Comparables

comparables

Public market investors are facing high inflation, low yields, and volatile markets. Even those who diligently followed the "gold standard" portfolio allocation of 60% stocks and 40% bonds suffered one of the worst years in recent history. In the search for yield, there are now countless options to choose from. An ease in regulatory restrictions, the growth of tech-enabled investment platforms, and even a growing number of accredited investors are all contributing to the rise of alternative investments. One such option is investing in art and other collectibles, like fine wine and luxury cars. But before you invest in these types of assets, it is important to understand the associated risks. Higher Taxes The highest tax rate on long-term capital gains is 20%. A married couple needs to earn over half a million dollars a year to be taxed at this rate, and most are taxed at 15% or less. In sharp contrast, the capital gains tax on the sale of a collectible, if it appreciates in value, is a whopping 28%. If you sell a collectible in less than one year, it will be taxed as ordinary income. In other words, your tax bill could easily be twice as high as it would be for private equity, venture capital, or other investments. Higher Fees Exacerbating the tax issue is the fact that fees associated with investing in collectibles can be significantly higher compared to other investments. Investors in collectibles have to pay for authentication, appraisals, storage, insurance, broker fees, shipping, and more. Collectible-investing platforms pass these costs onto investors. For instance, Masterworks is a leading art investing platform that charges a , as well as a 20% fee on any profits. 150 basis point annual fee Vinovest, the wine investing platform, charges an even more extreme on its starter plan. 285 basis point annual fee In comparison, Gridline is a leading alternative investments platform that charges a management fee of annually, depending on your assets under management. 50 to 100 basis points Let's illustrate the impact of those fees with a couple examples. Suppose you invested $100,000 in art. After one year, and the application of a 150 basis point fee, your investment is now $98,500. If the art appreciated in value by a strong 10%, your investment would be worth $108,350. After a 20% profit fee, you'd end up at $106,380. Finally, let's apply the 28% collectibles tax on your $7,880 gain, and you'd be left with $104,174. Or, suppose you invested $100,000 in wine. After a 250 basis point fee, your investment is worth $97,500. If the wine increased in value by 10%, your investment would be worth $107,250. If we apply the 28% collectibles tax on your $9,750 gain, you're left with $104,520. Now, suppose you invested $100,000 in private equity instead. After one year, and the application of a 100 basis point fee, your investment is now $99,000. If the private equity fund appreciated in value by the same 10%, your investment would be worth $108,900. Applying the 15% capital gains tax on your $9,900 gain, you'd be left with $107,415. That's a nearly 80% higher return than investing in art with the same appreciation rate, and more than 60% higher than investing in wine. As you can see, the fees and taxes associated with collectibles significantly reduce the amount of money you end up with. Lack of Information and Comparables A strong private market investment is built on a foundation of data and hard evidence. selection process Professional screening tools are needed to analyze performance to public market equivalents and compare a fund’s performance to a customized peer group of funds with similar investment styles. This kind of data-driven strategy is key to evaluating and selecting the right private market investments. But when it comes to collectibles, this analysis is not always possible. For example, how would you compare a Van Gogh to a Picasso? While businesses are valued based on quantifiable metrics like earnings and cash flow, collectibles are often valued based on hype and emotion. The Risk of Damage Speaking of Van Gogh, climate activists have recently attacked many of his paintings, including "Sunflowers" and "Peach Trees in Blossom." Dozens of other works of art have been recently damaged in acts of protest and vandalism. Collectibles like wine and whiskey are even more . In one case, a warehouse mishap resulted in the loss of around $700,000 worth of premium wine. susceptible to destruction In another case, a Manhattan wine merchant accidentally dropped a $500,000 bottle of 1787 Chateau Margaux. In comparison, you can't destroy a business by gluing your hand to it or accidentally dropping it on the ground. Takeaways At first glance, investing in wine or art may seem like an exciting way to diversify your portfolio and generate returns. But, as with any type of investing, it is important to understand the associated risks. With significantly higher fees, taxes, and a lack of information and comparables, the return on investment in art and other collectibles is often lower than expected. Additionally, there is always a risk of physical damage to the asset, or even counterfeit pieces entering the market.

