Comment by absherwin | Hacker News Reader

Comment by absherwin | Hacker News Reader

Parent Full thread

If this were a one time game you'd be correct. Assuming, he can quickly filter out a significant portion, it's possible to be very involved and have a significant chance of a large exit. This, of course, assumes that he's good at what he does which is an underlying assumption of this whole proposition.

Rationale: Let's assume a home-run rate of about 3% which is my rough estimate of what it is for YC startups. That means that funding 75 startups yields a 90% chance of at least one home run.

Now one might ask how long this will take. If we assume that 50% of the companies can be marked as failures quickly, he will only need to invest substantial time in ~37 companies. If he can focus principally on 3 at a time for a period of 6 months, it will take approximately 6 years to achieve a 90% home run probability. Of course, he'll almost certainly have had some modest successes before then.

Again this is all predicated on hmexx being good at selecting and advising startups. For most people, the odds are much worse.

That's a good argument except it depends on:

(a) one person being able to do the job of the entire YC team.

(b) that person having equivalent relationships with additional capital.

(c) one might make the case that the relationships to capital must be better because ventures are likely to be located further from conventional sources of capital.

50% equity is a lot to give up for two months of effort unless the other co-founder is only expected to put in the initial two months. And if that's the case, why bother?

The entire YC team can advise ~66 startups and they have ~14 people which suggests a person can advise 4-5 startups at a YC-level. It's not quite equivalent since YC has the benefit of multiple perspectives though at the cost of increased coordination.

The truth of b & c are completely dependent on who hmexx is.

YC also has Yuri Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital working with any company which takes a convertible note.

Furthermore, those companies taking the note have a much longer runway than hmexx will provide and will be plugged in to a network of later stage investors.

Finally, each YC company has access to the other companies in its class and the YC alumni...and lots of other things in the valley.

It's logically possible hmexx could approach a similar level of success but it looks unlikely.

YC has those things now. At the beginning it didn't have any of these things, and a few really successful startups emerged from those early days even with YC not having guaranteed follow on funding, not having a large network of alumni and not having the reputation.

I don't think it's fair to compare it to YC. This looks a lot more like something you would do and then take to YC or other investors.

The comparison is the basis for estimating a rate of success relative to resources available to a company entering the OP's program.

If the OP is investing in only one or two companies at a time, then it is practical for him to participate in YC in his role as cofounder. If it's 25 companies, then it is more difficult.

Reply on news.ycombinator.com