Secondhand Clothing Marketplace Twice Is Putting Up $1M To Acquire YC Companies(techcrunch.com)
techcrunch.com
Secondhand Clothing Marketplace Twice Is Putting Up $1M To Acquire YC Companies
http://techcrunch.com/2012/10/08/secondhand-clothing-marketplace-twice-is-putting-up-1m-to-acquire-yc-techstars-or-500-startups-backed-companies/
24 comments
I can't remember who wrote this, but someone recently was blogging about YCombinator being the future of the educational and credentialing system. Stories like this make me believe the author's premise.
How so? YC plays in an industry (internet tech startups) that never cared much about education and credentialing to begin with.
I think I know what you're saying: times and times again, unknown people with no diplomas have found success in the tech industry. However that just means that it's possible to succeed without credentials or education.
But that doesn't mean the industry doesn't care about them. Look at how many stories mention "founded by ex-Googlers/Facebook", "YC-backed", etc. Sure, these are just from tech blogs, but if they add it in there it's because the readership reacts to that information, most often positively.
Besides, I don't think any industry doesn't care about credentials, since at least someone's reputation is their credential. For example, I don't know much about John Resig besides the fact that he created jQuery. That fact would open him many doors. It's not about education, but it's still credentials. Don't you think YC would instantly back him?
More to the point, I'm totally convinced that adding "YC-backed startup" to your resume, even if said startup never really went anywhere, is a very strong credential in a lot of places and I wouldn't be surprised if people use it that way. I'd even say that I'm sure many YC applications are "YC or nothing" in that if they don't get in, they won't start a company. It doesn't hurt to apply but the upside is fantastic: you get access to a great network, media coverage, some automatic seed money… and that YC stamp you can put on your resume.
But that doesn't mean the industry doesn't care about them. Look at how many stories mention "founded by ex-Googlers/Facebook", "YC-backed", etc. Sure, these are just from tech blogs, but if they add it in there it's because the readership reacts to that information, most often positively.
Besides, I don't think any industry doesn't care about credentials, since at least someone's reputation is their credential. For example, I don't know much about John Resig besides the fact that he created jQuery. That fact would open him many doors. It's not about education, but it's still credentials. Don't you think YC would instantly back him?
More to the point, I'm totally convinced that adding "YC-backed startup" to your resume, even if said startup never really went anywhere, is a very strong credential in a lot of places and I wouldn't be surprised if people use it that way. I'd even say that I'm sure many YC applications are "YC or nothing" in that if they don't get in, they won't start a company. It doesn't hurt to apply but the upside is fantastic: you get access to a great network, media coverage, some automatic seed money… and that YC stamp you can put on your resume.
I don't disagree with you. But the post I replied to said YC would replace traditional credentialing mechanisms. I don't think it necessarily follows, because YC plays in an industry that didn't care much about traditional credentialing mechanisms to begin with.
Using things like YC for credentialing depends on the relatively unusual characteristic of the internet startup industry that you can do "real work" in the field with no little to no startup capital or association with a big company. For this reason, software companies have always been impressed by project credentials. Aside from a short burst when Google was really focusing on Stanford/Berkeley PhD's, traditional educational credentialing never really took root in the industry. I have a hard time seeing how things like YC will replace traditional credentialing mechanisms in other fields. Is Lockheed-Martin going to look at your jetenginegithub.com account to decide whether to hire you?
Using things like YC for credentialing depends on the relatively unusual characteristic of the internet startup industry that you can do "real work" in the field with no little to no startup capital or association with a big company. For this reason, software companies have always been impressed by project credentials. Aside from a short burst when Google was really focusing on Stanford/Berkeley PhD's, traditional educational credentialing never really took root in the industry. I have a hard time seeing how things like YC will replace traditional credentialing mechanisms in other fields. Is Lockheed-Martin going to look at your jetenginegithub.com account to decide whether to hire you?
I'm still searching for the blog post I was thinking about; I apologize for not being able to yet locate it.
