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Comment by User23 | Hacker News Reader

YC's success is due to a combination of luck, skill, and yes, the most juiced bull market in a century. That last one is less of a factor than one might think though. Everyone has benefitted from easy money. So if were a primary factor then every early stage investor would have a 6% unicorn hit rate and that's clearly not true.

I'm not an insider and I don't personally know any of their principals. But I have followed their work and read what they write, and I am absolutely certain they are considerably above the mean when it comes to intellect and operational ability.

I also suspect they have benefitted to some greater or lesser extent that is unknown to me from connections in government. But like it or not thats part of how the game works, so if you want to be at the top of the game you have to play ball.

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Connections in the government? Care to elaborate? How would a government connection increase your success in terms of investing in the right start up?

There are countless ways that government connections could be very useful if you're trying to ensure the success of portfolio companies, especially if they're operating on regulatory frontiers.

Nudging policymakers in a favorable direction on legislation that could effect your portfolio is the most obvious, but there are tons of other examples as well.

I'm not arguing that this is a primary driver of YC's success (I don't know the extent, if any, of their government influence), but you'd be silly to think that political connections can't benefit an investor.

Palantir is one of their big successes because the government has chosen to pay them for big contracts; a government who thought differently might have not only declined to do that but shut down their whole operation as fundamentally harmful to regular citizens. Likewise Uber and AirBnB built their whole business pretty knowingly on open violations of the law; a government faithfully representing its citizens' interests might easily have decided to shut that down (as e.g. the government of Japan did; both companies barely operate here). Those are just the biggest names that come to mind; I'm sure there are similar things at every level in their portfolio (e.g. not so long ago there have been stories about YC funding a malware distribution company and a company that makes illegally usurious[1] loans; at the time dang claimed pretty vigorously that YC didn't and wouldn't fund companies that do that, but the evidence that they did fund the company and the company was doing that seemed pretty irrefutable).

[1] when lending to veterans, which the company in question did

Well this is different. Palantir is a defense contractor, their biggest customer IS the government. So of course connections matter for Palantir. My question pertains more to start ups in general.

One way is getting a 8 or 9 figure government contract from said government connection.

Sounds like the only way. And it sounds rare. Most startups in yc or anywhere never get these contracts.

For the simple fact that investment leverage scales super-linearly with investment size, I think you may have mis-judged how much the market affects valuations.

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