Tech Billionaire Boot Camp

theodp writes "Forget the Summer of Code. If you've got a hot idea for a start-up, Newsweek says Y-Combinator, the boot camp where Silicon Valley meets 'American Idol', is the place you should be. 'Some critics scoff that Y Combinator's investment is peanuts for that amount of equity. But the opportunity is unparalleled -- total immersion into Silicon Valley start-up culture, advice from Graham and a fast track to the top angel investors and venture-capital funds. When Graham calls the winners, the founders have only five minutes to accept. "If people turn us down," he says, "as far as we're concerned they've failed an IQ test."'" We've previously discussed the program on the site, just over a year ago.

Comments

Barely an investment

[Anarchysoft]

How much do you usually invest?
Usually $5000 + $5000 per founder. So $15,000 for two founders, $20,000 for three. Occasionally we invest more. The goal is usually to give you enough money to build an impressive prototype or version 1, which you can then use to get further funding. This is peanuts. If this is all the money you're going to get, it's probably a better use of your efforts to keep your day job and do your startup on your own spare time.

Re:Barely an investment

[martin-boundary]

Content analysis as pushed by Graham is much less effective than looking at other message features such as the headers, timing, etc. Bayesian learning is much less effective than other strategies.

You don't know what you're talking about. If you knew anything about Bayesian filters, you'd know that all information in a message is/can be used: that includes headers, time stamps, etc. Even the spacing between words might be used depending on the filter.

Bayesian filtering does not come close to the effectiveness of most of the commercial schemes I have used. Since I get over 3,500 spams a day (and 500

Yadda yadda. You claim it doesn't come close, I claim it's way better than anything I've used. I get 5000 mails a day, around half is spam, there's mailing lists and messages etc, and I simply don't worry about false positives because they're so low. There, that's a competing anecdote.

Best paper at Graham's first spam conference was by an MIT undergrad from course 6 who completely debunked the whole notion with some rudimentary statistical analysis.

Great rhetorical point! You can gain geek cred by namedropping a conference and pretending you understood some rough calculation an undergrad presented, when in that same conference other _phds_ actually showed the opposite with actual test data (gasp!).

I suggest you educate yourself: start by looking at the performance of spam filters that get regularly _and scientifically_ tested by NIST (National Institute of Standards and Technology, there I'm namedropping too) instead of believing in commercial press releases.

Re:What a load

[TodMinuit]

Agreed. Paul Graham isn't a computer nerd or a business man. He's a late night startup infomercial. "I got rich on startups and you can too! Just follow my 10 easy steps!"

Failed an IQ test - depends on perspective

[Anonymous Coward]

"If people turn us down," he says, "as far as we're concerned they've failed an IQ test."

In other words, if you say no, or demand to "think about it for 24 hours", you probably might have an IQ that is too high to allow them to take advantage of you, and thus makes you ineligible to be one of their patsies.

The smart people are the ones that after receiving the call, say no, realizing that the idea has been vetted as having potential, and should run with it on their own.

Everything that is wrong with Venture Capital

[Sanity]

"[if founders turn us down] as far as we're concerned they've failed an IQ test."

Yeah, they scored too high and thus know better than to sell their equity for peanuts. I mean, wealthy or not, what an arrogant twat.

total immersion into Silicon Valley start-up culture

I can imagine few worse things for starting a technology business than to be immersed in the incestuous and insular world of Silicon Valley. Most Internet users don't live in Silicon Valley, why would it be an advantage to be isolated from them?

When Graham calls the winners, the founders have only five minutes to accept.

And they are willing to admit such underhanded pressure tactics? Sounds like these guys are everything that is wrong with venture capital.

a word of advice

[Anonymous Coward]

If you're ever placed in a position where you're offered a deal that doesn't sound so hot, but

1) the surroundings are hyped up, for example a "boot camp for Web 2.0 entrepreneurs" that is a "combination of Silicon Valley and American Idol";

2) you are given a ridiculously short time limit to make up your mind, let's say five minutes

and

3) if you don't accept, you "fail the IQ test" in the eyes of the people making the offer

then grab your shit and head out the door as fast as possible. Don't forget your cell phone.

(following Harvey Mackay).

Don't jump the gun now...

[Anonymous Coward]

As a Y-Combinator funded company, I can tell you that it's not about the money. The money is sufficient to get a prototype for real investments from Angels/VC's. The justification for the low valuation (~400k) is that it isn't a valuation. The 5% of equity is in exchange for a community of incredibly intelligent, passionate peers who are similarly coding for their lives and guidance from someone who knows the startup industry inside and out. PG is also incredibly well-connected; he'll get you in a room with Sequoia on a dime and instant publicity.

In response to 'just keep your day job and just work on the side' - sorry, that just doesn't work. If you're dedicated enough to an idea, you'll quit your day job. If you're not living on the edge, you'll live the rest of your life dreaming of what could have been.

Re:IQ Test

[homer_s]

Here is a passage from one of his essays (which I think are very insightful):

A while ago an eminent VC firm offered a series A round to a startup we'd seed funded. Then they heard a rival VC firm was also interested. They were so afraid that they'd be rejected in favor of this other firm that they gave the startup what's known as an "exploding termsheet." They had, I think, 24 hours to say yes or no, or the deal was off. Exploding termsheets are a somewhat dubious device, but not uncommon. What surprised me was their reaction when I called to talk about it. I asked if they'd still be interested in the startup if the rival VC didn't end up making an offer, and they said no. What rational basis could they have had for saying that? If they thought the startup was worth investing in, what difference should it make what some other VC thought? Surely it was their duty to their limited partners simply to invest in the best opportunities they found; they should be delighted if the other VC said no, because it would mean they'd overlooked a good opportunity. But of course there was no rational basis for their decision. They just couldn't stand the idea of taking this rival firm's rejects.

An old scam for a new generation

[cstec]

"When Graham calls the winners, the founders have only five minutes to accept. "If people turn us down," he says, "as far as we're concerned they've failed an IQ test."

If you accept in 5 minutes, you've failed an IQ test. These people are not that important, regardless of what they tell you, and neither is the amount of money they have on the table. This is an attempt at simple manipulation on the part of older investors looking for wage slaves that will ask how high when told to jump. Unfortunately, if you're a 20-something, they're targeting you.

Understand the strength of your signature and the committment it represents. Never, EVER, be afraid to walk away from a deal. It's a big planet and there are plenty of legitimate people to do business with.

Wow, I think every single person here misses the..

[dumbfounder]

point. Most of these companies are just at the idea stage. Most companies at the idea stage would give out 5% just for Paul Graham to be on their board of directors, which opens up Paul Graham's rolodex for making contacts in the industry. For kids coming out of college to get funded in this way is a huge springboard for their careers. It is a HUGE opportunity for these (mostly) kids that I thought the slashdot crowd would have some amount of respect for. Yes, it isn't a lot of money, and it is meant to put a lot of pressure on these guys to get a product together ASAP. Which is a GOOD thing for a tiny startup.

Re:IQ Test...Mod parent up.

[Bamafan77]

Great excerpt and you should be modded up. Hypocrisy is such an easy disease to catch. I'd love to hear how Paul Graham reconciles his current actions against his owns words. No doubt referring to his own exploding termsheet as an "IQ Test" helps quell the cognative dissonance.

Re:Words of code?

[joss]

I'm more proud of myself when I manage to remove more than a 1000 lines
in a day.