
Secondhand Clothing Marketplace Twice Is Putting Up $1M To Acquire YC Companies - noaharc
http://techcrunch.com/2012/10/08/secondhand-clothing-marketplace-twice-is-putting-up-1m-to-acquire-yc-techstars-or-500-startups-backed-companies/
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noaharc
Hey everyone, I'm the co-founder of Twice. Just wanted to add my 2 cents too.

\- @jboggan, agreed. YC knows how to pick em.

\- We're only planning on one acquisition for now.

\- Yep, it's a mix of cash and equity -- we haven't quite finalized all the
details -- and everything will vest (as is standard), but you'll at least be
able to buy a car on day one.

\- The equity is valued based on our Series A valuation, which, unfortunately,
was substantially less than $100 trillion :-)

\- It's definitely an expensive proposition for us, but awesome people make
awesome companies, so we think it's worth it.

More at restartfund.com. Feel free to shoot me an email as well
(noah@liketwice.com)

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jboggan
I can't remember who wrote this, but someone recently was blogging about
YCombinator being the future of the educational and credentialing system.
Stories like this make me believe the author's premise.

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rayiner
How so? YC plays in an industry (internet tech startups) that never cared much
about education and credentialing to begin with.

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Timothee
I think I know what you're saying: times and times again, unknown people with
no diplomas have found success in the tech industry. However that just means
that it's possible to succeed without credentials or education.

But that doesn't mean the industry doesn't care about them. Look at how many
stories mention "founded by ex-Googlers/Facebook", "YC-backed", etc. Sure,
these are just from tech blogs, but if they add it in there it's because the
readership reacts to that information, most often positively.

Besides, I don't think any industry doesn't care about credentials, since at
least someone's reputation is their credential. For example, I don't know much
about John Resig besides the fact that he created jQuery. That fact would open
him many doors. It's not about education, but it's still credentials. Don't
you think YC would instantly back him?

More to the point, I'm totally convinced that adding "YC-backed startup" to
your resume, even if said startup never really went anywhere, is a very strong
credential in a lot of places and I wouldn't be surprised if people use it
that way. I'd even say that I'm sure many YC applications are "YC or nothing"
in that if they don't get in, they won't start a company. It doesn't hurt to
apply but the upside is fantastic: you get access to a great network, media
coverage, some automatic seed money… and that YC stamp you can put on your
resume.

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rayiner
I don't disagree with you. But the post I replied to said YC would replace
traditional credentialing mechanisms. I don't think it necessarily follows,
because YC plays in an industry that didn't care much about traditional
credentialing mechanisms to begin with.

Using things like YC for credentialing depends on the relatively unusual
characteristic of the internet startup industry that you can do "real work" in
the field with no little to no startup capital or association with a big
company. For this reason, software companies have always been impressed by
project credentials. Aside from a short burst when Google was really focusing
on Stanford/Berkeley PhD's, traditional educational credentialing never really
took root in the industry. I have a hard time seeing how things like YC will
replace traditional credentialing mechanisms in other fields. Is Lockheed-
Martin going to look at your jetenginegithub.com account to decide whether to
hire you?

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jboggan
I'm still searching for the blog post I was thinking about; I apologize for
not being able to yet locate it.

The statement about doing "real work" is right on the money for why and how
this experiential model might transfer into other industries and economic
spheres. The aerospace example is rather a wonderful counter-example for those
very reasons. But wherever the ragged red edge of the world is (at the border
where software is eating it) I think that this model of education and
experience will trump existing forms of credentials.

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aresant
Brilliant, brilliant PR that's knocking every corner of the internet.

But the pitch feels a bit dishonest given that the $1m will be "a mixture of
cash and equity"

A mixture could mean a $10k signing bonus and $990k in stock. And then what
type of stock. And then at what valuation. etc.

But still, got to respect the hustle in that pitch.

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gojomo
Hmm, let's say they pay YC their liquidation preference, pay Milner's note,
and give the team a small signing bonus and new salaries for the new mission.

Twice could probably do up to 5 such acqui-hires with $1M cash. It fits nicely
with their second-hand clothing theme, while ensuring some consideration from
any YC team on the verge of liquidating their existing organization.

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netmau5
I'm incredibly curious about how the Twice investors feel about this
allocation of capital.

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twelvedigits
Investment capital is typically used to hire people, so why does it matter how
they go about doing it?

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Julianhearn
Don't yc companies have only a few team members, say three. That $333,333 per
team member. Seems like more money than sense. a good argument not to give
startups much money until they have a profitable business model and just need
money to scale.

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mattmaroon
If I'm reading this correctly, it's $1m they're putting up to acquire "teams",
not "a team". My guess is each team will get much less, which makes me
question the usefulness.

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arbuge
Desperate times call for desperate measures...

...is the Valley still a good place to launch given the enormous expense of
talent there these days? Raise money there but hire remotely now seems like a
better formula.

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Codhisattva
So who's the product now?

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sriramk
Aren't these the Minno guys from Randall Stross's book? Didn't know they had
pivoted.

~~~
noaharc
Yep! Restart Fund is actually partially a product of our pivot. We basically
weren't getting anywhere with micropayments, and we weren't sure where to go
next. We got approached by a few big companies about talent acquisitions, but
we knew we really wanted to be working on something early-stage with a lot of
opportunity for growth. So hopefully if anyone else is in a similar position,
Restart Fund could be another option to consider.

