When you look at Airbnb's potential I hardly consider this a small venture. Maybe they are not disrupting technology / hardware businesses. But at least from my point of view they have the potential to disrupt the hotel and travel industry (including corporate travel, I know an austrian company using it for their sales people). Wether or not that scale was part of the vision right from the start I can't tell.
Sounds like you don't understand what we do. We do seed funding. The money we invest is not the last a startup will raise; it's just enough to get them to the point where they can raise more. So YC can fund arbitrarily expensive projects.
The microprocessor was invented in the 60s to be the
wing controller for the F14. The F14 was rolled out
in the 70s and deployed in the 80s, and in service
till a few years ago.
So the government was funding integrated circuits for
multi-decade deployment, decades before it intended
them to be used and between 5-10 years before silicon
valley got in on the action.
Last time I checked, VC funds are 10 years, and
most VCs want an investment to return within 3 years.
(As Steve Blank is complaining about).
By my understanding, even if somebody got seed
funding for a project with an F14 level of
ambition, the money would be peanuts compared to
what it would take to make meaningful progress,
and then the VCs would think it too far from a
liquidity event to invest in anyway.
How could YC invest profitably in such a venture?
What am I not understanding?
I think you'd need to find a source of follow-on
financing that would be much longer term than either
Wall Street or Sand Hill Road (again what Steve Blank
is complaining about).
I think Steve Blank has in mind the level of ambition of the stealth fighter program.
Such a venture would involve putting in many orders of magnitude more money than YC invests in a single startup.
Today's equivalent would be investing in a new Intel corporation.
Last time I checked, YC sponsored much smaller ventures such as bed-and-breakfast exchanges and online backup systems.
So why would you be involved at all in such ventures, let alone aware of the trend?