Commodity Entrepreneurship

One thing about Y Combinator plus its imitators is that it takes a truly commodity view of the entrepreneur, at least the entrepreneurial founder. After all, what does it really ask that the founder have? Not deep technical expertise in a horizontal discipline, nor in a vertical industry, just energy and the willingness to take a risk. And energy and a willingness to take risks are the commodity of youthful labor, which puts not-so-youthful capital in the position of price maker.

Unsurprising then that financial returns accrue to the capital:

If you add up the I.P.O. figures and the sale figures, this means about 33 percent of venture capital exits are in a position for the founders to earn a dime.

But it is probably lower than that. According to Sand Hill, 7.5 percent of the venture capital I.P.O.’s had exit values that were below the total venture capital investment. As for sales, the venture capital investors still need to be paid back their 8 percent accrued dividend. This probably puts the number of deals where the founder receives anything in the 20 percentile range. These numbers also do not take into account management or other fees paid to the venture capital firms.

The notion that entrepreneurs are the new labor is explored in more detail here.