The Risks of Platforms For Investing in Commodities and Art

The 409a valuation refers to a set of processes and standards for determining the fair market value of a company's stock. The mandates that a company must have an independent, qualified appraiser determine the company's fair market value. In order for an appraisal to be accepted by the IRS, it must meet certain qualifications. While backsolve is a method is a valuation approach to determine the value of common shares. In this article, we will look at how this method of valuation is handled in a 409a valuation. Internal Revenue Code Understand backsolve method and 409a valuation The approach is in which an appraiser calculates the fair market value of organizations with complex capital structures where there have been no recent common stock transactions. The appraiser generates several potential value drivers and runs them through a series of calculations to provide an estimate of fair market value. backsolve method of valuation The uses the backsolve method simply because most companies have complex capital structures. The IRS qualification for using the backsolve method in 409a valuation is that the appraiser must have specialized knowledge in undertaking the valuation. 409a valuation Why is getting a 409a valuation important? The IRS uses 409a valuations to make sure that a company is issuing stock at the current fair market value. The value of a private company's common stock is not readily available since it is not listed on a public stock exchange. The IRS has issued rules and guidelines requiring a for determining FMV at the grant date. Using an independent third party to determine the fair market value of a company's common stock every 12 months is one way that the company can ensure that the IRS believes the stock's value is fair. "reasonable method" In non-fulfillment of their obligations, the company could be subject to severe penalties. However, it is important to note that the backsolve method is one way of valuation; it is not the only way. Companies may also utilize other methods such as discounted cash flow calculation. Therefore, getting 409a valuations is a great way to ensure that the company is compliant with IRS standards. Why do businesses need to backsolve methods to value equity compensation? The business valuation with the backsolve method can be useful for evaluating early-stage companies with less operating history. It can offer a reliable indication of the value of a company's common stock, even if the recent investments have been in preferred shares. The backsolve method makes it simple for directors to easily understand the fair market value of their company's when it comes to equity compensation. Here are two main reasons why backsolve method is used to value equity compensation: equity compensation The board can ensure that the company is issuing stock at fair market value. Provides a fair price for employees who participate in the stock compensation. Therefore, backsolve method is a great tool for valuing equity compensation for a company that has a complex capital structure. Advantages of backsolve method In a nutshell, backsolve method is a proven method for valuing companies with complex capital structures. The backsolve method of valuation presents a high degree of precision in determining the . The advantages of using this method of valuation are as follows: value of stocks The reliability of the backsolve approach is high since it uses recently completed transactions in order to create a fair market value estimation. This means that the backsolve method makes it easy to find comparables. It is easy to value equity compensation with the backsolve method as it only requires historical data and a few adjustments for the company's current circumstances. The backsolve method is also more robust than other methods of valuation. This method is beneficial for companies having complex capital structures because backsolve method does not require any equity transaction history. This makes it a more efficient option for valuing the stock of such companies. Thus, backsolve method of valuation is an effective and efficient way to ensure that the company is compliant with IRS standards. How does backsolve method work for the 409a valuation? The backsolve method has a number of rules designed to ensure it provides accurate results. The first step is to estimate the company's value based on a number of factors, including financial forecasts, management estimates of future earnings, recent sales, and the company's market capitalization. Next, you have to construct an option-based valuation equation for the company's equity. Estimates are based on a number of factors, including risk associated with the company and the potential time period to exit the market or known as liquidity. Following this, the latest transaction is used where the pricing data is assembled. This data must be appropriate and up-to-date and should not be older than one year. In addition, no changes may have occurred in the company since the last transaction that could have influenced the company's value. In the end, you need to use the backsolve technique to estimate the common relationship that is related to all the distinct securities (total equity value). Once the backsolve technique is used, a formula is generated that estimates the fair market value of a company's common stock at the date of grant. The resulting value can be then used to determine the cost of stock options if the company does not have a readily available share price. Common methods businesses use for 409a valuation Businesses should be aware that there are a variety of methods that are available for valuing equity compensation. In order to make a fair determination, organizations should utilize a method that provides accurate information with the least amount of errors. Following are the top 4 methods for 409a valuation: - The backsolve method has been around for a long time and is a highly reliable strategy for 409a valuation. It is one of the most widely used methods for 409a valuation and one of the most trusted. This method is ideal for companies that have a complex capital structure and need to validate and calculate the fair market value of equity. This method is highly accurate and easy to understand, which makes it a great option for valuing equity compensation. The Backsolve Method - This method is based on the concept of assets approach and has been the standard for calculating 409a valuations for many years. The principle behind this method is to determine the value of equity by identifying the net asset value to arrive at the . This method is utilized for companies with no revenue and is based on proven principles. The Cost to Recreate proper valuation - This method is used to determine the 409a valuation by assessing a company's equity as a result of evaluating the cash flows that will be generated in the future. This method is widely accepted and offers great value for its simplicity. It is known as more effective and reliable than the other methods of valuing equity compensation. The Discounted Cash Flow - This method is used to determine the 409a valuation of a company's stock by comparing it with other companies that are similar in size, location, industry, and overall economic and market conditions. This comparison will result in an accurate estimate of the fair market value for the company's stock. The Comparable Company Analysis Therefore, all the above-mentioned methods are great for determining the fair market value and complying with IRS regulations. Each method is proven and tested, and each has its own unique capabilities and limitations. It is up to the business to make the choice of which method to use. Allocating equity value with 409a valuation Companies that want to determine the value of equity under 409a regulations can use the backsolve method. The backsolve valuation method is an accurate and fair way to determine the FMV. Following are the basic steps for performing the backsolve method: - First, you have to determine the simple capital structure of the company, which is the sum of cash, retained earnings, and preferred stock. This includes the capital structure of common shares and a stock option pool to provide a proper 409a valuation. It is essential to conduct a thorough review of the company's capital structure to ensure that it is accurate. The next step is to form a water analysis of the company, which will be used for determining the fair market value of common shares. Capital Structure - The waterfall analysis is the major component of a backsolve analysis. It is used to break down the levels of payouts in case it is acquired or liquidated. Waterfall analysis is an effective tool in financial modeling because it breaks down the amount every shareholder would receive in the event of a sale, exit, or when using the backsolve method. It must be understood that waterfalls are built upon a contingency basis because of the uncertainty and risks that are associated with the future. Waterfall Analysis - The BSOP model is a fundamental tool that can be used for allocating equity value. This model is extremely accurate because it considers each type of equity class as a stock option to determine the value. This allows for accurate calculations and the correct allocation of equity value. Black Scholes Option Pricing Model (BSOP) - After calculating the BSOP and other factors, the implied equity value has been calculated. This is the final step, and this value is used to evaluate and allocate equity. Implied Equity Value Therefore, the backsolve method is a reliable and accurate means of calculating 409a valuation. It is a fairly simple approach for determining the fair market value of equity. It is well-suited for companies that have a complex capital structure or that are looking to determine the value of stock options in an accurate manner. Why do backsolve method’s complications occur? In order to ensure that a backsolve method is conducted in accordance with the IRS regulations, there are a number of complications that must be considered. The IRS takes a very broad approach when evaluating a 409a valuation. It is vital to keep accurate records and details of a company's capital structure, how it is managed and in what amounts. The higher the capital structure is, the more complicated it becomes to follow the . Here are some complications that you must consider when using the backsolve method. IRS guidelines The 409a valuation can be affected by changes to the capital structure. This includes modifications to share counts, the creation of new classes, and the form of capital. Capital structure is one of the key components that can affect the 409a valuation. A complex capital structure can affect the calculation of the 409a valuation. The more complex the capital structure is, the more work it requires, and more time is required to complete a calculation. It is vital to understand what kind of changes can occur in the future that may affect the 409a valuation. This knowledge will enable you to build waterfalls and BSOPs before initiating calculations, which will reduce the time you need to perform this section. Thus, when it comes to the creation of a proper 409a valuation, it is necessary to follow the . IRS regulations Conclusion In conclusion, it can be seen that backsolve method is a reliable and accurate means of determining the fair market value of a company. It can be used for determining the value of stock options, which is an effective tool to help companies meet 409a regulations. In order for this method to be successful and accurate, there are some complications that must be considered. It is vital that a proper capital structure is created and managed to ensure that the backsolve method will provide an accurate and fair valuation of the company.

How Does The Backsolve Method Work In A 409a Valuation?

