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Comment by ecb_penguin | Hacker News Reader

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ecb_penguin

> YC is very similar to a university

No it's not. It's not even remotely comparable.

> There is a small group of companies that create the reputation on which everybody lives

Also called luck. YC investors cannot articulate what made them successful, or else they'd have better results.

Universities have decades of sustained output. They are not comparable.

> you joining some arbitrary YC startup was a bad experience

I am at a YC unicorn. We are one of YC's most successful startups.

> The average performance of a YC company is __phenomenal__

It absolutely is not. It doesn't even beat the SP500. The __vast__ majority of YC companies are unprofitable failures.

You could flip a coin and beat YC.

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You're wrong. YC's returns far exceed the returns of the S&P 500. This is why LP's throw money at YC's funds. And secondly, I've been through YC. It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not. You are correct the vast majority of YC companies are failures. However this does not preclude that the *mean* of YC outcomes is very very good. If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.

> You're wrong

You thought YC was comparable to a university

> This is why LP's throw money at YC's funds

Yeah, we know hedge funds that throw money at things usually beat the SP500.

> It is very apparent after many many group office hours, which startups are likely to be in the 6% unicorn group and which are not

Group office hours and not actual revenue. Proving my point!

> However this does not preclude that the mean of YC outcomes is very very good

It absolutely does, lmao.

> If Bill Gates were in a room with me and my friends the MEAN net worth would be tens of billions of dollars, the median would be less than a $100k.

Yes, one person being successful, the rest failures would skew the results! Way to prove the point I'm making, lmao.

You agreed with his rephrasing of his original assertion

> There is a small group of companies that create the reputation on which everybody lives

>> Also called luck.

Startup skill is a necessary but not sufficient condition for success. You also need luck. I doubt YC would claim otherwise.

Let's say each startup is a planet. Whoever gets hit with the most asteriods wins. Every conscious right decision and technical prowess that constitutes skill increases the size of the planet. The bigger the planet the more likely that more asteriods hit it. But space is a hig place, the largest planet is not guarenteed to have the most asteriod hits. A smaller planet could actually win. So it is with luck.

>YC investors cannot articulate what made them successful, or else they'd have better results.

Again, I doubt YC would contest this. But the power law so far has allowed them to be successful without having to guess correctly who in their pool would become the unicorn.

>You could flip a coin and beat YC

Where are you flipping this coin exactly? Are you flipping a coin in a pool containing all the startups in the world? If that's the case I'd like to see you take that bet. But if you flip a coin on Demo day, I'm sure you can beat some YC partners who additionally invest in a personal capacity.

Garry Tan posted some data recently on performance investing in demo day: https://x.com/garrytan/status/1927946812364574912

These returns outperform the S&P. Maybe these aren’t typical, but it’s pretty far from “you could flip a coin and beat YC”

You need to read the fine print on the slide you linked. They carefully chose a cohort to show these numbers. It only apply to investors that backed 3 or more companies during a demo day. And, as you can see, the more YC drinks it's kool-aide, the worse it performs. Even years when the market was gangbusters, YC still saw decreased returns year over year.

It's an odd metric to choose, which makes me believe it's one of the few positive ones.

Also, as I've said, Ponzi schemes work great for the early people. You give $50k to an unprofitable company and convince someone else to give them $1m. You get your investment back plus a little bit, and you leave someone else holding the bag of an unprofitable company.

> These returns outperform the S&P.

These very specifically chosen returns outperform the S&P :). That's why it's mostly kids that go through YC.

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