[robbiep]

Definitely looks pretty bad - but on the other hand, an accelerator not making any bets in crypto is not a sensible accelerator. You need to make bets everywhere and hopefully some stick. The other side of that is some don’t stick, and some go proper pear shaped. Make enough bets, it has to happen.

I’ve got no idea what their original pitch is, I certainly wouldn’t back a crypto startup that ostensibly aims to do something like what it looks like they tried to do, but if I was making 300 bets a couple times a year I’d be silly not to do something in the space.

Whether a ycombinator seal of approval lead to investment which lead to consumers getting fleeced and culpability in that situation, I don’t know. It’s crypto. If you’re silly enough to think it’s a safe investment, you’re blind. A company can also say a lot of things differently from first pitch to accepting millions from consumers. As an investor with 10%ish equity, you’ve got some sway, but you don’t have much sway. And who is to say their bet isn’t the right one.

A stain, but I don’t know about righteous indignation, I don’t know how much culpability transfers back to yc… but I don’t feel it’s a whole lot

[blitzar]

> not making any bets in crypto is not a sensible accelerator. You need to make bets everywhere and hopefully some stick.

Thats not how it works; VC's are allowed to pass on anything they want, and it turns out they dont cut a fat cheque to every idiot who knocks on the door.

[gitfan86]

And how many Porn companies has YC funded? Zero as far as I know, is that because porn related companies have zero chance of being profitable? Or is it that they take a moral stance against that industry?

[blitzar]

Nor as far as I know are they in the asphalt industry, likely because they are focused on tech. I am sure some people out there find asphalt a moral issue (I personally dont) but I suspect they are not spraying some funding around in that industry because it isnt really of interest to them or their investors.

[gitfan86]

Implying that the Porn industry has no overlap with Tech is a stretch. Over 30% of internet traffic is adult content.

[blitzar]

I implied nothing of the sort. Porn is 99% tech these days. Ashpalt laying is 1% tech.

[Scoundreller]

Lots of asphalt tech opportunity, just not so much electronic tech. And timelines are long.

I’m disappointed that we still do cold patches instead of heating the surrounding asphalt when filling potholes. That’s where I’d transfer soldering technology into asphalt.

[anamax]

YC only invests in companies that have a reasonable chance of having an exit.

Porn companies don't have exits.

[ulzeraj]

The problem here is not a bet on crypto but a company that basically went "oh hey sorry too bad the USD displayed on your account is actually UST. K thx bye".

[robbiep]

I think I cover that. Company does not equal backer. Bad behaviour by company is not the responsibility of investors, it’s the responsibility of the board, the exec, and ultimately the courts. Investors can shape and influence, investors hopefully provide a filter and feedback, but everyone can get swept up in a good story. Company should be caned. Yc? I’ve already said what I feel.

[pmyteh]

It's not the legal responsibility of the investors, because society has given them limited liability. It may or may not be their moral responsibility, depending on what they knew, encouraged, or whatever. And the usual payoff for morally-shady but legally-blameless behaviour is reputational damage.

[formerkrogemp]

Y-Combinator exists to make Paul Graham and it's investors money. Morality is not money. Y-Combinator doesn't exist to make morality for its investors.

[UncleMeat]

Maybe it'd be better if our society reprioritized so "these organizations are all amoral actors who exist for no other purpose except to fatten the wallets of their owners" isn't the assumed norm.

[formerkrogemp]

Perhaps the sarcasm here was not understood? Corporations should exist to serve people, broadly. Not the other way around. People over profit. We should all strive to be kinder as well where possible.

[chitowneats]

Yes, of course. They should exist for the purpose of advancing things that u/UncleMeat finds important instead. \s

[etrautmann]

This is not a good argument. Of course companies can optimize for multiple objectives and to pretend that any company doesn’t is willfully blinding oneself to reality.

[IMTDb]

> Definitely looks pretty bad - but on the other hand, an accelerator not making any bets in crypto is not a sensible accelerator.

That's why we have the concept of "due diligence". YC is absolutely allowed to make bets in the crypto world; but they have a brand name and a reputation of serious investors. I know that when I see the YC logo on a new product I discover, it serves as a signal. And having a fraud company being allowed to use the YC brand on their website, because YC wanted to work with them and gave them money to allow them to grow (meaning: "cheat on more people") is definitely a stain on their track record

[unicornmama]

Social-proof does not replace due diligence. The Theranos investors whose money followed big name investors paid dearly for this lesson.

