Strong early growth is a very positive sign. But growth is a funny thing and can be hard to sustain. The true market test may come later... from when you are trying to grow a $50 million dollar business into a $500 million dollar business.

The key word in that sentence is "could", not "will". I'm pretty sure after all these years YC have enough experience and data to identify the "could"'s. But they're still just "could"'s. Doesn't seem "wildly" optimistic to me, just optimistic, based on previous track records.

But a lot can, and poor execution is why they don't.

Let's put it another way. When you say:

>It would be interesting to put together a list of these "good idea, but poor execution" ideas.

I read:

>It would be interesting to put together a list of these "execution plans but poor execution" ideas.

There is absolutely no way to separate out the "good idea" from the "good idea but poor execution" because business is the art of execution.

But maybe I'm crazy.

You can patent entire industries and fundamental advances. The hard part is just choosing what to focus on, that you can actually do in 1860 starting with $1,000,000 and maybe the patent system (though it's probably unfair that you're using a time machine - this is likely quite immoral as you're not the true inventor of anything.)

And then doing it.

In other words: the outcome of the game is about execution. But what you're executing is idea. The two go hand in hand. You have a real chance to become worth 2015$ 1 trillion within the 20 years - or generate a one-million fold return on the million. You can be worth as much as entire continents. But you have to do it right.

For starters, you have to be someone whose brain can ship those technical ideas back to 1860 in one piece. This is quite similar to someone with an idea today. Not everyone qualifies.

Put another way, you could probably make exactly the same amount of money, if not more, with a "back to the future 2" scenario where you had zero ideas, but had a chart of various events that you could wager on or invest based on.

When we look at it from that perspective, it's only execution - can you correctly execute about the information you already have.

Soooo - yeah, it's not a great analogy. In general, having a perfect knowledge of what happens makes for bad analogies.

Why this is a workable analogy is because this really is similar to the position that founders with technical ideas are in. They have this vision that something can more or less work - but even if it does they still have to execute on it. That's my point.

Everything you dictate in this revised game is 100% guaranteed to work, because you're reading it straight out of technical manuals for the scientists who build these things today. But that still doesn't make a company that manufacture these things pop out of thin air. You can transfer a very large part of a $1 trillion in R&D back in time -- the ideas; but you won't suddenly have a company as a result. Someone still has to make it all and sell it all.

As an example, even if Babbage had invented modern transistors, he didn't "almost" create Intel and IBM. These companies as such are quite separate from the idea.

What do you define as "a lot"? What do you define as a "vast majority"?

Luck and timing no doubt play a very important role in addition to simply poor execution. Also even excellent execution doesn't take into account how the market will respond to what you are making or trying to sell which can't always be determined prior to actually going through the motions.

The vast majority will not achieve that goal (you don't need them to, either -- for sustainability, all you need is a few winners), and in the process, I can't help but feel that they're stunting their career, technical, and personal growth by approaching critical period of their lives with the belief that your economic model of the universe applies equally to them.

We try to be up front that they have a high chance of failure. But I truly believe that there is nothing better for their career, technical, and personal growth than doing a startup they're passionate about (we try to filter out the people that want to do a startup for a resume item).

Also, one of the advantage of YC is that if the startup doesn't work out, founders have made a lot of connections in the network and can usually find something interesting to do next.

As I've said before, I think the actual risky path is not pursuing what you really want to do and then spending the rest of your life regretting it.

We added a few people (part-time) raised a little money, but ultimately we couldn't get the product market fit we needed to feel comfortable that we could grow and keep our integrity (we were a financial product). A few weeks ago I shut down the business and I'm about to find something new.

The fact that I lost a year of income is completely irrelevant vs the regret I would have faced had I never made the leap. Even without YC my network has strengthened considerably and I learned more in a year than I thought possible.

I have read a ton, watched all the startup school videos, talked to a lot of founders and tried to understand how to do this well. The fake work problem is real and even while paying extreme attention to it, often times I would waste a few hours doing something that would not increase the probability of success.

Code and talk to customers. It's so, so crucial.

Starting a fast growth company is not for everyone, but for those that want to do it, YC's information is gold. Thanks for everything you guys have put out.

I'm a lot happier having spent 10 years building a sustainable company doing what I really want to do, than I ever was at exciting startups during the v1 .com bubble.

Getting to that point, however, required putting in a lot more than 3 months -- or 3 years -- of backbreaking effort.

Peer pressure once there is no longer there and you can't replicate that easily.

Further, I think nearly every founder who has gone through YC would report that, succeed or fail, they are net-benefited by the experience. Rather than stunting an individual, the exercise of founding a startup is probably one of the best ways to rapidly increase your skill-set over a short time frame.

I would disagree that you should grind away for it on years. If YC is confident that hustle/effort is the problem, they should be hiring engineers directly, pay them market rate, and keep all of the equity in their projects to themselves instead of having founders shoulder the risk.

If it were reasonable, I don't think the value created would be so great.

While I don't disagree with your points on a macro, startups are very specific entities, and their success is contingent upon founders (and team members) who are willing to do unreasonable things. And also be extremely lucky.

Sure, you worked harder than someone who has a boring 9-5, but you're not turning yourself an indentured servant until the end of time. Your only risk is the additional time/effort.

Your chances of success, however, are much higher with more experience and resources at your disposal.

This suggests that creating a business with the intent of not exiting, but retaining and growing it gives better odds. While a more typical small business has its own stressors and certainly can have long hours, in my experience the level of intensity is much more sustainable.

The down side - you're much less likely to walk away with large sums of money. On the up side, you're much more likely to create a sustainable venture that has a lot more success paths than the binary 'get acquired or go public' routes available to vc-funded startups.

