Shamelessly copying a comment by /u/MasterCookSwag on reddit:
THIS is the major piece everyone misses. Mortgages were such a disaster because banks held the debt securities thinking they were safe assets and they weren't. This caused a chain reaction of devaluation of balance sheet assets and paper losses which resulted in the collapse of some major institutions. It then caused credit to dry up so businesses couldn't borrow and a crisis of confidence in the fundamentals of the economy.
Student debt won't do any of these things because the underlying structure is not even remotely similar. What student debt will do is represent a long term suck on the taxpayer both directly(through payments) and indirectly(through defaults). This will result in a drag on GDP. There is no way to short this and there won't be a collapse. That doesn't make it not a bad thing.
This isn't a strong argument to me. Student debt might not be collateralized the same way mortgages are (i.e. there's no house to repossess), but student debt is still an asset on a bank's book. If anything, student debt default seems to me more troublesome, as defaulted debt without collateral is more damaging to a balance sheet than debt with collateral.
I think you are missing that the many (most?) student loans in the US are either made by the government (post-2010 direct loans) or are guaranteed by the government (pre-2010 guaranteed loans):
If the student defaults on a direct loan, the government is the one not being paid. If the student defaults on a guaranteed loan, the government pays the loan holder. Everyone wins! Except the for the credit blemished student and the US taxpayer, that is.
I was just thinking the other day, that it would be logical for there to exist something like a mortgage-backed security for student debt. Call it a millenial-backed security. You'd bundle up a bunch of student student loans into a security, then sell shares, paying out the interest as dividends. It'd be like 2007 all over again! What could possibly go wrong?
In a sense, I suppose that's not much different than buying stock in a bank that's heavily invested in student loans. You can invest in or short those as you see fit.
Question remains - if this is winner takes all market. If it is - only one company will survive. As a consumer most important thing for me is to get cab as quickly and cheaply as possible maintaining the basic standards of cleanliness, and politeness from service providers. If quality of service is more or less the same - then I'd argue that the platform generating more demand and supply in the market will prevail and take on outsize market share (80%+). if this is true - then only one will prevail.
It seems pretty clear that it's not a winner-take-all market. There's, what, 3+ competitors out now that are competing on price and service, and furthermore the drivers can switch between them more easily than any other prior form of employment. This means that they're facing strict price competition for both drivers and riders. The infrastructure required is all relatively basic software, so costs are relatively low. As you said, all the customer cares about is "as quickly and cheaply as possible" - all you need is new competitor that drops the cut for riders and drivers (+ advertising) and people will switch. This is exactly Fasten's strategy.
Without fundamental change to the landscape everyone's just going get their margins eaten in this environment. Uber knows this, so they're trying to own self-driving vehicle technology to give them an edge over their competitors. Then they're in competition with the other self-driving technology providers who might partner with Lyft etc., so that doesn't even put them fully in the clear even if they can pull it off.
Self-driving technology and how it plays out determines if these companies actually reach the high valuations, IMO.
I don't see why people think this will be a winner-take-all market. The marginal cost for Uber or Lyft is nearly zero, so competition should drive the cost to zero. Lyft and Uber are both past the network-effect barriers to entry, so there's no way for one to boot out the other without slashing rates to try to drive the other out of business. Neither appears to be trying to do so yet.
More fundamentally, there's nothing stopping drivers from driving both Lyft and Uber, so there's no reason one should go out of business just because the other is more successful.
I have my doubts that this is inherently a winner take all market, but it maybe because of funding. It appears that the investment community believes it is a winner take all market and on that basis it will be a winner take all.
I moved to Australia around 10 years ago (originally from Poland but traveled the world extensively) and worked in tech since then wishing I did a course in welding or heavy machinery operation instead. Even mining laundry service workers here get 120,000/year salary!
The tide is turning though and world's biggest quarry is in trouble.....since China problems are looming more profoundly on Australian economy (China sneezes and Australia catches a nasty cold) more people are looking towards other industries i.e. services, tech, medical and those who used to make a tidy profit in the mines are being let go due to slumping iron ore pricing and weakened demand. In the space of last 12 months iron ore price was cut in half.
Add world's most expensive housing prices, climate issues, stalling economy, bogan attitudes (less so with the influx of educated migrants) etc. and Australia has its own share of issues to deal with. All things considered though, I would never want to go back to Europe or move to US. Why? To name a few: stable democratic government, great lifestyle, far away from some of the the loony bins e.g. Putin or not sharing borders with other countries (can get pretty lonely here at times though as to get anywhere is a minimum 10 hours flight), good pay and social support system, lots of nationalities in bigger cities so racial tensions are rare (we all just seem to get along), warm weather etc. Why would I want to live anywhere else? Yes, I could make more money in US, be more culturally aware/inspired in Europe, have cheaper lifestyle in Asia (south-east) etc. but when you look at what's really important in life and narrow it down to a dozen or so factors, especially if having a family is a prospect, nothing comes close to living Downunder. Even Kiwis want to live here. And that comes from someone who lived (at least 16 months) on every continent, except Antarctica and Africa.
