Paul,

Respectfully, it is not linkbait.

This is my honest opinion based on Facebook's track record. I would give the same advice to any startup: don't trust Facebook and don't give them any access to your startup or plans.

Period. End of story.

If an entrepreneur needs any evidence of the trustworthiness of Facebook, simply talk to folks inside of Quora, FourSquare, Twitter and Zynga (among others). I'm sure you've spoken to folks inside these companies, like I have, who are infuriated with Zuckerberg's blatant stealing (without innovation).

At every chance they can get, Facebook has simply stolen. Given their scale, bringing them inside the incubators is, well, mind boggling.

If you're a startup company you should be avoiding Facebook and their staffers.

I'm sure you have great intentions PG, and you know I respect all that you've accomplished, but don't dismiss me. I really don't need press because, to a certain extent, I am press.

Add to that the fact that I'm massively overexposed (especially here on HN), and you're claim that I'm link-baiting feels disingenuous.

Like you, I love startups and entrepreneurship. I only want to see folks do well and not get ripped off by Facebook, which I consider the most unethical company in technology.

One only need to look at the mountain of lawsuits they've generated for proof of this. Facebook's long list of lawsuits are not from ambulance-chasing law firms mind you, they are by PARTNERS and FRIENDS of Zuckerberg's! Oh yeah, a lot of the lawsuits and complaints are also by privacy groups and government agencies trying to protect citizens.

If Zuckerberg has no problem screwing his friends, partners and customers, what do you think he will do to a three-person startup that might innovate its way into being competition for him?

I fear you've made a big mistake letting the fox into the henhouse.

Startups: listen to PG on everything since he's brilliant--but take my advice on this one. :-)

best jason

Linkbait or not, just because you don't plan to act against your own interests doesn't mean your actions won't break that way in the long run. Your heart is pretty clearly in the right place, but you're not good at hearing criticism.

The FB/YC thing looks like a net win for YC companies, but it's just not valid to say it isn't at all fraught.

For those who prefer reading, or can't reach Youtube, etc.

"This is a message to YCombinator companies and hopefuls: if you tell Facebook about your startup before you reach critical mass and you get found by Facebook in any way you're an idiot. They will steal your company's ideas and try to get you to take a small price for your company and vision and take a job at Facebook. Which by the way is going to be a job that sucks. Don't do it. It's a scam. It's a trap. It's a trap. It's a trap. Insert Star Wars quip here. It's a trap. IT'S. A. TRAP. End of message."

Gruber characterized this as TechCrunch getting "smacked around" by the judge, but if you actually read it, it's kind of the opposite. TC doesn't get an injunction that puts them in control of all of FG's revenue, which is what they were asking for: the court decided it wasn't likely they'd have a claim to all revenues even if they won the case. However:

* FG seems to have claimed that any relationship they had with TC was in the nature of a "joint venture" and not a partnership. Doesn't matter, says the court: call it what you will, but there are fiduciary duties at play.

* FG claims they couldn't have had a real relationship because TC's Arrington made statements about both parties sharing profits, and both sides bearing its own losses. So what? asks the court: that's part of the definition of a partnership. Not to mention: TC already has shouldered some of FG's expenses.

* FG claims there's no partnership because a TC employee proposed actions that would have put TC in breach. But a "potential breach" (which TC management prevented) doesn't absolve FG of any duties.

* FG claims there couldn't have been a real partnership because TC had threatened to unilaterally dissolve the venture. So what? asks the court: as long as TC lives up to its obligations, it has that right.

* FG claims there's no evidence of co-ownership of the business. And? asks the court. It's the joint venture that created the fiduciary duties, not ownership.

* FG claims that no joint venture could have existed because TC was negotiating to buy FG. Be that as it may, whatever duties FG had to TC in collaborating on the CrunchPad remain.

* Finally, and probably most importantly, and this is worth quoting directly:

Fusion Garage argues that the terms of the parties joint venture were simply too uncertain and unsettled to be enforceable. While it may be true that the parties never reached a meeting of the minds on how the business would operate on an ongoing basis, their cooperative efforts in developing the product were sufficient to give rise to an obligation on both parties' part not to usurp the fruits of those efforts.

In other words, see you in court.

