The total value of YC-funded companies is around $10 billion, but just two — Dropbox and Airbnb — account for about three quarters of it. In purely financial terms, there is probably at most one company in each YC batch that will have a significant effect on returns, and the rest are just a cost of doing business.

On the extreme concentration of startup returns.

Peter Thiel's Venn diagram: two intersecting circles labelled 'seems like a bad idea' and 'is a good idea.' The intersection is the sweet spot for startups — it reminds you good ideas that seem bad exist, while the vast majority of ideas that seem bad really are bad.

One of Paul's most valuable memories is how lame Facebook sounded when he first heard about it: a site for college students to waste time — a niche market, with no money, doing something that didn't matter. One could have described Microsoft and Apple in exactly the same terms.

History gets rewritten by big successes so they look inevitable in hindsight.

Fundraising success after Demo Day isn't merely a useless metric — it's positively misleading. If 100% of YC startups raised money after Demo Day, it would almost certainly mean YC was being too conservative.

YC can afford roughly 10x more risk than Demo Day investors. Taking the right amount of risk would mean only ~30% of startups raise after Demo Day — but 'a Demo Day where only 30% of the startups were fundable would be a shambles. Everyone would agree that YC had jumped the shark... And yet we'd all be wrong.'

Paul deliberately avoids calculating the post-Demo-Day fundraising rate: 'if you start measuring something you start optimizing it, and I know it's the wrong thing to optimize.'

On the danger of legible metrics in a power-law business.

To succeed in a domain that violates your intuitions, you need to turn them off the way a pilot does flying through clouds — ignore what your body tells you and listen only to instruments. It's a leading cause of crashes precisely because it's so hard to do.

The probability that a startup will make it big is not a constant fraction of the probability that they'll succeed at all. You have to ignore the elephant in front of you — likelihood of any success — and focus on the nearly invisible question of whether they'll succeed really big.