A very large component of that is wealthy Chinese immigration. I have a feeling that it happens to mesh well with the definitions of "millionaire" because a very common route for Chinese immigrants to come to Australia is through property investment, which intrinsically creates a readily quantifiable asset qualifying them as a millionaire. Further, since property investment by foreigners is restricted, any chinese person who does immigrate immediately becomes a funnel for relatives and friends back home to channel investment money in. So I would suspect that a lot of these "millionaires" are paper millionaires only.
Yes, it's not ‘close’. Australia is not really close to anywhere, apart from New Zealand, PNG and Indonesia. But I do think that it helps us being in basically the same timezone as China.
Laughable, it's quite solidly Social Democratic. Strong unions, universal health care, full social safety net. It's way harder to fire an employee in Australia than in the United States. A rich person would move to Australia because it's safe and comfortable.
1. How does it scale horizontally? if I am consuming from say topic with 100 partitions - do I have to deploy this on library on multiple nodes? or expectation is we need to embed this inside spark streaming/ storm/ samza/ any other real time processing framework?
2. Is RocksDB instance local to your consumer/ thread/ node? or can state be stored across nodes? What happens when joins are needed across the partitions?
I have been doing real time processing for a long time now - and this does capture most of the typical things you end up doing with kafka with spark/ storm etc- so this does look a significant step forward.
I am just trying to understand where it exactly fits.
Disclaimer: I work for Confluent (www.confluent.io). That said, let me clarify that Kafka Streams is a component of the Apache Kafka open source project. There's nothing proprietary about it. The reason the links below point to docs.confluent.io is because the Apache Kafka docs for Kafka Streams are not ready yet; but they will when Kafka 0.10 is released, which will be the first official Kafka release that includes Kafka Streams.
> Do I have to deploy this on library on multiple nodes?
Kafka Streams really is a normal Java library. You include it in "your" Java application just like you'd include a library such as Apache Commons, Google Guava, or JUnit. There's no "deploying" of this library -- i.e. no need to pre-ship it to machines; also, you don't install a cluster or anything like that for Kafka Streams. It's a purely client-side library.
Interestingly, many folks I have talked to seem to be confused initially about the "library" aspect because I suppose, in the big data world, one has simply become used to (and pigeonholed by?) frameworks like Spark, Storm, etc. that you must deploy and operate separately (and which then dictate how they want you to write your own apps against them).
Does that make any sense?
> 2. Is RocksDB instance local to your consumer/ thread/ node?
I hope this helps! If these pointers above aren't sufficient, please drop us a note to dev@kafka.apache.org (http://kafka.apache.org/contact.html). We really appreciate any such feedback (code, docs, whatever) to ensure people have an easy and fun time to get started with Kafka as well as its upcoming Kafka Streams library.
$2 billion is not staggering amount. Given it has over 300 Million active users - thats just $6~$7 for user acquisition.
If you want to build twitter today - its definitely going to cost more. It has built a brand - and hundreds of millions of loyal fans.
Question is - is it worth the valuation thats put on the company. Given now they are cash flow positive - that they have lost $2bn in the past is immaterial.
Just $6-$7 isn't a lot, until you multiply by 300 million and realize that they aren't worth $6 each.
$2bn is absolutely material. If their growth is predicated on setting money on fire, future forecasting has to take that into account. Sure, it is a sunk cost, but unless the fundamentals of acquisition have changed then their valuation is not nearly as high.
And the the fundamentals of acquisition have changed. Unfortunately, in the wrong direction.
Why does YC needs to grow into 2000 companies/ year program?
I feel they should tackle it like a University. Stanford does not try to grow 10x from 20k students to 200k students.
Part of the appeal is exclusivity (besides of course its hard to scale).
I'd rather see YC at 200-300 companies a year - and ensuring these companies continue to grow/ succeed after the batch is over rather than churning out 1000 more.
There are too many complex problems in the world that need to be solved for the desire of exclusivity to exist.
I think 2000 companies/year is too few. There are so many good problems that need to be solved and they just need a little bit of midas's touch. This sounds pretty reasonable to me.
Between NYSE and Nasdaq there are about 3,700 publicly traded companies in the United States total right now. The current funding paradigm will have to change to accommodate that many companies (more IPOs? long-term private funds? who knows).
