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> ...whenever a company has a signifier of quality - a YC demo day slot, a high quality angel, pedigreed founders, or, even better, strong growth. In these cases, there are investor feeding frenzies...

And therein lies the fundamental problem of Silicon Valley today. Most of what matters in early stage startups is not anything remotely objective about the startup's prospects. What matters most at this stage is connections and perceived pedigree.

All that should matter, in an efficient market, is the real potential of the startup itself.

"YC demo day slot" = someone spent 10 minutes interviewing some people and decided they were a good culture fit.

"High quality angel" = Someone's friend knows a well known rich person and hooked them up.

"Pedigreed founders" = Someone's rich parents bought them credentials by gaming the system.

It's not reasonable to expect every early stage startup to have "strong growth" because big successes most did not have this attribute.

But what could be improved is the process of finding startups with high potential. YC was, when it launched, an innovative attempt at solving this. But it hasn't evolved or scaled enough to address the market.

Some kind of early stage crowdfunding solution seems the most likely answer, but no one has managed to crack this nut yet. And so the Silicon Valley investors continue to feed in the same small pond.

The most likely outcome is that a new system will develop that totally bypasses traditional Silicon Valley investors. They may have an abundance of capital compared to the small number of startups they care to look at, but they have nowhere near the money (or intelligence) that the public at large has.




This is what people call "luck" when talking about successful startups. Unfortunately some people are just more "lucky" than others :)




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