If you go through the most recent YC batches, it's insane how much of their "customer list" is just other companies in the same or recent batches
Yeah, they raise a massive round on traction from other YC companies then need to find the real Product Market Fit (enterprise and others) after that round. It's actually very inefficient
The flywheel!
yc circular funding scam
One of Micheal and Dalton video does address this
Even if you larp revenue, when you get acquired or go public auditors will figure stuff out. Or worse you go to prison. Its like cheating in college-youre just hurtung yourself and others
It's the YC playbook. I guess it works, Corgi for example a "AI" insurance company with like only 5 real engineers and a bunch of growth people. Their main customer is other startups mostly YC. Same with Delve.
It says something about the state of the world that I was genuinely uncertain whether this was actually a joke right until the last paragraph.
Very well done.
I too was nervous until I clicked through and had a read.
What I wonder is what LARP stands for. something like “looped/linked annual revenue platform”? (Don’t answer with something about role playing, it’s definitely not that)
Okay, that's genuinely funny. Sadly, it might be a little subtle for the folks who need to feel the mockery most.
I was genuienly confused till the pricing and tipping section.
YC be like: hold my beer
I was able to close my first series A after just a few hours of using this. I wish the rate limits were higher though.
It worked for NVidia.
The creator of this has a good note on how the Nvidia situation relates, under his diagram of their circular deal:
"To be clear: every deal here is legal, publicly announced, and defended by the people in it — Anthropic CEO Dario Amodei called the structure "nothing inappropriate in principle." Critics compare the pattern to 1990s dot-com vendor financing and warn it can inflate the appearance of demand. As Bloomberg puts it, a circular deal is legally different from a fraudulent "round-trip" — regulators' term for sham trades with no economic substance designed to inflate results. LARP is a joke about the round-trip. This is the legal cousin it rhymes with."
What people miss from these things is that there is economic value being created.
For example, if you gift someone a $100 Amazon gift card, but they also gift you a $100 Amazon gift card. Has any gift actually been exchanged? Yes, the sentiment of giving.
Or if someone pays you $100 to eat a pile of shit, and then you use the same $100 to pay them to eat a pile of shit, you both have eaten, but the money is in the same place it started.
In the end, if you paint a big enough picture, all money flow in an economy is circular anyway.
The moving of money across time is 100% central to money's value. Passing digital money around to cook the books is moving money... fraudulently. So yeah, they're not the same unless you're goaling on the semantic purity of the word "move".
I'm confused how circulating legal tender between 2 parties could be cooking books or fraud. Each party can absolutely claim they made money from the transaction. The fact they lost money in a different transaction is a separate concern.
Gross Revenue is sometimes passed off as Revenue in reports, until you examine the fine print.
you’re literally scamming VCs lol