shameless rumormongering

Rumors & Acquisitions: The Personalities Edition


CHEESE AND CRACKERS. Startup godfather Paul Graham was in town this week to promote Y Combinator, the accelerater program that remains the gold standard despite the fact that it does not have its own TV show. Living in New York makes his upper lip sweat, he shared, indicating a YC branch in the city is not in the cards. Entrepreneurs were salivating over the chance to meet the jolly and gracious Mr. Graham–“never seen so many dudes in a line” as someone on Twttr, we can’t remember who, tweeted. But Mr. Graham is not as beloved when it comes to the investor community. A notoriously fierce advocate of founder power, Mr. Graham pushes for extremely favorable investment terms for YC companies–namely in the form of uncapped notes, whereby the stake in the seed round converts to a proportionate amount of stock in the next round. “Angels and super-angels tend not to like uncapped notes,” Mr. Graham has written. “They have no idea how much of the company they’re buying. If the company does well and the valuation of the next round is high, they may end up with only a sliver of it.”

The main problem with this, one investor told Betabeat, is that Mr. Graham takes a straight six percent stake in YC companies even as he waxes righteous when those companies go out to raise. Entrepreneurs defer to Mr. Graham’s advice, this source said, even when there’s another investor they’d like to work with. “He’s protecting those two blockbusters,” this source said, referring to the relatively small number of mega-breakout YC startups such as Airbnb and Heroku.

It’s fine by some investors if Mr. Graham wants his companies to talk a big game, our source said–personally, this source plans to clean up by investing in YC companies later when they “have to do a down round” after the inevitable failure to meet their investors’ artificially inflated expectations. Read More

App Economy

How to Sell Your Indie iPad App: Lessons From the No. 1 iPad App in the App Store

Mr. Capucilli.

Earlier today Betabeat posted a memo: How not to sell your indie iPhone game, a list of tactics that didn’t work. Matt Capucilli, a freelancer who lives in the East Village, built the no. 1 iPad app currently on sale. Video Time Machine, a curated collection of videos categorized by time period and type and just $.99, got picked up by Apple and featured in the App Store last Thursday. Since then, Mr. Capucilli has earned “what could be considered one person’s salary,” for an entire year.

The app beat out Angry Birds for iPad and the iPhone version is hovering at no. 2 in the entertainment category. “If we hit number one in the iPhone app store, it’s going to be over. Game over! Retirement!” Mr. Capucilli told Betabeat over beers at last night’s East Village Tech Meetup. Read More