
Facebook To Begin Giving Y Combinator Startups VIP Treatment - aaronbrethorst
http://techcrunch.com/2010/08/26/facebook-y-combinator/
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csmeder
Interesting strategy.

Devils Advocate: basically encourage many of the best and brightest to lock
them selves into using facebook like Zynga originally did?

Only question, does this welcome offer include the frid.ge :)

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codexon
My guess is that Facebook wants to sell personalization and credits as a
service.

Once a few YC startups become successful, Facebook will showcase them to
legitimize their "product". Big companies will want to join in, and then
Facebook will start charging for it.

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csmeder
Yeah but 30% is a big cut. Thats what they want for their credits correct?
Basically they want to become the de-facto APP store for web apps?

For example:

A user has a Facebook account with his credit card attached to it and now
every YC startup has a button that says buy Plan A for 8.95 a month.

In single click the FB user is now a user of the the YC funded App (He doesn't
have to fill in any email or password, or his Credit Card number) and the App
is able to bill the FB user 70% of $8.95 a month.

Its a win for the the YC startup because this new button takes all the
friction out of buying the App ( having to make an account and open your
wallet to type your credit card number in). FB wins because they control web
3.0 and get a 30% cut.

If I didn't think this was a really boring way to make money I was going to
submit this idea about a year ago as a YC application.

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maukdaddy
Ugh what a frightening future you picture there. =(

Let me put my MBA hat on - don't back out of a good money-making idea because
you think it is boring way of making $$$. Spend a couple of years making an
awesome product, then either sell it and do something interesting or live off
the profits and do something interesting.

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_delirium
On the last point, startups have a pretty high failure rate, so you also have
to factor in the possibility that you'd spend a couple of years doing
something boring that you hate, _and still_ not end up any richer. I wouldn't
go for something unless either you found it actually interesting to work on,
or you somehow knew you had a 90%+ chance of succeeding.

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maxklein
What this basically means is this: if facebook is this aggressive, and pg et
al have done the due dilligence and still gone into the deal, then we on the
outside should copy them and follow a similar path, because it's probably
going to end up as the standard.

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AmitinLA
What I find interesting is how this is going to change the types of YC
companies that will be funded, especially in the short term. One of the things
I've noticed about past YC companies is how diverse they've been in terms of
the markets/industries they're going after. This will largely change the focus
of certain companies already funded as well as the types of applicants.
Presumably YC has an upper limit of companies they can fund due to human
capital restrictions, and if this means that they fund or focus more on
companies focused on "transformative social experiences" this will mean that
other incubators and angels that don't have the brand of YC may be able to
market themselves/differentiate themselves from YC better.

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boredguy8
Why would it change what's accepted? I could simply provide more access to
those social applications that are already accepted/would have been accepted
anyway.

~~~
AmitinLA
It's not just more access. This is a case where FB has, for some reason,
signalled that they want to work with YC companies, and specifically YC
companies. As some people pointed out already, maybe this is them outsourcing
R&D. So let's accept that for a second, that this is a way to get them to
outsource R&D b/c the FBfund isn't working. If that's the case, that means
that they're looking to acquire companies. And not just any company, though
that's always the case with any company anywhere with sufficient resources and
an eye on growth, but specifically YC companies.

If we presume that the odds of an exit of a YC company before this interview
were even across all industries (i.e., that no matter whether they were into
working in travel or B2B or whatever a company's odds of being acquired/going
public where the same) that is certainly not the case anymore. The odds of an
exit for a YC/FB company probably just went up dramatically. In actuality, it
seems like it went up dramatically; it's too early to tell if it actually did.
And maybe not just b/c the YC company is not going to get acquired by FB, but
b/c the YC company can get revenue quicker with preferential access to FB's
revenue making methods.

But here's what the cynic in me thinks: based on the RFS[1], this seems really
like a way for a cheap and easy way for FB, which has has major credibility
issues with Connect, etc. to get good publicity for Facebook Instant
Personalization. Since YC is super, super hot right now and just came off
their demo day, the tech news was all about them. I don't know if money
switched hands -- after all, if YC took a million (cheap for this buzz) that
would be enough for them to invest in 66 companies at $15K a pop but with
absolutely no risk to them since it's other people's money. If so, it probably
wasn't enough.

In addition, YC's other RFS have been generic and in fields that have been
buzzworthy enough that they didn't need YC entrants to attack the problem. In
other ways, "The Future of Journalism," "Things Built on Twitter," and "iPad
applications," -- these are not solving obscure but lucrative problems[2].
It's simply a way for YC to signal their interest in a hot space and that they
want to work with the best of the breed in this space. Now, I presume, they're
getting paid for it.

[1] <http://ycombinator.com/rfs7.html>

[2] I'm assuming that there was no similar deal announced with Twitter or
Apple, which I feel like I would have heard about, but I could be wrong.

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iliketosleep
it sounds like a wise strategic decision by facebook. since it's likely there
would be YC startups which address facebook deficiencies and eat away at their
marketshare. although it looks impossible for any challenge to facebooks
position, all it takes is one huge outlier which could change the game, and YC
seems like a probable source of such an outlier. but for YC startups it seems
like a tradeoff.... short-term boost at the expense of long-term dominance..
but i don't know the details of the deal so can't be sure.

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jfager
What is FB's consideration in this deal? Is it simply preferred access to
acquisition targets and promotion of their platform, or does this relationship
preclude (formally or otherwise) YC from funding startups that want to compete
with FB?

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nl
I'd be guessing it's about promotion of their platform

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mkramlich
I think it's about doing outsourced R&D a little more explicitly than big
software corps have been doing it already. Plus Zuckerberg prob likes the
filtering aspect of YC and so wants to benefit a little more directly from
that filter.

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sanj
I wonder if this means the fbFund is shut down.

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coryl
Sounds terrific for YC companies. Looks like getting into YC just got that
much more competitive.

