The Top 7 Startups From Y Combinator’s Winter ’13 Demo Day | Hacker News Reader

The Top 7 Startups From Y Combinator’s Winter ’13 Demo Day

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66 pointsnickfrost59 comments

"If it can sell a $12,000 a year license to just the top 1 percent of the 2 million U.S. e-commerce market, it could start earning $240 million a year and help a new wave of commerce entrepreneurs succeed."

I thought that the 1% fallacy had been busted well and truly by now. Not sure whether this was added by TechCrunch or was in their presentation.

This also ignores reality; the top 500 retailers account for around 75% of the market, the rest make up a really long tail. After the top 1000 or so you're looking at retailers who make around $12,000 in revenue a month. Optimistically you're looking at $6MM a year vs. $240MM.

I'd also worry that this data is more valuable if all your competitors don't have it. If you look at the Amazon Marketplace it's commonly a race to the bottom.

> fter the top 1000 or so you're looking at retailers who make around $12,000 in revenue a month.

From our experience as a CSE, these numbers are way off. There's a lot more than 1000 retailers making a lot more than $12,000 per month, even in smaller markets than the US where not the top 500, but the top 20 or so account for 75% of the (e-commmerce) market. There's a huge number of (more than $12,000/month revenue) brick & mortar stores out there with a humble online presence but whose investments are focused on increasing e-commerce revenue.

This wasn't an instance, as the word "top" should tell you. They merely meant that they're going after that subset of online retailers, not the small ones.

Wow the premise of this company is working off is on very shaky ground! From my days at Procter&Gamble I had the opportunity to talk to a lot of buyers as well as pushing a new sku to market and I don't see this solving the pain points for retailers/buyers.

On a side note, I am currently watching launch conf and these guys are a good example of solving a real problem, within the correct market, http://www.youtube.com/watch?v=HB5-5ee72Ic, It is a good niche in the ecommerce space. Thalmic labs seems like the only true original concept here and the others are just iterations of other startups. It reminds me of when reality shows got popular, put them on an island, put them in a house, reality sports, reality jobs, reality parenting, reality wives .......... It just goes on

That seems so valuable that $12,000/year seems much too little to charge for it.

Curious where that 2 million market size came from. All the estimates I've seen put the US market in the low hundreds of thousands. I've also read something that said only 90k merchants make more then $15k a year.

As disappointed as I am that FlightCar isn't actually a flying car startup, I love the idea. I would love to see the monetization of more of my unused resources in the future. Why does everyone on my street own their own lawn mower? I think this company orchestrated co-op idea is the future of a lot of resource sharing.

I'm amazed they've gotten it off the ground considering all the potential legal/insurance hurdles. I'd use this tomorrow if it were at my home airport.

Flying cars DO exist! :) http://www.terrafugia.com/

"I would love to see the monetization of more of my unused resources in the future."

AirBnB for storage of furniture and household goods?

That's what Sparefoot does.

I'm really surprised not to see Zenefits on this list. We've been working with them for the past few months and they've been absolutely incredible to work with. They also had cheaper quotes for us than SimplyInsured.

I'd be more than happy to chat with anyone else about it, but I can't say enough good things about Parker, Zenefits, and the crew over there.

Just my $.02.

Same. I just started working with them a few weeks ago and they're awesome.

I would speculate that a Techcrunch writer has probably not felt the pain of administering payroll and benefits for a small and medium sized company. Nothing is worse than logging into ADP of Paychex, and that's one of many functions that Zenfits makes suck less.

IMO. A good question to think about is.... will this solution scale with my company? It's not proven that it will.

lower quotes

I'm a big fan of flight-car. Not only you make money renting your car you also save money not paying for parking or a cab! They "killed two birds with one stone" (sorry for the morbid idiom)... They mention in this article that they are tapping into two markets, "airport parking" and "car rental" market but I actually think that a lot of people taking a cab or a Uber could use this service instead.

I'll try it next time I travel...

One thing is not clear to me : does a "valet" pick up my car at the airport of do I have to drop it off at their parking near the airport?

Great to hear you're a fan of our service! Yes, you come to our location ~5min away from the terminal, and we'll have a black car drop you off right at the curb. We're working on a valet option; it's a bit more complicated as it requires infrastructure at the airport itself, but we're working on it.