Hachette, HarperCollins, John Wiley and Penguin Random House are asking a court to reject Internet Archive's request to access huge volumes of data regarding the sales performance of books. IA wants to counter the publishers' lawsuit by showing that its lending library did no harm but the publishers describe the request as not only "burdensome in the extreme" but also "irrelevant". Last June, publishers Hachette, HarperCollins, John Wiley and Penguin Random House , describing its ‘Open Library’ as operating like a pirate site. sued the Internet Archive for copyright infringement The Internet Archive (IA) sees things differently, noting that its ‘Controlled Digital Lending’ process operates for purposes including preservation, access and research, therefore meeting ‘fair use’ standards. In parallel, IA believes its liability is limited due to the safe harbor provisions of the DMCA. As last week, IA wants the opportunity to show that its digital library lending had no negative effect on the publishers’ business. reported To do that, IA wants access to sales data for the 127 books listed in the lawsuit, plus data on one or more comparable works that were not available for digital lending at the same time as those works. However, the parties cannot reach a compromise so IA is now demanding access to detailed book sales performance data for all books sold since 2011. Publishers Respond to Internet Archive’s Request In a new response to the court, the publishers reiterate their claims that IA operates “an illegal ebook distribution service” that threatens to “destroy the legal library ebook market”. The publishers say that they have already produced detailed sales and financial data for the 127 books in the lawsuit, totalling over 670,000 rows of data in Excel. They say that IA now wants access to data related to more than 500,000 additional books, complaining that it only wants access because the data it has obtained thus far doesn’t support its theory of no market harm. “IA argues it is entitled to [access the data] in order to see if any evidence might exist to support the inherently incredible theory that copying entire books and distributing them to any member of the public worldwide upon demand does not compete with Plaintiffs’ sales of the same books,” the publishers’ letter reads. “Even worse, IA’s quest rests on the palpably false theory that it can quantify the harm caused by its infringement by comparing the sales of completely different books. Books are not interchangeable widgets and marketplace performance is driven by countless indeterminate and changing facts.” Publishers: Fourth Factor Fair Use “Misinterpreted” The publishers say they distribute their books to millions of readers around the world through many legal channels, including by selling or licensing ebooks to library aggregators which allow library patrons to borrow ebooks on their devices for free, subject to limitations. However, they insist that IA’s argument that its lending practices do not affect the commercial performance of books misinterprets the fourth factor of the fair use analysis. “The fourth factor looks beyond lost sales and focuses instead on the effect of the [infringing use] upon the potential market for or value of the copyrighted work,” and requires consideration of “not only … the market harm caused by the particular actions of the alleged infringer, but also the market harm that would result from unrestricted and widespread conduct of the [same] sort,” they write. “Here, IA self-evidently harms Plaintiffs’ existing markets by refusing to pay the customary fees that aggregators pay to distribute the same ebooks to library borrowers. The market harm compounds as others engage in the activity, destroying the vibrant market for licensed library ebook lending that currently exists. None of the requested data, or so-called ‘comparables,’ is necessary to or even related to this category of market harm.” Data Sought is “Not Material”, Creates a Massive Burden The publishers say that producing sales data beyond that relating to the works in suit is not only “burdensome in the extreme” but also “irrelevant”. They dismiss IA’s claims that there would be no burden in producing the data as “preposterous” since it would require them to pull masses of data from multiple databases in a way they would not do in the ordinary course of business. This would incur “incalculable” employee time and significant resources to compile what could amount to billions of rows of data. In addition, the publishers say that the entire request for data rests on the false premise that books can be compared to each other and discounts events that inflate sales, such as an author dying, a book being made into a movie, or receiving a great review. “In short, it is impossible to calculate the market harm of IA’s infringement based on the crude comparison IA proposes because there are innumerable reasons why one book sells more copies than another that have nothing to do with IA’s infringement. IA’s demand for this massive data rests on no coherent foundation. It should be denied,” they conclude. The publishers’ letter can be found (pdf) here ” Originally published as “ Publishers: Internet Archive’s Sales Data Demand is “Burdensome and Irrelevant ” with the Attribution-NonCommercial 3.0 Unported (CC BY-NC 3.0) license.

What Publishers Had to Say About Internet Archive’s Sales Data Demand

The Best Risk-Adjusted Path to 10x Crypto Returns with Ethereum

Many of our friends in the valley feel completely unempowered to negotiate compensation plans since COVID began making waves in the US in March. The common stories we hear from top talent are either: (A) not even considering recruiting due to fear of the current economic climate (B) a feeling of “no leverage  to have any compensation conversations internally and (C) fear of on-boarding to a new role while everyone is remote. While that fear may have some validity it does not outweigh the potential lost opportunity of a better career advancement. Many in the country are hurting, and plenty of people  are without jobs. However, many software companies are seeing phenomenal growth, and the career options and opportunities for those in tech career paths become better with almost every passing day. With the current climate of uncertainty, even high performers seem to be more risk averse while negotiating their value in roles. But companies are more worried than ever about losing top talent in this uncertain time, and so right now might be the best time for you to renegotiate. This is the time to align your value with your company’s goals and your own. A few of our friends have recently tested this theory, and one even got a raise of $45K from a base pay under $200K. In March of 2020, recruiting and hiring in many companies froze, or was delayed due to COVID uncertainty. It felt like every other day there was a new article talking about layoffs around the country. And while the job market in the tech industry has bounced back, the rhetoric of nationwide unemployment is still rampant. In fact, by May that tide had turned and many companies gained ability to forecast their core business, as well as forecast hiring needs. Two examples include: Truework itself, with not even 100 employees and over as of 11 October 2020 13 openings Bazaar Voice with around 1K employees and as of 11 October 2020. 78 job openings If you sit in a competitive and growing part of the software and tech world, the poor job market is a myth.  