HN Theater @HNTheaterMonth

⬐ on_

> http://www.bloomberg.com/news/videos/2015-09-24/y-contributo...

Ahh yes, Dan Altman, a recent hire at SV clone "Y Contributor", talks about attention to detail, and working with the Samwer bros.

Edit: << pun intended.

⬐ ThomPete

I am not actually sure why people have so much against the Samwer brothers.

Have they done anything particularly despicable?

I know their model is to copy any potential idea coming out of the US which I don't understand the issue with.

One thing they really did well was to have a structure that makes it easy for them to localize any company.

I hear the work environment is hard but so is it many other places.

Or maybe I am missing your joke?

⬐ on_

I have nothing against them, they are an organization founded by smart MBAs with a strong focus on software and finance. Some of their media companies are a bit derivative, but what would you expect from a finance company. The organization is run by detail oriented, anal-retentive founders who know how to edit a team. Sometimes though, I think they get a bit lost in repackaging other peoples content, and in their haste, miss a few titular details.

⬐ seiji

copy any potential idea coming out of the US which I don't understand the issue with.

Except, they don't just copy the idea, they copy the entire products and companies wholesale (interface, API, UI, user interaction model). How is that not bad?

⬐ lmm

As a European they're adding a lot of value for me, by making useful products available for me.

Don't like your products being copied? Stop making them US-only. I would use the "real thing" if I could.

⬐ stock_toaster

With the recent "death" of safe harbor in Europe, I can only assume it will become more pervasive, as it gets harder for silicon valley startups to do business internationally (at least until they are large enough to afford multi-presence).

⬐ pavlov

There are plenty of legal protections for corporate IP: patents, copyrights, trade secrets... If an aspect of a business can't be protected, competitors are free to copy it.

Consider a small coffee shop. Are they allowed to write the customer's name on the cup? That's clearly not an original idea, they copied it from a bigger competitor. Should it be forbidden?

⬐ gnaritas

How is it bad? Business doesn't have to be original.

⬐ ThomPete

So when italian restaurants copy each other it's bad?

Not sure I understand the issue.

⬐ peterjancelis

I love how everybody in Silicon Valley claims ideas don't matter, only execution does, then hate on the company that is taking that maxim to its ultimate conclusion.

⬐ ThomPete

Exactly!

⬐ wpietri

Personally, I despise them because they're parasites. I'm also not a big fan of, say, tapeworms. Sure, I don't doubt that tapeworms are also miracles of evolution. And sure, I guess even tapeworms have to eat. But at the end of the day, they're still parasites, and I still think they're repulsive. Ugh.

⬐ lmm

All businesses take things from those that have come before. These guys make money because they're providing a valuable service.

⬐ wpietri

The problem isn't that they borrow ideas from others; it's that they do it in such volume and with such little creativity of their own. Zynga faced similar criticism:

http://www.forbes.com/sites/insertcoin/2012/08/08/a-photo-re...

Both companies do of course make money. But that doesn't entitle them to respect, just money.

⬐ ThomPete

So ideas do matter after all? Not just execution?

Again an italian restaurant opening up on the blog right next to another isn't going to complain that someone steals their idea even though they sell more or less the same products.

Furthermore Rocket Internet takes ideas that haven't yet come to Europe. People do that all the time just very few have been so successful as the Samwer Brothers.

⬐ wpietri

The "ideas don't matter" bit is to help people understand that having one idea that feels smart does not guarantee them success. It is not some eternal, fundamental truth.

Opening up an Italian restaurant right next to another doesn't matter because it's the eight zillionth Italian restaurant in the world and the concept was jointly created over centuries by the nation of Italy and many entrepreneurs.

Moreover, even when similar restaurants open in the same area, they typically work hard to distinguish themselves. If somebody opens up a restaurant and copies the exact menu, layout, decor, trade dress, pricing structure, and dish names, that still looks shitty.

I agree that the Samwer brothers are unusually successful copycats. But as with other parasites, I don't think that makes them better; I think it makes them worse. I can forgive it when it's some desperate, low-rent operation, like somebody selling cheap DVD copies on the streetcorner. But these guys clearly can afford to innovate; they're just happy exploiting the work of others.

⬐ on_

They really drive home a few points often overlooked:

Business fundamentals are really important, while not the only thing, that are a critical aspect of longevity.

Ideas are less important than execution.

Porter's 5 forces model provides some basic criteria for evaluating competition. If you provide something easy to copy and the barriers to entry are low, it could be a good idea but not a great business. In one of Sam Altman's lectures the "when to expand internationally" question is brought up. I don't want to misqoute it, so I won't. The context might have been the Samwer bros, but he gives some good insight.

⬐ gozo

I think they are implicitly challenging peoples ideas how startup works. Both for people who are "waiting for the right moment" to start a startup and people already running a startup and feel they have an advantage.

While I'm not a big personal fan of them I think competition is good. US startups need to step up their game and not coast until getting acquired.

⬐ ibsufupu

Good job dodging those landmines. It's always nice to hear him talk about this stuff. What I would like even more is to just hear people knowledgeable about this kind of stuff just chat. Doesn't even have to be able what they're good at. I just want to witness their mindset.

