Because if Stypi can become one of the top 4 companies on that list, the VC firm gets a stake in whatever Stypi decides to build with the huge number of users that implies?
Not to put too fine a point on it, but, it's easy to see why you wouldn't invest in it: because you can't afford to put that much money behind a 1:10 or 1:15 risk. But that's exactly the problem every VC firm in the world has: finding the right set of 1:10 bets to put their money behind.
I feel like, if you're going to complain about people funding stuff like this, you're really complaining about the whole VC model. And sure, I don't like it either. So go build a company without it. Plenty of us here have or are doing exactly that.
Because if Stypi can become one of the top 4 companies on that list...
The question is why do you or anyone else believe that this is a distinct possibility -- i.e. given this team, this product and this vision, why does someone with money believe that this represents a good bet?
I agree with your assessment of the VC's challenge. However, VCs don't put money into every long bet that comes their way. The different between a 1:2 bet and a 1:10 bet is obvious -- distinguishing a 1:10 bet and a 1:10000 bet is where the art comes in. (That is distinguishing a long but feasible proposition from bullshit.)
Sure. The point is just the naivete implied by being surprised that someone would invest in an Etherpad clone, as if anyone was likely to have simply invested in an Etherpad clone.
I see people all the time on HN who think that the logic of a situation inescapably reduces to a single, simple statement or set of axioms which coincidentally agree with their own viewpoint. They are genuinely shocked and bewildered that a large segment of the population would fail to reach the same, simple-to-reach conclusion, and from this they conclude that everyone who does not arrive at that conclusion is defective.
Even if 50%+ of the opinion-holding population disagrees.
Because they are unmitigated narcissists, it never enters their mind that perhaps there are factors unseen to them that make the analysis more complicated for those other people.
I think this is related to what Nassim Taleb calls "epistemological arrogance" -- refusing to question the validity of one's own knowledge, despite significant evidence that one's knowledge may be insufficient or invalid, e.g. 50%+ of the population has a different opinion, or people with a compelling need for high-quality knowledge (VCs, in this case) are arriving at different conclusions.
For concrete examples of this, see the comments on HN article which involves a discussion of race or gender relations.
You do raise the important point that one should never assume one knows everything, but 50%+ of the opinion-holding population is wrong about a very large set of ideas (though which 50%+ varies from idea to idea). As such, the fact alone that the majority of a population disagrees with an idea should carry little weight when deciding whether to keep or abandon an idea.
Agreed. However, that fact should give you pause, and if you reject the majority opinion (or merely a plurality, or just widely-held) you should be able to articulate a solid reason as to why it deserves rejection.
That's a bold claim. Even if it becomes one of the top 4 companies, what's the business model? Most of the sites I listed are non-commercial, absolutely free. It's a bitch to compete with free services, and pretty much identical functionality.
You must also realize that the sites I listed is just a small percentage, something I googled in 2 minutes. There are many many players in the collaborative editing "market".
One of my coworkers here at Google wrote a webcrawler and search engine - probably the first webcrawler, according to Wikipedia - back in 1993. It was an academic project, deployed completely for free, with no possible way to make money.
That didn't stop Google from making hundreds of billions of dollars off search 15 years later.
When investors look at a company, they look at what it could become, not what it is now. Most gigantic megacorps started as tiny niches that nobody ever believed they could make money from.
Google didn't succeed because of a crawler. They succeeded because of pagerank algorithm, a new invention (plus hiring the smartest people they could find).
And I'll ask again - what's so groundbreaking about this project?
You're missing the point which is: when Google was funded, it wasn't Google, the king of search, as we know it today, but yet another search engine in a saturated market, started by 2 academics with no business background.
The reason they were founded was that they convinced the investors that their plans and ambitions go beyond what they've built so far.
It's a remarkable lack of imagination to not see a potential in a good, collaborative web editor. Sure, if they don't ever write a single line of code, it's not going to be anything special. But they probably will and they probably have many ideas on how to move this project forward.
An obvious evolution would be to turn it into a web-based IDE, competing with the likes of cloud9.
Or they could make it an embeddable editor widget usable by others (it's surprisingly difficult to build a decent web-based editor and a lot of web-based software (a forum, a commenting system, q/a sites) needs a good editor).
Or many, many other possibilities. Stop thinking of it as a finished product. Think of it as a first step in a thousand-step journey and try to imagine what the other 999 steps could be.
FWIW, PageRank is a relatively minor component of the ranking algorithm (I dunno why people latch onto it...maybe because it's a public, patented, easy soundbite), and the core Google ranking algorithm was entirely rewritten by Amit Singhal in 2001. The ranking edge that most people associate with Google wasn't even written when Google got its funding, and its inventor hadn't yet been hired.
I'm saying that PageRank isn't the ranking edge that Google is famous for, and that if you applied the ranking algorithm as invented by Larry and Sergey to the web (even the web at the time, before everyone started to game Google), it would suck. It might suck a bit less than AltaVista, which was why they got funded, but it's not at all the quality that people have come to associate with Google.
How could you possibly think you know this company's investment pitch based on the information we now have? You just want to bag on YC companies. And I don't care, except that you're doing it pretentiously.
Both snapjoy and stypi seem to lack innovation, at least from the information they are giving us. Take hipmunk, for instance, that's a great example of a fresh idea.
Not to put too fine a point on it, but, it's easy to see why you wouldn't invest in it: because you can't afford to put that much money behind a 1:10 or 1:15 risk. But that's exactly the problem every VC firm in the world has: finding the right set of 1:10 bets to put their money behind.
I feel like, if you're going to complain about people funding stuff like this, you're really complaining about the whole VC model. And sure, I don't like it either. So go build a company without it. Plenty of us here have or are doing exactly that.