11 ms·

People seem to become really attached to the validation from YC. Getting into an incubator or getting money from investors is zero measure of business success.

People seem to become really attached to the validation from YC. Getting into an incubator or getting money from investors is zero measure of business success. Business success is users and growth and revenue. Whether YC blesses you is also zero reflection on you as a person. Rejection by YC means nothing at all. I think business is about trying to make money, it’s not about YC and funding and the scene and investment rounds and hyper growth and beers after work and been seen as one of the cool kids. Head down, work, balanced lifestyle, try to make something small succeed on your own.

hef19898 7y ago
Even YC is open about the fact that they are wrong with rejections. Also agree on the problem with VC money as a measure of success, because it is not. And still it used, it seems, as the prime success indicator in everything start-up. And as such is the primary thing people seem to seek out. It is also very persuasive, sometimes I catch myself with a small amount of jealousy when someone in my field is raising multi-million rounds. And wouldn't even take that money if someone offered it right now.
spottybanana 7y ago
> Business success is users and growth and revenue. To me, business success is only the profit, what my business makes after the expenses - free cash to invest or share to shareholders. Everything else can go to hell, I don't care (except when it relates to making profit). However nothing wrong if someone else has some other metrics. However I don't really understand why to pursue something else in business.
- randlet 7y ago
  That line stuck out to me too. As someone on here said recently "revenue is easy if you're selling dollars for quarters".
- gnicholas 7y ago
  I completely agree that revenue gets too much airtime, at the expense of profit. I do think revenue can be a useful stat for startups, for example if it is a harbinger of future profit. Imagine you're spending $500k/yr on engineering to build a platform, and you're bringing in $500k/yr in revenue. In the early years, this means you have no profit. But if your product (perhaps Saas?) is one that requires much less upkeep than initial development, then you can be fairly certain that your business will become profitable once the early dev work has been completed. Of course, you can't be naive here and forget to account for customer service, maintenance, etc., which all ramp up over time.
bald 7y ago
Having been rejected 2 times by YC, could not agree more. biz #1 is now series B at $120M valuation biz #2 is now series A with $50M valuation biz #3 is now seed with $15M valuation I did not bother to apply with biz #3 to YC, probability-weighted, it was not worth the effort to me.
- giovannibonetti 7y ago
  I'm curious to know what biz #1, #2 and #3 are...
- xiphias2 7y ago
  Your post contradicts itself. You either care about investor validation or not. You just described your businesses by what investors value your companies, which means that you care about investors. I think it's great though, both investor validation and user validation matter a lot in business (it doesn't matter if it's YC or VC).
  - texasbigdata 7y ago
    Or...he described part of the formula that determines how much he can cash out for...which backwards looking is a function of company success.
  - kossae 7y ago
    I think they're referencing YC specifically. While money is money, there is a prestige put upon the acceptance into YC (obviously more so in this community). This, I believe, is what's being discussed. Not the validation of business ideas via VC investment.
  - objektif 7y ago
    I think you are contradicting yourself. YC is not just an investor. And may be he just cares about money.
  - pdubs1 7y ago
    Maybe, or maybe you lack logic + specific situational insight. Perhaps you spoke too soon, before understanding. Your case is true only if "YC" === "All Investors"
ryanmercer 7y ago
>Rejection by YC means nothing at all. More accurately it probably means "Honestly, we probably didn't even look at your idea very well because we have a shot glass to fill and 10 fire hoses of output trying to fill it. Likely, for some entirely arbitrary reason, you did not make the cut. You may or may not have a good idea but we lack the time to tell you"
throwaway_tech 7y ago
>Getting into an incubator or getting money from investors is zero measure of business success. That is sort of like saying money doesn't buy happiness...true, but financial stress or poverty typically can be outright bars to happiness. As you say YC admission or raising funds from investors isn't a measure of business success...but then again I haven't seen a tech unicorn that hasn't been funded by investors. >Head down, work, balanced lifestyle, try to make something small succeed on your own. That is a great message to tell to the 99% that get rejected from YC and will never touch VC funding...but even that sounds more like a pipe dream than the American dream now a days.
- davidajackson 7y ago
  > ...but then again I haven't seen a tech unicorn that hasn't been funded by investors. MailChimp
- JangoSteve 7y ago
  > As you say YC admission or raising funds from investors isn't a measure of business success...but then again I haven't seen a tech unicorn that hasn't been funded by investors. There is a difference between a company getting investor funding and the investor funding being a significant measure of success. There are plenty of unicorns that didn't raise money until well after they were already considered a success. A couple examples off the top of my head would be: * Github - first round was a $100mil series A at a $650mil valuation about 5 years after founding. * Atlassian - first round was a $60mil round 8 years after founding. I'm sure there are plenty more that are easier to find once you know what you're looking for.
- marcus_holmes 7y ago
  >...but then again I haven't seen a tech unicorn that hasn't been funded by investors. Partly because if you're not in the target market for a bootstrapping business, you probably won't have heard of them. It's a waste of money, time and energy making a big noise about your business if you're not chasing investment. Partly because the desired exit for bootstrapped businesses is (usually) a trade sale. You can't trade-sale a unicorn-sized business because finding a buyer that big is difficult/impossible. Bootstrapped businesses tend to sell before they get that big, while they're still showing huge growth, to make sure they have enough potential buyers. Partly because valuations of bootstrapped private companies are weird. With no VC driving valuation growth, and no stock sales, how much is a private company actually worth? Valuing one is tricky, and a lot less important than for an investment-driven business.
drclau 7y ago
The problem is, virtually no VC is taking cold calls anymore (did they ever, really?). YC is great if you are early stage and need the money, networking and yes, validation. Their knowledge and experience are also very useful, but they already make it available to the public for free (which is amazing in itself). If you can bootstrap a business without needing any of the above, that's really great and you should do it. But that depends greatly on the type of your business.
redm 7y ago
> Getting into an incubator or getting money from investors is zero measure of business success. "Put your money where your mouth is" It may not be a measure of business success, but is a validation of an idea, a team, or both. That's a strong validation IMO.
wtvanhest 7y ago
Lots of comments here. This is one area where either you have tried or you haven’t and you have either succeeded or failed (to get to the next step). I tried, (left my job, put my time and money on the line), had some small wins, but ultimately failed. Looking back, not getting in to YC was probably not a significant driver in the business not working. That said, when you have your money and reputation on the line, validation is very valuable, and those that say it isn’t, either haven’t done it or are truly unique.
fudged71 7y ago
There are very valid reasons to be drawn to validation from groups like YC. They may be disconnected from business success, but they are valid nonetheless. So what would YC disconnected from business look like?
sub7 7y ago
> Business success is users and growth and revenue Nope, it's net profit. I know there are fashionable exceptions like Uber/Amazon that grab market share in a winner take all market before focusing on profit but for 99% of companies out there, unit economics are still the measure of success. I've been part of companies with insane growth, crazy fund raises etc that eventually died because revenue didn't keep up with costs.
aogl 7y ago
You are completely right. I think your point on a balanced life is also crucially important. Being too obsessed with something also shows off badly and had a way of pushing people away from both you and your "business". Nobody like a desperate person, balanced and well rounded people are more attractive.

