

What could you do with $41 Million? - chaosmachine
http://photoshoplayerstyles.com/blog/41-million-dollars-color

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jonnathanson
I would almost rather turn down $41M in the first round. I just don't need
that much money so early on, and quite frankly, I think it would corrupt me.
I'd be much more prone to making expensive, wild, ultimately bad choices. I'd
be more liklely to overhire and overspend. I'd be more likely to get reckless.
I'd probably, even if not consciously, scale up my _company_ more quickly than
I'd scale up my _business_. And I'd probably have an army of financial
overlords demanding that I do so.

That's just me, obviously, and I can't generalize to everyone out there. But I
have a pretty good feeling that plenty of others would fall into the same
traps.

$41M is way too much for an early-stage startup for most people -- unless
we're talking about a category with extremely high capital barriers to entry,
like biotech or energy.

$41M to scale up an existing and growing business? Definitely. $41M to start
up a business? No, thanks.

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bane
I'd start a Y Combinator East Coast, looking for great startups between D.C.
and Boston.

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dutchrapley
[2] More than enough money to give seed funding to every Y Combinator startup
since 2005.

That says it all. Instead of pumping it all into one company, diversify.

If you invest in 40 different companies, more than one is bound to come out on
top. 40 x $150k = $6 million

[http://techcrunch.com/2011/01/28/yuri-milner-sv-angel-
offer-...](http://techcrunch.com/2011/01/28/yuri-milner-sv-angel-offer-every-
new-y-combinator-startup-150k/) <http://www.crunchbase.com/financial-
organization/start-fund>

~~~
patio11
There is a bit more to YC than just investing in a lot of companies. If that
were all the secret sauce you needed, the VC industry would probably rack up
impressive average return numbers like _cough_ 0%. (It has not been a kind ten
years to the industry, to put it mildly.)

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dutchrapley
"There is a bit more to YC than just investing in a lot of companies."

You're exactly right, investing isn't going to make those companies succeed as
you said, doesn't increase your chance of getting a return at all. There's a
ton of dynamics at work.

What we do know is that the YC team has a process that works. I'm not going to
say they have a "formula," since that would imply that they take the same
approach with every class and company. I imagine it's something they work to
improve each time and adapt uniquely with each situation.

The recent bulk investment in YC companies rides on the YC team's decision
making process, based on a good track record. Granted, you're likely to see a
better return with investment in 40 YC companies over 40 that have been
randomly picked.

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dodo53
Build a paywall for the NY times :o)

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greyfade
... With $1M left over to embezzle! :)

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jjudge
Love this quote:

"I think, at the end of the year, if you picked your team right, you'd have a
pretty good shot at a profitable business. And if it fails? Well, good news,
you can do it all over again. 40 times. And still have $5 million left"

As someone who has bootstrapped a company to profitability, you're definitely
right about people the most important ingredient.

I think Color definitely took a lot of money, but the goal is to get the app
installed on every phone possible - and that will take a lot of advertising
money.

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pclark
Making 40 stable revenue growth driven companies does not trump 1 Google or
Facebook.

These companies are not comparable, and cut from entirely different DNA and if
you try to compare them, you just sound bizarre.

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chaosmachine
I wasn't really comparing them as much as just thinking about other ways to
use that money. Would any of those 40 companies turn into the next Google?
Probably not. On the other hand, what are Color's odds?

And like I said, you'd still have 5 million left, enough to give seed funding
to every Y Combinator launch since 2005. If you're looking for Google-sized
returns, that's where I'd start.

~~~
pclark
Their odds are much better than the 40 other companies.

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thrill
I'm at the beginning of a (non software) project that $40 MM would likely
return 25X (will need about 3x that before it's done).

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thekevan
Retire

~~~
blinder2451
I agree! I would make games for the iPhone, and let my imagination run wild!

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nazgulnarsil
fund SENS.

