
Updates from YC - peteratt
https://blog.ycombinator.com/updates-from-yc/
======
kaycebasques
> The current total market capitalization of YC companies is around $150
> billion. The YC network now has over 4,000 alumni and 1,900 companies, and
> it has become a reliable source of advice, customers, friendship, and
> support for YC founders.

A question for people more savvy about VC than me. What's your ballpark
estimate on YC's bottom line? They put $150K at least into each company,
right? So that's $285M right there? But some of those are non-profits, in
which case they only put $100K into the company. And then they get 7% of each
company, which would theoretically be $10.5B? $150B * 0.07 = $10.5B (just
removing non-profits from the equation). But accounting for dilution, it would
probably be less than 7% ownership? In other words, I guess we'd need an
estimate of how much YC actually owns in its overall portfolio.

Forgive me if my numbers are wildly off or naive. VC isn't my domain.

~~~
tim333
I think its about 3% as the 7% gets diluted so approx $4.5bn for the assets.
Of course a lot of that is illiquid and unrealised. The GAAP bottom line would
be a lot less and not give a very accurate picture as it wouldn't include most
of the gains.

~~~
calgaryeng
On the contrary - GAAP earnings give the __most __accurate picture of cold
hard cash. That is the reason they exist , and securities regulators are
specific about its definition.

Paper gains are notoriously easy to stretch.

~~~
tim333
Maybe but say YC put $20k into Airbnb for a stake now worth $1bn and $80k into
4 other statups that went bust. GAAP would show a net loss of $80k which would
not reflect very accurately how they were doing. GAAP has been designed more
to provide a consistent way of calculating corporate income tax than to
accurately show how a company is doing.

~~~
lugg
You're welcome to suggest a more accurate way of consistently accounting
income tax requirements.

~~~
hn_throwaway_99
That seems like an ungenerous interpretation of the parent's comment. I didn't
take that comment to mean that GAAP is not a good way to calculate income tax,
but that it's not a good way to judge the true financial prospects of a
company.

~~~
lugg
I took it the same way. If there is a better way to judge the true financial
prospects of a company we should be taxing them accordingly.

My point was that GAAP is probably the best we're going to do because of the
consistency problems.

The moment you start applying special rules or caveats per company you stop
being able to compare companies properly as an investor, at which point the
measure becomes useless as a talking point as well as being useless for tax
calculations.

My original post was framed against tax because it doesn't really make a
difference. If the new method is good enough for comparison between companies
it's good enough to replace GAAP - unless it's not.

~~~
hn_throwaway_99
I don't agree with this sentence at all, "If there is a better way to judge
the true financial prospects of a company we should be taxing them
accordingly."

The main thing investors want are some measures that are reasonably forward
looking, with the caveat that some of those forward-looking measures will of
course be inaccurate when the future comes.

Taxes, on the other hand, should be mostly past looking, taking into account
events that are fully settled and guaranteed.

If, as an investor, you're only examining trailing metrics, you're going to be
a pretty horrible investor.

------
shafyy
I'm a bit worried that we might be seeing "peak YC".

Clearly, Sam Altman and Michael Seibel are the most influential and impactful
people that drive YC forward. Sam's on the way out, and I wouldn't be
surprised if Michael also leaves in 1-2 years. Is YC going to be able to
innovate without them?

Furthermore, I would suggest that YC is becoming more risk-averse as it grows
(as any organization does). Will that mean worse decision making?

Another point is that the average age of YC partners is growing. Will that
hinder them to spot and understand new trends, and pick the right companies?

Now, this is an outside-view analysis. I've spoken to a few YC partners (as
part of office hours or at events), but never went through YC myself. I know
quite a few people who did, and they seem always most impressed with Sam and
Michael.

Edit: Typos

~~~
sama
The entire partnership is incredible and does a huge amount of valuable work,
and startup advising, that they don't get nearly enough credit for.

I'll still be involved (and will ensure we continue to take risks and grow!),
and obviously Michael is amazing.

~~~
matthewwiese
By damn, I just love when the big kahunas still involve themselves in the
community they cultivated so long ago. Cheers, Sam; the best of luck to you
and the team at YC.

------
jdsully
I think it says something about our industry that I assumed they were about to
discontinue something or make a change that negatively impacted people.

