[ltnately]

Directly from link

To win, I have to be right on all three propositions.

1) The top 6 US companies at http://fortune.com/2015/01/22/the-age-of-unicorns/ (Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX) are currently worth just over $100B. I am leaving out Snapchat because I couldn’t get verification of its valuation. Proposition 1: On January 1st, 2020, these companies will be worth at least $200B in aggregate.

2) Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker, and Weebly are a selection of mid-stage YC companies currently worth less than $9B in aggregate. Proposition 2: On January 1st, 2020, they will be worth at least $27B in aggregate.

3) Proposition 3: The current YC Winter 2015 batch—currently worth something that rounds down to $0—will be worth at least $3B on Jan 1st, 2020.

[tacos]

Ironically a basic statistics class indicates that cherry picking companies that deliver 2x, 3x and ... whatever the fuck that third pick is ... as a guaranteed return over 5 years is indicative of the overenthusiastic hype that historically surrounds bubble valuations.

#3 is a die roll. #2 is the killer. And I might take the bet on just #1.

[dvanduzer]

#3 isn't just a die roll, it's the entire basis of early stage investment. If he loses on #3, YC will either be a shadow of its former self, or Sam will have given himself enough rope to hang himself (as president of YC).

This is exactly the sort of thing that everyone making press about investment capital should be willing to do. Sam isn't making a bet about money here, he's making a bet about his reputation as a forecaster/analyst.

[fleitz]

That's not true, YC could just have a bad batch, or the economy could be in a serious downturn in 2020.

A number of reasonably likely events could cause #3 to be false without any catastrophic loss to YC.

[tacos]

Exactly. I admire Sam's balls but the externalities here are immense. The greatest financial mind of our time built Berkshire Hathaway to $350B over 50 years. GE is worth $250B. Microsoft $340B.

To believe Sam's motley list of companies can either hold onto valuations approaching those "real" companies for five more years, let alone actually generate viable earnings and go public (even at goofy P/E multiples) in line with what GE, Microsoft, or Buffett's candy, ketchup and mac'n'cheese subsidiaries alone make seems ... optimistic at best.

If he loses, might I suggest the book title? "Oops! Brands Aren't Businesses!" by Samuel H. Altman.

[icebraining]

It's $200B on aggregate, so they just need to be worth $33.3B on average. That's more on the level of Adobe than Microsoft.

[tacos]

I understand the bet. I do not think you understand what "averaging $33B" means.

For instance Rubbermaid simply owns numerous home, commercial and healthcare markets. They make everything from saws to Sharpies. They doubled their market cap in the last five years. 20,000 employees (more than anyone on that list) $6 billion in revenue (ditto) P/E ratio of 30 ... and they're worth $10B.

[mbreese]

Or, 5 years isn't that long from now... for comparison (from CrunchBase) Dropbox was part of the Summer 2007 batch. So, in the context of this bet, they would have had to have had a valuation of 3B in 2012 (assuming the rest of the batch failed).

As of Jan 1, 2012, their most recent funding would have been a Series B round for $250M at ~ $4B. So, in this case, Sam would have won.

In my opinion, #3 is a little unfair, just because there are significantly more startups in these YC batches than in years past. I wouldn't be surprised if the entire W15 batch hit $3B in total valuation by the end of the year. There are roughly 100 in this batch, so they would only need an average of $30M in valuation for Sam to win #3.

[NhanH]

Somehow I interpret the bet as #1 being the most risky to win.

It seems like there are still chance that Pinterest, Dropbox and SpaceX still might ... fold, isn't it?

[jumby]

(3) will be the clincher for this guy.

[prawn]

There are a lot of potential home runs in the current batch IMO - medical startups, etc. If someone like Stripe faces too much competition (as I'm certain Instacart will), I think (2) is his best option. Most of the rest of those names don't scream megacorp to me, but then I imagine Sam is privy to the interesting future plans of all of them.