[quaquaqua1]

``` “In addition, processing hundreds of follow-on rounds per year has created significant operational complexities for YC that we did not anticipate. Said simply, investing in every round for every YC company requires more capital than we want to raise and manage. We always tell startups to stay small and manage their budgets carefully. In this instance, we failed to follow our own advice.” ```

Is picking winners difficult? Or is it that the economy has a hard cap on how many winners will occur every year?

[goatherders]

Both. YC batches are littered with companies that disappeared. That's not a criticism of YC, that's reality.

[quaquaqua1]

I completely agree. But I am curious as to why the economy only allows a certain number of winners. As in, why do 90% fail?

Additionally, if you fund 100% of companies equally, if 1 becomes FB and 99 become nothing, dont the winnings from FB pay for the losses of the 99?

[jfim]

There are multiple reasons why startups fail. Some of them are:

- Product-market fit: Is there demand for our product? Is the timing for our product right?

- Customer acquisition: How can we make customers know that our product exists? How much does it cost to acquire a new customer (through ads, etc.)?

- Market size and profitability: Is the demand and profitability for our product sufficient to sustain a business?

- Building a viable product within the constraints of the runway capital (Uber for dog walking is not as capital intensive as building a self driving car fleet, for example)

[threeseed]

1) It has nothing to do with the economy and everything to do with whether people love your product and you have product-market fit. Getting to that point takes time and mostly companies run out of money before they get there.

2) Yes that is how VC works.

[quaquaqua1]

With regard to 2), if that's indeed how VC works, then YC just needs to fund every company. There's no need to do vetting if you are guaranteed to fund the next FB and the earnings will outweigh all operational expenditure on non-FBs.

1) People would definitely love a machine that prints gourmet food for them in their house, but it's really difficult to do that. It's so difficult that the amount of money it would take to make such a machine is pronably greater than all of the money in the world. This is what I mean by "the economy has a cap on the number of new ideas that can be funded"

[PopeDotNinja]

Picking winners in nearly impossible. If it were easy, raising money would be easy, as investors would be able to see a winner before they'd won.