6 ms·

And if they sell four? Wish I still had a copy but there was a brilliant story printed years ago called something like "there are numbers smaller than 1%." It i

And if they sell four? Wish I still had a copy but there was a brilliant story printed years ago called something like "there are numbers smaller than 1%." It illustrated the fallacy in the thinking behind saying things like, "even if we only sell 1%, we'll be rich." Just because you pick some arbitrarily small number as your minimum sales doesn't mean it's actually the minimum, or even the most likely minimum. You could sell a couple hundred. You could sell ten. You could sell zero.

mrkurt 6y ago
If they sell zero, YC's investment is worth $0 just like it is for half of the companies they invest in. The success rate for hope-to-be-unicorn startups is very low.
cbsks 6y ago
This is probably the story you are thinking of: https://sive.rs/1pct https://sive.rs/1pct It was discussed on HN at the time: https://news.ycombinator.com/item?id=847334 https://news.ycombinator.com/item?id=847334
- danaliv 6y ago
  Yes, that's the one. Thank you!
effingwewt 6y ago
I remember this as well but can't find it via searching. Was a fallacy along the lines of 'we only have to sell to one percent of China to make billions, anyone can sell anything to one percent of a country', but in reality it never works out due to factors like shipping and getting a foothold among the many established companies. If someone could cite the name of the economic theory it would be super appreciated. Edit: so I was thinking of this one[1], which I believe speaks to where this theory originated, and was known as 'Chinese Math' which is apparently re-invented every year by someone, but glad you found the one you were thinking of GP. [1] https://www.businesspundit.com/please-stop-with-your-chinese-math/ https://www.businesspundit.com/please-stop-with-your-chinese...
fallingknife 6y ago
The point is that decent shot at break even / small but non-zero chance of a home run is a good investment, at least if you do a lot of them for cheap. Which is what YC excels at.

mrkurt 6y ago

If they sell zero, YC's investment is worth $0 just like it is for half of the companies they invest in. The success rate for hope-to-be-unicorn startups is very low.

cbsks 6y ago

This is probably the story you are thinking of: https://sive.rs/1pct https://sive.rs/1pct It was discussed on HN at the time: https://news.ycombinator.com/item?id=847334 https://news.ycombinator.com/item?id=847334

danaliv 6y ago
Yes, that's the one. Thank you!

effingwewt 6y ago

I remember this as well but can't find it via searching. Was a fallacy along the lines of 'we only have to sell to one percent of China to make billions, anyone can sell anything to one percent of a country', but in reality it never works out due to factors like shipping and getting a foothold among the many established companies. If someone could cite the name of the economic theory it would be super appreciated. Edit: so I was thinking of this one[1], which I believe speaks to where this theory originated, and was known as 'Chinese Math' which is apparently re-invented every year by someone, but glad you found the one you were thinking of GP. [1] https://www.businesspundit.com/please-stop-with-your-chinese-math/ https://www.businesspundit.com/please-stop-with-your-chinese...

fallingknife 6y ago

The point is that decent shot at break even / small but non-zero chance of a home run is a good investment, at least if you do a lot of them for cheap. Which is what YC excels at.