What's produced more value YCombinator's investments or Hacker News?

Intro

There's no doubt that Paul Graham is changing the world. His company YComninator is finding the smartest and most creative people and is funding them to create businesses that disrupt the traditional players.

This has led to a bunch of acqui-hires in which the core team of engineers and designers get a hefty paycheck to surrender their intellectual property and go to work at a big company like Google or Microsoft.

But another creation of Paul Graham's has had an even greater impact on my life personally and that's Hacker News.

Why?

I'm a software developer. It's how I make my living and it's what I'm passionate about. About 2 years ago a friend told me about hacker news. He said there was tons of stuff that I'd dig.

Over time it has proven to be such a crucial source of information regarding the software industry that I now have it as my homepage and go to it multiple times an hour when free online.

And your point?

This got me wondering which has created more 'value'--the YCombinator investments or Hacker News?

First let me start by saying that 'value' is subjective. Beauty is in the eye of the beholder.

Though it's easy to point to how much money companies have raised and how much they've sold for it's far less easy to quantiy how knowledge spread through a community has created value in many ways.

But nonetheless let's do some simple back of the envelope caluculations.

Ok let's do so calculations

YCombinator investments

Per wikipedia):

The average valuation of Y Combinator-backed companies, according to co-founder Paul Graham, is $45.2 million.

and

As of June 2011, Y Combinator had funded 316 startups.

Wolfram Alpha tells me that comes out to $13,430,000,000.

That number is a simplification and is clearly flawed because:

• It was the business owners who built that value and not YCombinator
• YCombinator wasn't the only investor in most of them

Still I think that this number serves as a useful metric. Though it's clearly not 100% accurate it allows us to say that Paul Graham and YCombinator have clearly been successful at early stage funding many startups that themselves have went on to become successful.

A far more accurate number would be the actual returns that YCombinator has made in total. But I'm neither asking for that info, expect to get it, or am implying that I even want to know. I respect their privacy and this isn't meant to be an excercise in examining YCombinator's finances.

Hacker News valuation

This value is much harder to quanitfy. First it's worth noting that if Hacker News were a regular tech news site like techcrunch, or techmeme it would probably have some outrageous valuation due to the high traffic.

But that's not really what I'm talking about here. What I'm talking about is value to the individual users to the site.

Hacker News is really the go to spot for up to date info on the most important and interesting things related to the startup industry. It's actually become critical to the way I do my job.

A good example is the multiple recent rails and ruby security issues. I found out about those pretty much as soon as news hit the wire because they were at the top of Hacker News.

Another example is just staying on top of general trends, frameworks, conferences, and new products. Each day I'm guaranteed to see something that I need to know in order to do what I do.

The community on Hacker News has proven to be resilient despite the occasional troll. Conversations are intelligent and and informed with Paul Graham himself weighing in surprisingly often.

So how do you quantify that? Considering that most of the future batches of YCombinator will have surely been inspired by Hacker News you could argue that some of the value there can be attributed to the site.

Summary

So, some shoddy math shows that YComninator has early stage invested in over 300 companies which have generated Billions of dollars in valuations alone.

But the tribe of people on Hacker News are sharing information that is shaping the industry which in turn produces the great startups that YCombinator then funds. It's truly a virtuous cycle.

My conclusion is that though YCombinator has helped generate Billions of dollars in wealth Hacker News is generating greater wealth by connecting, training, and inspiring the next generation of business owners, entrepreneurs, hackers, makers, and artists.

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Published

Tags

• hacker news 1
• ycombinator 1