⬐ firasd

I know what you mean and there's surprisingly good content on youtube along those lines. Some examples:

(1) How to Start a Startup (by Sam Altman et al): https://www.youtube.com/channel/UCxIJaCMEptJjxmmQgGFsnCg (2) CS183C: https://www.youtube.com/playlist?list=PLnsTB8Q5VgnVzh1S-VMCX... (3) PreMoney conference: https://www.youtube.com/playlist?list=PLOStnEM8wBOYdQ6FFXTnY...

And of course a lot of great podcasts.

⬐ userium

I agree with the comment about diversity; "Everyone talks about diversity in tech. I think the best thing you can do is not talk about it but just act on it".

With over 40% of women leaving tech, we (http://keepwomen.com/) have been doing research into this topic and talked to lots of women in tech. One of the things we found out was the importance of finding a company culture that’s right for you. Those women who persisted and changed jobs eventually found a company that was a good match for them. So we think one of the ways to "act on it", is to help women find a company culture that's right for them.

⬐ rokhayakebe

I would like to see a YC clone for Dude's businesses, companies that interested in building a profitable business that pays dividend yearly. No exit, No billion dollar valuation, actually no valuation necessary.

⬐ wpietri

I love the idea, but would it make money? Lower returns would require lower risks. But with lower returns you'd have fewer resources to invest in picking and supporting the winners, which I'd think would push risks up.

⬐ rguzman

http://indie.vc/ maybe?

⬐ sarciszewski

Anyone have a text transcript handy? I don't like multimedia.

⬐ tristanho

It's very similar to what he talked about here:

http://blog.samaltman.com/unit-economics

At least for the first section of the interview.

⬐ jaoued

My view is that the ones, who first hand know will succeed are the founders and co. (even if they sometime doubt)... Investors, etc..., on the other hand, once they invest will always put the right spin and word to fullfill the prophecy. Before they invest, most of of them have no clue, hence invest in large numbers of startup projects with the hope, at least one of each portfolio will make boom for the entire portfolio.

"Prediction is very difficult, especially if it's about the future." dixit Niels Bohr.

Good interview from Sam though.

⬐ vasilipupkin

Great interview, but my advice for Sam would be to drop the use of "like". I think it makes him sound a little bit like a high school student :)

⬐ peterjancelis

I also hate the overuse of the word 'like' but didn't notice it here until you mentioned it. It was fine.

⬐ rokhayakebe

Sam's audience and customers will either like the "like," or not care.

⬐ efoto

As far as I can tell his use of the word is totally appropriate and not even close to high schoolers "like". Trust me, I have one at home.

⬐ vasilipupkin

perhaps, but I counted like between 4 and 6 likes, that were, like, totally unnecessary :)

⬐ wakeless

No [video] ?

⬐ curiousjorge

he seems like he doesnt know whats going to happen next, just like everyone else.

⬐ firasd

Great quote about ‘Unicorns’ (lightly edited from verbal form):

“I looked through the list of companies that have an over a billion dollar valuation recently, and more than half, I think, were valued between like a billion and 1.5 billion, and something like a quarter were valued exactly at a billion. So people are clearly obsessed with getting to this mark, and they are willing to put all sorts of weird structure on their terms to get there. If you were looking at the financial data, you would say something is amiss. You’d say there is some fraud going on or something, if you were just looking at the numbers. Because they don’t fit the distribution you’d expect. There is this huge desire to get right to a billion or just over. I don’t care about it. I think it’s dumb, but that’s not going to make a company great or not.”

As a sidenote, Sam should probably stop antagonizing his interviewers by dismissing the business pontification featured on their shows :) I agree with him but it’s also a bit unnecessary.

⬐ zem

nope. pet peeve - symbolism isn't irrational. "a billion dollars" is a powerful symbol, and may well pay off as much in psychological benefits as it loses in structural weirdness. or it may not, but it's definitely not clear-cut enough to dismiss as "dumb".

⬐ seiji

How is it not dumb? It's an arbitrary number of digits in base 10 numerals.

Perhaps your point would be better addressed during your next regularly scheduled Bloomberg interview?

⬐ on_

> How is it not dumb?

Because PLS Logistics Services does ~$100m a year more than dropbox (PLS rev is $515.6m) and has a growth rate of 42% and no one has ever heard of it. Dropbox was reportedly valued at $10 billion in November 2014, when it raised $350 million in its Series C[0]. You can plot the failure of the company on a graph inversely proportional to moores law, and yet they are "crushing it". So with less liquidity, they somehow have extracted maximum mileage out of being a 'Unicorn', being on the top of every 'unicorn list', and getting heaps of coverage in the media. They will IPO and exit which, after the lockup period ends, is a win.

So, to what extent is being a 'Unicorn' priced into the company? No one knows of course because we can't even see their financials. So other companies don't have to really engineer anything. Just get close to that num, and then wait 6 months. So, the point is, the media's obsession with ranking things is important and being in that top 10 list is helpful.

