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Comment by parhamn | Hacker News Reader

I think if you get over the drama here and implied "dirtiness", the main result is still a bit interesting.

Even if you exclude the implied carteling and take everything he said with a grain of salt, the outcomes of this incentive structure are clear: once SV (i.e. the YC centered VC machine) gets into a space and has a main horse, SV can no longer incubate new innovation/competition in the space. It can also very likely become predatory to the potential innovators that SV is supposed to support.

At a more macro scale, this means that YC will fade in the same way as everything else does because it won't be able to entertain a wave of innovators, and they will, as he did, seek and build the next SV.

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If that's the main result of the post, then it's a reductio, because YC funds competitors all the time and would never turn down an innovator for anti-competitive reasons—only because they thought it wouldn't be a good investment at that moment. Anything else would both be bad for YC's business and against its principles (https://www.ycombinator.com/principles/). Of course it still happens that YC turns down good companies which go on to innovate and succeed—but only by mistake.

Edit: by "principles" I don't mean some sort of moral edict, I mean YC's investment thesis, which is described at https://www.ycombinator.com/principles.

I find this comment surprising. I didn't say anything too controversial. Investors regularly refuse (and it's often the morally correct thing to do) investments in competitors. It's also often in their financial incentive too. To assume any investment organization in broad does differently because of their stated principles is absurd. Most investors would comfortably say this.

> YC funds competitors all the time and would never turn down an innovator for anti-competitive reasons

While I know your intentions weren't bad, it feels disingenuous to speak so confidently about the behavior of hundreds(?) of investors/employees, regardless of the take. Also getting a seed check from YC doesn't really disprove any of this. The forces of the business immune system he's describing probably wouldn't kick in until later anyway.

To be clear I don't think any of this is abnormal behavior (or reprehensible). Regardless I stand by my bet: the successor to Airbnb & Stripe probably wont be YC backed.

YC is indeed different from VCs in this regard.

VCs generally don't fund direct competitors to those in their portfolio, which I agree with you is a good thing -- conditional on there being a lot of VCs out there (which there are).

(Btw, in case any reader is not aware, dang is employed by YC to manage HN - and YC acts differently from VCs in many respects).

With all due respect there have been 2-3 HN posts in the last few months about YC and HN being biased towards Stripe. Surely it cannot be so much smoke without a fire.

That's bad logic in two ways. First, this is the internet. Smoke goes a lot further than that.

Second, to the extent that the claims involve HN, (I'm being careful only to comment on facts I personally know about), they're definitely false [1]. So yes, for sure there can be that much fireless smoke.

[1] I haven't had a chance to respond properly about those claims yet. Normally I'd have done it by now, but I'm on my phone with intermittent access at the moment, so am a lot slower and don't have my usual tools. Edit: I finally got it out - https://news.ycombinator.com/item?id=30070287.

dang, imho you’re trying too hard.

Sorry, but if someone makes statements about HN or YC that I know to be false, I believe it's my job to correct them—especially since we can't treat this kind of post in the way we normally moderate HN (https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...). What do you think I should do instead?

I can see someone who isn't convinced you're a fair operator taking the volume and detail of response as defensiveness, and that can look suspicious in a context like this.

They aren't right, but I can understand the perspective.

> They aren't right, but I can understand the perspective.

How? I'm curious. If someone makes accusations that you know to be false, wouldn't your best defense be a comprehensive refutation?

What alternative do you see that would be more compelling?

I, for one, really appreciate this level of detail, because the most common alternative is to attack back mercilessly without evidence. This tactic being commonly employed by politicians the world over.

Most of the world's ills would be solved if facts and evidence were enough to convince people.

I get it too. But when things get to that stage, literally anything you do will be taken as proof of the same nefariousness, whether you sink or you float.

I think it makes more sense to focus on the much larger audience that's sincerely making up their mind, and give them good information with which to do it. Could I do that less defensively though? Absolutely. Not there yet.

