Y Combinator cuts its pro rata stake and makes later investments case-by-case

Re:Y Combinator cuts its pro rata stake and makes later inve... by new_realist on Thursday April 16, 2020 @10:56PM (#22895799)

YC was always about exploiting the startup mystique by creating a sweat shop of fruit fly startups, some of which will make it big by sheer dumb luck. It’s the index fund of the startup scene, but naive new grads who can’t get audiences with first-tier VC firms still fall for it.

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Re:Y Combinator cuts its pro rata stake and makes later inve... by tomhoward on Friday April 17, 2020 @06:13AM (#22897685)

"Sheer dumb luck" doesn't produce home-run successful companies like Stripe, Airbnb and Twitch.

Companies can get lucky and look successful for a while, but they crash and burn just as fast.

YC only succeeds if they invest in the home-run companies. The lucky, flash-in-the-pan companies don't provide the returns YC needs.

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Re:Y Combinator cuts its pro rata stake and makes later inve... by throwaway2048 on Friday April 17, 2020 @10:24AM (#22899213)

I think OP is saying its "sheer dumb luck" on the part of YC, not so much the successful companies.

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Re:Y Combinator cuts its pro rata stake and makes later inve... by tomhoward on Monday April 20, 2020 @01:54AM (#22921501)

The sentence doesn't read that way, but if that's what they meant, it's just as wrong.

YC's publicly-stated strategy from the very beginning has been to cast an extremely wide net, knowing that most wouldn't amount to much but the outliers would return enough to deliver a huge outcome overall.

And a key part of their strategy has been to be so founder-friendly that most of the promising startups would want to be part of their program.

If you look at the number of "unicorns" that have emerged since 2005, it's remarkable how many went through YC.

It's also notable that basically none of the spectacular boom-then-busts went through YC.

That's not "dumb luck", it's a well-thought-out strategy that has been proven to work extremely well over a decade-and-a-half.

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Re:Y Combinator cuts its pro rata stake and makes later inve... by mikeg8 on Thursday April 16, 2020 @11:03PM (#22895838)

So how many times has your application been rejected?

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Re:Y Combinator cuts its pro rata stake and makes later inve... by gowld on Thursday April 16, 2020 @11:16PM (#22895896)

Have any of the founders that made it big and exited rich turned around and said they feel ripped off by YC?

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Re:Y Combinator cuts its pro rata stake and makes later inve... by skolsuper on Thursday April 16, 2020 @11:43PM (#22896005)

How many lottery winners feel ripped off by the lottery? Not agreeing with the GP comment but your question is just silly

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Re:Y Combinator cuts its pro rata stake and makes later inve... by landon32 on Thursday April 16, 2020 @11:38PM (#22895986)

Ask the ones who didn't make it big too. All my friends and batch mates who have done it have good things to say!

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Re:Y Combinator cuts its pro rata stake and makes later inve... by dannyw on Friday April 17, 2020 @05:07AM (#22897399)

Considering how well index funds perform in practice, even if your description was correct it sounds like a Great Thing.

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