This is no time to feel disempowered. Instead, the first half of 2021 is both an important time to consider your and a key time to negotiate for plans either internally or externally. As a high-performer, now may be the best time of your career to renegotiate and create long-term alignment with your company, or seek a new company that is better aligned with either your own values or the massive economic shifts underway. Know what you are worth and push for the right plan for your current contributions to the business. career path compensation We have seen a few trends in how to negotiate compensation / recruit during COVID. to avoid and tips to reframe your thinking. The following are the most common mistakes Focusing only on what you have done and what you have been paid in the past. All come down to leverage in some form or the other. By only focusing on the past you significantly weaken your position. Ultimately a founder's goal is to strategically spend capital in a way that maximizes future return on investment. No company in their right mind would offer an outside hire more money because they felt their compensation was too low at their old job. negotiations A common response when an employee uses this tactic is that your past performance is covered by your previous contract with the company, and that is a valid point. Focusing only on your title Some companies simply lack the ability to make material changes to title without mountains of political buy-in and support. For other companies, they may be able to change the title to your preference, but leave the rest of your compensation the same. Fighting for title, if you choose that path, may win a small battle  but lose the war in terms of achieving your overall goals around compensation. Making it personal / emotional Your negotiation has nothing to do with your self worth or how much your managers respect you. Particularly in this climate, company needs may have changed with scale and markets - what it needed a year ago may no longer be relevant. Preface the conversation by telling your manager this is not personal and you want to find long term alignment with the company. By mentioning this in the beginning you have a framework to reference as negotiations become more intense. Making it obvious that you are not willing to walk away Know your market value and that there are always options out there, and back to earlier points, negotiations come down to leverage. When you make it clear you are staying no matter what happens in the negotiation, your leverage is decreased, perhaps down to zero. Failing to get organized All too often employees simply state they want a higher base pay or bonus. The complete lack of research, lack of preparation, and lack of real-time comparables harms the negotiating process before it has even truly begun. Leverage your internal network, mentors, or even outside advisors on how to prepare for this negotiation including who you should talk to within the company first. Instead of falling into the above quagmire of mistakes, we recommend these solutions to ensure you are putting your best foot forward, and giving yourself the maximum chance of success in your endeavor to obtain a better or more fair compensation package. Focus on what the business needs in the future and why you are a key part of that solution Make clear in words, and ideally in quantitative details why you are the best person who can help the company reach the next stage in their growth trajectory. Clearly communicate how you are a proven asset and team player. Any new hire is risky and expensive,, not to mention the opportunity cost of ramping them up. Know your BATNA (Best Alternative To a Negotiated Agreement) What is most important to you and what is most important to the company, both now and in the future?  Are you willing to sacrifice cash now for equity later, and if so what is your preference, and what is your preference versus your understanding of company preference. For example, Amazon is widely known to have high equity compensation, and yet rarely if ever pays more than around $170K in cash base pay. Knowing your company’s preferences can save you a great deal of time and effort. If you have the time and interest, another offer is often powerful leverage in these sort of conversations. It can take significant time and energy to get this outside offer. However, if you know your company matches outside offers, and rarely works on a negotiation without it, then this may be the right path for you. Patty McCord, ex Chief People Officer at Netflix, is famous for encouraging employees to interview at other companies. Research, and predict what levers your boss/company cares about This research should help inform you on both who to talk with first ( likely your first line manager), and will also probably help shed light on how other negotiations have occurred for either existing employees or current recruits. If you have any relationship with HR or recruiting that can prove helpful to understanding where the market is currently for other hires, and how to think about positioning yourself. Negotiating by Email We rarely hear of anyone who emails these sorts of issues to managers with great success. Even if you are a star player, not using the video or phone call to convey important information like a compensation concern can put a bad taste in the mouth of leadership and harm your overall potential for the ideal outcome. Additionally, you should be ready to adapt your strategy based on the response and verbal/visual clues your boss gives you during the negotiation. You would never call an all-in bet in poker without first trying to read your opponent. Every negotiation is different, and your own compensation makes it difficult, if not impossible, to be fully objective. However, if you follow these steps, our experience is that you create the possibility of a very healthy engagement with your leadership, and probably showcase that you can and will stand up for yourself at the least. In a best case scenario there is an open attitude and mindset, your ask is logical and makes sense, and your leadership grants all or most of what you ask for enabling you to be an even more productive employee. These conversations are almost never easy, and rarely is there a “ ” during COVID to surface these issues. However, if you avoid solving an underlying point of friction for you as an employee, it will likely surface eventually as a point of conflict in either your departure to another job, or decreased performance. Neither of these outcomes are ideal for either party, so get out there and see what is possible. perfect time Hopefully, after you follow these best practices, you achieve your goal in compensation, promotion, and other career advancements. Congrats. The next step is to clearly define goals and objectives required to succeed in the new role / position / etc. Once you succeed in these new goals, it may be time to reach for your next promotion. Why read this / about the authors and have had wins in negotiating compensation for themselves and dozens of others over the last several years in both public companies and start-ups. Ben Faw Jeff Morelli Ben is a serial entrepreneur, an alumni of UBS (I Banking), Tesla, HBS, LinkedIn, and a Co Founder of BestReviews ( , and ). Sold to Tribune Publishing for over $100M sold again to Nexstar for $160M in November of 2020 Jeff was the first non-cofounder hire at (where Ben was an early advisor), and has built two multi-million dollar sales playbooks. On top of leading the company in sales every quarter, Jeff also closed the largest deal in Truework’s history. Truework

