What if Obama gave Y-Combinator 40 Billion Dollars
I just came across this headline: Government to swap $40B for GM stock
This got me thinking about a super hypothetical: what if Y-Combinator got 40B?
First a few assumptions...
- First off, let's take out 25% for running Y-Combinator. This leaves $30B of cash to dole out.
- Let's say the average invested per startup is $25,000. Let's add another $25,000 for paperwork. So per startup, $50,000 will be spent
- YC has funded 118 startups in total. They employ 198 people not counting the founders. Per invested startup, 1.7 new job is created. (198/118)
Now for some numbers...
- 600,000 new startups
the number of startups that can be funded.
(total money - admin cost) / cost per startup = ($40B - $10B) / $50,000 - 1,020,000 people
employed by the startups.
avg. # of employees x total startups = 1.7 x 600,000 - 125,000 people
# of people employed by GM.
This is all hypothetical.
Nevertheless, this should help show the ridiculous nature of pumping in 40B in a failed corporation to bail out a few hundred thousand employees temporarily. There ought to be a better way to bring food to the tables of GM factory workers than delaying the death of their jobs.
2 comments
Jun 07, 2009
faruque said...
Admin costs of $10 billion is way too much. I'd suggest you put it at 1% of $40 billion which is $400 million. Other than that, everything in your article makes perfect sense.
xenoterracide said...
I think for this to be truly successful you'd have to be willing dish out more per company, that way more traditional brick and mortar businesses that require more initial overhead could be started. I know that it's VC area, but it still wouldn't be bad even if it ended up cutting the # closer to 500,000 or 250,000 people.



