| Reading this, I'm struck by a few things that I believe are telling about the tech sector's culture. The paternalistic/maternalistic attitude of Paul and Jessica is more than a little cloying. Frankly, it seems like they enjoyed the position of power granted them by the cash in their wallets. And second, the focus on dysfunctional behavior as an aberration instead of the norm. See how the term 'dysfunction' is used to describe Yishan's departure, Twitter's board, Reddit in general. Things rarely go 'professionally' when humans are concerned; I'd argue, in fact, that Yishan found a quite professional avenue to quit, in that it did not become a shouting match over a core issue. I think it a mark of corporatism to adhere strongly to the facade of professionalism and punish or otherwise shame those that prove it a lie. Meanwhile, cultural leaders within the Valley pick favorites and call them "Muffins" but are, presently, secure from social fallout. There is an in crowd and an out crowd, in other words. |
In a setting where ideas change rapidly and companies start overnight, having a hunch about people even through failure might be completely justified. "You've produced garbage so far, but I'm confident that you'll make something good" is much more reasonable in the startup world than it is in, say, large-scale retail. The investment that PG makes in a prospect is really, really low; if "Muffin" doesn't produce, it doesn't really matter to him.
If this paternalistic attitude didn't work, Y Combinator wouldn't be doing it. To use a sports metaphor, they're drafting a football team rather than a baseball team. Baseball players can be studied statistically because the college game is similar enough to the professional game that you can study prior data. In contrast, football is a crapshoot; the college game is so different from the pro game that there's barely a correlation at all between good college players and good pro players. So is choosing startups to fund.
If the Muffins end up making money, that's a great indication that PG & Friends having an "in crowd" is producing results.
If they're incorrect, they're opening the door for a more rational company to do the exact same job as them without Muffins and beat them.