[CPLX]

If you’re financially backing and providing direct hands on strategic guidance to an active and blatant scheme to commit securities fraud then you are doing something you should not be doing.

The previous sentence isn’t and shouldn’t be particularly controversial.

[jsjohnst]

> If you’re financially backing and providing direct hands on strategic guidance to an active and blatant scheme to commit securities fraud then you are doing something you should not be doing.

As you wrote it as a generic hypothetical, no, it’s not really controversial to me. If however you are meaning to say it as a passive aggressive way to accuse YC, yeah, it very much is controversial.

To not be controversial (for me anyway), you’d need to meet some burden of proof with evidence. How much would be enough to meet that burden? I’m not sure at this moment, but as you’ve presented zero that I’ve seen, I think “more than zero” is a fair starting point.

[CPLX]

By definition, a “YC Company” is given hundreds of thousands of dollars and direct hands on strategic advice on how to run the company. That’s the meaning of the concept.

The company in question has blatant securities fraud as their core business model.

QED

Here’s a logical construct in return. When people you like do unethical things they are still unethical.

[jsjohnst]

I feel like there’s a lot of leaps in your “logical construct” there.

First and foremost, did YC approve of this “core business model”? Sure, the founders got into YC, but did they pivot during the program (frequently happens)? And while YC may be on the board, they don’t have controlling interest either.

So yeah, there’s a lot of scenarios where people “you know” and/or “partner with” do unethical things, but that fact alone doesn’t mean you are unethical. You very well could be, but guilt by association isn’t enough proof here imho.

[webmaven]

It isn't particularly controversial, but who is to say that the founders in question took the advice being given, or even showed up for the feedback sessions? Has anyone ever been kicked out of YC?

Given the number of companies that have gone through the program, I'd be surprised if there wasn't at least one that completely ignored everything the founders didn't want to hear or do.

[nradov]

Yes companies have been kicked out of YC. I don't know whether these allegations are true and have no opinion on which party was in the right here.

"Dark CEO Paul Biggar said YC booting him for tweeting about internal posts on skipping COVID-19 vaccine lines.

Prolific CEO Katia Damer said she was cut after calling out misogyny by YC founders.“

https://www.businessinsider.com/ycombinator-katia-damer-paul...

https://techcrunch.com/2021/06/09/does-what-happens-at-yc-st...

https://news.ycombinator.com/item?id=27399581

[webmaven]

Hmm. Both those cases seem to be more along the lines of "said/posted things that made YC look bad" rather than "kicked out for ghosting their mentor" or "kicked out for scamming their users"

[diggernet]

Scamming their users makes YC look bad. Seems like a good reason to boot them.

[webmaven]

Eh.

Scamming their users mostly makes the Founders look bad.

NOT kicking them out is what would make YC look bad. I wouldn't expect it to happen immediately, though, if YC does an internal investigation to see whether any principals, mentors, or advisors are implicated in the unethical behavior as well, whether by commission (giving unethical advice) or omissions (such as failing to raise red flags).

YCs public track record in terms of self-reflection on possible errors in judgement isn't particularly encouraging though. From the outside the org seems to focus on evolutionary changes though certainly at a fairly rapid clip (which means that cultural norms are hard to establish and maintain, giving the "carriers" of non-normative behavior opportunities to wriggle around avoiding scrutiny. For new extensions of the program YC favors rapid experimentation and iteration, which may fail to establish compatible norms depending on who is leading the effort.

It is worth contrasting one of the more stable outposts for YC culture, this very Hacker News site. YC has a very strong policy regarding not just avoiding a conflict of interest when it comes to moderation of posts critical of YC, but moderators have been instructed to moderate those posts and discussions considerably less than would otherwise be indicated, to avoid even the appearance of a conflict of interest or self-dealing. That's a pretty strong commitment, and one that can be difficult to live up to (avoiding the appearance of a conflict of interest is a standard that judges are supposed to be held to, but not lawyers, for example). YC may or may not have always lived up to the spirit of that commitment (only insiders can know for sure), but it is reasonably plain that an ongoing effort is being made to live up to the letter of that commitment. Kudos to pg for establishing it early, and to dang for keeping it going.

The point I'm arriving at is that establishing and maintaining a cultural reference point like that is very difficult in an organization that is growing, changing, and sending out strange offshoots without a lot of explicit (even occasionally public) communication about similar bright lines and thou-shalt-nots, and outside of the HN context, we really haven't seen evidence for that.

[cuteboy19]

""No one could have predicted that risk free 20% apy project would be a scam""