[1] pdf - https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

It's no surprise that someone who starts a landscaping or property management company, where the prime thing being sold is hours of labor, would have a higher 5/10 year survival rate than a company selling bits, ads, or other types of digital engagement.

A quick search turned this up:

http://smallbiztrends.com/2012/09/failure-rates-by-sector-th...

This shows all business types following roughly the same trend. 'services' [which would include software and property management] have the lowest 5 yr survival rate at 36% and mining the highest at > 50%.

This is data is from the 2010 census, examining businesses started in 2005 - likely a different methodology than the SBA used. This which probably accounts for the discrepancy from my SBA stats in the original post.

The number of businesses that can be supported in the physical world is dramatically higher than for Internet services. Why? Geographic restriction and franchising.

There are going to be two dozen major cloud hosting companies, and maybe 50-100 smaller players. There are 7,000 frozen yogurt shops.

It would be great to have data on this. How many SMB owners make a few hundreds $K a year, for many years, ending up making a lot more than a very successful/lucky early employee making a couple of $M in one shot after many years. Especially in the software field.

2nd article just links to other articles on fortune which don't have anything to back them up.

So I'd be dubious of those figures.

"Y-Combinator’s success is undeniable: the program has produced 37 start-ups worth over $40 million each in the past five years. In its first six years, 72 percent of Y.C.’s 249 start-ups raised money after Demo Day, and today, the average value of a Y.C.-financed start-up is $22.4 million. However, these statistics also reveal a grimmer reality: 93 percent of the 511 companies accepted by Y-Combinator have failed. Even more alarming, only 3 to 5 percent of the companies that apply to Y-Combinator are even accepted, meaning that only one in every 200 companies that applies to Y.C. eventually succeeds."

Emphasis mine.

[+] http://koltai.co/notebook/the-risky-business-of-entrepreneur...

EDIT: Please disregard this post. Left for historical purposes. sama notes that the stats are inaccurate.

EDIT 2: The citations in that link I mention above are from nytimes and business insider. They might be accurate, if a bit old, but require verification. Treat them appropriately.

Also, he average valuation of all YC startups through w2014 (i.e. with enough time to have raised a first round) is now over $100MM.

- cofounder disputes - market timing - not continuing to find growth

are top 3

Dropbox - Not public, probably not profitable

Airbnb - Not public, might be profitable, lots of legal questions.

Coinbase - Not public, raised $100m+, no idea if it's profitable

Stripe - Not public, raised almost $200m, almost certainly not profitable

Reddit - Acquired by Conde Nast (private), might be profitable.

Zenefits - Not public, probably not profitable, raised ~$500m

Instacart - Not public, not profitable, raised ~$300m

Weebly - Not public, might be profitable

So I'd say their track record isn't great on that front. I don't know of any meaningful ($1bn+) IPOs of YC companies (not to say that they don't exist). The fact that I had no idea what Weebly was until a moment ago probably means it's not one of their success stories. I suspect DropBox will IPO at some point, but after Box's IPO, they have an uphill battle to prove that they won't be the same dud. Coinbase I had forgotten existed, so I'm really curious what their deal is (especially considering their valuation is so high, I wonder if they can support it anymore).

Box is trading at about 6x their forward revenue in valuation, versus cloud industry's 10-12x average, and during the last Dropbox round it was rumored it was valued at 40X its forward revenue.

Meanwhile Box is winning major partnerships and customers left and right and the market still hates it, I really wonder how Dropbox is gonna tell their story considering their vast consumer user base is a liability instead of asset when it comes to profitability.

But how many were successful, in the sense of paying back their investors? The most likely outcome of most VC investments is a "zombie", a company which can pay its own operating systems but is a net loss to investors. The usual VC stats are that about 10% are wins, 20% go bankrupt, and the rest drag on for years in zombie mode.

Sure, but I don't think there have been any studies that find negative returns after 40-50 hours.

If we are optimizing for maximum returns, rather than maximal efficiency, you would advocate for increasing hours worked until the result of one hour of work was zero.

Many activities have diminishing returns after a certain amount of work (oil drilling, distance running, mining bitcoin, etc.), but it doesn't mean that the rational decision is to stop when the point of diminishing returns is reached.

http://www.lostgarden.com/2008/09/rules-of-productivity-pres...

The cited research claims total overall productivity of working 60 hours a week starts showing a deficit to working 40 hour weeks, after about 4 weeks.

That one grind where you kept pushing could keep affecting the productivity of the whole engineering team for the next 2 or 3 years. I've seen it happen. A lot.

I would assume doing strategizing or negotiating when tired could equally have devastating long-term effects on the business side.

Work as long as you want, just don't work tired. It isn't worth it.

In the average case.

People who build billion-dollar businesses are not the average case.

That isn't to say everyone should grind super hard. People should, however, have the self-awareness to recognize whether or not they are capable of high levels of achievement. Few people are.

Being "superhuman" doesn't make you terribly more likely to succeed.

He'll be long gone before Uber fails. They're probably going to dump all of the liability onto the public markets, he'll probably resign to focus on other projects or some such, and leave some MBA schmuck to deal with the mess.

Is it a characteristic of most successful founders that they can make good decisions in high stress situations while sleep deprived?

Sure, but they're killing a lot more people than the docs getting sleep.

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1705824/

"Interns working five or more extended-duration shifts per month reported more attentional failures during lectures, rounds, and clinical activities, including surgery and reported 300% more fatigue-related preventable adverse events resulting in a fatality."

Did you read beyond the first two paragraphs?