So the interwebs are in an uproar over today's letter from Paul Graham to Y Combinator companies.
If you've not read it yet - go do so now
You've read it?
So here is the problem.
Paul is right.
But his opinion and perspective are limited and not globally applicable. And the problem is that everyone seems to think there is some sort of universal truth being communicated here ("the sky is falling").
Let me explain.
A significant part of the Y Combinator model is exits through what is now being called "acqui-hire" (where early stage start-ups are acquired by large tech companies for their engineering talent rather than their product, business, revenues or customer base). Y Combinator companies see a significant percentage of their positive exits through this mechanism. There is nothing wrong with this - and in fact much of what Y Combinator does (from funding size to focus on engineers to style of demo day) seems optimized around this style of exit.
But with the Facebook IPO performance, one of the larger and more active potential buyers for this sort of approach is likely either slowing down their M&A activities or perhaps even halting it.
So for Y Combinator (and organizations and start-ups modeled after it), the Facebook IPO very well could have a chilling effect.
This does not, however, mean that "the good times are over" for tech start-ups or the Bay Area -- or any of the other nonsense being put out there. For start-ups that have been created with the goal of building a successful business - that are in it for the long-haul - that are more than a feature or an engineering proof - that are in essence trying to build a real, big, company are in no different straits than they were before the Facebook IPO.
There is, of course, one additional exception to the above statement. If you're a later stage company hoping to go public this quarter... good luck.
As always (to sum up) you need to understand the context and POV of the person making a statement before trying to apply it -- and nearly NOTHING is universal.