How to Negotiate Compensation During COVID (and at other times)

(Photo by Diego Madrigal from Pexels ) I’ve been using Elm for the past two years. During that time I’ve written about 34k production lines of code in Elm across four projects. That work spans code from my very first day until today. My overall progression looked something like this. A major part of Elm’s pitch is that it has no runtime exceptions. Does it mean there are no bugs? No, but they are much less frequent than in more orthodox languages. For me, most bugs actually appear in the interface between Elm and its impure environment. How do you get into Elm and how to use it on a daily basis? Is the hype around Elm justified? Are the detractors right? Read on to find my take on the issues. Elm is my overall favourite language. Disclaimer: How I learned Elm Effectively I’ve learned enough Elm to write my first production code within a couple hours. Then it took me a couple more weeks to get a fuller grasp of what’s going on. These here were roughly my stages of progression. Official Guide (, “Elm in Action”) In the beginning I’ve started with the . It’s a great place to start as it provides an overview of the language. However, for a beginner it can lack a little context. Often programming books provide more context, such as toy applications. Check out the new book by Richard Feldman ( ) “ ” for a more complete guide. official guide @rtfeldman Elm in Action Coding with Django and Phoenix While and after reading the guide, I’ve experimented with (seems to be abandoned/reworked now). Then I’ve integrated Elm with an ongoing Django project. Finally, I started to write some production code on the first day. The code still runs today, unchanged. elm-reactor That initial production code was for an admin login. It was not necessary to rewrite that login interface, but it was a good opportunity for practice. Although today that’s an easy task for me in Elm, it took a little tinkering before I got it right on the first day. Don’t get frustrated, stay with it, after a little stubbornness usually things become clear and your brain wraps around new concepts, which then become second nature. Watch talks by those in the know After some more coding, I’ve learned a lot from talks by Richard Feldman  and Evan Czaplicki ( ). Richard evangelizes Elm, while Evan is the inventor and main developer of Elm. I learned a lot from their talks here: “ ”, “ ”, “ ”. @czaplic Scaling Elm Apps Make Data Structures The life of a file Read other peoples’ code Another good source for me was reviewing Richard Feldman’s . Richard has a ton of experience writing in Elm, so his code is an excellent source to learn from. RealWorld example app Join the community Additionally, the usual applies: search for problems on Google/DuckDuckGo, read StackOverflow, check out the Consider joining the . Code a lot, grow your code base, think deeply about the problems you code and how to solve them idiomatically, research and read. Grow larger projects and grow more complex projects. Elm forum. Slack channel Bonus: Exercism Recently, I’ve discovered for myself. Doing a track on exercism kind of feels like cheating when progressing through a new programming language. I’m currently using it to learn Haskell, but I’m sure that the Elm track is great as well. exercism How I’ve been using Elm I’ve been using Elm in a legacy project with (👍) and in new projects with (👍👍). Both are relatively similar with regards to the integration with Elm, but both also have their quirks. Django Phoenix Piecewise adoption In both frameworks I began with server side rendering. Initially, I’ve started to replace existing features and then I began to add new features with Elm instead of templating. Most of the time I’ve used Elm for features that benefited considerably from interactive dynamism. But often enough I’ve also implemented other features in Elm, just for the heck of it. Try it out, it’s fun and provides good practice. Check out for some inspiration. gampleman/elm-visualization Integration with Django and Phoenix via webpack In both frameworks I’ve used webpack to get Elm running. It’s a pain. Each time I ended up wasting hours to get Elm running properly with webpack. This is not Elm’s fault, but still this nags me. Once webpack is set up, it’s great though. During development webpack will trigger the compiler on file changes. In Phoenix you even get an automated page refresh out of the box. In both frameworks, I keep the Elm code in the corresponding global static dir: `assets/Elm` for Phoenix and `static/Elm` for Django. One might want to separate the code by Django-app/Elixir application. However, I prefer to keep all the Elm code in one place and thus to keep the webpack config simple. RESTful APIs over channels (sockets) Again, in both frameworks, I’m using a RESTful API between the backend and the Elm code. That works neatly in Phoenix, which supports the full breadth of HTTP verbs. With Django there are limitations on the available verbs. For example, there’s neither PUT nor DELETE out of the box. So you need to improvise or use additional packages with Django. With Phoenix I’ve tried out channels, which is an abstraction on top of web sockets. There are  (abandoned 🤷‍♂️) for that. However, for my taste there is still too much coding overhead. At least for my use cases the benefit did not justify the added complexity and extra effort. bindings in Elm In the beginning I’ve mostly used embedded apps in legacy code. The normal templates (Django templates and EEX) provide the placeholder for Elm and a dedicated JavaScript file bootstraps the Elm app. By now many of my older pages have multiple Elm apps running. Things I like Let’s quickly go through the best parts of Elm. I am not going into details here, because I’d just be parroting the usual pitch. You can read about the . details in others places Exposing complexity Often Elm forces you to do things in a seemingly convoluted and complicated way. What I’ve realized after a while is that Elm actually only exposes the inherent complexity of the underlying problem. Elm forces you to face the complexity head on. https://twitter.com/elmradiopodcast/status/1254912574115557377?s=21 Furthermore, Elm provides you the tools to cope with that complexity. For example, decoding JSON values in Elm initially may seem . Here’s an example where we decode a user struct with . overly complicated a decode pipeline .succeed |> required .string
        |> required .string
        |> required .string
        |> required ( .list .decode)
        |> required ( .maybe .string)
        |> required ( .maybe .decode)
        |> .map Decode IdentityRecord "token" Decode "emailAddress" Decode "userId" Decode "roles" Decode Role "institute" Decode Decode "color" Decode ColorPicker Decode Identity In JavaScript you can just access the fields once you get a response from a RESTful API. The catch in JavaScript comes later on, when you start to add workarounds for missing fields and fields with unexpected data types, or when you start to modify your data type. This leads to plenty bugs downstream. In Elm you need to decode the response first, explicitly defining every expected field. But once you’ve defined the decoder you’re good to go. Either you can decode the value as expected or you’ll get an error response, which you will be nudged to take care of explicitly. So things in Elm aren’t really more convoluted or complicated, but actually simpler; maybe one could call Elm’s approach more “honest”. The language itself Elm is a great programming language, but for most people not necessarily what they are used to. It’s a functional programming language ( ) with strong, static typing. Functions are pure (i.e. there are no side-effects). The language is strongly and statically typed, so you have to make sure that all pieces neatly fit together before you can run your code. All data is immutable. These three aspects are pretty much the antithesis to dynamic languages, such as Python or JavaScript. whatever that means In my view, after spending years with dynamic languages (e.g. Python, JavaScript, Groovy) that’s really a relieve. As I see it, static typing, pure functions, and immutability add a steeper learning curve and take some getting-used-to.  However, these concepts vastly augment your power to wrangle the complexity when your project grows. (mostly `|>`) is another great concept, which allows to chain function calls, without nesting them and without having to name intermediate results. Once you know pipelines, you’ll miss them in other languages, such as python (pipelines for PyTorch would be , 🤔). Pipelining really magnificent “I call it my billion-dollar mistake. It was the invention of the null reference in 1965.” — Tony Hoare There’s no type or as its inventor Tony Hoare calls it: . Instead you have a type called , which is the same as in Haskell and in Scala. Using leads to a little more work and a lot fewer bugs! null/nil/None “my billion dollar mistake” Maybe Maybe Option Maybe Here’s an example how you can deal with a value. Maybe mInput input ->
        transform input ->
        defaultTransform case of Just Nothing are great and allow you to abstract your code via polymorphism quite a lot. That means that you can write functions that operate on mostly unknown types. Generic types is really good, especially once you’ll start applying more , such as matching in function arguments, the keyword, and advanced pattern matching on lists, records, and tuples. For example, here we’re matching a pattern in a function argument: Pattern matching advanced features as : ( , ) -> (firstValue, _) =