Donald Trump has become qualified to run America because he was on television, has > $1b, and is on a list.

[0]https://www.cbinsights.com/blog/dropbox-valuation-bubble/

⬐ eCa

> Because PLS Logistics Services does ~$100m a year more than dropbox (PLS rev is $515.6m) and has a growth rate of 42% and no one has ever heard of it.

The business version of "nobody goes there anymore, it's too crowded".

(But yes, I hadn't heard of them.)

⬐ seiji

I think you just agreed in a slightly angry way with plenty of citations.

Internet company valuations are also driven up by a small group of very rich people who all collude to drive up valuations anyway and promote their own rich people agendas anyway. It's not entirely based in the real world and doesn't come under real world scrutiny until it's too late.

⬐ on_

> I think you just agreed in a slightly angry way with plenty of citations.

I am not sure what you mean? The citations I included, I agreed with and included them to substantiate my claim, which was:

It is not dumb or irrational to get to $1b, I disagree with Sam there. This allows you phenomenal free marketing, exposure, access and capital. It is rational to continue to take money and increase your status as the market is placing a huge premium on reputation and hype. I do think a horrible equity structure would be a bad compromise to make, but given that these markets are private your value is basically your old valuation (which prices in extreme future growth) and your status/pr/exposure. So depending on your value you can fake your way onto the unicorn list.

PLS Logistics is a inc 5000 company, I do not know the valuation. I suspect it is much less than the article I cited stating the dropbox deal terms >$10b. To be clear, the article, which I agree with, states this is well overvalued, but the "price" is around that number by the market. Box stock has liquidity, less uncertainty (known financials), more enterprise customers (stickier) and is valued less. I think storage is a bad business to be in and it is likely in the twilight of 2016 price parity is reached between SSD and HDD drives, a terabyte SSD can be had for $300[0]. Consumers can use free solutions like google and apple, or a 256GB thumb drive and enterprise companies will migrate to locked down internal private networks.

Regardless, freemium and non-monetizing service companies are in bad shape. Investors and founders have an incentive to get their pseudo-value up, and I was addressing that point. Status, in a market with limited transparency or liquidity, is passing as capital and given the rate hike that is coming and the likely failure of a few of these companies creationg a series A crunch, it wouldn't be unwise to cash that status in for currency.

If you were referring to my other comments about the Samwer bros. I apologize for the long winded spiel above. Those were really bad punny jokes and allusions to Bloomberg not editing the story and referring to it as 'Y Contributor' which sounded like a knock of version of YC.

edit: If you meant that the: > It's an arbitrary number of digits in base 10 numerals.

I disagree in that, much like in a Casino, the value is def. not realized until you walk out. That amount of arbitrary digits when that bell on the IPO day, will make them anything but arbitrary. Having that number start high and go up is good, and even if they are loosely based on something, people will used past values as a benchmark, at least initially. By then some wil have cashed out. Depends on what others are optimizing for.

Digits aren't wholly arbitrary, but they will become important.

[0]http://www.networkcomputing.com/storage/ssd-prices-in-a-free...

⬐ chiaro

I mean this kindly: the tone in which you read comments on the internet can be very dependent on your own mood.

⬐ firasd

Yes but anytime you are engineering “financials” instead of engineering sales and customer satisfaction you are headed down a path that warps things. In the case of unicorn valuations it’s your term sheet: investors who are getting in at high symbolic valuations are asking for special provisions to protect downside that you wouldn’t otherwise grant them.

⬐ hkmurakami

That valuation (perversely) likely affects hiring as well.

⬐ beambot

All of those (eg. sales and psychology) are interrelated. For example, say you're an enterprise SaaS company. Saying, "We have a $1B valuation and aren't going anywhere" actually carries meaningful psychological weight during the sales process -- weight which could be the difference between winning or losing out to a competitor. In that regard, it may matter...

⬐ lambdasquirrel

Well how do you address a trollish question then? Honest question. At some point, you need to push back.

⬐ firasd

Well, why isn’t he interested in pontificating about the business environment? It’s probably because he doesn’t consider it worthwhile. I would just say that: I don’t pontificate on trends when I don’t see concrete value in reasoning about them. If you’re literally on someone’s show and dismissing their program or channel it’s a bit biting. Their whole raison d’etre is to talk about the business environment.

⬐ None

None

⬐ dperfect

Maybe Benford's Law[1] has something to do with the distribution being skewed toward the $1 billion mark (at least in part).

[1] https://en.wikipedia.org/wiki/Benford%27s_law

⬐ lambdasquirrel

Actually, I'm pretty sure it proves he's right. In these distributions, the percentages matter a lot. I think the mentioned figures were upwards of 50% for startups in the 1-2 Billion valuation range? That's a fairly nontrivial difference from the expected 30%.

Is there a real stats person around here? I bet that if you plugged in the numbers into the formulas in "Statistical Tests" in the link that you gave, it would pretty much show that Sam is right. When I punched in the numbers and ran the Chi-Square test, it seemed kind of off. :P

https://docs.google.com/spreadsheets/d/1FoSfPvRSLK04ySAfjEqE...