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Stripe is the second most valuable YC company. Total valuation of all companies that YC funded (more than 1,900) now exceeds 100 billon dollars. Airbnb has a p

by haaen 8y ago

Stripe is the second most valuable YC company. Total valuation of all companies that YC funded (more than 1,900) now exceeds 100 billon dollars. Airbnb has a private valuation of 31 billion. Stripe has a private valuation of 20 billion. Dropbox has a public valuation (DBX) of 11 billion. So the two most valuable companies account for about half the total value of all the YC companies. This is what a power law looks like!

lifeisstillgood 8y ago
To the founders and employees of all the other less "powerful" companies - well done too ... making the world better, however you are doing it, is powerful work. keep it up :-)
- martinvol 8y ago
  You should google power law, I think you misunderstood everything and have a chance to learn an amazing statistical concept today :)
  - jzoch 8y ago
    How did you come to the conclusion that he misunderstood anything at all? Reading his comment I cant see how you think that.
  - lifeisstillgood 8y ago
    No I understand it. I even have at least one book extolling it in business and life. I just wanted to convey that the sheer act of starting and running any (non evil) business is a Good Thing and worth doing irrespective of your valuation, power laws or not. More power to their elbows. (That is such a flexible word!) Any way, assuming power laws hold in life is like assuming financial markets have normal distributions - it's gravy while true, but if it ain't so, things can get hairy. :-)
ransom1538 8y ago
"This is what a power law looks like!" Exactly. That is why, now, if a VC looks at your company they think: "Will this company be worth more than all the companies we have ever funded combined". So if the idea isn't something close to that power law, they are out. My 'buy Japanese bubble gum' idea might not hit that.
- gammateam 8y ago
  No., they invest on the merit of the idea and any Venture Capitalist's funding is validation of the idea in and of itself! SYKE
chadash 8y ago
And this is why Y Combinator may not be right for your startup. The 100 billion dollars of valuation listed on YC's website may not be up to date, but it's clear that the top 10% of companies make up the overwhelming majority of their portfolio. So they go for moonshots. And they also invest in multiple competitors in the same space in the hopes that one will pan out. So if you're building the kind of company that might be worth $100 million someday but won't ever be worth $100 billion, VCs and startup incubators might not be right for you, but just remember that a rejection from them doesn't necessarily mean you aren't on to something great.
- fanzhang 8y ago
  What is an accelerator or a funding group for whom the portfolio is not following that power law? For example one where the top 20 companies each comprise say appx 2% of the portfolio?
  - anujabro 8y ago
    One that all have similar successes (e.g. all fail) Odds are most early stage venture portfolios have a power law distribution, but of different magnitude. Later stage you go, the more normal the distribution will look
  - maehwasu 8y ago
    Growth stage private equity buying out companies for multiples of EBITDA. Whenever you're investing in early-stage companies with low marginal costs, that deal primarily in bits, not atoms, you're likely to end up with power law outcome distributions.
- colechristensen 8y ago
  the top 10% of companies make up the overwhelming majority of their portfolio. So they go for moonshots This is just a power law thing and what would be expected with any large group of companies. Success isn't linear or a bell curve, people seem to understand those two distributions rather well power law distributions rather poorly.
0bfus 8y ago
More specifically this is probably closer to a Zipfian distribution: https://en.wikipedia.org/wiki/Zipf%27s_law https://en.wikipedia.org/wiki/Zipf%27s_law
- aidenn0 8y ago
  I would guess it's closer to a yule-simon distribution, as that is the limiting distribution of a particular form of preferential attachment that has many similarities with how equity is assigned.
Liron 8y ago
Crazy that Elon Musk's top 3 founded companies (PayPal, Tesla, SpaceX) are higher valuation than YC's top 3 investment companies (AirBnB, Stripe, Dropbox). Interestingly PayPal and Stripe are both competing for some of the same integrations. PayPal increased our revenues by 20% when we started using it in addition to Stripe.
- totoglazer 8y ago
  Although only spacex is clearly Musk founded.
  - meowface 8y ago
    PayPal wasn't founded by him, but X.com was.
  - napoleond 8y ago
    That actually makes the observation more interesting in some ways--none of the YC examples were "founded" by YC either. One could argue that Musk has acted like a very aggressive version of an angel or VC--finds promising young startups in growth industries, provides them with capital (or, in Musk's case, some capital and lots of sweat equity, to the point of getting himself listed as the CEO and over-shadowing the original founders), and helps them to blossom into a precious unicorn. Either way, it's interesting to think of Musk's personal endeavours in comparison with a group like YC. I don't really know what conclusions I would draw though.
deleted 8y ago
[deleted]
allenleein 8y ago
In case you don't know, Y Combinator sold about half of its holdings(Dropbox) to other investors at around the same time as the series B financing round led by Index. That’s the only time that Y Combinator has ever sold any portfolio company’s shares in a secondary transaction. I don't understand why YC did that? It seems like not a good move. Source: https://www.recode.net/2018/3/22/17150770/sequoia-dropbox-ipo-win https://www.recode.net/2018/3/22/17150770/sequoia-dropbox-ip...
malloryerik 8y ago
This also seems to imply that they charge too much. Don't get me wrong, I love Stripe, but they're still expensive for what they do with great pizzaz but which is really a utility service: an online credit card payment. Competitors should step up. Isn't 2.9% + 30¢ huge in the scheme of things? Add 1% for international and 1% for FX conversion and an overseas card transaction costs 5%. That's nice for Stripe.

