Seems like every public YC company has fallen 50%+ within the last 12 months. I'm sure the private ones are even worse off. I'm hoping the definition of success changes. I'd like to see "rational valuations", "cash flow positive", or "a sustainable business model" as metrics in the future.
I wouldn't say that's a YC-specific issue. Look at Nasdaq, this is a general issue with tech stocks right now, just this immense selling all across the board.
Yes it's probably going to round trip back to $300B given AirBNB and DoorDash have taken their hits as of late. That said - I do think since the lock-up periods have probably expired on the big ones - the pre-IPO investors like YC/founders/VC probably made it out just fine already.
It's really a message to those of us retail investors buying the IPO or post IPO shares of YC companies that need to be aware of the track record w.r.t. an investment. Most of the gains have been extracted already and future post IPO growth has already been priced in.
It also does suggests that YC was perhaps a beneficiary of easy monetary conditions that lifted valuation.
I agree - It isn't specific to YC IPOs - it applies to all IPOs.
I think the point is that YC perhaps is a good early stage VC in maximizing the IPO price for the benefit of LPs and founders and unloading at the right time onto the market.
Perhaps its less clear given the current state of things whether their companies are good for long term earnings performance for long term ownership by retail investors.
Its relative - high PE, high growth multiple stocks (such as YC IPOs) have generally been reverting to mean. Most stocks that were already at the mean w.r.t. PE are still sticking to the mean with flat earnings.
What needed correcting is getting corrected. What was correct is staying correct.
The rise in interest rates means that companies that have been producing their own cash can fund growth initiatives internally. Companies who were funding growth initiatives using outside capital (debt, VC investment) are now going to be paying 10%+ to do so.
I search for it but can't find it, but I do recall reading an article that if you put the same amount of money into every tech stock at IPO, you actually beat the market by a hefty bit. It was probably a year ago so who knows if that's held as I think tech has been particularly hard hit by the latest correction, but who knows.
This is success because the fund’s cost basis is so low specifically because of the financial engineering involved when they were private companies. The valuations of the public companies could fall 99% and still be highly profitable bets for the angel/seed investor.
This is as absurd as saying "data-driven approach for finding out successful humans".
I am kind of aggravated to see drivel like this from VC's. This is similar to algorithm trading on stock market and not funding deserving startups. This 'data-drive' garbage is how you end up with more grocery delivery, food delivery and pet walking startups.
Absolutely! Looking at the success in hindsight is not data driven. Just because the most of the past YC unicorns have been in industry X, doesn't mean the next ones are going to be like that. This is even more pronounced when it comes to the year of the batch, which is already past. Unless he wants to suggest companies in batches of the years with even numbers achieve higher valuations.
But yes, these days I think "data-driven" is really just a convoluted way of saying "we approximate the informed decisions of others without specifically understanding what we're doing". This is ML in a nut-shell after all. Is it possible to use ML and data science to find insights and draw conclusions that you then base your activities off of? Sure, but most are just looking for a magic black box that makes decisions for them specifically because they don't want to go to the trouble of understanding X. Once you abstract things away to that extent, you're inevitably training your algorithms to do what others do in an informed way, because where else would the training data come from?
IQ tests are even more garbage. It's mostly American centric and more so West centric. I had a IQ test for an interview around 10 years ago and it has something like "Unknown number of pennies and nickels are in a jar..."
WTF is a penny and wtf is a nickel? Nickel is supposed to be a metal.
Or "If you hit a golf ball 50 yards..." what's golf? wtf is a yard? one kilometer?
> All of the questions on the Raven's progressives consist of visual geometric design with a missing piece. The test taker is given six to eight choices to pick from and fill in the missing piece.
Sometimes losing tons of money is an intentional decision, so if the board/investors are OK with it, it's not a failure. Certainly not the best way to run a company though...
A "dumping" period where your business gains marketshare and undercuts competitors to drive them under is an essential part of establishing monopoly power.
