21 hours ago
- Startup investing is counterintuitive; almost all returns come from a few big winners, and the best ideas initially seem like bad ideas.
- Two companies (Dropbox and Airbnb) account for about three-quarters of the total value of funded startups, illustrating extreme concentration of returns.
- In startup investing, there is a 1000x variation in outcomes, which defies typical expectations and makes rational decision-making difficult.
- Financially, only one company per YC batch may significantly affect returns; the rest are just a cost of doing business.
- To succeed, investors must ignore intuitive signals and focus on the rare, often unpromising-looking startups that could become huge winners.
- The best startup ideas are often not obviously good; they seem like bad ideas because otherwise others would have already executed them.
- Fundraising success after Demo Day is a misleading metric; a high fundraising rate may indicate being too conservative.
- YC could theoretically afford to fund startups with only a 30% fundraising success rate, but this would feel wrong despite being financially optimal.
- The psychological difficulty of embracing risk and failure prevents investors from acting on what they know is rational.