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As viscerally unappealing as it is to find myself agreeing with Calacanis, I'll note that Facebook doesn't even need to intend to trap YC companies for the net effect to be negative. The problem is the same as with "strategic investors": an early, quasi-structural relationship with a potential acquirer may be perceived as a de facto right of first refusal to the rest of the industry. It can be a trap even if it wasn't designed to be!

I sort of watched this happen with a friend's company.

Obvious caveats apply: (a) I'm not a social networking entrepreneur and don't know the space that well, (b) you have to balance the risk --- and the opportunity cost of another business in a different market --- against the benefit of collaborating with Facebook, (c) to whatever extent Facebook benefits unreasonably from this program, YC probably suffers.

jason is making it sound as if he personally knows someone who made this mistake. i think you're claiming the same, and based on how many (few) acquisitions facebook makes, it's possible that you both know the same person who feels they were "trapped." can you say who it is, or did you intentionally leave out the name of the person you know?

edit: sorry if i misread this part to imply it had to do with facebook: I sort of watched this happen with a friend's company.

I don't know anyone who's been scammed by Facebook. I like Facebook.

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