When we miss a good startup, we always go back and figure out what went wrong and try to fix it. One advantage of all the other incubators that have arisen is that when we miss a good company, we at least find out about it. We've changed our application process several times in response to misses.
(Strangely enough, it might actually be net beneficial to YC to have so many competitors, because they're training our filter.)
At the end of the day you are taking a calculated risk. The interesting question isn't whether you wished you had funded them, because that is asking you to make a risk-free (in hindsight) decision. The real questions is how you decide whether a missed opportunity indicates a lapse in the way you calculated risk/reward, or simply a bet you ended up on the wrong side of despite it being the right bet at the time.
That's the question I'd really be interested in hearing the answer to. How do you decide whether a missed opportunity represents an error in your process?
Having funded 465 startups over 7 years may not sound early, and I suppose it isn't in a relative sense, but it is in an absolute one. Society in general and we in particular are still learning how to predict which startups will succeed.
To say that every missed opportunity is a failure is like saying that every CA lottery I didn't buy a ticket for was a mistake. That strategy risks over-fitting to successful fluke's, to people who made bad bets that happened to work out. There is enough loose money floating around today that some people out there are going to make bad bets and succeed.
I don't see why you/YC wouldn't focus on bets where you have an unfair advantage over the market and feel fine passing those up where you don't, even if they have some non-zero probability of success.
In particular from the non-economic perspective.
Lots of redditors will repost a picture and claim it as their own, but this is both frowned upon and the doing of users, not admins. 9GAG admins themselves are the ones guilty of plagiarism, and that's where they cross the line.
On the contrary, Reddit (and particularly smaller subreddits) contain some of the most active and intelligent conversation available to vast general audiences on the web. AMAs alone spark a lot of interesting dialogue. Nick Eftiamiades' yesterday was really enlightening (http://www.reddit.com/r/IAmA/comments/zchnb/ive_appeared_on_...). The hivemind can be embarrassing, but there's still a lot to glean from such a userbase.
This kinda fits in with the Kickstarter discussion, scale is entirely different of course.
I guess in short is business more about making money or about creating value.
Kudos for your postmortem optimization feedback loop. This is one of the non visible features of YC that could explain the difference. Do you record the presentations for later review in such case ?
For the applicants, this gives the hint that they should apply to many different incubators and angels before applying to YC so that they can learn from their rejection how to optimize their submission. ;)
However, I have been involved in the process with potential investors deciding whether or not to invest in a company -- on both sides of the table. I can't answer your question, but I might be able to lend some relevant conversation on the topic.
Investors, especially those who specialize in early-stage startups, take a lot of risks. We all know that most startups will fail -- and those that don't are not always wildly successful. There are plenty of ramen-profitable startups that will piddle out, and plenty more that never even get to that point.
Because of the inherent risk involved with investing in general, it makes sense to take as risk-averse an approach as possible. That's why YC-backed companies are built on such solid, great ideas (the best foundation possible) -- and even many of those, even with Y Combinator's full support, still fail.
Whether or not pg has regrets is a question that only Paul himself can answer (and I hope he will), but my opinion is that his approach is the same that I take towards my investment portfolio: maybe a slight tinge of missed opportunity, but the decision whether or not to put money into a company is calculated rationally. Because of this, there's no real regret to be had.
 I meant Holiday Inn Express
A more "HN-spirited" comment would have been:
You aren't speaking from any real authority or
experience, and your 5 paragraphs could have been summed
up with the following: "when you gamble you don't expect
to win them all, so regret is baked into the equation".
Please be more concise with your comments and get to the
The original commenter's post read like the beginning of one of these commercials.
Edit: joking aside, I cannot comment for pg but there are a number of startups I regret not funding - funding with my time and effort. Whatever strategies or not people use to invest in others companies we can all invest in one - our next one.
I am minimising my regrets, by investing in me.
(I do worry about that management team though !)
I remember reading a similar post that was about how an engineer felt about turning down the opportunity to be a 1-10 employee at Facebook
This would be a company who got grew initial growth but, for lack of proper guidance and mentoring, made really bad decisions that killed them. Perhaps a company that had a chance to be huge, did well initially, but didn't have the proper connections to scale after that.
That to me is a harder but ultimately much more valuable question.
YC's investment is primarily about time and effort, not money anyway.