Funding "No-Idea" Founders Is Bullshit

http://adii.me/2012/05/funding-no-idea-founders/

by adii • 14 years ago

8 10 14 years ago

rewind• 14 years ago

YC never said they would fund no-idea founders. They said they would let them apply. It's an experiment. Maybe they'll fund them; maybe they won't. This is only the first step. When you consider how much experience and data YC has now, you should assume they'll use that wealth of information to determine if a no-idea set of founders matches the qualities they attribute to success in previous start-ups. They'll probably also talk to them about different types of ideas and projects in the actual interview.

People shitting on this idea appear to be assuming that YC is run by a bunch of idiots.

adii3• 14 years ago

If you read closely, you'll see that I know that this makes sense to YC (and others in similar position). But it's not viable as a generic investment strategy.

YC have a proven track record and I'm sure if they allow no-idea founders in, it'll prove to be a big success too. But again, YC is the outlier here.

kstenerud• 14 years ago

To turn this around, how exactly do you measure the risk of investing in a would-be entrepreneur?

If two otherwise equal entrepreneurs ask for money, and one has a product idea while the other does not, what is the difference in probability of business success between the two, assuming they both go on to secure the same amount of funding? If they are different, what is your reasoning for assigning different probabilities?

benologist• 14 years ago

Most startups have shit ideas and most of the good ideas end up failing anyway, where failing means mediocrity or bankruptcy or selling yourself and your team into slavery for a few years.

It's pretty retarded to fund startups with ideas - even for YC it almost never works out.

therealarmen• 14 years ago

There’s just no reason to determine the founding team actually warrants that investment.

I don't follow. If Mark Zuckerburg quit Facebook tomorrow and wanted to start a new company but didn't have an idea yet, would you invest in it?

adii3• 14 years ago

Yes, I probably would try make a small investment in his next venture; not because I think he can recreate the same wealth he's done with FB, but his FB journey suggests he can make money again. I would still regard this as a bit of a gamble though.

Would you put $10k / $100k / your life savings into his next venture without knowing what it is?

avichal• 14 years ago

Investing in great people is the ONLY viable angel investment strategy. Most great early stage investors invest in the team first and idea second. Capital is plentiful and readily available. Great entrepreneurs are extremely rare. These people are such a no-brainer than NOT investing in them would be a mistake. There are thousands of them out there and not meeting them because they don't have an idea yet would be a HUGE mistake. Betting that they will find a great idea and execute on it is the right approach.

The quality of an idea is just a proxy for the other intangibles that a great entrepreneur needs to have (including being able to identify a opportunity to pursue). Just because they don't have an idea yet doesn't mean you can't consider other proxies for how great an entrepreneur could be.

YC is looking at other non-idea filters and it's a smart approach. It's the approach most great angel investors use. Because it works.

justin• 14 years ago

Every angel investment is "a calculated risk and semi-gamble."

Also, title is link bait, considering author doesn't actually provide any reasoning why you shouldn't be funded if you don't have an idea.

There are plenty of people I'd rather give money to even without an idea than the average would-be entrepreneur with an idea. A recent example: my friend Tikhon, CEO of Parse, raised money and started his company before they thought of the idea for Parse. I'm pretty confident my investment in Parse is going to make me a bunch of money, given their skyrocketing growth.

paulsutter• 14 years ago

It's probably impossible for YC to locate founders that have no ideas whatsoever, so I dont think you need to worry about them succeeding at that goal.

Especially because that isn't the goal. The experiment was to accept applications without a specific idea.

ps. As noted elsewhere, your article is linkbait because it offers no specific reasons beyond the title itself.

Funding "No-Idea" Founders Is Bullshit

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