Oct 13, 2023·edited Oct 13, 2023Liked by Daniel Vassallo, Louie Bacaj
The arguments against what you're saying remind me a lot of the arguments against self-publishing on Amazon, etc. years ago.
Trad pub authors (and the industry itself) lambasted self-published authors on every topic from quality to them not publishing 'real' books, but it slowly dawned on everybody that self-publishing was not only possible, but easier and more profitable with more upside for a broader spectrum of writers. And the gatekeepers (the industry that hoarded and controlled the profits and distribution) were left scrambling to adjust. Weirdly, many still believe they need 'permission' from agents and trad pub houses to publish 'real' books.
I've missed the Small Bets newsletter, great to see you're publishing it again!
Ergodicity is one of those concepts I had to hear about multiple times before it truly hit home. But once it did I started seeing it everywhere. Such an important idea for thinking about the world and about business strategy!
I was intrigued learning about the "ergodic" systems, until the middle of the essay, where you start mischaracterize several of YC's advice to founders and their actual viewpoints.
They don't believe that startup ideas "brainstormed" ideas at all - they have published explicit video advice "How to get startup ideas" that directly contradict this.This really harms your credibility - it tells me you don't actually read in detail what YC stands for.
You're also using YC as clickbait, as your arguments are not YC specific, but addressing the business model of any general accelerator program. Moreover, the analogy of "digging for diamonds" or bust is inaccurate - especially that you arbitrarily chosen $1 billion dollar valuation as "success". 50% of YC startups raise series A funding, and many can be sustainable. In fact, Paul Graham himself even advices founders to be as frugal as possible to be "ramen profitable", and tell founders to survive. They don't incentive founders to raise more money than they need.
You have an interesting point, but you overstayed your welcome by going into a topic you don't actually understand.
Life in general is a numbers game. For example a study found that musicians on average released 32 songs before they landed on a hit song. Thats almost 3 albums and most musicians would give up on the first one.
On the other hand, I see many people who like to play the "Startup game". This is a game where your company doesn't need to be successful for the founder to reap the benefits:
Start a startup with popular concept/person/accelerator/VC
I agree with the sentiment but I feel like you shouldn’t use YCs definition of success ($1bn+) for the metric. I think anyone in small bets would consider any multimillion dollar exit is success so I’d imagine YC is batting a bit higher than 1%. Unless you’re not allowed to exit under 1bn for some reason
Hold up, so you're saying that since only 50 startups became worth $1b, the founders of startup #51 who exited for marginally less than that wasted their time?
The median startup exit is ~50 million. How many YC startups have cleared that bar?
You're saying that YC forces you to pivot if you're not on track for $1b. Does the data confirm that?
I enjoyed your article, but I don't agree with your characterization of the military. You said, "The military wants to recruit expendable soldiers who will go out to the battlefield risking their lives and limb for the collective, while the generals with all the medals sit in an air conditioned room giving orders."
I don't think that's what the military wants. I think the military wants to recruit the most intelligent, capable, and driven people so that we can outperform our foes. Our next war will not be won by expendable soldiers. It will be won by highly trained, high performing individuals with a passion for doing their part to continue our free society.
I think you should rethink your claim about what the military wants and update your article.
The arguments against what you're saying remind me a lot of the arguments against self-publishing on Amazon, etc. years ago.
Trad pub authors (and the industry itself) lambasted self-published authors on every topic from quality to them not publishing 'real' books, but it slowly dawned on everybody that self-publishing was not only possible, but easier and more profitable with more upside for a broader spectrum of writers. And the gatekeepers (the industry that hoarded and controlled the profits and distribution) were left scrambling to adjust. Weirdly, many still believe they need 'permission' from agents and trad pub houses to publish 'real' books.
Loved how you broke down the VC funding model, makes so much sense this way. Glad I’m following the small bets pathways to having a business
I've missed the Small Bets newsletter, great to see you're publishing it again!
Ergodicity is one of those concepts I had to hear about multiple times before it truly hit home. But once it did I started seeing it everywhere. Such an important idea for thinking about the world and about business strategy!
Made me think about YC, in a totally different way. Thanks for the awesome insight. Subscribing you for more great ideas.
This mirrors my experience. A couple threads to tug.
Brainstorm then find product fit is why so many fail. If brainstorming doesn't include product fit, it's just silly.
Good ideas do come from network effects but as you said, beware the network.
Fail early fail often is your pivot. It's YC letting founders burn all their time and resources. It also is dumb. (I wrote about that part here)
https://www.polymathicbeing.com/p/fail-early-fail-often-or-maybe-not
I was intrigued learning about the "ergodic" systems, until the middle of the essay, where you start mischaracterize several of YC's advice to founders and their actual viewpoints.
They don't believe that startup ideas "brainstormed" ideas at all - they have published explicit video advice "How to get startup ideas" that directly contradict this.This really harms your credibility - it tells me you don't actually read in detail what YC stands for.
You're also using YC as clickbait, as your arguments are not YC specific, but addressing the business model of any general accelerator program. Moreover, the analogy of "digging for diamonds" or bust is inaccurate - especially that you arbitrarily chosen $1 billion dollar valuation as "success". 50% of YC startups raise series A funding, and many can be sustainable. In fact, Paul Graham himself even advices founders to be as frugal as possible to be "ramen profitable", and tell founders to survive. They don't incentive founders to raise more money than they need.
You have an interesting point, but you overstayed your welcome by going into a topic you don't actually understand.
Life in general is a numbers game. For example a study found that musicians on average released 32 songs before they landed on a hit song. Thats almost 3 albums and most musicians would give up on the first one.
On the other hand, I see many people who like to play the "Startup game". This is a game where your company doesn't need to be successful for the founder to reap the benefits:
Start a startup with popular concept/person/accelerator/VC
=> Raise money
=> Spend it all to get recognition
=> Profit from personal brand building
=> Close the startup
=> Repeat
I agree with the sentiment but I feel like you shouldn’t use YCs definition of success ($1bn+) for the metric. I think anyone in small bets would consider any multimillion dollar exit is success so I’d imagine YC is batting a bit higher than 1%. Unless you’re not allowed to exit under 1bn for some reason
Hold up, so you're saying that since only 50 startups became worth $1b, the founders of startup #51 who exited for marginally less than that wasted their time?
The median startup exit is ~50 million. How many YC startups have cleared that bar?
You're saying that YC forces you to pivot if you're not on track for $1b. Does the data confirm that?
I enjoyed your article, but I don't agree with your characterization of the military. You said, "The military wants to recruit expendable soldiers who will go out to the battlefield risking their lives and limb for the collective, while the generals with all the medals sit in an air conditioned room giving orders."
I don't think that's what the military wants. I think the military wants to recruit the most intelligent, capable, and driven people so that we can outperform our foes. Our next war will not be won by expendable soldiers. It will be won by highly trained, high performing individuals with a passion for doing their part to continue our free society.
I think you should rethink your claim about what the military wants and update your article.
Interesting perspective