~~~
seizethecheese
Or maybe it says something about you.

I don't mean to say you personally, but perhaps cynicism is an easy trap that
a lot of the industry falls into.

~~~
jdsully
Perhaps. But when it’s good news it usually makes it into the headline.

------
akozak
I'm curious why more bay area startups haven't come to Oakland. (maybe it's
happening and it's just not obvious?)

Always felt like there was plenty of potential office space relatively close
to BART but maybe that's wrong.

~~~
nostrademons
A lot of really-early-stage startup activity (eg. solo engineer working on a
project, or 3 guys working out of an apartment) seems to be happening in
Oakland and the East Bay generally. It's the last place rents are affordable,
so it's naturally attractive to people who need to go without income for a
while.

The commute over the bridges is terrible, so with the bulk of investment
capital and experienced engineers living on the peninsula (and oftentimes more
down by Palo Alto & Menlo Park than in SF), it remains difficult to scale East
Bay companies. Unless you're someone like Elon Musk where you can just invest
$100M of your own capital and need more semi-skilled manufacturing workers
than skilled software engineers. Fremont/Milpitas is coming up as a bedroom
community for mid-career engineers though (because if you work at Facebook
it's just across the Dumbarton, while if you work at Google/Apple you can take
237 and avoid the bridges), so that may increase the engineering supply along
the East Bay BART corridor.

The East Bay really hurts from BART & Caltrain being two separate systems;
it's easily BART accessible, but much of the peninsula's population only has
Caltrain access, so you need a very time-consuming transfer to get there
without dealing with the bridge traffic.

~~~
djakjxnanjak
I think tech employment in downtown San Jose is going to blow up for this
reason, once the BART tunnel goes in. Combined access from electrictrified
Caltrain/BART/ACE/VTA/Amtrak is going to be killer for bringing in people from
all over who don’t like being stuck in traffic. Google sees this coming and is
building the new campus there. And that will push up prices for homes near any
of those rail systems.

It will also be possible to commute from SJ or Santa Clara to Oakland via
BART, which may marginally improve recruiting there.

It would be fantastic if Caltrain or somebody rebuilt the burnt-out rail
bridge next to the Dumbarton, but that’s wishful thinking. It would be useful
to integrate ACE, Caltrain, and Amtrak.

~~~
kenneth
I put almost zero faith in Bay Area governments fixing the mess that is
Bart/Caltrain/etc.

~~~
djakjxnanjak
I don’t have any hope for system integration without a major culture shift in
the government, but I do think that the expansion projects that are in
progress are likely to be completed eventually.

------
denisvlr
I was in YC W16 batch.

Coming from abroad, part of the YC experience was, besides the program itself,
renting a house in a residential area of Palo Alto where our team of 4 lived
and worked. We didn’t have a car and the nearest bars & restaurants were at a
20 minutes bike ride. This set up felt like a retreat, and really pushed us to
100% focus on our startup. Basically the only things I did for 4 months is
working, exercising in the surrounding parks and eating homemade food.

Had YC been located in SF it would have been a totally different experience.
It’s a vibrant and exciting city specially for new comers.

However, I understand YC’s rationale: most local founders live in SF and the
1h commute is painful, the current building is not easily accessible, and
doesn’t scale to bigger and bigger batches, etc.

------
tzhenghao
I definitely understand the point on moving to SF. I was there for a YC
hackathon few months ago, and their current office wasn't logistically easy to
get to without a car/Uber. It wasn't close to a Caltrain station either, so
it's a much bigger pain point for those commuting down from the city too.

------
sethbannon
This is really bittersweet news.

On the one hand, this is a huge loss for YC. Sam's energy and vision helped
herald in YC v2.0. His leadership will be sorely missed.

On the other hand, I'll sleep better at night knowing he's dedicating himself
fully to AI safety and the work of OpenAI. There's no one I'd rather have
leading the effort to ensure AI development doesn't lead to a dark future.

------
rsweeney21
Am I the only one that feels like the YC brand is being diluted by the
increasing size of their batches? 200 companies feels like too many.

