transition, I noticed virtually every founder came from an Ivy League school or something comparable. Their work experience was equally impressive before YC. Other people noticed this too and brought up the lack of diversity and complained. They felt that this strayed from pg's initial goal for YC, which was helping the little guy against the VCs instead of being yet another launch pad for Ivy League alum. Is this the result of YC wanting more diversity (not just gender and race, but for background too like education and experience)?

EDIT: The technical founder came from Apple and Cruise, and he graduated from the Univ of Michigan. He has the same cred as most YC founders. They probably didn't vet them as much since he came from a successful YC company, and I'm sure they talked to his former bosses. YC's system just had a public failure after using what seems like the same process for 15 years.

EDIT: If YC was too careful, Stripe and AirBnB wouldn't have happened. Those guys didn't have any experience in their respective industries either.

Definitely damaging to the YC brand.

I'd like to see a postmortem on how these _blatant_ con artists got through.

Italics on HN are made using asterisks. They should really make underscores do the same...not like those do anything else.

Maybe the brand is a little bit hyped to begin with? I suspect there are only two companies these VCs have ever funded that are known to turn a profit. It seems like they've trained a generation of young smart people on how to get rich by losing money.

What a strange thing to hear. Even I can tell you that many more than "two" YC companies have become profitable, and I'm pretty removed from the business side of YC.

Which ones? There are only two public companies that currently make a profit that I'm aware of: dropbox and coinbase. I don't really pay much attention, but that's all I can think of at the moment.

Well, here's one: https://www.forbes.com/sites/alexkonrad/2021/03/08/zapier-bo.... Sorry I don't have a list for you, but HN seems to have warped my memory in strange ways. I'm sure that YC has funded at least dozens, probably hundreds of profitable companies, including many that people wouldn't remember, because they found a lucrative niche for the founders and a small team (or maybe even just the one or two founders), and opted out of the fundraising track and are happily making a good living. That's not the preferred outcome from a venture investor's point of view, of course, but YC has always supported what founders want to do. Also, Zapier's an outlier - there are others that have followed a more conventional fundraising path.

Seems like a deeply tedious topic, but it sounds like the argument is that the small number of (claimed) profitable companies have basically ignored whatever it is you tell them to do. That's a great pitch.

In my YC batch (I was in the same one as dang and Airbnb), the issue of revenue/profit was what the partners talked about the most. Growth too, but profitable growth. Like, it was talked about all the time in the batch. That was particularly important in our 2009 batch due to the financial crisis, but it remained important later in the good times - see PG’s post “Default Alive or Default Dead?”.

Though it took us a while due to engineering challenges, our company survived and became profitable by minimizing spend and focusing on revenue/profit, just as YC advised.

This notion that YC backs/encourages companies to flush money down the drain is a mistakenly applied stereotype spawned from a combination of different eras, different companies and different investors. Notably, YC has never been involved with companies like Uber, WeWork or Theranos, or any other company that SoftBank has tried to artificially pump up by pouring billions of dollars into.

And yet here they are investing in something that is so obviously a scam that possibly even my grandmother would notice.

It reminds me of the "but you fuck ONE goat" story: one misstep like this surely can and should have more impact than all the good steps.

> "investing in something that is so obviously a scam"

None of us has any idea what was presented in the application form and interviews, but given YC prizes its reputation above anything else, we can reasonably presume it wasn't obviously a scam.

Most of these companies are obviously a scam in one way or another. It just depends on your definition of what a scam is. Is it a scam to insert a middle-man to profit off a transaction that already occurs, or is it a brilliant hack? Is it a scam to use huge amounts of veture funding to undercut prices in an existing market to grab market share and claim "disruption?" These are called business models, but some of us call them scams. They seem particularly scammy when they never ultimately turn a profit and begin to look suspiciously pyramid shaped.

> It just depends on your definition of

This is the moment in an online discussion where we all lose 50 IQ points, so thanks for that.

"Scam" has a well understood meaning in modern legal and economic systems, and that's obviously what I'm addressing, not some other ideologically-charged alternative definition that you're now invoking as a debating move that amounts to little more than trolling.

(As for middlemen - for as long as commerce has existed, middlemen have been derided for inserting themselves into transactions that were already happening, by people blithely handwaving away the fact that those transactions were not, in fact, already happening.)

Your insinuation was that YC trains the founders it invests in to deliberately build long-term money-losing companies, which is demonstrably false and also highly implausible.

Philosophical discussions about the deeper nature of things are also of great interest to me, but not like this.

I'll set aside your ad hominem and let you go on your merry way. Enjoy.

I don’t think Dropbox are GAAP profitable either, I was looking at their financials a couple of weeks ago.

Some of us remember when YC funded InstallMonetizer and people around these parts were defending it.

I doubt it'll affect the brand.

YC didn’t fund installmonetizer! They funded the next venture from the people behind installmonetizer, who then proceeded to say “we’re funded by YC” on their about us page.

I lost a lot of respect for YC when I realized they invested in a startup that sold laundry detergent with a manly scent. The founders I think were from Stanford.

So yeah, I don't think they are nearly as good as they say at judging startups. I believe a lot of it is based on signaling from founders and already successful startups applying.

We have been following YC's devops companies. It seems like they are basically investing in pretty much similar companies, which we found a little bit weird. I would assume as fund or incubator you would diversify your investments.

In an area that might be hot, VCS are wise to diversify by investing in multiple companies in the space rather than trying to pick the winner themselves way ahead of time.

VC is about funding the massive winner and much, much less about avoiding funding the runners-up.

Yes, it is funny. Sometimes fools with big mouth get more attention than they clearly deserve.

By the way, I wouldn't like to be those three YC interviewers who valitaded this idiotic project into ycombinator !

"Le bonnet d'âne pour tous les trois ! "

Didn’t Oculus sound just as crazy when it was conceived? As far as I know the founder had barely any experience with hardware. Just a glorified gamer.

His wikipedia[1] page states that he was a VR enthusiast for quite a while, building several prototypes before launching the kickstarter [1] https://en.wikipedia.org/wiki/Palmer_Luckey

First Oculus was pretty much linear continuation of where VR died in the nineties with VFX1 and Virtuality. Merely a hardware upgrade of LCD and IMU technology.

The VC game these days is no different to flipping houses. They're primarily funding boring, inconsequential and incremental startups which can be acquired in <5 years. Or chasing the <1 year money-on-money return of crypto projects.

It's Peter Thiel's "Great Stagnation" decline accelerated by the capital allocation of short-sighted VCs.

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