[bovik]

If you're actually willing to engage in this discussion, then here's your answer. YC and (other "incubators" like it) are basically opportunistically exploiting cheap/free labor of thousands of naive (mostly) young developers to play the lotto on the cheap. You throw in a laughably small amount of money for a good chunk of equity, encourage your young charges to go forth on a steady diet of ramen noodles and ketchup -- burning through 100 hour weeks to experiment with 100's of different(mostly bullshit) trendy catchwords of the day.You only need to get lucky to be able to flip a few of these companies to the next level of VC's or acquirers to make back your money multiple times over. Rest of the blood, sweat, lost sleep and trashed health of the thousand of other fools that failed is no sweat off your back.

 Care to publish aggregate statistics on the percentage of yc backed startups became profitable businesses compared to rest of the industry?

EDIT: Apparently I was mistaken. He's not actually looking to engage in a real discussion of yc's business model.

[pg]

When you talk about flipping a company to VCs, it tells me you know nothing about this business. VCs don't acquire the stock of earlier investors; they just come in later and dilute you. But for the sake of completeness I'll address your point about acquirers. Stock in a company like Dropbox or Airbnb is worth literally a thousand times more than stock in a company that gets acquired early. If there is one type of company that generates 1000x higher returns than another, why would we spend our time focusing on the latter?

[bovik]

PG, I'm glad to see you're at least willing to engage in the discussion.

The main point was not what end-point you're aiming (large exits, which btw, are yet to be realized for either airbnb or dropbox) or merely progressively higher valuations in further rounds of funding (let's not argue over how those are beneficial to earlier investors, shall we.)

The point was that hordes of fresh graduates are working their asses off for peanuts with minuscule probability of making up for lost time and income. (That's not even including possible losses to health and any conception of what the real world looks like). Mass incubators like yc and it's ilk are rolling the dice and the invested amounts are so tiny that the only substantial losses are those incurred by the founders.

The counter-argument of course is that the founders are adults and are entering into these agreements of their own volition. That's where the whole issue of cult-like mentality and the callow youth of most of these founders comes into play. The asymmetry in knowledge and power between these founders and investors is vast.

That's why I cheer the writer of the original post for bringing the ridiculousness of the whole situation into the open. Lord knows techcrunch and other tabloids like it are not going to publish anything like that. And that's why you personally applying the kill switch on that post is so distasteful.

[zaidf]

What are the so-called "substantial losses" that you are talking about? May be you have some insider info that I don't but in my intimate conversations with dozens of fellow YC founders, I haven't run into anyone who wished they didn't do YC. I don't think you are being evil here but rather just have a belief that isn't based in reality.

Same thing for suggesting YC is all about freshly minted grads. A significant percentage of founders are in their late 20s and older making that assumption of yours inaccurate.

Frankly your post is offensive for painting founders as brainwashed dudes making terrible life decisions as they go about joining this imaginary cult. Do you really believe this?

[ryanx435]

you will probably be interested in this article that appeared ok Forbes awhile ago, entrepreneurs are the new labor:

www.forbes.com/sites/venkateshrao/2012/09/03/entrepreneurs-are-the-new-labor-part-i/

its a long read, but worth it. it basically covers and expounded.upon the ideas you presented in your comment, that the incubators are exploiting the entrepreneurs

[bovik]

Just read Parts I and II of that article. Really interesting perspective. I've been talking to some recent YC "grads" in the valley and the amount of brainwashing they seem to have undergone is just shocking. And yet, so many more keep flocking to them year after year like lambs to the slaughter. Amazing.

[ryanx435]

in theory, what YC does is good for our society. they provide mentorship and opportunity to new companies and help lead them to success. I have no problem whatsoever with YC's existence nor with the people they fund. I just don't want to be involved. they don't offer very much money at alli and they get too much influence and power over the start up for my tastes. I realized by pg's response that it wasn't for me. I wrote up why, and posted it. I was honestly not expecting him to respond.

but than again I also agree with the original articles premise that there is another tech bubble of stupid companies and it is about to go bust. and I think YC actively contributes to the problem by funding companies with terrible ideas. they want their funded companies to be aquihires because than they get their return. YC doesn't care if the business is sustainable or not as long as it gets bought. that's their schtick: they do the training instead of the universities.

this will affect me if and when I decide to get outside funding because investors won't be willing to invest as much. it will be exactly like after the internet bubble where there is no market to sell investors on the company. that is what concerns me. I'm not looking for an aquihire. I'm not looking for an exit. I'm looking to build a sustainable company that brings value to my customers.

note: not trolling you, these are my actual concerns.

[seiji]

the amount of brainwashing

I'd love to hear you expand on that (specific cases? the progression of delusion? were they crazy to start out?).

[bovik]

I won't give out specific names of course. The brainwashing is mostly around the cult of personality around pg. Everything he writes or espouses becomes gospel. Now, we all know he can write intelligently and with research on some things he knows well. But he can also sound equally confident spouting utter bullshit about stuff he knows nothing about (e.g. http://www.idlewords.com/2005/04/dabblers_and_blowhards.htm ). Listening to ultra confident blowhards and separating bullshit from reality is a skill people tend to learn as they grow into the adult world.

But these are mostly people in their early to mid twenties who have little to no actual experience in the real world. They seem to believe startups and entrepreneurship was invented by this one man. The fact that after almost 200 investments, there are a sum total of two possibly viable businesses that may end up coming out of this enterprise seems to have no effect on that conviction (and one of them (airbnb) is teetering really close to edge of being unsustainable (pending the question of legal liabilities of renters as well city ordinances etc.)).

It really is a cult of personality with all connotations of the word "cult" coming into play.

[YuriNiyazov]

I don't understand why you are here, on a site run by pg, insulting him and yc.