Waited for 2 years for the new long range Tesla Model X and sold it within 3 months for exactly this reason. The range was a total fabrication - actual range for city driving was closer to 180 miles, not the claimed 300+. Complete sham.
Think this is a great reinforcement of also requiring a guiding mission to what you do - otherwise it won't feel authentic.
So if your niche is for example custom IT security services for religious, well off business folks, if you don't align and empathize with that niche (e.g., you're an atheist), even if it's a monetary opportunity, you're going to feel dissonance.
At a broader level, this is why I think aligning with your company's mission helps when people can do that vs. taking a more agnostic approach to where you work.
Same exact experience - I finished my CS PhD in 2005 and thought I would go into academia, but decided not to given how much of academia seemed to be just writing grant proposals vs. actual research.
FWIW, also decided not to go into academia because of how much smarter I realized I needed to be to be a top tier academic!
Specific anecdote - SaaS companies selling to other SaaS companies is going to cause a mini-winter in that sector. My company (which we thankfully sold last year :praise) had several (though not exclusively) high-growth tech companies as customers.
Now, when I look at layoff announcements, I see a lot of our former customers. Additionally, with budget freezes (driven by VC RIP decks), these same companies aren't buying new software for a while, even if they would benefit from it. And many tools now are priced based on headcount. So it's sort of the perfect storm - valuation resets so you have to go a lot farther with your current funding, reduced retention revenue because your customers are paying for fewer seats and harder sales because of budget freezes. Ick.
100% this - a good chunk of initial traction for YC companies is other YC companies - which is great in some ways to bootstrap initial growth/credibility, but the uncharitable view is that it's a Ponzi scheme in a way.
I think Ponzi is an overstatement, though I agree with the general sentiment.
There's in principle nothing wrong with clusters of companies that are inter-dependent on selling stuff to each other. Car parts manufacturers live and die by the big car companies - and to some degree vice versa - but we would hesitate to call that a Ponzi scheme.
The key is whether or not this clustered ecosystem is bringing in money from the outside. Somebody in the ecosystem has to be making money from the "outside" world. It's the sustainability of this outside connection that really matters.
For a lot of SaaS companies I think the rude wakeup is that the "outside" source of money was never an actual business but instead was just endless rounds of VC cash. Likewise (and IMO more offensively) with crypto the "outside" money source was hyped-up retail investors (and hyped-up VCs) and not any actual useful business.
I do agree though - the VC sphere has spent the last 10+ years building up an entire web of companies that inter-depend on each other but where the "outside money" was always highly dubious. This is distinctly unlike the older crop of BigTech companies where the outside money is (relatively) stable: actual advertising, actual hardware in people's hands...
100% and legitimately have nothing but respect for YC. Ponzi is definitely an overstatement which I used to make the point that in-network traction is potentially a risky signal of product-market-fit which was obfuscated when everyone was being rewarded with gobs of money for early 0->$1M traction.
I've been lucky enough to have sold two companies (edit: in the very low $XXX M range to provide context on the rest of my comment), and 1 is the most important point by far in this list.
The other thing that I almost think should be point 0 is that medium sized acquisitions (high $XX M - low $XXX M) are incredibly hard to "incept". If you're looking for a low $XX M exit, that can be justified with good tech + a good team. If you're looking for larger exits, that's all about revenue, and company traction.
For the high $XX M to low $XXX M acquisitions, you can't just start talking to companies 6 months to a year before you run out of cash to make it happen. Typical tech companies do product planning cycles 1 to 2 years in advance, and a key part of that planning cycle is whether they're going to build or buy parts of the solution. The result here is that unless your product/company is part of the acquirer's plan (e.g., either to buy you or to build equivalent that was too hard), it's really hard to get the corporate sponsor and the budget and the timeline etc to work. Hence, it's damn hard to "incept" a deal.
This is important for founders to understand IMO because so many of the recent Series A and Series B fund-raises have taken low $M ARR companies and given them valuations >$100M. That means these companies have no option but to go for a revenue and traction outcome after >$30-50M ARR. Tech acquirers aren't going to pay a premium of your Series B valuation if you don't have consistent off the charts growth. IMO, there's going to be disappointed employees mainly in a bunch of companies in the next 2-3 years.
> This is important for founders to understand IMO because so many of the recent Series A and Series B fund-raises have taken low $M ARR companies and given them valuations >$100M.
This is also puzzling to me. Many founders are just not thinking clearly about exits. Acquirers want revenue and accretive value at a reasonable valuation.
> If you're looking for larger exits, that's all about revenue, and company traction.
That's highly dependent on the space. Companies in emerging domains can be bought pre-revenue at valuations that by traditional metrics do not make sense simply to gain some time.
My previous company was acquired by Google and I totally agree with assessment. Immense respect for Google's investing, corp dev and legal arms in as much as I interacted with them. They always treated us fairly and were ethical in their interactions.
I think this is more a result of the increase in acceptance of entrepreneurship as a career option. Adding to the list of predictors of a tech correction, when you have a bunch of investment bankers and management consultants coming into consulting, you know you've peaked.
I have to wonder, what's the catchet of YCombinator when you have so many new startups being churned out every quarter? YC is always going to be fine - they get their 7%. They're simply increasing the bandwidth and they'll get a few hits, but we should be prepared for the average quality of YC start-ups to fall with volume.