When you have a fixed mindset, have chosen a side in a debate, and actively participate in a story where you have a vested self-interest, you cease to become what this community loves about you -- the impartial gardener of HN. At this point, you've become a YC defender and have abandoned your post as someone who could serve as a balanced arbiter. Surely, there are other people at YC who could comment on such matters for stories like this. That would be far, far better for you and HN (and probably YC too).

I appreciate your comment! but I really don't think that's the right conclusion. I've been doing this for years—people know what to expect from me. I'd rather be up front about the fact that I care about HN and YC, and don't like to let false accusations go unanswered. To some extent it's a temperament thing. Past experiences (long before HN) have conditioned me to be a bit passionate in this department, and with a community like this one, which is extremely sensitive to the truth, I think it would be a bigger mistake to pretend otherwise. Probably a hugely bigger mistake, because what works best for me on HN is relating to people, and I can only do that by being myself.

I've never claimed to be impartial and never would (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...). What I do claim is that (a) we try hard to be fair and to follow HN's principles, especially the one about intellectual curiosity (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...) ; (b) we always answer questions truthfully, partly because it feels better that way and partly because it would be dumb not to (https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...) ; and (c) we moderate HN less, not more, when YC or a YC startup is involved in a story (https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...). That, by the way, is the only reason why this imaginary riler-upper spent 11 hours on HN's front page today. We'd never allow that normally—it goes against everything the site is supposed to be for. But I dutifully gritted my teeth and bore it, because that's the principle, and because I'm not about to trade a global optimum for a local one (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...), even though it sucks to periodically get slimed like this.

Thank you for your thoughtful comment and the links. Very helpful! Three thoughts in response:

- The appearance of unfairness is arguably at least as important as actual fairness from a community perspective. If you're being fair, but no one thinks believes it, the community suffers as though it were true. During this story, people were openly questioning your motives (even though the original story was apparently not factual) because they perceived unfairness.

- Choosing not to engage on certain topics and leaving that to other people in no way prevents you from connecting and engaging with the community naturally. Not engaging throws cold water doubt (unfounded though they may be) before it has an opportunity to smolder.

- There are lots of new community members, who could easily get the wrong idea. They don't know you like many (like myself) who have seen how you interact with the community, and in whom you've built up a large reservoir of trust.

The role you play in this community is very special and incredibly important to me and many others. Thank you so much!

I think people have already made their mind but if you want to share more information, I would suggest being 100% transparent and releasing any internal communication (emails/text/slack) about Bolt.

I don't understand what sort of communication you're talking about. If you mean internal communication at the time (back in 2018), there wasn't any. If you mean internal communication yesterday - there was a bit (e.g. someone pointed me to the thread), but what value would there be in releasing it?

Thank you . That was a fantastic and very detailed response. Obviously seeing a few of those posts made me think there was something to those insinuations so its good to get those clarified. Ball is now on Bolt founder's court to back up his claims otherwise its libel.

My comment wasn't about hundreds of investors -- it was strictly about Y Combinator, which is just one company. I've worked for YC for years and therefore know things about it. Since I don't work on the investment side of the business, there are a lot of details I miss out on, but on the macro level, such as the core patterns by which YC operates, I know quite a bit. Also, part of my job is to be a liaison between HN and YC, and an important part of that is to correct inaccuracies and misperceptions where possible.

But this poster is also a HN "moderator" and has a very biased perspective in this conversation. Moderators are in place to ensure fairness, to act as a referee and prevent spam. It's PR that does the sort of "correct inaccuracies and misperceptions where possible" stuff of effectively using outsized leverage to control the narrative. It's PR that tries to deny that beliefs that are deemed "incorrect."

I'm sure that line between PR and "forum mod" can get blurred over the years, but that's exactly the OP's point. The YC community, as it has scaled, is no unbiased marketplace, and it has not handling scaling responsibly. Look at the founders who were ousted from bookface, or even some of the non-public discussions there. The OP's Stripe commentary might be over the top, but YC has yet to produce a mature response to any of these friction points.