Also strangely enough it's illegal if you're already a successful company and try to do it in a new vertical, but completely fine if you're a couple unknowns with a few hundred million of venture capital.
Ninety-nine percent of private equity profits come from taking strategies that are illegal with regulated, public companies and applying them to unregulated assets. And venture capital is a subset of private equity. Almost every conversation VCs have amongst themselves would be considered market manipulation if it pertained to an exchange-traded company, and of course the fact that it's all insider trading goes without saying. So no one should be surprised.
This is one of those things that sounds right, and I'm inclined to believe, but I've never read any in-depth discussion of it so I'm hesitant as it's sort of confirming my own bias without a ton of concrete evidence.
Personally, I want to know how much Y Combinator companies have lost in Market Cap in the latest route. Many are trading below their IPO prices and have lost a huge amount of value.
Hate to be pedantic but our star won't collapse it's not large enough for that, it will simply puff out and die leaving behind a very hot core called a White Dwarf
The oldest company in the world is only 1443 years old (Kongo Gumi of Japan.) Most companies don't last a single human lifetime. It's completely besides the point to bring up things that play out over billions of years in that context. It's just trolling.
There are a lot of good responses, but another is that these companies are all expected to pay dividends, do buybacks or liquidate some time between now and the end of the universe. Every stock contains that promise, or a chance of it, supplying the ultimate justification for a nonzero price.
I wonder if it'd be an overall boon for Rebel Fund to open up their data sets?
Pros:
- The HN/YC community would almost certainly contribute new models with new types of signal.
- It's been proven many times that we mere mortals often unknowingly either bake-in our own biases into models or act on model output unaware that the models arrived at what could be undesirable, unintentional bias. Having more eyes on the data & methodology could not only prevent unintended biases but reveal signals that turn out to be much more insightful.
- If these signals point to real, underlying fundamentals (which they likely do) perhaps YC startups could benefit by learning from them or using them as guideposts.
Cons:
- Obviously Rebel Fund may risk giving away their competitive advantage.
- YC startups and applicants may over-optimize for these signals, distracting them from their unique challenges and overall end-user value generation.
On one hand it seems obvious for Rebel Fund to protect their IP- on the other hand what if more value could be generated for YC, YC startups and Rebel Fund by finding a way to introduce a cooperative positive feedback loop? Any loss of their slice could be outweighed by growing the pie. This is likely an oversimplification and naive to the many factors being weighed but it's an interesting space for thought!
> YC recently published an updated Top Companies list including 271 companies with a combined official valuation of over $600B (we now estimate it closer to ~$900B). Much can change in a year!
900B! Is this time travel or cognitive dissonance?
#3-5 on the list are being valued significantly above 50B and closer to 100B Meanwhile...
Most venture-funded startups solve silly non-problems or in fact cause serious harm to society, but make billions of dollars in doing it.
Meanwhile, we haven't been to the moon since the '70s, life expectancy in the US is declining, and a substantial percentage of our energy comes from coal. Oh, but if you want to bet your life savings on (entries in a distributed ledger that say you own) digital pictures of dog penises, I imagine there's a way to do it.
Technology didn't fix the evil of neoliberalism. It didn't clean anything up. It accelerated the corrosion.
Casinos haven't wasted the bulk of a generation's top talent to enrich a small number of pederasts in a tiny geographic area.
My view of "morals" laws is that harm reduction should be the policy. Do I like gambling or drug abuse? Of course not. Do I think they should be illegal? Probably not, because empirical evidence shows that harm is better reduced by making these things legal and then regulating them.
Of course, if I found that casinos were having huge negative externalities, then my opinion would change.
58 comments
[ 2.8 ms ] story [ 116 ms ] threadIt's really a message to those of us retail investors buying the IPO or post IPO shares of YC companies that need to be aware of the track record w.r.t. an investment. Most of the gains have been extracted already and future post IPO growth has already been priced in.
It also does suggests that YC was perhaps a beneficiary of easy monetary conditions that lifted valuation.
