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Comment by 999900000999 | Hacker News Reader

I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place.

I think I'll just keep working on my side projects. They'll never be billion dollar ideas, and that's ok...

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shouldn’t the relevant metric be whether they increase your chance of success more than the cost (equity) you sell them in return?

Yes, and in comparison to whatever your best alternative would be (i.e. max increase of success odds of giving someone else the same equity and same time commitment).

Yes, but that is never the case with venture capital.

You think this is literally never the case? Raising VC money has never helped a company significantly?

They might help a lot, but they also take a lot of equity. Let's say you alone might get the company to a 10 million valuation, if you're good. Well, the VCs will help you get it to 100 million, but they'll take 95%.

Those numbers are very inaccurate.

But in general, yes - VCs give something and it costs something, like almost everything else in life and certainly in business. It's your job as an entrepreneur to decide if that money is "worth it". Sometimes it is, sometimes it isn't. In the end, just like borrowing money, it's a tool that you have to decide on as an entrepreneur. It's a big decision, maybe one of the biggest at first, but one of many thousands of decisions you have to make every day.

Isn't that the point of the music business? They look at talent, then decide if select the "ramen profitable" ones and (try to) hyperscale their popularity with judicious A&R spending. I think people outside the music industry criminally underrate effect A&R. It is really the difference between nobody and famous.

For anyone not in the know about the music industry, "A&R" means:

    > Artists and repertoire... It refers to the department of a record company that is in charge of talent scouting and the creative development of recording artists.

>I feel like YC is a bit like the music biz. They only sign companies which would have a chance without them in the first place.

Yes, and also like book publishers.

> They'll never be billion dollar ideas, and that's ok...

Yeah! That's totally ok.

But YC's business model is funding companies which will be that big. Otherwise it can't work.

I'm pretty convinced that YC's alpha mostly comes from the fact that they can shine a turd into something that doesn't lose them much (or makes a modest profit) when it fails.

Many other VCs that have survived for that long have a huge IPO under their belt, like Google or Uber. The best in the YC portfolio are probably Stripe, Dropbox, and Coinbase. These are great companies and great exits, but don't support 1000+ $0 failures. They do deliver the goods if your failures have a ~0% return rather than a -100% return.

That is a good thing for you if you want to learn how to grow a company, though, because it is a great sign that YC actually works as an education opportunity.

Twitch and Cruise are other household name ones but it seems there are quite a few others that aren’t: https://www.ycombinator.com/topcompanies/exits

Am surprised not to see Airbnb on the list tbh.

It’s somewhat uncouth to put AirBNB or Reddit on the list since they were pretty much funded out of pity (and almost weren’t funded).

Twitch has also never been able to really stand as a company on its own. It's like YouTube: a money-losing business that drives attention to the parent company.

They're under the "public" tab.

I did some back-of-the-napkin math when I first applied to YC, and IIRC just based on their unicorn and almost-unicorn companies, and assuming any outcome below $100M was equal to zero, joining YC still gave you an expected value of about $20MM.

So I think it's a way better deal than you're representing here.

It sounds like you are attributing all of the value of the company to joining YC. Many of those companies would have been worth plenty without YC. We have no idea how many.

I would suggest to you that the top YC companies often are the ones who get the least from YC. This is also almost confirmed by the many YouTube videos that YC puts out where they say things along those lines. These companies do everything right while with YC, and they continue to do everything right well past YC (as I understand it, YC is not all that helpful past series C).

I have no strong feelings towards or against YC, but your whole argument seems to hinge on

> Many of those companies would have been worth plenty without YC.

How would you know this?

Are there many companies that got accepted by YC, turned them down, and got as big as the average YC company?

I told you that there's no data, but the heads of YC have outright said this, so I believe them.

Counterfactuals like this are famously hard to prove, and even the statistic you want does not prove it.

not every company is going to massive or in the billions. but plenty of companies in the 100m - 500m revenue range. to get there, yeah you usually need vc money.

I work on small games.

I don't really want to waste time applying for funding though. I went through a phase where I was spending a lot of time on just trying to get feedback.

Aside from a few friends saying ohh neat, I didn't really get a response. Indie games aren't really billion dollar prospects...

Network effects though

same here

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