I'm actually not that interested in the TC/FG saga, since I think that product was D.O.A. But I'm very interested in the legal dynamics of joint ventures, because it's not crazy to think I might be involved in another one someday. Food for thought.

If a bunch of startups that might have grown big were nipped in the bud by Facebook, it would be as bad for YC as for them. So Jason is essentially claiming that by agreeing to let YC-funded startups get early access to Instant Personalization (which is all this deal amounts to), we were acting against our own interest.

That should at least make one skeptical about his claims. It is possible that we've done something that wasn't in our interest, but surely by default one should assume we understand and care about our interests more than Jason does.

Or to put it more briefly: this is mere linkbait.

LCBO is the Liquor Control Board of Ontario.

Ironically while arguing one side of the case he becomes an example supporting the other. He sounds so grumpy and closed minded. Who'd want to hire him?

His thesis that technology hasn't changed is false in any case. E.g. while the fundamentals of algorithms haven't changed, that sort of knowledge is less central than it used to be; for better or worse, software development seems to be evolving into something where you glue together building blocks made by other people rather than writing everything yourself.

Facebook is not an investor like Sequoia, they have a primary business to run and there is some merit to Jason's warning, linkbait or not. How would you judge a year from now if this was a mistake? What criteria are you going to use to assess whether or not the deal met your goals?

With due respect, pg:

The game of building a facebook dependent start-up has many possible outcomes but we could break them down this way:

1. Destined to lose. Nobody wins, not FB, not YC, not founders. All three parties joined in making a mistake. Oops. Boring case.

1a. Destined to win barely. Maybe YC finds a break-even exit. FB is incrementally helped. Maybe the founders are happy or maybe restless. Boring case.

2. Destined to win big by unique, non-replaceable opportunity. E.g., Founders have an exclusive contract with Bob Dylan and their product is going to go big... they can stay independent. They've got an "f.u." contract with Dylan. FB wins a little on the margins of the revenues of the new firm. YC and the founders win really big. The only problem is, such unique, exclusive opportunities are rare.

3. The start-up OR AN UPSTART COMPETITOR (most often Facebook itself or a better "friend of FB") will win big and it's winner take all. This is half of the case that has Jason Calacanis' panties twisted. FB can often (we presume, act as if we knew to be true) brute force the firm out of the market by replacement or force them into an early acquisition with the threat of replacement.

There are two sub-cases:

3a) Facebook's dominance as market-maker cum market-player is hostile towards YC and the start-up. FB wins. YC and founders essentially break even or worse.

3b) Facebook is in a cooperative mode (e.g., FB invests products and services in the YC firms and then dominates by friendly acquisition or similar). FB wins big - low stakes and high return on their perceived value as market maker. YC wins non-stellar but more reliable returns: a respectable interest rate on 20K outlays. That's a sweet spot for YC (they aren't playing the lottery, they're managing a fund). Founders get, in effect, a very modest bonus and then either a (likely crappy, per Jason) job or just a nice bullet point on their C.V.

Uncompressed, Jason has a reasonable concern I think. There's a new case where founders barely win and wonder if the struggle was worth it, while YC and FB are quite happy.

And, nobody asked, but I think YC's fundamental mistake is interest in funding FB-related start-ups at all. The problematics of letting one particularly odd firm create and dominate a market like that are such that I think YC should generally shun the unfathomable risks and complexities.

I see the deal as YC submitting a bit to FB's domineering tendencies because by submitting on these terms, YC does OK and the founders aren't creamed. A better solution (in my biased view) would have been to decide just to not fund anything that cares about FB's actions at all.

Being homeless in Canada is 'something else'. You don't really realize how harsh those winters are until you're in Toronto and you see the streetpeople after a night at -30 Celsius.

I've lived on King street, where it ends on the lake, and from there it was about a 20 minute walk to the office. Every day I'd walk that same route and meet probably between 5 and 10 people living 'off the street'. They'd all be equally friendly. They had their own spots.

The police in Toronto was pretty laid back at the time (I'm no longer there so I have no idea how they are today), when a really cold night would approach they'd round up the homeless people and bring them to a shelter. But every year, in the spring one or two bodies would be found in the melting snowbanks. The unlucky ones that avoided the shelters and slept in 'their' spots only to never wake up again.

Winter in Canada is harsh.