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Comment by robocat | Hacker News Reader

Firstly, if your prior is that every previous startup failed, what does that say about your future chances of success?

Secondly, all the returns for YC are concentrated in a few companies. If you were in a winner then great, otherwise you most likely got $0 for your shares.

4% of YC companies become unicorns. How many startups do you need to work for before you become part of the 4%? That number is not a feasible number of jobs for one lifetime.

The modal return matters far more than the average return because you don't get to choose to be in an outlier.

The first article I checked said that 17 companies had IPOed for YC. Common shares often only get returns from an IPO. How many companies have gone through YC? What's the average number of companies you need to be part of before you get to be in one of the 17?

I'm using YC because the numbers are better for YC than most other VC or startups.

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> Firstly, if your prior is that every previous startup failed, what does that say about your future chances of success?

The prior is the market. It isn't sane to use your own prior experience. (Works both ways -- if your last startup did great, shouldn't assume next will).

> 4% of YC companies become unicorns. How many startups do you need to work for before you become part of the 4%? That number is not a feasible number of jobs for one lifetime.

The bar (and what the model is calculating) is Series A from top VC, not YC Seed funding. That significantly increases odds. Specifically, ~45% YC companies get Series A, so it's more like 10% chance of a YC Series A funded company becoming a unicorn (https://www.lennysnewsletter.com/p/pulling-back-the-curtain-...).

Model is change jobs every 18 months if not booming. A 1 in 10 chance is quite reasonable over a career.

I agree there is an issue with the event being too rare, but you can't just look only at modal returns. 2/3 chance of $0 (the modal return) and 1/3 chance of $10 million profit is still pretty good odds to work with.

> The prior is the market.

What a wierd statement. It matters not how well others do. In a winner takes most market, then only the median outcome matters ($0 usually).

I admit my statement about priors was unclear: I meant that your prior is a previous attempt with a startup. If you have influence and the startup fails then that is a signal about your ability to be successful working with your next startup.

> The bar (and what the model is calculating) is Series A

Common shares still have a median worth of $0 on series A.

> Model is change jobs every 18 months if not booming. A 1 in 10 chance is quite reasonable over a career.

I really doubt that. Someone has some historical stats that would show the truth either way. YC in particular haven't published any stats on median returns. I've only seen them mention average returns (heavily skewed by outlier winners). They have the data but they don't publish the modal return because they are VCs.

Common shares only return value for the rarer big successes. I also strongly suspect that there's a lot of historical bias. VCs play repeated games and are getting better at reducing the value of common shares to $0. It is an adversarial relationship: every dollar that common shares gain is a dollar that preferencial could have had if they played their game better.

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