This also struck me. It seems as though YC gives you $120K, advice, contacts and exposure. Obviously it's worth $120K plus whatever the other happens to be worth. They take equity from the company in return.
Paypal offers a necessary service to a company (payment). They charge a service fee.
I'm not going to say YC isn't useful or worth the equity for some people. However, you've got think that a $120K loan is pretty damn cheap these days. Also, I pay my accountant a few thousand a year and he gives me incredible business advice. Possibly I'm just lucky, but I suspect that young founders do not really understand the options they have open to them for growing a business.
I view my accountant as a necessary business expense. I even get to write off the money I pay him from my income. That's more like Paypal. Similarly, on a loan, I have to pay interest. That's a cost (and possibly necessary expense). If I need to pay a consultant to help me improve my image or make contacts, that's a cost.
Giving away part of your company for a service? Not at all like Paypal :-) Personally, I'd rather pay an expense than give up part of my company. Obviously depends on the situation, though.
It's like how when PayPal is processing your payments and they connect you with really successful people who take in the same kind of payments so you can learn from them and get their advice, and then connect you with other people who just take in a lot of payments in general for their advice too.
Paypal offers a necessary service to a company (payment). They charge a service fee.
I'm not going to say YC isn't useful or worth the equity for some people. However, you've got think that a $120K loan is pretty damn cheap these days. Also, I pay my accountant a few thousand a year and he gives me incredible business advice. Possibly I'm just lucky, but I suspect that young founders do not really understand the options they have open to them for growing a business.
I view my accountant as a necessary business expense. I even get to write off the money I pay him from my income. That's more like Paypal. Similarly, on a loan, I have to pay interest. That's a cost (and possibly necessary expense). If I need to pay a consultant to help me improve my image or make contacts, that's a cost.
Giving away part of your company for a service? Not at all like Paypal :-) Personally, I'd rather pay an expense than give up part of my company. Obviously depends on the situation, though.