~~~
csbartus
No, you are not alone. The current batch (W19) is disappointing so far:
[https://news.ycombinator.com/item?id=19333170](https://news.ycombinator.com/item?id=19333170)

------
ironchief
Altman (YC) leans into SF

Thiel leans away

Will be interesting to see the winning move

~~~
kenneth
Thiel's problems weren't with SF the city, it was with the bay area's culture.
As such, a move within the bay area isn't counter to Thiel's stance.

------
tosh
I wonder when YC is forking to other cities.

Staying in the Bay Area longer than other acceleration programs which
decentralized (& often diluted their network and quality) earlier was wise.
That said, from the outside it seems like sticking to the Bay Area is no
longer optimal.

Startup School and YC China are mentioned but I think by now there must be
enough YC alumni all over the world to facilitate local communities/office
hours and investment activity (while keeping the quality).

For example I like how Lambda School is expanding globally much faster. I know
the two are difficult to compare and it is not a straight forward decision to
make.

Would love to learn if you have some thoughts on this.

~~~
nostrademons
The model for YC startups is that most need to raise outside capital after YC.
Part of their value proposition is being able to create a market of follow-on
investors so their startups don't get totally shafted in those deals. That
requires being in areas where there are enough investors to create a liquid
market in fundraising rounds after YC.

China is one such area, and places like NYC or Boston could also work (YC used
to be in Boston before PG & JL had kids). Those don't help much with the cost-
of-living issue, though.

~~~
my_username_is_
It doesn't help with cost of living, but it does help open the door to a new
pool of founders that can't/don't want to live in the Bay Area for any number
of reasons.

If there are enough quality founders and enough quality investors, it seems
reasonable that YC could provide value to a new region by filtering for
quality and facilitating new connections within the network

------
craigkerstiens
Really surprised by the consideration of moving to SF. For a long time now YC
stated that the ability to focus down in the valley was key, though
immediately founders moved to the city after. I knew of a few cases where
founders were based in the city and would commute down on needed days.

I'm a bit surprised as this shift now as it was positioned as thought out
before, but the reality is the center of new tech startups is now very much
SF.

~~~
shmooth
YC in SF gonna be like Joakim Noah in NYC :-D

------
lightedman
My question, how many of those companies funded by YC have been caught doing
things we don't like, such as dark patterns, data collection, and more? I can
already think of two companies off the top of my head. It's pretty much a
given fact on this planet you don't get huge valuations and money unless
you're about to violate someone's privacy and sanctity.

"Speaking of San Francisco, we are considering moving YC to the city and are
currently looking for space. The center of gravity for new startups has
clearly shifted over the past five years, and although we love our space in
Mountain View, we are rethinking whether the logistical tradeoff is worth it,
especially given how difficult the commute has become. We also want to be
closer to our Bay Area alumni, who disproportionately live and work in San
Francisco."

Telecommuting works just fine for me when it comes to designing, prototyping,
and testing actual physical products with companies around the world, from
LEDs to solar panels to remotely-controlled hydroponics facilities - why can't
you do the same with your primarily software and speaking stuff?

------
minimaxir
> Speaking of San Francisco, we are considering moving YC to the city and are
> currently looking for space.

I thought YC had an office in the city?

~~~
tyre
They do but it's just offices for partners and employees. Nowhere near large
enough to hold dinners, office hours, etc.

------
dennisgorelik
What is "the current total market capitalization of YC companies" that were
accepted into YC since Paul Graham and Jessica Livingston left YC (~February
2014)?

That would be an interesting metric that evaluates Sam Altman's performance at
YC.

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pylus
Market cap $150 billion is insane. Never thought it is that big.

------
randomsearch
Rather than monetary valuation, what do you think have been the most
innovative and significant startups from YC?

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dennisgorelik
It is weird that these "Updates from YC" do not list the name of the author of
these updates...

------
appstorelottery
I didn’t hear anything about the 10k grants to startup school attendees. Did
this happen?

~~~
awaaz
Yes, it did. AFAIK, they took in 15,000 companies, but gave the grant to about
100.

I got the grant :-)

------
shmooth
Sam finally too far off the deep end

------
N0RMAN
Sam who?

~~~
badfrog
[https://en.m.wikipedia.org/wiki/Sam_Altman](https://en.m.wikipedia.org/wiki/Sam_Altman)

