Comment by barce | Hacker News Reader

Comment by barce | Hacker News Reader

I still think a lottery ticket is still has far worse ROI, than the YCombinator application and startup process.

Let's say you pony up rent for your YCombinator startup and are paying about $2400 / month + utilities for 3 months. Let's say you get your food & other necessities costs to $80 / week.

That's an $8160 investment.

What you get back are the weekly dinners with great speakers. The connections you make should be worth at least $150k if your startup fails and you have to use that connection to get a job. I'm assuming a markup in your value as an employee for just getting into YCombinator.

$8160 and you can make 20% - 35% more than your peers if it fails.

$8160 in lottery tickets will pretty much get you zero if you fail.

You're forgetting the opportunity cost of forgoing the salary of working for an existing company. Call that 10k/month for three months, and now your costs are closer to 40k.

You still end up ahead since you can day trade yourself into a higher income bracket.

It is my impression[0] that a YCombinator startup is a cut above other startups along a variety of criteria (they receive more support in general, they are pre-vetted). It may be perfectly reasonable[1] that forming a startup has lower expected value than a lottery ticket, but conditioned on acceptance to YCombinator, a startup has positive expectation.

[0] For reference I am not currently in SF/Silicon Valley, but my brother is, as are many of my friends.

[1] I present this as a hypothetical, I have not thought about this enough to have an estimation of the value of a `generic' startup.

If you remove tail returns and just at the financial outcomes, the roi of YC and the roi of a lottery ticket start looking very similar.

The labor market signal (plus network) is another thing entirely, YC alum is probably more valuable than Harvard or MIT in certain circles so if you just look at it as an $8k credentialing, it is an easy thing to justify.

For a first time YC founder, you get both. For a second time YC founder you would only have the financial return traits.

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