Comment by brigadier132 | Hacker News Reader

Comment by brigadier132 | Hacker News Reader

Let me give the other side of this because I used to believe this too

I'll start with the most important first

1. When you take YC money you get to pay yourself. You wont be paying yourself FAANG money (if that's still achievable nowadays who knows) but you are paying yourself to build a company you own the majority of. So yes, they want you to dig to the center of the earth to find gold but you are being paid to do so.

2. I don't think starting a niche startup is meaningfully easier than starting a startup seeking uber growth. While a tech startup might require more up front knowledge I don't think startup ceos are working harder than the baker that's waking up at 4 am every day.

3. YC has a very good success rate and I think it's related to services they provide founders and the network.

I think if your business falls into the category of hyperscale startup and you are a first time founder I really think YC is worth it. They seem to have a system that works.

I concur that the system works.

The point of the article is who does it work for?

Personally, I agree with you. If you're just coming out of college this is a great way to get a couple years of salary and a chance to work on whatever you like. Give it a few years, if it doesn't work out it hasn't really cost anymore than a post-grad course in terms of time.

Basically you can view the whole program as a simple "job" with pay, with a 1% chance of going big. That's probably worth taking a punt on.

99% will fail, so frankly I wouldn't spend more than 5 years on this path, but if you're young you can afford that time.

Honestly this approach seems a lot more attractive than putting up my own life savings to start a business. Or working without income for a year or whatever.

And a startup doesn't need to make 1 billion per year to be a success. How about one that makes 100 million? or even 10 million? If the company is sold, the founders will be rich (not ultra rich, but have a million or more).

And, for ycombinator, the number of "startup exits" is: 351 (according to this page: https://explodingtopics.com/blog/startup-stats). Am no expert at startups, but this may mean that out of the 4000 that when through ycombinator, ~9% where valuable enough for investors to take profit. That sound pretty good to me.

> or even 10 million > the founders will be rich

A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.

Ah, I see. And actually, I do know a little about startups (even though I said I'm no expert), and thought that most founders who sell their businesses for something like 10 million can make a comfortable amount of cash. But didn't realize that if they use VC's, the VC's can take so much!

So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money? (Talking about the minimum needed to make a million for a couple of founders).

I guess the break-even line is exiting for more than you raised. If you raise 20 mil, and sold for 20 that's different to raising 5 and selling for 10.

Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round.

Until you can't raise anymore, at which point the exit is likely underwater.

But you got paid a salary along the way, so thats not to be ignored.

Often founders don't get to choose when to sell. e.g.:

  Investors usually get vetos over certain big decisions, like selling the company, regardless of how many board seats they have.

And investors can force-feed money that founders don't want for a variety of reasons. Read articles by: https://siliconhillslawyer.com

Ah, can see that investors can force the company to shoot for the moon, instead of just trying to right-size the business and sell it. Very interesting!

Yeah: VC incentives do not match with founders incentives - share classes are just one obvious signal of that. Good article on that conflict: https://siliconhillslawyer.com/2019/02/18/relationships-and-...

> ~9% where valuable enough for investors to take profit

Or aquihired.

Best analysis I have seen of YC: https://jaredheyman.medium.com/on-the-life-and-death-of-y-co...

Disappointingly YC hasn't provided any good analysis for founders or employees.

YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align).

I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options.

Finding good information is difficult and YC don't help.

Good to know, thanks for the info!

I imagine it's not much fun with YC on you constantly telling you to make more, scale, or pivot to you make our investment worth it. I find the clients that pay the least demand the most

agreed:) But on the flip side, as long as the startup is sold in the end and you as the founder make a good amount of money (meaning over a few hundred of thousands), think it's probably worth it

I hope, perhaps against mainstream opinion, that the myopic focus on the young will be proven flawed.

I see the launches and highlights YC posts on LinkedIn and elsewhere and see no one like me, yet am confident I would both benefit from it and be more likely to build something amazing than the majority (that being a particularly uninformed opinion, since I know only a few personally).

yes, you are correctly taking alternatives into consideration here.

while the author is Tru about the reasoning they fail to elaborate on the alternative.

take a job with youghly the same pay as working in your own startup? that would seem terrible.

obviously, if you have opportunity with a much higher expected pay, then that should be the go to opportunity.

Taking a job is indeed an alternative. You pay yourself, but you get little control on what you work on (apart from choosing which company to work for). However, you can usually leave easily with a 2 week notice without many downsides.

Getting accepted into YC is quite similar to getting a job. You get paid (less), but you get more control on what you work on. Even though technically you have full control, you don't really do that for moral and ethical reasons. You will want to do things that have a chance of paying off big time, because that's why your investors trusted you with their money. And if you get fed up, it's not as easy to leave. What about your investors? What about your reputation? Will you want to let these people down? Etc.

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