Thanks for your reply, Valet is definitely the way to go, more glamorous, marketable and convenient. I sent you a private message via linkedin (not sure if it's best way to reach you)

i just signed up today for this thursday at 6AM - will someone be available to drop me off at the airport then? will the parking lot be open also?

Yes! We're open 24/7!

It says you park near the airport then get black car'ed to and from the airport.

I see, it should probably be called a limousine service instead of a Valet service.

I think they should make it an actual valet service though...

It's probably a little harder to implement but it would be so much better... No need to find their location or to worry about the time to travel from their location to the airport and I think it would make the service a little more glamorous :) and much simpler.

Getting paid to get free unlimited airport Valet service. This sounds almost surreal :).

Disclosure : I don't know them or work for them or invested in the company (at least not yet :) )

We did try (and are trying) to make it a true valet service. The barrier here is not the logistical difficulty but rather getting the appropriate permission from the airport to do what we want - which is difficult and possibly cost-prohibitive.

Got it, even without a Valet component I think you guys are onto something great but in the meantime I suggest changing the description and call this part of the service "free limousine ride" or even something more glamorous like a "Chauffeur service". A valet is someone who parks my car not someone who gives me ride.

The best way to manage customer expectations is to under promise and over deliver. When you launch your valet service you can email all your customers to tell them they were upgraded to Valet service for free, you'll delight them instead of deceiving them.

I would be interested to see how TCs top startups from demo day have actually fared over time.

On FlightCar, I would suggest:

First, we have to notice the nature of the customer 'load', e.g., on their shuttle car/bus, front desk, rental operation, etc. That is, this load has peaks and valleys, some fairly predictable based on airline schedules, some based on weather, and some just 'random' things independent of anything in the past available to be used as a predictor.

Second, for such a load, there nevertheless will be a strong effect from the law of large numbers that as the load increases the standard deviation of the load will become a smaller and smaller fraction of the average load. That is, a large load is much more predictable than a small load.

Third, then, for efficiency in staffing, shuttle cars/buses, happy customers, etc. want a large load.

Fourth, notice that the customers who leave their cars are likely residents of the area surrounding the airport. I.e., if Joe lives in Kansas City and flies to Los Angeles, maybe that means he wants to leave his car at the Kansas City location, that is, use the service in Kansas City, but does not much mean he wants to use it in Los Angeles.

Fifth, notice that a location of FlightCar in Kansas City is not in much competition with a competitor in, say, Cleveland. That is, this business is heavily geographically local.

So, net, for a large load, for repeat customers at a location, and to defend against competition at a location, want to concentrate on that location and do well there before moving to another location. So, this business can have a fairly strong geographical barrier to entry. That is, it is basically a local business. So, a 'big national or international rollout' should be delayed in favor of just doing well one city at a time.

Does YC plan to make a financial return on its Watsi investment? If so, how do they plan to do so given that it's a non-profit?

No. The money we gave them was a donation, not an investment in the sense of buying stock.

Do you anticipate having more non-profit startups in YC in the future? Are you curious to see any other specific charity model put to work that we maybe haven't seen before?

Watsi was pretty novel I thought (and wonderfully implemented). You must be very proud of what it was able to accomplish.

Yes, probably. Thanks!

I really like FlightCar in theory, but I'd never actually allow my car to be rented to someone I don't know (and even to some people I DO know). I realize they provide wear/tear and mechanical insurance, but I don't think $10/day in gas money is worth the hassle of potentially having to have my clutch repaired or new brake rotors installed for someone who rides both my clutch and brakes. But maybe this is geared more for someone who buys an econobox and doesn't care?

I doubt they'd LET you rent a manual out. Generally rental places only allow automatics. If you have a special car that you love, probably not great. If you're one of the great majority that buys a Civic/Camry/Focus/etc. then it's not like driving your car takes any special skill.

They actually do rent manual cars: I searched a random day in April and 3 of the 10 cars available are manuals (https://flightcar.com/cars/SFO/2013-04-02%2012:00:00/2013-04...). This seems like a great benefit if you're looking to rent a manual car, since car-rental places don't usually offer them.

Huh! Shows I should look before I speak!

That's very cool. I wouldn't rent my manual though, heh.

No one who's met the Thalmic guys thinks they're going anywhere but up.

My favorite would have to be Watsi, which PG described as YC's first company that’s “intentionally” not-for-profit.

