It is NOT a big chunk of equity for startups. If you think it is, you haven't failed enough times to know better. Cause when you fail, you get to keep 100% of nothing.
But we do know the rate at which startups fail. We see that everyday. If you've been involved in startups, you've experienced it. The problem is, your looking at equity as a piece of the pie, trying to keep as much pie to yourself as possible. The relative size of your slice doesn't matter. Its the absolute size of the pie that matters.
Fact is, we all have different risk tolerances. I can tell you to play your pocket aces aggressively, but if you want to slow play them, thats up to you.
I did my best to rationalize with you why the numbers don't matter in the big picture. The best question to ask yourself is: can I create more value than the value of the stake that I give up? If the answers yes, then give up the stake, whatever the number. Most of us believe we'll get at least equal value, and that giving up 5%-10% is worth it. Thats why the numbers mean nothing to us, we don't equate 5% to being a lot because we know our new 95% will be worth more than the previous 100%.
If your company is already doing amazing or you're already some sort of super hot shot, then of course its not a good deal. Jeff Bezos does not need to go through the YC program. But I don't see a bunch of Balmers and Bezos' complaining about the YC terms, I see a bunch of people that need precisely what YC provides.
Right, I simply said that opinion is absurd and flies in the face of the very idea of running a business like YC. And it is a business, right, we agree on that?
And I'm sure there isn't a single successful YC founder that would disagree
Why on earth would a successful YC founder disagree? They've been successful. This is the definition of selection bias.
Wow. I can't believe I have to explain this.
As I already explained in my previous post, this is simply the only truly useful metric, not selection bias. People care about equity after they succeed, not when they fail. No one sits around crying that they wished they had a larger percentage of nothing. In fact, you know what, I bet pg would be willing to make an agreement with you that after you officially close your company he'll gladly give you that 5-10% back, that way you'll be happy either way.
Go and ask any YC founder who is currently successful, whether its chugging along fine or had any form of exit, I don't think you'll find any of them worrying about those percentage points. The ones who've failed clearly don't care and certainly don't ridiculously blame their failure on YC taking too much of their company. Better yet, they're making use of those same connections and opportunities on the next startup they're working on, and for free this time.
You do, because it's silly. By the same token go and ask any founder who did not take YC funding and was successful. People care about equity well before they succeed. Talk to any investor.
Go and ask any YC founder who is currently successful
Explain to me, again, how this is not selection bias?