hef19898 7y ago

Even YC is open about the fact that they are wrong with rejections. Also agree on the problem with VC money as a measure of success, because it is not. And still it used, it seems, as the prime success indicator in everything start-up. And as such is the primary thing people seem to seek out. It is also very persuasive, sometimes I catch myself with a small amount of jealousy when someone in my field is raising multi-million rounds. And wouldn't even take that money if someone offered it right now.

spottybanana 7y ago

> Business success is users and growth and revenue. To me, business success is only the profit, what my business makes after the expenses - free cash to invest or share to shareholders. Everything else can go to hell, I don't care (except when it relates to making profit). However nothing wrong if someone else has some other metrics. However I don't really understand why to pursue something else in business.

randlet 7y ago
That line stuck out to me too. As someone on here said recently "revenue is easy if you're selling dollars for quarters".
gnicholas 7y ago
I completely agree that revenue gets too much airtime, at the expense of profit. I do think revenue can be a useful stat for startups, for example if it is a harbinger of future profit. Imagine you're spending $500k/yr on engineering to build a platform, and you're bringing in $500k/yr in revenue. In the early years, this means you have no profit. But if your product (perhaps Saas?) is one that requires much less upkeep than initial development, then you can be fairly certain that your business will become profitable once the early dev work has been completed. Of course, you can't be naive here and forget to account for customer service, maintenance, etc., which all ramp up over time.

bald 7y ago

Having been rejected 2 times by YC, could not agree more. biz #1 is now series B at $120M valuation biz #2 is now series A with $50M valuation biz #3 is now seed with $15M valuation I did not bother to apply with biz #3 to YC, probability-weighted, it was not worth the effort to me.

