[tptacek]

By top 10 YC startup standards, Paul Graham's Viaweb success isn't all that interesting either.

But, of course: if the model they're building with YC works, this is the outcome you'd expect. YC wouldn't be very interesting if its outcomes were capped to Viaweb's and Loopt's.

[CptJamesCook]

Paul Graham started Y Combinator, which is a company.

Paul Graham was a borderline founder of Reddit, as well.

[dwaxe]

By YC startup standards again, Reddit isn't a very successful company. The amount of early investment that went into it has certainly paid off, but monetization is a seriously hard problem for them.

[CptJamesCook]

Reddit's last round valued them at $500 million, and it is something like the 25th most visited site on the Internet.

That's a successful company by any standard.

[mbesto]

It might be "successful" (however you define that), but $8.3M in Revenue in 2014 (and an estimated $10M in 2015) on $50M in investment (not including Conde Naste's investment) in a 10 year period for a company valued at $500M and the 25th most visited site, seems like it's under-performing.

[rhizome]

Underperforming relative to what standard?

[mbesto]

Underperforming versus it's competitors. I know of several websites that do 1/1000th of the traffic and have similar, if not better revenue.

[nashashmi]

ROI: the standard of YC

[dsacco]

>>Reddit's last round valued them at $500 million, and it is something like the 25th most visited site on the Internet. That's a successful company by any standard.

I think you're conflating "impressive" and "successful." I would say that based on the numbers you've given, Reddit is an impressive company (it's hard to get any company to that level of private investment and internet fame!), but it's not necessarily a successful company yet.

Being that Reddit's valuation is solely attributable to private investment and not revenue generation (so far), the only sound way to judge whether or not it is a financially successful company is based on its potential return to investors.

By the standards of most VCs in tech, a $500M exit is suboptimal, which will result in either a modest return or just getting their money back. This is not good for a firm's "batting average" when they're trying to beat the SPY with a ten year fund. They need to cover their losses (which, indutry-wide, represents approximately all of their investments), their staff and business continuity costs, their management and performance fees and still beat the market. Modest returns aren't helpful in that regard.

You also have to consider the likelihood that Reddit will transition into a mature business that can exist profitably on its own, without continually receiving significant infusions of cash. If it can't find a way to navigate out of "tech adolescence" it's not really a successful company. The last numbers I read indicated that Reddit has achieved an annual revenue of $8-10M, which is an annual return of >= 2%. Considering that the S&P's average annual return is about 7%, you could earn $10M on $500M by sticking it into an index fund and literally burning the other $25M you would have generated by doing nothing.

[Alupis]

> Reddit's last round valued them at $500 million

> That's a successful company by any standard.

Simply being "valued" at some dollar amount doesn't actually mean success. Revenue and positive net profit mean success...

[Reedx]

What if Reddit is around for 50 years, paying dozens of employees the whole time while never making a net profit. Would that not be a successful company to essentially everyone? (except the investors)

[Alupis]

If all your business does it extract money from investors and deposit it into employee's pockets (and never generates self sustaining revenue, let alone turn profits), I think we'd call that a charity, more than anything.

[kasey_junk]

No. That would be a very unsuccessful company.

[tptacek]

Sam operates YC, which is a company. If the argument is that he lacks operational experience, and YC is a company, you've defeated your own argument.

[nostrademons]

As I read the grandparent, his argument is that YC's business is teaching you how to start a company, not operate one. Thus, it's relevant to prospective customers whether its leaders have experience starting successful companies, not just starting unsuccessful ones or operating successful ones. Eric Schmidt may be one of the best CEOs ever, but if your goal is to start the next Google, you're probably a lot more interested in what Larry Page has to say.

Not saying I agree, BTW - I think that binary startup success has a large skill factor, but the magnitude of that success is largely luck, and that good luck can mask bad practices to a large extent. So in my view, people with relatively minor startup successes like Sam Altman, Paul Buchheit, or Michael Siebel might actually be better coaches than knock-it-out-of-the-park successes like Larry Page, Mark Cuban, or Notch. But don't misrepresent the argument: operational experience running an existing business is very different from experience founding one.

[CptJamesCook]

I was arguing that Paul Graham ought to judged by more than viaweb, not that Sam Altman isn't an excellent president of YC. He has done amazing things with the organization in a short period of time.