The statement about doing "real work" is right on the money for why and how this experiential model might transfer into other industries and economic spheres. The aerospace example is rather a wonderful counter-example for those very reasons. But wherever the ragged red edge of the world is (at the border where software is eating it) I think that this model of education and experience will trump existing forms of credentials.
The statement about doing "real work" is right on the money for why and how this experiential model might transfer into other industries and economic spheres. The aerospace example is rather a wonderful counter-example for those very reasons. But wherever the ragged red edge of the world is (at the border where software is eating it) I think that this model of education and experience will trump existing forms of credentials.
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...and therefore it's natural that the industry would develop other institutions that fill the same role.
Brilliant, brilliant PR that's knocking every corner of the internet.
But the pitch feels a bit dishonest given that the $1m will be "a mixture of cash and equity"
A mixture could mean a $10k signing bonus and $990k in stock. And then what type of stock. And then at what valuation. etc.
But still, got to respect the hustle in that pitch.
But the pitch feels a bit dishonest given that the $1m will be "a mixture of cash and equity"
A mixture could mean a $10k signing bonus and $990k in stock. And then what type of stock. And then at what valuation. etc.
But still, got to respect the hustle in that pitch.
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Hmm, let's say they pay YC their liquidation preference, pay Milner's note, and give the team a small signing bonus and new salaries for the new mission.
Twice could probably do up to 5 such acqui-hires with $1M cash. It fits nicely with their second-hand clothing theme, while ensuring some consideration from any YC team on the verge of liquidating their existing organization.
Twice could probably do up to 5 such acqui-hires with $1M cash. It fits nicely with their second-hand clothing theme, while ensuring some consideration from any YC team on the verge of liquidating their existing organization.
I'm incredibly curious about how the Twice investors feel about this allocation of capital.
Investment capital is typically used to hire people, so why does it matter how they go about doing it?
Don't yc companies have only a few team members, say three. That $333,333 per team member. Seems like more money than sense. a good argument not to give startups much money until they have a profitable business model and just need money to scale.
If I'm reading this correctly, it's $1m they're putting up to acquire "teams", not "a team". My guess is each team will get much less, which makes me question the usefulness.
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Being that the $1M is a mixture of cash and stock, they're not likely to actually get that much cash per person. In fact, I'm betting it's much less. Also, who knows if what they intend on paying the founders/new employees after they start working. Perhaps they'll offer a minimal salary, meaning that it all balances out in the end. Despite this eye catching headline, there's still a lot of unknowns that could make it a not very sweet deal.
They dont say how much real money they put on the table. They say "$1MM in cash and equity". Its a marketing ploy. And it worked. They got a catchy TC headline for free.
It's not necessarily $1 million each, but total for however many they find. If it's coming out of a $4 million investment, they can't recruit that many teams.
Equity, baby! They offer equity, not cash. Only an unnamed amount of cash. So if they value their company at 100 trillion, they can recruit a lot of teams for 1 million each :)
Desperate times call for desperate measures...
...is the Valley still a good place to launch given the enormous expense of talent there these days? Raise money there but hire remotely now seems like a better formula.
...is the Valley still a good place to launch given the enormous expense of talent there these days? Raise money there but hire remotely now seems like a better formula.
So who's the product now?
Aren't these the Minno guys from Randall Stross's book? Didn't know they had pivoted.
Yep! Restart Fund is actually partially a product of our pivot. We basically weren't getting anywhere with micropayments, and we weren't sure where to go next. We got approached by a few big companies about talent acquisitions, but we knew we really wanted to be working on something early-stage with a lot of opportunity for growth. So hopefully if anyone else is in a similar position, Restart Fund could be another option to consider.
- @jboggan, agreed. YC knows how to pick em.
- We're only planning on one acquisition for now.
- Yep, it's a mix of cash and equity -- we haven't quite finalized all the details -- and everything will vest (as is standard), but you'll at least be able to buy a car on day one.
- The equity is valued based on our Series A valuation, which, unfortunately, was substantially less than $100 trillion :-)
- It's definitely an expensive proposition for us, but awesome people make awesome companies, so we think it's worth it.
More at restartfund.com. Feel free to shoot me an email as well ([email protected])