> The OP's Stripe commentary might be over the top, but YC has yet to produce a mature response to any of these friction points.

How could they produce the mature response you’re looking for when the accusations are full of holes. Lyft isn’t a YC company and didn’t use Stripe initially as he claims. The only “Proof” (his words) posted is incorrect: Stripe posted their blog post before he posted his.

He has produced no real evidence for his claims. The evidence he has tried to produce is trivial to check and works against his claims.

How should YC respond to this?

Curious about the funding competitors part. What enables YC to do this, why aren't other VCs able to fund competitors? Has this ever resulted in conflicts or lawsuits between companies? Lots of questions appreciate any insights.

Disruption

>Anything else would both be bad for YC's business and against its principles

Well, "bad for business" is arguable, but it's not like "against its principles" has been any big detterent in Google, Apple, Microsoft, and generally coporate behavior...

YC is orders of magnitude smaller. So far, from what I've seen, those principles still carry some weight.

Edit: I think I might have confused things by using the word 'principles'. I'm talking about YC's investment thesis, as explained here: https://news.ycombinator.com/item?id=30070101.

Creating a cartel is "bad for business"? Are you sure about that?

Turning down good deals is bad for a startup investment business, yes. In fact it's the worst mistake such a business can make. This observation is so commonplace that it's long been a cliché.

dang, this is a bad faith argument.

Every member of a cartel is motivated to defect, yes. The hiring cartel Facebook broke wasn't for business reasons, it was because Steve Jobs was mad about recruiters calling his people.

>Anything else would both be bad for YC's business and against its principles

Come on. It's like saying crime won't happen because it's illegal.

I think the word 'principles' is leading to a bit of confusion here. I used that word because I was referencing https://www.ycombinator.com/principles, but I don't mean moral precepts, I mean YC's investment theses. These, for example:

"Y Combinator’s goal is to cause there to be more startups, by helping founders to start them."

"YC’s value is the number of startups we help times how much we help them."

The point is that funding new startups in the same markets as previous startups it funded is a consequence of YC's model. Not to do it would be self-contradictory.

This sort of thinking reminds me of the efficient market hypothesis.

The Twitter thread and OP didn't say anything about YC investing in companies who do similar things. The "accusation" is that YC discourages other VCs from investing into competitors that YC isn't part of (for whatever reason).

I was responding to the claim in https://news.ycombinator.com/item?id=30067382 that YC "won't be able to entertain a wave of innovators".

Ok, but that doesn't change his argument. He's saying that as SV becomes less relevant, so will YC, because they are strung so tightly together.

Not agreeing or disagreeing with this, just trying to point out this argument :-)

> the outcomes of this incentive structure are clear

Yes, I think the incentive argument is certainly the more interesting piece than the notion that there is any sort of coordinated conspiracy, which seems far-fetched.

> At a more macro scale, this means that YC will fade

I'm not sure that this follows. This argument doesn't really apply to new approaches, it only applies to direct competitors of market-dominant darlings, not fresh approaches within a vertical.

Wait, I forgot which payment processor silicon valley liked? CyberCash, PayPal, Venmo (whoops), BrainTree or something, does Toast (but they're east coast, maybe not SV darlings) count? I like the name, clearly and they do process payments... Etc.

There's a ton of companies in this space, and a lot of them got funding from somewhere.

Then why did Lyft and Uber, Dropbox and Box, come from SV, from the same time period? I just pulled these from my brain with little recall, which tells me your argument probably has a lot of contradictory examples.

The answer to this is probably FOMO (and it does work against GP's argument) — the VCs who missed out on the hot new startup will want to get on the second best rocket.

I know of at least one instance in which direct competitors were accepted to YC in the same batch. So your implication that SV can no longer incubate new innovation/competition in the space. is untrue.

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