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by jjmarr·2y ago·view on hn ↗
Let's just assume the facts are as he says in the most charitable interpretation. You either have a 1.25% chance of a $1 billion company and a 98.75% chance of a $0 billion company. The expected value of a 1.25% chance of $1 billion is $12.5 million, so treat that as an (unrealistic) lower bound on your company's valuation.

There's no real explanation of why that isn't a good deal for an entrepreneur. You don't get to keep all that, but $500,000 dollars from YC for a 7-10% stake of companies (as others have said) with an expected value of $12.5 million is a deal that gives YC a maximum of $725,000 in value, given that 10% of $12.5 million is $1.25 million.

The question to ask is whether being part of YC adds $725k in value to your company; i.e., is it the cause of those startups being worth that much? Based on what others are saying in the thread, this seems to be true, but I'd love to know if people who were a part of YC felt like the assistance was worth that much.

My point is that it's difficult to believe that the average wealth of the entrepreneur is worse off by joining YCombinator even assuming all of the facts proposed in the thread are true.

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YC adds almost no value. They capture all of the startups that would have been founded anyway (and many that wouldn't, because they are idiotic ideas) and tax them. Then, inevitably, some of those hit it big and YC takes the credit. Does the doctor that delivered Steve Jobs at the hospital get to claim credit for Apple? They don't. But YC does. They're a doctor that has talked their way into delivering all the babies in the city, and taking a tax on their future income as adults.

The average wealth of the entrepreneur is actually maximized by having them go into a career in FAANG and not launching a startup at all--or launching a startup from a stronger position with a real VC that values their company at more than $7M. A $7M valuation in today's tech world is an absolute joke. It's scandalous the exploitation that's going on here.

> YC adds almost no value

For some definition of "almost"

I am not in the market, but if I were 22 in San Fran doing what I was doing when I was 22 in Auckland, I can see tonnes of value

Networking and mentoring mainly