

Paul Graham, Changing the World and "Built to Flip" Startups - Anon84
http://www.25hoursaday.com/weblog/2008/08/03/PaulGrahamChangingTheWorldAndBuiltToFlipStartups.aspx

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pg
"Y Combinator style built-to-flip companies?" Sigh. Does this guy not grasp
how much less we make when a company gets acquired early than we would if it
went on to become a big success? The real money in venture funding, for us as
for all other investors, is in the companies that become Google, not the
companies that get bought by Google. The returns can be literally _ten
thousand times higher._

We would always prefer it if founders turned down acquisition offers and kept
growing the company. Any investor would. The reason some YC startups get
bought early is not that it's the optimal outcome for us, but that we're
willing to get less than the optimal outcome if that's what the founders want.

~~~
breck
Are there any current companies that you think have a reasonable chance at
pursuing an IPO within 12 months? 24 months?

~~~
pg
I don't think there are many companies in the world that have a significant
chance of doing an IPO within 12 months.

I do think there are several YC-funded companies that have as good a chance as
any other startup at their stage. Loopt is obviously one. There's another
that's almost as old but is building something so big that they haven't
launched yet. More recently than that, it gets harder to say, but there are at
least 5 more I wouldn't rule out.

~~~
mattmaroon
Yeah, the IPO has (at least for now) ceased to be an indicator of success.

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mattmaroon
"Why these large firms, and now even places like YCombinator continually think
the best way to move forward in software is to hire as many gullible young
naive programmers as possible and work them to death is beyond me."

Seems like this guy doesn't understand how YC works (and judging by some of
his comments, OP as well) any more than the last troll. YC doesn't hire anyone
other than the occasional caterer (and to my knowledge, none of them work 80
hour weeks).

PG invests in people and says to work very hard (not as a mandate, but as
advice, which he gives just as freely to people he doesn't fund) and in the
troll's mind he's hiring them and forcing them to work for 2 months without
sleep.

My question is, why does this sort of stuff keep climbing up the page? It's
not interesting, it's not well thought. It's just senseless accusations from
people who apparently didn't even take the time to read YC's FAQ.

~~~
paul
I've been trying to figure this out as well. Maybe people like this kind of
thing because they WANT it to be true. The notion that they COULD be doing
something better is threatening in a way. They want someone to tell them that
their other options are all worse, that they've made the right choices.

~~~
jsmcgd
I think people sometimes vote for things, not because they agree with them but
because they know other people won't and they're interested to see what the
reaction will be. It's the online equivalent of 'Fight, fight, fight'!

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fallentimes
We are _not_ built to flip. There won't be a talent acquisition for us either.

We already have revenue and hopefully we'll have profits soon.

These blanket statements bug me - everyone else forgets about or chooses to
ignore Wufoo.

~~~
rantfoil
I think blanket statements about YCombinator companies are a little unfair to
the diversity of YC startups. As fallentimes points out, Wufoo has been
profitable from the start and continues to build on a vision they believe in.
Hardly built to flip.

Posterous, our YC-funded startup, is 100% committed to changing the world by
bringing publishing online to the other 90% of people out there who know how
to use email but don't know how to use complicated blog software. And we're
pretty sure we'll be able to do it well enough that people will be willing to
pay for the right features.

Finally, regarding the quote from Austin Wiltshire: "Who will end up really
getting the spoils out of any of YCombinator’s work? Paul Graham." This quote
strikes me as absurd on its face. YC takes an average of 6% but speaking from
personal experience the value of the mentorship and connections far outstrip
that slice of the pie. This isn't even including the access and network you
get from the hundreds of other founders who have passed through YC doors now.

It's completely misguided to think that YC has some sort of strange or
malicious goal of taking advantage of unassuming hard-working startup
founders. Paul didn't HAVE to create YC, but he did it to serve a need he
identified -- to help smart hackers like himself 'solve the money problem.'
The business world rewards owners, and YC / PG is giving smart hackers a push
in the right direction towards owning their creations and their destiny.

As for deciding whether to flip or not-- Google, Facebook, and every other
world-changing tech firm you can think of had the chance to flip a thousand
times. They said no. Making that decision is a part of a founder owning their
own destiny. YC is there to help startups get to that point. What you do when
you're on the threshold is your choice.

~~~
mattmaroon
Also, YC gets 6% of the first round. That gets diluted significantly over time
by further investment. By the time a company hits a liquidity event they
usually have significantly less.

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stcredzero
The choice isn't only about Changing the World or just getting paid. You can
also change the world in a small way that gets you paid consistently.

Search engines changed the world in a big way, and Google continued with that.
Google makes a ton of money as a consequence.

Wireless Toll Payment changed the world in a small way, which will probably
get bigger in time. But for now, toll roads are just a bit more convenient to
use.

You can also change the world in a big way that doesn't generate much money at
all: YouTube.

~~~
ashu
_You can also change the world in a big way that doesn't generate much money
at all: YouTube._

This was also true for Google for about 2-3 years after they started - perhaps
more. I think we should judge Youtube after a few more years. Everyone accepts
it has changed the world in a big way.

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hooande
People have been saying that YCombinator and the general hackernews culture
encourages people to work 80+ hours a week. I would like to put that to rest
right now. It's just not true.

Yes, people who work for YCombinator startups tend to work a lot of hours.
There is a simple reason for that: Anything worth doing is hard. It takes time
and passion and constant attention. There is no free lunch.

Paul Graham isn't a damn cult leader. He just talks sense. Imagine you have
only 3 months to build something so impressive that a venture capitalist will
give you a million dollars to continue building it. What would you do? Work a
four day week like 37Signals? Or spend every minute you have working hard to
make something amazing?

People get defensive when they feel that you're implying they aren't working
hard enough. Starting a company (especially a YC company) is an extraordinary
situation that calls for extraordinary measures. Please stop making a big deal
about the hours people work and focus more on what they build.

~~~
webwright
We had a RescueTime group tracking founders in our class where we could look
at the aggregate data of how founders spent their time. Rarely did anyone
actually spend more than 5-6 hours in their dev tools, and rarely did they
spend more than 10-11 hours per day on their computers.

Note that this is DURING YC-- the most intense months of hte experience. Since
then, these numbers have declined a bit.

I _really_ love the "unconditional love from a cult leader" part of this
particular string of trolls. Paul is decidedly NOT loving-- in fact, he's
kinda brutal. :-)

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Mistone
the YC deal (a bit of cash, huge PR, and massive connections) for a 5-10%
ownership of an idea is the fairest and most generous seed investment deals
around. The fact that you get to start a company and peruse a dream while your
young is priceless compared to the alternative. people who think this model is
about robbing youth and forcing 80 hour work weeks are missing the point.

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icey
Now business people can see how silly it sounds when they start talking tech
stuff to developers.