by haaen 8y ago

lifeisstillgood 8y ago

To the founders and employees of all the other less "powerful" companies - well done too ... making the world better, however you are doing it, is powerful work. keep it up :-)

martinvol 8y ago
You should google power law, I think you misunderstood everything and have a chance to learn an amazing statistical concept today :)
- jzoch 8y ago
  How did you come to the conclusion that he misunderstood anything at all? Reading his comment I cant see how you think that.
- lifeisstillgood 8y ago
  No I understand it. I even have at least one book extolling it in business and life. I just wanted to convey that the sheer act of starting and running any (non evil) business is a Good Thing and worth doing irrespective of your valuation, power laws or not. More power to their elbows. (That is such a flexible word!) Any way, assuming power laws hold in life is like assuming financial markets have normal distributions - it's gravy while true, but if it ain't so, things can get hairy. :-)

ransom1538 8y ago

"This is what a power law looks like!" Exactly. That is why, now, if a VC looks at your company they think: "Will this company be worth more than all the companies we have ever funded combined". So if the idea isn't something close to that power law, they are out. My 'buy Japanese bubble gum' idea might not hit that.

gammateam 8y ago
No., they invest on the merit of the idea and any Venture Capitalist's funding is validation of the idea in and of itself! SYKE

chadash 8y ago

And this is why Y Combinator may not be right for your startup. The 100 billion dollars of valuation listed on YC's website may not be up to date, but it's clear that the top 10% of companies make up the overwhelming majority of their portfolio. So they go for moonshots. And they also invest in multiple competitors in the same space in the hopes that one will pan out. So if you're building the kind of company that might be worth $100 million someday but won't ever be worth $100 billion, VCs and startup incubators might not be right for you, but just remember that a rejection from them doesn't necessarily mean you aren't on to something great.

fanzhang 8y ago
What is an accelerator or a funding group for whom the portfolio is not following that power law? For example one where the top 20 companies each comprise say appx 2% of the portfolio?
- anujabro 8y ago
  One that all have similar successes (e.g. all fail) Odds are most early stage venture portfolios have a power law distribution, but of different magnitude. Later stage you go, the more normal the distribution will look
- maehwasu 8y ago
  Growth stage private equity buying out companies for multiples of EBITDA. Whenever you're investing in early-stage companies with low marginal costs, that deal primarily in bits, not atoms, you're likely to end up with power law outcome distributions.
colechristensen 8y ago
the top 10% of companies make up the overwhelming majority of their portfolio. So they go for moonshots This is just a power law thing and what would be expected with any large group of companies. Success isn't linear or a bell curve, people seem to understand those two distributions rather well power law distributions rather poorly.

0bfus 8y ago

More specifically this is probably closer to a Zipfian distribution: https://en.wikipedia.org/wiki/Zipf%27s_law https://en.wikipedia.org/wiki/Zipf%27s_law

aidenn0 8y ago
I would guess it's closer to a yule-simon distribution, as that is the limiting distribution of a particular form of preferential attachment that has many similarities with how equity is assigned.

Liron 8y ago

Crazy that Elon Musk's top 3 founded companies (PayPal, Tesla, SpaceX) are higher valuation than YC's top 3 investment companies (AirBnB, Stripe, Dropbox). Interestingly PayPal and Stripe are both competing for some of the same integrations. PayPal increased our revenues by 20% when we started using it in addition to Stripe.

totoglazer 8y ago
Although only spacex is clearly Musk founded.
- meowface 8y ago
  PayPal wasn't founded by him, but X.com was.
- napoleond 8y ago
  That actually makes the observation more interesting in some ways--none of the YC examples were "founded" by YC either. One could argue that Musk has acted like a very aggressive version of an angel or VC--finds promising young startups in growth industries, provides them with capital (or, in Musk's case, some capital and lots of sweat equity, to the point of getting himself listed as the CEO and over-shadowing the original founders), and helps them to blossom into a precious unicorn. Either way, it's interesting to think of Musk's personal endeavours in comparison with a group like YC. I don't really know what conclusions I would draw though.

deleted 8y ago

[deleted]

allenleein 8y ago

In case you don't know, Y Combinator sold about half of its holdings(Dropbox) to other investors at around the same time as the series B financing round led by Index. That’s the only time that Y Combinator has ever sold any portfolio company’s shares in a secondary transaction. I don't understand why YC did that? It seems like not a good move. Source: https://www.recode.net/2018/3/22/17150770/sequoia-dropbox-ipo-win https://www.recode.net/2018/3/22/17150770/sequoia-dropbox-ip...

malloryerik 8y ago

This also seems to imply that they charge too much. Don't get me wrong, I love Stripe, but they're still expensive for what they do with great pizzaz but which is really a utility service: an online credit card payment. Competitors should step up. Isn't 2.9% + 30¢ huge in the scheme of things? Add 1% for international and 1% for FX conversion and an overseas card transaction costs 5%. That's nice for Stripe.