I'm really glad to see YC investing in more health startups. Paul, given the heavy regulations and liabilities, are there any areas of health/medicine that you guys try to steer clear of? You guys have invested in startups doing both EMRs and health insurance, so my guess would be not really.

Not really. The founders are the domain experts. If they're competent and not afraid of some area, we trust their judgment.

I've never seen YC fund a regulated medical device (well, other than IT systems, which are very very loosely regulated vs. something like a stent or ortho screws), let alone a drug company.

My guess would be this is more for capital reasons than legal ones. It is extremely expensive to form a company of either type. I think the standard drug pipeline costs somewhere between 10s of millions to billions of dollars per drug. I'd imagine that the cost for medical device development and approval is similar.

Medical devices are 1-3 years vs. 5-15 years (orphan drugs are actually pretty fast now), and 1-2 orders of magnitude less capital.

Medical devices would be just on the upper bound of what I think YC could do. The right way is probably to do an unregulated "fitness" or "convenience" product, which later has regulated-medical-device functionality. Defer the compliance parts until the product itself is proven.

There are plenty of "small business" ($1-5mm in personal-recourse debt) type medical device entrepreneurs. US and Israel seem to be the two big markets for developing them. Surprisingly, a lot come from people outside the medical professions.

Ah, thanks for that info, I wasn't aware that the time from development to deployment was that low now.

There are ways to fast-track in the US and other countries.

A medical device which had applicability to the military (specifically, IEDs, TBI, PTSD, eye/hearing protection or remediation of damage, traumatic amputations, or prosthetics) would largely avoid the FDA, too. There is going to be so much money in improving the lives of wounded veterans from Iraq/Afghanistan for the next 50 years, and it's going to be one of those cases where money you earn is also related to a societal benefit.

If I were in biotech/biomed or robotics, that'd be what I'd want to do; the only comparable-scale problems are reducing cost of care for everyone and dealing with an increasingly elderly population.

For medical devices that are based on modern mobile platforms, the average FDA clearance time is down to 67 days. It's not nearly as capital-intensive as it used to be and there are going to be plenty of predicate devices to base your filings on.

The ubiquitous computing plus sensor environment is making healthcare hardware startups the norm—we're seeing more and more applicants in this space at Rock Health. We don't think the FDA process is that onerous, and just published a report outlining the process for entrepreneurs who are new to the space.

Anyone has any rationale why some companies still prefer to remain in stealth mode on demo day? I'm confused by the "ideas are dime a dozen, execution is all that matters", "do not sign NDA" and the fact that in almost every batch of YCs, some companies still remain in stealth mode on demo day.

It's not because YC companies are in stealth, but announcing you're a part of YC is a newsworthy event, and that can be used tactically in coordination with something else. For example, launching a new product or campaign.

Surprised PayTango didn't make the list - seems to be a great way to both reduce fraud and increase convenience.

I'd be interested to know what specific things YC helped Watsi with.

Does anyone have any idea as to the companies that remained in stealth on demo day?

They were good, too. Not particularly different in quality IMO from the ones who launched. There are a lot of different reasons why you might still be in stealth on demo day.

Well they are in stealth... so commenting on them on hacker news or in public forums would go against the whole stealth mode concept PG put in place.

Fair enough. My bad.

What's with all the hype around Watsi? A non profit oriented approach to poverty is doomed to forever be nothing more than a vanity exercise. The scale of resources needed to attack the problems of poverty can only come from two places: governments or capital markets. Historically, governments have shown themselves to not be terribly able in this regard.

They're not trying to fix poverty itself. They're trying to fix the medical problems of people who are poor.

The same criticism applies: attempts to solve the problems (e.g., medical) of poverty in non-scalable ways are futile at best.

There are a lot of people who are economically marginal but potentially rising with the tide, who suffer a medical ailment or other specific setback, and then end up essentially doomed (along with their kids, etc.). I mean, look at the...50% (? I forget the real number) of bankruptcies caused by medical bills in the US, where even poor people are essentially rich.

Solving someone's one-time problem for $500-1000 and letting him and his family get back to growing along with the rest of their economy seems anything but futile.

By your logic, a person should never try to save another person's life, because so many people die that you can't even make a dent.

I wonder if the right charities could get just enough people on their feet that they could start to reform their governments from the inside. Then the big change could come from governments, when they were finally "of the people".

That is such an odd rant and more importantly so far from the mark. We seem to be only at the tip of the iceberg in terms of what can be done with crowdfunding.

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