Perhaps its less clear given the current state of things whether their companies are good for long term earnings performance for long term ownership by retail investors.
What needed correcting is getting corrected. What was correct is staying correct.
The rise in interest rates means that companies that have been producing their own cash can fund growth initiatives internally. Companies who were funding growth initiatives using outside capital (debt, VC investment) are now going to be paying 10%+ to do so.
This is as absurd as saying "data-driven approach for finding out successful humans".
I am kind of aggravated to see drivel like this from VC's. This is similar to algorithm trading on stock market and not funding deserving startups. This 'data-drive' garbage is how you end up with more grocery delivery, food delivery and pet walking startups.
But yes, these days I think "data-driven" is really just a convoluted way of saying "we approximate the informed decisions of others without specifically understanding what we're doing". This is ML in a nut-shell after all. Is it possible to use ML and data science to find insights and draw conclusions that you then base your activities off of? Sure, but most are just looking for a magic black box that makes decisions for them specifically because they don't want to go to the trouble of understanding X. Once you abstract things away to that extent, you're inevitably training your algorithms to do what others do in an informed way, because where else would the training data come from?
not absurd at all, simply do IQ tests
WTF is a penny and wtf is a nickel? Nickel is supposed to be a metal.
Or "If you hit a golf ball 50 yards..." what's golf? wtf is a yard? one kilometer?
https://en.m.wikipedia.org/wiki/Raven%27s_Progressive_Matric...
> All of the questions on the Raven's progressives consist of visual geometric design with a missing piece. The test taker is given six to eight choices to pick from and fill in the missing piece.
Well, they suffer no consequences, and get more money to lose, so that's success, I guess.
That’s what I meant by collapse, but maybe in astronomy collapse means supernova?
Interesting that it started by building Buddhist Temples and has been building and maintaining them for that long. Cool!
Pros:
- The HN/YC community would almost certainly contribute new models with new types of signal.
- It's been proven many times that we mere mortals often unknowingly either bake-in our own biases into models or act on model output unaware that the models arrived at what could be undesirable, unintentional bias. Having more eyes on the data & methodology could not only prevent unintended biases but reveal signals that turn out to be much more insightful.
- If these signals point to real, underlying fundamentals (which they likely do) perhaps YC startups could benefit by learning from them or using them as guideposts.
Cons:
- Obviously Rebel Fund may risk giving away their competitive advantage.
- YC startups and applicants may over-optimize for these signals, distracting them from their unique challenges and overall end-user value generation.
On one hand it seems obvious for Rebel Fund to protect their IP- on the other hand what if more value could be generated for YC, YC startups and Rebel Fund by finding a way to introduce a cooperative positive feedback loop? Any loss of their slice could be outweighed by growing the pie. This is likely an oversimplification and naive to the many factors being weighed but it's an interesting space for thought!
(edited for formatting)
900B! Is this time travel or cognitive dissonance?
#3-5 on the list are being valued significantly above 50B and closer to 100B Meanwhile...
#3, Instacart now 24B (private valuation)
#4, Doordash now 20B
#5, Coinbase now 12B
Are you serious? I am interested to hear your perspective.
Meanwhile, we haven't been to the moon since the '70s, life expectancy in the US is declining, and a substantial percentage of our energy comes from coal. Oh, but if you want to bet your life savings on (entries in a distributed ledger that say you own) digital pictures of dog penises, I imagine there's a way to do it.
Technology didn't fix the evil of neoliberalism. It didn't clean anything up. It accelerated the corrosion.
Do you feel that the world shouldn’t be allowed to have casinos?
Casinos don't dominate the economy.
Casinos haven't wasted the bulk of a generation's top talent to enrich a small number of pederasts in a tiny geographic area.
My view of "morals" laws is that harm reduction should be the policy. Do I like gambling or drug abuse? Of course not. Do I think they should be illegal? Probably not, because empirical evidence shows that harm is better reduced by making these things legal and then regulating them.
Of course, if I found that casinos were having huge negative externalities, then my opinion would change.