    firstValue fst String String String fst The compiler is great. The help a lot. The type system in combination with compiler messages allows you to do without a headache. The , which is especially important and convenient during development. error messages big refactorings compiler is fast The resulting asset is small and executes very quickly. Especially, when deploying for mobile it’s great to have a small build that doesn’t lag during usage. The new time travel debugger can be of great help. The debugger keeps a history of all actions (received messages) with their resulting state. You can  then jump through all historical state changes while debugging. Finally, Elm pushes you to . Elm is not Haskell, but if you’re only used to object oriented programming or imperative programming, you’re going to dive into a different world that you didn’t know existed. In the beginning the concepts will feel awkward, but after a while they’ll feel like second nature and you will probably prefer the functional programming style for many tasks over the imperative or OO style. stretch your brain The Elm Architecture (TEA) 🍵 defines how you can structure your app. This pattern is used throughout the Elm ecosphere. Its use is not mandatory, but in the end seemingly most projects do apply it. The Elm Architecture Because most projects use the same basic architecture, it’s quite easy to find your way around other people’s code. Still, there’s plenty of flexibility baked into the architecture. For example, the update function can be changed to include additional arguments, such as a random value, the current time, an authentication token or a . Navigation.Key Basically the same architecture is used for single pages (akin to components), for embedded apps, and even for single page applications. Kind of fractal 💥. High quality packages Elm has a list of great packages. My favorite ones revolve mostly around UI. These include , , , and . elm-ui elm-bootstrap elm-mdc elm-visualization These days elm-ui is my go-to package for the UI. Actually, alone elm-ui provides enough value to me, to use Elm in the first place. Another great tool I found useful is , which allows you to create simple parsers. I’m using them for complex form validation (e.g. validating a date input in a free-form text field), and to parse complex values in instances. elm-parser Json.Decoder Of course, there are plenty more packages for all kinds of use cases. Blissful everyday use On a day-to-day basis, Elm is just fun to work with. When you write and deploy your code, you can be reasonably sure that the frontend will work properly. When you or your collaborators change some code, again you can be quite sure that you don’t break something else. Finally, large refactorings are quite relaxed. They still might take some time, but you won’t have the constant feeling that you just jumped into the abyss and there’s just no way out of it. Often enough I’m doing refactorings in Elm that I wouldn’t even think about touching in Python, or for the most part, even in Elixir. Finally, Elm is fun to use on a daily basis. Even when projects grow I can make good progress without running into complexity walls. Things I dislike Nothing is perfect, so there are a couple of things about Elm that don’t suit me that well. Keep in mind that the benefits and downsides are not static. For me this list changed considerably during the last two years. A novice has different requirements than an advanced user. Also, before you read this remember that . Elm is my overall favourite language Missing advanced language features My first, and probably biggest complaint, is about advanced languages features, especially abstractions. Many people complain about those, but I don’t see them as a showstopper. Also, they were no issue for me until I was becoming an advanced user. I would like to have typeclasses, more advanced functions on lists, dicts, and functions ( is gone 🙁), pattern matching on function signatures (with fall-through), and guards. I understand that these features are mostly missing to keep the language simple and consistent. Especially for new users that’s a good choice. My guess is that actually the lack of those features might be the reason why Elm is more popular than , which is rather similar to Haskell and which has more advanced features. flip PureScript Getting a random value, the time etc. Some things are surprisingly cumbersome in Elm. These issues pop up because Elm has no side-effects. For example, getting the time or a can be surprisingly convoluted. random value A pure function cannot produce a random value or the current time itself, since side-effects are required for that. If you need the current time somewhere deep down in a function, you need to first send out a command to the runtime, then you get a message with your value, then you need to write a handler / case in your update function, and then you can go on with your business. This whole process can force you to change a lot of function signatures on the way. Missing packages React has nicer themes. On sites such as theme forrest, you’ll find plenty of themes with React components. You can still use those themes in Elm, but you’ll have to write the Elm integration (at least a couple of wrappers/renderers) yourself. is really impressive. There’s nothing as impressive as material UI (react) for Elm. Elm-mdc, elm-bootstrap are great and will suffice for very most applications. However, material UI is just more polished, including its animations and page transitions. Material-UI For some problems, there are just no good packages. For example, I’ve used in a project. When I used it the first time with Elm it was hard to get to work and required some hacky code. I had to write my own wrappers via JavaScript interop. Now, anybody else who wants to use the Hands-on-Table will have to do the same, because I can’t publish my interop code. Packages that use the port mechanism for interop cannot be published in the package repository 🤷‍♂️. Additionally, probably no one will write a table package that is as advanced as Hands-on-Table for Elm any time soon. So you don’t get proper access to the arguably most powerful JavaScript table package. That’s a trade-off for not having run time exceptions. Fair deal to me, but you’ll have to decide use case by use case. Hands-on-Table Hard to find bugs Some bugs can be hard to find. I usually debug with log statements. Logging in Elm is relatively inconvenient: . Granted, it’s a lot worse in Haskell. Another good approach for debugging in other languages is a step-debugger. Well, there’s none for Elm 🤷‍♂️. let _ = Debug.log “log name” “foo” in ... Recursive imports Recursive imports can be a nuisance, because they are not allowed in Elm. Recursive imports can be hard to avoid sometimes because reality is messy at times. You can easily end up with weird references between data structures. Although a nuisance, this issue shouldn’t appear to often and there are . ways around it Scaling the architecture (🤔🤷‍♂️) Although I’ve written plenty of Elm code and although I had to scale my applications again and again, I still don’t know how to do it properly. I try to stick to writing modules around data structure. This approach sometimes leads to files that are a couple thousand of lines long. I’ve got functions that span hundreds of lines. Although it’s kind of discouraged, I often separate parts out using the page pattern. However, creating a page that can keep track of its own state involves quite some overhead. You’re practically writing another app, which is embedded in your main app. However, writing a page without its own state often doesn’t seem a good choice to me, mostly because it blows up the code of the surrounding module. update Things I dislike even more Setting up Elm and issues due to missing abstractions bother me most. The first issue has not too much to do with Elm. But setting up Elm with webpack to work in Django or Phoenix gets me every time. For me it takes a lot of fiddling until the setup works properly. While some missing abstractions only lead to some more typing, there also are worse cases. As an example, when you want to restrict the keys to your you need to use a . Dict comparable Comparables are defined by Elm and you can’t implement a type yourself. That means you can’t just use an algebraic data type as a key in a . In Haskell that’s resolved in a nicer way. comparable Dict You define your ADT and derive and and you can use your new datatype as a key in a . So in Elm you either lose type safety over those values (by using strings directly) or you have to do some awkward manual conversion between ADT values and strings. Eq Ord Map What’s next I’m coding Elm nearly everyday and I am looking forward to Elm’s future. Furthermore, there are plenty things I would like to explore more in Elm. Probably next up: , , some more . GraphQL Haskell/Elm Bridge gampleman/elm-visualization Besides that I’m going to experiment with expanding the Elm experience to the server by developing a backend with Haskell. End-to-end type safety from Postgres to the browser sounds very appealing to me. Actually, Elm might be the best pitch for Haskell for web developers! If you like this article, please follow me on Twitter ( ). I’m posting  my experiences with Elm, Elixir, Haskell, and PyTorch. @chronz_peter