There's a huge funnel effect. Most (99%?) of the YC companies don't IPO. A lot get bought out on the way, and many fizzle out. There's an enormous Power Law effect happening. (DropBox and AirBnB at one point accounted for 2/3 of the valuation)
> A lot get bought out on the way, and many fizzle out.
The concern is who does the buying? The number of public companies is small (and shrinking btw), how much more acquisitions can they absorb? If it is other private tech companies, the money is just changing hands between VC funds. In either case those sources of funding have to grow or change to provide more acquisition opportunities.
They can absorb a tremendous amount. The total market cap of the S&P is ~$18.5 trillion. [0] Total VC investment is ~$50 billion annually. [1] Let's say that each VC investment returned a 3X return (a reasonable average) then the S&P would only need to dilute itself by 1% per year to buy the entire stock of VC companies in that year.
Another way to look at it... In just one quarter [2] the S&P 500 spent more than $150 billion in stock buybacks, that's triple the annual amount of VC investment.
There is a tremendous amount of room for the market to absorb innovative real companies.
There are indeed. But is YC really going after those?
As far as I understand they are def interested in research etc. But I have still to see any real complex or hard problems they are trying to solve. Or am I missing something?
I think it's way too early to see anything, and that's what you're probably missing ( no offense intended ). This shift towards supporting research and long term capital intensive companies is very recent as far as I understand, at most a year, parts of it just in months.
There's finding the companies/research projects, getting them staffed and sustainably funded, and then years if not decades of work before some of these real complex and hard problems are solved.
I'm not saying any of it is going to work but we're just looking at the first steps in this direction. It'll be a few years before anyone is able to really judge whether it's paying off or not. Unfortunately this is beyond most of our ( myself included ) attention spans, so we'll probably feel like nothing is happening. Fortunately it seems like these folks are putting mechanisms in place that will outlast our collective attention and keep the engine running for the long time span these problems will need.
Well I agree it's too early to say anything, that goes for both of us.
However the angel model isn't really suited well for solving complex problems it's mostly not even a execution problem (besides as I said elsewhere, that solving the problem IS the execution)
I am happy to see they are moving that way but so far I haven't seen any attempts at solving first principle problems.
I love YC don't get me wrong it just doesn't look like it's something they will ever be good at and thats totally fine.
There are plenty of startups solving hard and complex problems. The issue is that they're usually not amenable to the Silicon Valley VC model of "sell it to the next biggest fool."
I think it's a lack of synergy between the angel model and the price of solving really big or complex problems.
YC in my understanding is catered at companies who are solving natural next steps at the right time, not necessarily problems with a 5-10 year horizon.
I am always reminded how Interval Research went from 10 years research to market horizon to suddenly 3-4 years.
For all the Silicon Valley is good it it seems to be best at creating relatively obvious solutions for fairly trivial problems.
If more big and complex problems were solved Elon Musk would be the rule not the exception.
This is what's kind of sad about SV these days.
It might drive the digital economy but one might ask in what direction.
Hard to say that cloud storage and travel accommodations are not real problems. The solutions created with YC's help have improved the lives of hundreds of millions of people.
And you're not considering the recent increased YC focus on startups from developing countries. Just from top of mind you have companies selling cheaper solar energy in Mexico, improving online payments in India, lowering interest rates in Africa, treating low-income patients in Central America, etc.
There are dozens of YC companies just getting started that will positively impact the lives of billions of people in the next 10+ years.
I don't think it really is. These ideas have been kicked around for a long time and several companies have attempted at solving them.
I am not talking about execution but about problems as in. Solving the problem is the execution (think cure for cancer)
I am not saying there ren't companies in YC that aren't solving big problems but it's not what they are good at noor what the angel model is good at either IMO.
Because if they don't expand acceptance with the number of applications being done for every class they would end up being a program that you have almost no chance of getting into if you apply. They might miss out on quality that way, there is most likely a fairly fixed relationship between #applicants and #accepts in order to make the formula work.
Yes Jacques this is a very good point. If YC is perceived to be a total lottery then nobody with any talent will bother applying.
Personally I think this problem is best solved by making the selection criteria narrower. Rather than expanding, YC should be narrowing its focus. Of course this requires that they narrow to the right area which is very hard problem.
People continue to apply to Harvard. The problem YC has will be similar. At some point the thing changes from being a thing that improves its students to a credential or at least a marker. Once you make that transition, smaller size is needed to maintain the perceived value of the marker
Harvard has an self-described problem where a large percentage of the students they would admit don't apply (particular those from low income backgrounds) because they think they won't get in. Sure YC will keep its pipeline full, but if it is worried about getting the best then it needs to adjust what it is doing.
Since nobody can accurately predict which companies will succeed, putting more companies in the pipeline will give you , generally speaking, more companies at the end.
