Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

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The premise of this question is that each year YC operated produced identical returns. No.

* The alumni network has gotten steadily more valuable

* The signaling value of being accepted into YC has increased dramatically

* YC's direct influence on investors has increased steadily

* The incentives to apply to YC have increased accordingly, setting up a virtuous cycle (you had to be a bit of an oddball to be in that first class)

* Each batch now funds many more companies than YC did in its entire first year

Meanwhile: it takes lots of years to get to a point where you're ready to file S-1; since the nuclear winter in 2001, you need to be doing a huge amount of revenue with a profitability that can be modeled in simple Excel spreadsheets to do it.

So if you figure YC hit its stride 5 years ago, the year Stripe applied, they're right on schedule.

Consider: Square was founded in 2009, with gold-plated credentials, has done very well, and is only now filing for IPO.

I'd have thought the premise of the question was more along the lines of: YC's signalling value grew as a direct result of having great companies in its first few cohorts and supporting them well. And the ethos has been very much focused around building huge companies within VC fund time horizons. Yet the successes [seen so far] in those early cohorts chose to exit through private sales rather than push for the public markets. Is there a reason behind this?

Which is a valid question, even if the pool of potential candidates for IPOs by now really covers only the first seventy or so companies rather than the whole 940. The few companies that haven't privately exited or died in those first seventy or so companies does include Dropbox though...

Can you elaborate on Square's gold-plated credentials? Most of the news / comments I've read about square post their IPO disclosure have been negative (or at least skeptical) - largely to do with the increasing loss rate and the state of the payments market.

Square has prominent co-founders and raised over half a billion dollars from prominent investors.

One way to look at Square is as a company that essentially bought its way into the payments space. The question is whether its premium valuation is warranted.

Some analysts point out reasons to be skeptical[1].

[1] http://www.streetinsider.com/Analyst+Comments/Cowens+Damning...

Famous founder with previous start up success, lots of VC capital, lots of press, lots of growth, lots of hype. Maybe they even have an open office with foosball and Aeron chars (or are standing desks the new status symbol?) As a start up, they're crushing it. As an actual company, you know, the kind where revenue > expenses, they utterly fail it.

No such premise was was intended, or, I believe, implied.

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