Elm in Production: Developer Reflections After 34k Lines of Code

The following post is a walkthrough on the methodology we followed to value Perlin's native network token, the PERL. The report and post were authored by , Senior Research Analyst at Decentral Park. @eliasimos Key takeaways Holding and staking Perlin’s native network token, will allow validators access to a stream of transaction fees, to be distributed to them as validator rewards. As such we can deploy a discounted cash flows methodology to find the "fair" value of the token. We conclude that a fair token price for PERLs, stands at , at a fully diluted market capitalization of . $0.823 $850,690,646 The core technical that power this valuation are: . assumptions [validator reward: 2%; main use case contribution: 65%; growth rate for TV: 2%; discount rate: 30%; float rate: 100%] Through a scenario exploration exercise, we projected a . fair value range between $0.177 and $2.675 per token We would strongly encourage further research on the modelling approach and more specifically, in incorporating variables such as token velocity to the model. For the reasons above, we have open-sourced the valuation model. Perlin; a short introduction Perlin is a bleeding edge, lightning fast, DAG based distributed ledger, that offers Bitcoin level security through a novel, leaderless PoS consensus protocol (Wavelet), while achieving 31,000+ transactions per second and consistently has 0 to 4 second time to finality. What Perlin also brings to the table, is a straightforward token economics model, that lends itself out to applying a discounted cash flows approach to value its native token. The main use cases that PERLs (the native network token) will assume, are to facilitate: (i) payments for ledger transaction fees (ii) payment for smart contract fees (iii) as a PoS consensus token, used for running a validator node and and potentially (iv) as a governance token as the network grows towards maturity. Given that very little is yet known about (iv), for the valuation exercise purposes, this post will be focusing on use cases (i) through to (iii). According to the team behind Perlin, the validators will receive the full amount that is collected on the ledger as fees, as a reward for securing the ledger via incurring the opportunity cost and risk that is associated with staking. As such, the Perlin token holder and validator, can expect a form of residual income to accrue to them over time, that is relative to the amount of value that is transacted on-chain. The purpose of this short report, is to act as a walkthrough for the line of thinking we followed in this exercise, while acting as a manual for those that are interested in using the model to experiment with their own inputs and potentially even extensions thereafter. While our selected assumptions are strongly influenced by our understanding of the fundamentals of the project, we will avoid getting too detailed on the technical and fundamental merits of Perlin as a nascent platform, and will solely focus on the valuation exercise. The Core Assumptions As a general purpose distributed ledger, Perlin can eventually assume a multitude of use cases. However, given the strong ongoing relationship that the team is developing with the ICC (the largest business organization in the world, with 6 million members in over 100 countries), and the first products that the team is building for the platform, we have benchmarked our analysis on the activity that will concentrate on Perlin, to come from 3 distinct industries; trade finance, supply chain management and distributed computing. We have leveraged 3rd party evaluations to benchmark on rates of compound annual growth for each of the 3 industries, which we are using as a proxy for the transaction volumes that can be driven through blockchains over the course of the coming decade. We have further assumed that technologies based on distributed ledgers will achieve varying adoption levels in the aforementioned industries, with different adoption patterns – though all based on a logistic “S- shaped” function. At the same time, we assume Perlin’s share of the blockchain dominated partition in the industry, to be static and grow in proportion with the overall share of blockchain related solutions (for simplicity). Given Perlin’s unique relationship with the ICC, our base assumption is that Perlin will be a market leader in the trade finance vertical with a 25% market share at the end of the decade, a strong player in the supply chain management vertical with a market share of 8% and a dynamic entrant in the distributed compute vertical with a 3% overall market share. We have further assumed that the adoption curve will reach maturity faster for the first two use cases – again by merit of Perlin’s relationship with the ICC, and our evaluation the transformation capacity the already existing infrastructure and current modes of work allow, and slower for the latter. The table below outlines the quantitative inputs of the assumptions above, and the resultant adoption rates for Perlin, as well as the total value Perlin stands to capture as validator rewards (assuming that the 3 use cases explored here attribute to 65% of the total value transacted on Perlin, and a 2% validator reward) Transaction fees Value will accrue to PERL stakers in the form of transaction fees on the platform. As such, our valuation of the PERL is based on an assumption of a given, competitive transaction fee level. To the best of our knowledge, the team has yet to decide on a transaction fee function, and as such, we have assumed a certain static fee level in order to calculate the amount of value that gets distributed back to the validators. Our base case scenario benchmarks that level at 2% of the total value that gets transacted on the Perlin ledger. The main reason why, is that we feel that this is a fair multiple on the average transaction fees that users have to pay on existing comparables, while (in most cases) remaining competitive compared to centralized clearing parties, adjusted for transaction speed and resource availability. Take Ethereum for example; the table below ranks 6 separate, randomly selected points in time from the past 12 months, and explores the relationship between median transaction value and median fee charged. The result is an aggregate 0.25% median fee charged for every transaction that is processed on Ethereum. Given that Perlin’s latest performance test recorded a resource availability multiple of 2000x compared to Ethereum (31,000 tps vs 15tps), we believe that a modest 8x increase in the cost of service (2% vs 0.25%) can be justified. Given the above, and combining the output of the adoption rate assumptions outlined in the previous section, we arrive at a forecast for the total value projected to be funnelled through the Perlin blockchain and a resultant projection for the figure that validators stand to collect as fees. Valuation assumptions The final pieces of the puzzle that complete the discounted cash-flows model are relating to the modelling process itself. A core assumption in the process of arriving to a “fair” token price, is that the valuation of the whole set of tokens issued, is equal to the net present value of future cash-flows that will accrue to token holders. In this line of thinking, tokens are effectively tickets to a stream of future income, and the maximum a potential holder would be willing to pay, is the value of the whole income stream discounted for risk, opportunity cost and the time value of money – so that cash flows of equal magnitude that materialize further away in time, have a present value that is smaller than that of cash flows that occur sooner. In this process, we assume a discount rate of 30% - the lower bound discount rate among venture industry standards. We believe that both (i) the unique opportunity that is presented to Perlin via the ICC membership and (ii) the quality of the code and early reception from the developer community, de-risk the project and justify a more lenient discount rate. In order to arrive to a valuation for PERLs, we then project cash flows 10 years out, discount them accordingly, add them up (including the cost of building the platform, which we have assumed to stand at $40M) and combine them with the terminal value we estimate for the project (capturing the value accrual beyond the 10 year period explored). To do this, we used the , assuming a 2% steady growth rate, and discount the resultant figure at year 10’s discount rate. The two modules, under the assumptions outlined above, give us a present value of $663M for the first 10 years of cash-flows and at terminal value of $188M that together give a net present value of ~$850M. Gordon Growth Method Divided by the total amount of tokens floating on the 10th year, generates a price per PERL that stands at $0.823. (To keep reading on a scenario exploration exercise and how we arrived at a credible valuation range, refer to the full report here .) Conclusion Perlin is an exciting new entrant in the generalized distributed ledger and smart contract platform space. Though we understand that this is the most highly contested vertical among cryptoassets, we cannot help but look beyond the fact, accounting for both the technical innovations that Perlin brings to the table (leaderless PoS, high transaction speed and throughput) and the pipeline of business opportunities that the executive team has conjured up. Besides the specific value opportunity that this type of analysis helped uncover (the lower boundary of the projected value range stands at around $0.177 a piece, ~ a 2x from current prices), what we are really hoping for here is to further the conversation on different approaches to value cryptoassets and give the tools to anyone interested, to build and extend on this type of modelling. Solidifying a generally agreed upon toolkit for asset valuation in the cryptoasset space, is one of the keys to unlock the next stage of evolution in the industry, inviting new capital to flow into the space - so don't tread lightly! Download the full report and model here Disclaimer : Decentral Park Capital is an investor in Perlin and a PERL token holder. The above DO NOT constitute investment advice in any shape or form.