But in the end they are not able to pay the same amount of attention to 2000 startups vs 200. Or having really a hard time providing the same quality team.
Does that in the end mean that it doesn't really matter for the success of a YCombinator startup that they can just walk randomly into Paul Graham's office and ask for advice?
> But in the end they are not able to pay the same amount of attention to 2000 startups vs 200.
But this is the same issue everyone has when running their business! It is a problem of execution that you need to solve (or failed at) when you scale. Can you say that Google can't pay the same level of attention to their search engine once they started AdWords?
Force-fitting their old model into today doesn't make sense. YC has different core competencies now and the startup landscape is different. The separate early-stage fellowship won't dilute the brand at all, YC Core will still be as prestigious as it always was because it will still be exclusive.
Why 200-300? Why not 20-30 so they can really focus?
And if the answer is 200-300 because it seems like something they could realistically support, then what's against them scaling to support 2000-3000? Especially with their inclusion of overseas companies likely to tackle broader markets.
Exclusivity has so much practical value than the entire university system in the US is built around it. If you participate in a program that's considered to be exclusive, you will have an easier time standing out when competing in the future. It applies to people, and it applies to companies.
If YC isn't exclusive enough for you, I'm sure you can find a more exclusive accelerator.
In the eyes of customers, I don't think it would give you an "easier time standing out when competing", but I guess everyone is entitled to place their own bets.
Not in the eyes of customers, but in the eyes of future investors. I don't think customers should know or care what accelerator a company went through, although Cinder does advertise itself as "YC-backed" in order to convince customers that it's not a Kickstarter scam.
Because angel investing is a numbers game, and extending funding beyond those who traditionally have access to it has always been YC's edge (whether or not they saw it as such). You can fund 1,000 companies for 30k and if one becomes Uber [3] and all the others fail your 7% stake might be worth as much as 145x your initial investment. 30 million is only a half dozen Yahoo parties, many countries have wasted multiples of that on fancy "entrepreneurship encouraging" offices.
When Georges Doriot financed DEC in 1957 [1], he got 70% for his $70,000 ($600,000 in 2016 [2]). These were proven scientists with a track record of successful research. It was considered a landmark deal because it was not blue chip, and the founders were not connected. How many smart people languished in corporate or government labs instead of starting another DEC or Microsoft? What was the opportunity cost of the lack of capital availability?
Then you have YC v1.0, which invested $20k for 7%... which we easily forget today was a non-controlling stake, and thus groundbreaking (or at least trend-setting). YC set the terms for the rest of the world to follow (slowly - I still meet, here in Singapore, angels who want complete control from the seed round onwards). Founders could actually still control their company after taking outside money!
Of course there were the ancillary benefits of the network and so on, but to me the really groundbreaking idea was also that significant expansion of the number of companies that could get funded. Working class scholar at MIT whose daddy doesn't know Tim Draper? No worries, you just need to fill in the form, YC will get in touch.
Competition, and inflation (both general inflation, and of opportunity cost from the two tech booms) drove that up to $120k, still for 7% - which even today is a very good deal for a pre-product company, and allowed thousands of founders to have access to a much better deal than they would otherwise.
Who is left out at this point? Pre-product companies that need money to get the MVP done, and foreign companies where seed investment is done on much worse terms than in the US for a variety of reasons that are regularly discussed here. They don't need much; as has been amply written about you can get ramen profitable on 20-50k with many ideas, and this is literally years of living costs in much of the world. But that capital is just not available because wealth is concentrated in (often foreign) land, bonds and blue chip companies. 1.5% is laughably small, doubly so when you consider this is basically free money unless you become a fairly decent success.
YC is not the only company who understands this. The very idea of 500 Startups - "if you have an angel, you're eligible" - is about numbers over any attempt at reading the future.
I can't wait to see how it works out. And how people will copy it. And I love the philosophy of it: YC is expressly saying that no, not all talent is concentrated at "Stanford" - that there are many variables in life (such as geographical location or social background) that will impede a large number of talented people from having access to the resources necessary to capitalise on that talent.
> I feel they should tackle it like a University. Stanford...
YC is still an order of a magnitude smaller than YC. 200 startups per year, so maybe 600 founders at the max. Even if YC is trying to build in exclusivity, there's much to be gained before they hit Stanford's scale.
Also, I don't think it will be that hard to scale advice for their startups. All that's needed is to add more partners. Although this might complicate their org/management structure.
I think it's great that YC is thinking big and taking a risk by doing something no one has done before. The US economy wins whether they succeed or fail at this experiment, and the value creation if they succeed will be huge.
It would be nice to list tear downs in the order in which they were reviewed - so I can read new ones quickly when I visit. Looks like current list is alphabetically sorted.
The the UX side it can improve - but it's rock solid in what it does! Well done!