For better or worse that’s never going to be more than a thought experiment. We could never stand it. How about that for counterintuitive? I can lay out what I know to be the right thing to do, and still not do it. I can make up all sorts of plausible justifications. It would hurt YC’s brand (at least among the innumerate) if we invested in huge numbers of risky startups that flamed out. It might dilute the value of the alumni network. Perhaps most convincingly, it would be demoralizing for us to be up to our chins in failure all the time. But I know the real reason we’re so conservative is that we just haven’t assimilated the fact of 1000x variation in returns.
We’ll probably never be able to bring ourselves to take risks proportionate to the returns in this business.
So I get why Y Combinator can’t do this, but the “we” seems more inclusive here than just the YC team. I think this because in most other instances of not knowing how or being unable to do something, he troubles to suggest a way someone else might be able to.
If people are prepared to invest a lot of money in high frequency trading algorithms which are famously opaque to the people providing the money, or into hedge funds which systematically lose to the market, why wouldn’t someone be willing to invest in an even larger number of startups than Y Combinator?
If we follow the logic of dumping arbitrary tests, it feels like it might be as direct as configuring a few reasoned rules, using a standardized equity offer with standardized paperwork, and then just slowly tweak the reasoned rules as the batch outcomes roll in.
This part is a little baffling to me:
So I get why Y Combinator can’t do this, but the “we” seems more inclusive here than just the YC team. I think this because in most other instances of not knowing how or being unable to do something, he troubles to suggest a way someone else might be able to.
If people are prepared to invest a lot of money in high frequency trading algorithms which are famously opaque to the people providing the money, or into hedge funds which systematically lose to the market, why wouldn’t someone be willing to invest in an even larger number of startups than Y Combinator?
If we follow the logic of dumping arbitrary tests, it feels like it might be as direct as configuring a few reasoned rules, using a standardized equity offer with standardized paperwork, and then just slowly tweak the reasoned rules as the batch outcomes roll in.