The pg apotheosis reminds me of an interesting Google talk by Robert Sutton where he reports that in research with monkeys, the dominant monkey receives a highly disproportionate amount of attention relative to that shared among subordinates and this phenomenon is theorized to be one of the reasons people in authority, such as management positions, tend to become less sympathetic to those below them. It's a very insightful talk for anyone with an interest in management dynamics:
Rather short and disappointing article given the headline. I took a long sip of my coffee, reclined and looked forward to reading something much longer and better...but alas it wasn't to be!
I find it surprising that Heroku was the breakeven point. There have been other (what I consider) rather high-profile exits, such as Cloudkick, Reddit, Etherpad, 280 North, etc. These were good companies and were acquired for significant amounts; it seems like YC would have realized some significant gains on them.
The article might have meant YC recouped their past investments in all startups combined:
"YC broke even on its past investments when Salesforce.com (CRM) bought YC company Heroku"
Since the sales price is above 200 million, YC's equity would be worth 12+ million, which likely surpassed the total monetary first-seed investments in every startup they did so far.
That is kinda staggering given that there are still many stars that are doing pretty well...that YC is yet to exit. From Dropbox to AirBnB to WePay to Wufoo to Justin.tv to Posterous to Scribd, etc. All of those I suspect, if they have an exit (I doubt Wufoo will - mainly because I don't think the founders are interested), it will be pretty substantial.
Look at a Hollywood contract sometime, with such lovely concepts as "triple breakeven" and "rolling breakeven". The creativity in LA isn't just behind the camera!
And the headline stringers probably think, "I've never heard of pg, so my readers haven't either. I better put 'Apple' or 'Facebook' in this headline." [/cynicism]
As someone who is looking to apply, even at this stage, having YCombinator as an option is tremendously invaluable. So on behalf of the dreamers out there, I say thanks Paul, Jessica and crew. Even if not accepted, just having that door there gives one more clarity moving forward by removing lots of the uncertainty.
Oh, boy... The idea of some TV executives out there, champing at the bit to create a reality TV show about entrepreneurs is either f!#@ng scary or LOL funny.
I can just see it now... "Survivor: YC" or "The Entrepreneur: Paul Graham Edition." Even better: "Entrepreneur Death Match: Paul Graham v. Steve Case." And the inevitable "VC Revenge Stunts, hosted by Sean Parker."
"Mark Zuckerberg Goes Back To College" might be entertaining though.
If memory serves, the deals they offer on websites are terrible. 50% stake, $250k sort of thing. Also, they don't have any worthwhile experience to offer. I don't get why tech startups would go to them.
I think it's inaccurate about the deal with SV Angel and DST, isn't it SV Angel and Yuri Milner as an individual?
As for breakeven, I wonder whether that's accurate, but considering the low percentage of shares YC takes I wouldn't be surprised if lots of successful but not blockbuster spawn could still leave them without huge returns.
What does YC take? 5% for $20,000? They're getting a return if it sells for $500,000. Granted there's going to be a lot of dilution 99 times out of 100, but if most acquisitions are in the $10m-$100m range then they can still take the dilution and do pretty damn well with their current batting average.
Anyone know what the "bottlenecks" are in YC? I assume it has to do with the number of advisors? Also, I wonder if the growth in number means decrease in quality (or experience) for the entrepreneurs.
The biggest bottle neck is quality applicants, if I remember correctly. I believe PG mentioned that Y-Combinator could triple in size and not be severely affected, though.
Although that might be the first bottleneck YC probably cannot remove, the bottlenecks PG talks of in the OP (such as office space) are the removable, short-term ones that prevent YC from immediately tripling in size.
Like he is thinking "this is SOO cool...Mom is gonna be soo proud."