Token Valuation Done Right: A DCF Model To Value Perlin's Native Network Token

During my own preparation for Winter 2018 class interviews, I’ve reviewed every public resource on the topic and did over 20 practice interviews with Y Combinator alums. Everything I’ve learned is summarized below. This guide is my personal take and doesn’t represent an official position of YC. Along with this guide, you can also read and reuse our YC interview answers . To get more help, join a chat community of startups applying to YC . Answers development The core of your preparation process is writing a document with all anticipated questions and your answers to them. Start with the items below, then expand by adding answers to new questions asked at your practice interviews. Answers document. Your first sentence in the interview is either a solution description or value proposition. It should be 4–8 words long and pass the “mom’s test”, i.e. your parents should be able to repeat it back to you. Opening description. Define 3 core strength points in advance. Steer conversation to hit them all, sometimes even regardless of questions.Types of strength: revenue/growth/traction, domain expertise/done this before, insight aka “a-ha moment”, market size.Consider repeating or rephrasing your top three points when you aren’t sure they landed well the first time.Test your strength points: Will someone be excited about your company if she/he only hears the one-line description and three strength points? Strength points. Those are anecdotes, quotes, or factoids that receive consistent “a-ha” and “hmm.. interesting” reactions during your practice runs. Insights. Know your 2–3 key weakness areas and prepare short, crisp answers to most common concerns.For every question that you don’t answer with a strength point or an insight, limit yourself to one sentence. You want to maximize the time for strength discussion, not secondary issues. If you use the second sentence, it should go back to strengths or insights. Defense. How to write strong answers Use a lot of factoids and numbers. Your answers document should have at least 20–30 answers with numbers. Whenever possible, eliminate verbs from answers. E.g. “What’s your go-to-market?” — “A, then B, then C”.Use simple words and examples, avoid buzzwords or abstract concepts. For questions on weakness areas, acknowledge or defend it in one sentence, then go back to strengths in the second. Use examples and facts over forward-looking plans. “In the past, we’ve solved it by X with results Y”.Explain implications: “if we achieve X (hard, but possible technical achievement), then we will get Y (major business win)”. Whenever possible, use primary data from customers instead of analogies. Generally, YCombinator doesn’t see analogy-based arguments as reliable or strong.Avoid top-down market sizing. Either do bottom-up or close comparables. “Sell your co-founder”, be ready to tell why your partner is great. Practice runs Schedule at least 10–20 practice runs. For mock interviews, ask investors and founders you already know, YC alums from your city / country / university, YC alums in your industry or with a similar business model, and YC alums who volunteer to do practice interviews on Twitter. You don’t need an intro. Ask early, at least 7–10 days before your interview day. Take notes and rewrite your answers after each practice run. Do a debrief with each mock interviewer. Ask which answers were clear and strong, and which ones were not. Discuss how to improve your individual answers. Iterate on your top strength points, unique insights/anecdotes, and defense answers. Additionally, watch YC’s public office hours (links below) to get a feel of YC interview format. Interview day Arrive early, identify your room and learn who is on your panel, research panel partners in the remaining time. Make new friends with fellow applicants. Have the demo ready on the laptop with all important screens in multiple tabs. Don’t rely on YC WiFi.Assume that YC partners have no prior knowledge. Review partner’s bios in advance, identify partners who can become supporters due to their personal interest in your space. From YC’s standpoint, the purpose of the interview is to extract as much info as possible in 10min. At least one of YC partners will look closely for body language and nonverbal signals. Expect 40–80 questions in 10 minutes, 8–12 seconds per question-and-answer round. Be ready for constant interruptions (even after the first 2–3 words of response). Be ready for unique questions outside of your list. Be ready for parallel interview with multiple co-founders (not very common). Be ready for a narrow and deep drill on a single question, most likely related to your biggest weakness. Logistics and expectations. Talk fast, but not super fast. Feel happy, high-energy, and excited to pursue the opportunity. Be casual and friendly, maintain eye contact. Be confident, yet humble. Confident and concise = formidable. A few weak answers are ok. A long weak answer is much worse than a short acknowledgment like “I don’t know” or “we plan to work on this”. Don’t be too defensive, show coachability. Consider repeating or rephrasing your top three points, if they weren’t well received the first time. Most answers should be one sentence, some can be two sentences. Limit yourself to only 2–3 longer replies throughout the interview. Don’t interrupt each other, don’t argue on unexpected questions. Instead, say “yes and …” or “and I’ll add to this…” to continue after your co-founder. When disagreeing with YC partner’s statement, either give counter-facts or accept it as a hypothesis to test. Don’t make straight deflections. Answer the question asked, before changing direction. When challenged on critical hypotheses for your business, be ready to push back with crisp defense and facts. When the conversation goes sideways, try to steer it back to strengths, e.g. “and I want to make sure you hear this…”. Interview time. Interesting problem. Ideally, unique or novel. Otherwise, a new insight or approach. Compelling value proposition. Clear and concise solution description. Clarity on how the hard parts of the solution work. Inspiring mission. Market size and dynamics. A small but rapidly growing market is always compelling. Insightful ideas for overcoming market-specific concerns. Activation of “spidey sense” i.e. “hmm… something interesting should happen in this space” feeling. Team with deep relevant expertise and domain knowledge. Strong communication skills: crisp, short, clear answers. Competitive landscape fluency. Proven rapid pace of making progress. Energy and resourcefulness, “get things done” attitude. Coachability, being good at taking feedback constructively. Determined, yet flexible. Original thinking and learning ability. Unconventional points of view and insights directly from customers. Positive team dynamics, no interruptions or arguing, alignment on vision. Low chance of founder conflict. Good English and easy-to-understand accent, no language barriers in communication. Ability to inspire and recruit star team. Make YC partners want to work for you. Can grow into “forces of nature”. Direct path to building momentum by the end of YC program aka “become a hot seed deal”. Direct path to hitting high revenue in 2–3 years aka “getting big”. Expected YC evaluation criteria. Y Combinator Interview Resources , , , , . Official resources: list of partners preparation advice preparation advice video old advice Michael Seibel’s 7 points , , , , , , , , , , , , . Advice from alums: Quora thread Kwindla Hultman Kramer Henrik Zillmer Tristan Zier Barak Ben Ezer Scott Wheeler David Rusenko Sumon Sadhu Robby Walker Natalie Bartlett Fabrizio Buzeto GetAccept Gareth MacLeod , , , , . Question collections: PG Simulator Aptible Brad Flora TechCrunch QZ , , , , , , , , , . Public office hours: SS 2011 SS 2013 SS 2014 SS 2014 NYC TNW 2014 SS 2016 SS 2016 SC17–1 SC17–2 SC17–3 Acknowledgments I am forever grateful to everyone who helped us through the process: Hrachik Adjamian, Daniel Ahmadizadeh, Andrew Arruda, Delian Asparouhov, Chas Ballew, Kirill Belov, Eva Breitenbach, Matt Brezina, Tom Broderick, Levon Brutyan, Jeremy Cai, Dan Carroll, Deepak Chhugani, Nick DeMonner, Dmitry Dumik, Evan Farrell, Herbie Fu, Jim Gibbs, Anton Gladkoborodov, Allan Grant, Vlad Gurgov, Chetan Jhaveri, Ryan Johnson, Dave Kim, Alexander Kim, Kwindla Hultman Kramer, Sam Lang, Clarence Leung, Bowen Lu, Max Musing, Ivan Novikov, Thomas Pun, Roberto Riccio, Wen Sang, Boris Silver, Preston Silverman, Zac Townsend, Brett Van Zuiden, James Vaughan, Praveen Venkatesan, Tracy Young, Diana Zink. Good luck! To get more help, join a . I am frequently there to help with any preparation questions you might have. chat community of startups applying to YCombinator

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