giovannibonetti 7y ago
I'm curious to know what biz #1, #2 and #3 are...
xiphias2 7y ago
Your post contradicts itself. You either care about investor validation or not. You just described your businesses by what investors value your companies, which means that you care about investors. I think it's great though, both investor validation and user validation matter a lot in business (it doesn't matter if it's YC or VC).
- texasbigdata 7y ago
  Or...he described part of the formula that determines how much he can cash out for...which backwards looking is a function of company success.
- kossae 7y ago
  I think they're referencing YC specifically. While money is money, there is a prestige put upon the acceptance into YC (obviously more so in this community). This, I believe, is what's being discussed. Not the validation of business ideas via VC investment.
- objektif 7y ago
  I think you are contradicting yourself. YC is not just an investor. And may be he just cares about money.
- pdubs1 7y ago
  Maybe, or maybe you lack logic + specific situational insight. Perhaps you spoke too soon, before understanding. Your case is true only if "YC" === "All Investors"

ryanmercer 7y ago

>Rejection by YC means nothing at all. More accurately it probably means "Honestly, we probably didn't even look at your idea very well because we have a shot glass to fill and 10 fire hoses of output trying to fill it. Likely, for some entirely arbitrary reason, you did not make the cut. You may or may not have a good idea but we lack the time to tell you"

throwaway_tech 7y ago

>Getting into an incubator or getting money from investors is zero measure of business success. That is sort of like saying money doesn't buy happiness...true, but financial stress or poverty typically can be outright bars to happiness. As you say YC admission or raising funds from investors isn't a measure of business success...but then again I haven't seen a tech unicorn that hasn't been funded by investors. >Head down, work, balanced lifestyle, try to make something small succeed on your own. That is a great message to tell to the 99% that get rejected from YC and will never touch VC funding...but even that sounds more like a pipe dream than the American dream now a days.

davidajackson 7y ago
> ...but then again I haven't seen a tech unicorn that hasn't been funded by investors. MailChimp
JangoSteve 7y ago
> As you say YC admission or raising funds from investors isn't a measure of business success...but then again I haven't seen a tech unicorn that hasn't been funded by investors. There is a difference between a company getting investor funding and the investor funding being a significant measure of success. There are plenty of unicorns that didn't raise money until well after they were already considered a success. A couple examples off the top of my head would be: * Github - first round was a $100mil series A at a $650mil valuation about 5 years after founding. * Atlassian - first round was a $60mil round 8 years after founding. I'm sure there are plenty more that are easier to find once you know what you're looking for.
marcus_holmes 7y ago
>...but then again I haven't seen a tech unicorn that hasn't been funded by investors. Partly because if you're not in the target market for a bootstrapping business, you probably won't have heard of them. It's a waste of money, time and energy making a big noise about your business if you're not chasing investment. Partly because the desired exit for bootstrapped businesses is (usually) a trade sale. You can't trade-sale a unicorn-sized business because finding a buyer that big is difficult/impossible. Bootstrapped businesses tend to sell before they get that big, while they're still showing huge growth, to make sure they have enough potential buyers. Partly because valuations of bootstrapped private companies are weird. With no VC driving valuation growth, and no stock sales, how much is a private company actually worth? Valuing one is tricky, and a lot less important than for an investment-driven business.

drclau 7y ago

The problem is, virtually no VC is taking cold calls anymore (did they ever, really?). YC is great if you are early stage and need the money, networking and yes, validation. Their knowledge and experience are also very useful, but they already make it available to the public for free (which is amazing in itself). If you can bootstrap a business without needing any of the above, that's really great and you should do it. But that depends greatly on the type of your business.

redm 7y ago

> Getting into an incubator or getting money from investors is zero measure of business success. "Put your money where your mouth is" It may not be a measure of business success, but is a validation of an idea, a team, or both. That's a strong validation IMO.

wtvanhest 7y ago

Lots of comments here. This is one area where either you have tried or you haven’t and you have either succeeded or failed (to get to the next step). I tried, (left my job, put my time and money on the line), had some small wins, but ultimately failed. Looking back, not getting in to YC was probably not a significant driver in the business not working. That said, when you have your money and reputation on the line, validation is very valuable, and those that say it isn’t, either haven’t done it or are truly unique.

fudged71 7y ago

There are very valid reasons to be drawn to validation from groups like YC. They may be disconnected from business success, but they are valid nonetheless. So what would YC disconnected from business look like?

sub7 7y ago

> Business success is users and growth and revenue Nope, it's net profit. I know there are fashionable exceptions like Uber/Amazon that grab market share in a winner take all market before focusing on profit but for 99% of companies out there, unit economics are still the measure of success. I've been part of companies with insane growth, crazy fund raises etc that eventually died because revenue didn't keep up with costs.

aogl 7y ago

You are completely right. I think your point on a balanced life is also crucially important. Being too obsessed with something also shows off badly and had a way of pushing people away from both you and your "business". Nobody like a desperate person, balanced and well rounded people are more attractive.