
The Big Winner from Y Combinator’s Success? Sequoia Capital - ryan_j_naughton
http://priceonomics.com/the-big-winner-from-y-combinators-success-sequoia/
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2pasc
It's worth noting that Sequoia invested in YC early on, which gave them a
preferential portfolio access I assume.

The beauty of the model is not that YC has a portfolio worth $1B of gain - but
that they spent less than $15M to get there: A staggering 67x. Why?

Because they are good at picking Companies for sure - but most importantly
because the % they own for the money they put is very high ("founder level"
almost)... and is all a consequence of their brand and processes and its power
on entrepreneurs, investors + the network effect of their community. Amazing
jobs guys!

~~~
blobbers
[http://techcrunch.com/2009/03/16/y-combinator-gets-the-
sequo...](http://techcrunch.com/2009/03/16/y-combinator-gets-the-sequoia-
capital-seal-of-approval/)

~~~
nostrademons
For those who don't like to read articles, the one in the parent comment says:

"Y Combinator says that the investment by Sequoia and the angels won’t change
how they do business (other a projected increase in the number of
investments). The new investors won’t get any special investment rights in the
new startups, or have any obligation to invest further in them."

Having talked with one of the founders of the startups listed in this article,
the reason Sequoia led their round is because Sequoia "got" their idea - they
instantly understood the product, the business, and why it would be a big hit
- and then moved quickly to invest, getting a term sheet to them within a week
of Demo Days. Other VC firms hemmed and hawed and said "Well, maybe once you
show more traction", and that's why they missed out on those billions. Sequoia
didn't have preferential access, just better decision-making.

~~~
2pasc
that's true and they are impressive - and I know that because one of my
previous Companies got a term sheet from them and they made their decision
super fast.

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krschultz
I feel like priceonomics is specifically crafting articles for HN. I'm sure
they get a lot of traffic from here, but is this really their best channel?

~~~
larrys
"but is this really their best channel?"

Do you mean is HN their best sales channel for what they are selling?

The blog appears to show a wide variety of posts about different subjects. I'm
only seeing a few that appear to be HN targeted.

But on the topic what I'd like to see is a pricenomics post that details the
business purpose and value of the blog posts...comparing which place they are
posting to that seems to payoff in the most new customers for example.

~~~
rohin
Hi, I work at Priceonomics so I can sort of answer your question.

The blog posts we do that use data crawled from the web pay off enormously in
terms of generating leads and revenue for our data business. Here's an
example.

[http://priceonomics.com/the-seo-dominance-of-
retailmenot/](http://priceonomics.com/the-seo-dominance-of-retailmenot/)

The rest of the blog posts are done because we want to make them. In the past,
there wasn't any direct financial payoff from them. Now, it seems like they
lead to book sales which is neat.

~~~
larrys
Interesting. Thanks.

For the hedge fund market (or for any market for that matter) you might want
to append this statement:

"via API or spreadsheet" on [http://priceonomics.com/data-
services/](http://priceonomics.com/data-services/) to also say "via
Spreadsheet, Web interface or API".

You should probably also dedicate a complete "sell" page to each industry you
are targeting. Hedge funds deserve a dedicated page if that is a (and I
suspect it is or will be) big whale for you. I'm guessing you know this but PN
hasn't done it yet.

When making buying decisions people lock onto things that say "ok they have
exactly what I need and are experts in helping my industry and my competitors
are using them".

"We help financial service firms crawl data"

"We help hedge funds crawl data"

"We help retailers crawl data"

"We help non-profits crawl data"

And so on....

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birken
Well there is massive survivorship bias here. For all you know there is
another VC that invested 20MM into 5 equally great-looking YC companies that
all went bust, and now that VC is out of business and the former partners are
homeless.

Sequoia presumably only ends up invested in only a small # of companies from
YC, so saying their success is based on Y Combinator is logically incorrect.
Their success would be based on their own ability to invest in the type of
companies they like to invest in. Perhaps in theory YC is helping to increase
the supply of these companies, but that would affect all VCs equally. And of
course, Sequoia also invests in a lot of companies that never went through YC
and end up being successful.

I'm not any sort of huge YC or Sequoia apologist either, this post is just a
giant logical fallacy.

~~~
akiselev
No one said Sequoia Capital is successful _because_ of YC but that Sequoia has
_probably_ made more money (in absolute terms) from YC portfolio companies
than YC itself.

