Comment by CharlieDigital
1 year ago
I've been in the VC-backed startup space as a lead/principal engineer or technical advisor for the last 4 years.
In that time, I've worked at 1 startup that closed a $100m C, one that closed a multi-million B, one that recently closed a $30m C, and one that started with a $8m seed.
I've started my own startup and worked with founders of other startups on the side advising on the technical side (and once in a while building the initial PoCs).
Some have failed, some have succeeded wildly, some have hit their limits of growth, some have a great product that solves an obvious problem yet get zero traction.
Here is a lesson-learned as far as "copying" goes: it doesn't matter. It doesn't matter if there are 3 companies in the same domain doing the same thing; then it simply comes down to insider connections, sales, marketing, and pricing.
In the end, the team that wins isn't always the one with the best product; there is a fair bit of luck and timing, marketing is super important, and having the right leadership team in place makes all the difference. The non-product aspects of a successful business are supremely underappreciated, especially by the technical folks. Bad products can become good products eventually; bad teams can rarely survive turbulence and it is so hard to tell if a team has the right "vibes" or not.
So it makes sense for YC or any VC to bet broadly because the reasons why a team succeeds and another fails is so intangible with so much luck and timing involved as well that making broad bets -- even if two YC-batch companies are very similar in terms of domain and product -- is just sound business.
Edit: to be clear, these are not my principles (no need to attack me personally); these are simply my observations about teams that have succeeded and teams that have floundered. I left 1 company because because in principle, I disagreed with their loose operational style in a regulated space.
The problem here is not that they stole the idea, it's that they literally just took an open-source codebase and filed off the serial numbers to claim it as their own proprietary work, and they did so in the most comically inept way possible.
From the OP:
PearAI offers an AI coding editor. The startup’s founder Duke Pan has openly said that it’s a cloned copy of another AI editor called Continue, which was covered under the Apache open source license. But PearAI made a major misstep: PearAI originally slapped its own made-up closed license on it, called the Pear Enterprise License, which Pan admitted was written by ChatGPT.
> PearAI made a major misstep: PearAI originally slapped its own made-up closed license on it
This is comical but not the core fuck-up: PearAI failed to attribute, thereby violating Community’s license.
It might be salvageable if they can convince customers they aren’t dragging everyone who uses them into a legal morass. But that will likely take more funding, and “help me pay lawyers” isn’t a great pitch.
Good artist copy, great artists steal. PearAI tried and failed to copy. Y Combinator's value-adding play is in striking a licensing and indemnification deal between PearAI and Community. (If Community is smart, they'll demand an arm and a leg. They're owed it.)
The funny? thing is, this isn't the only YC company I've seen do this.
There's a really great Radiolab podcast Dealing with Doubt[0] that talks about how high level competitive poker has evolved over the years.
Any VC is making a bet of the same nature. Because there is some intangible in the team itself, it makes sense for the VC to bet on multiples if they believe that there is a valuable problem to be solved here. Some team(s) will be more successful than others, but it's really difficult to tell at the outset.
(The podcast is a great listen!)
[0] https://radiolab.org/podcast/278173-dealing-doubt/transcript
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I don't know anything about YC's due diligence. Is it strange they didn't catch this before infesting?
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Isn't the whole point of VC just throw money at the wall and see what sticks?
It doesn't matter so long as they didn't violate any licenses.
Where the product starts and where it ends will be two totally different endpoints that are sure to diverge once they find their domain and business model.
If you are so inept that copying someone else's codebase wholesale is what makes you a viable company, then perhaps you aren't worthy of investing in.
Unless, the investor is just trying to fund the most ruthless, least ethical, win-at-all-costs type of people, which as I type this seems like a sad but unsurprising move.
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> doesn't matter so long as they didn't violate any licenses
They copied without attribution. Not okay under Apache.
Starting off by making an obviously hamfisted move matters. It's a headwind to overcome.
Is it possible to overcome? Sure.
Yes, you can heal after shooting yourself in the foot.
(And, of course, removing attribution is violating licenses). However, they're unlikely to face litigation for this. The possible legal consequences aren't the actual consequences they're likely to face.
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> It doesn't matter so long as they didn't violate any licenses.
It appears that they did violate the license:
https://www.apache.org/licenses/LICENSE-2.0.html
4. Redistribution. You may reproduce and distribute copies of the Work or Derivative Works thereof in any medium, with or without modifications, and in Source or Object form, provided that You meet the following conditions:
a. You must give any other recipients of the Work or Derivative Works a copy of this License;
c. You must retain, in the Source form of any Derivative Works that You distribute, all copyright, patent, trademark, and attribution notices from the Source form of the Work, excluding those notices that do not pertain to any part of the Derivative Works;
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There’s legality, and bad taste.
Except they did blatantly violate the license of the code they stole and only fixed it after being called out.
From: https://fossa.com/blog/open-source-licenses-101-apache-licen...
[...]
I bet they ate their own dogfood by having ChatGPT file the serial numbers off for them.
> which Pan admitted was written by ChatGPT.
What morons
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The problem is that they took someone else's code, claimed they built it themselves, and then claimed that as evidence for the velocity and capability of their team.
If they had said it's based on X. Or that they're going in a different direction. Or even that they're going in the same direction but will best that other team. Who cares? YC should bet on multiple companies in the same space. It's only logical.
What bothers people is the lie.
Also. They did break the terms of the license. They replaced the Apache license with their own enterprise license. They said they have the rights to relicense the code. Apache requires that they disclose the origin of the code and what modifications they made. And they lied to YC about that, they don't have any of these rights.
It's not sound business to lie to investors. It's not sound business to violate licenses.
Wild take, copying matters. If you have a great idea, and no capital and I copy you and have more capital (money, social), I can deploy my capital to crush you in the market. This very idea that ideas don't matter is hogwash, you can say that idea alone is not enough, but it matters. This is why big companies sometimes get sued by the govt, they copy smaller companies ideas, add it into their already established product for free and stifle growth for the world.
This is precisely how our markets work and why we have a system of trademarks, patents, and copyright.
Use those tools to your advantage if you are small.
So many people on sites like this hate patents and trademarks, but I have seen patents used in two ways:
* In slapfights between huge companies that don't really matter.
* To protect startups from copying.
These things literally exist to protect startups.
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That is called capitalism. Like the word you used a lot.
> bad teams can rarely survive turbulence and it is so hard to tell if a team has the right "vibes" or not.
Their apology makes it pretty clear that this team doesn't have the right vibes:
"We thought the license in the root repo wasn’t that important, so we just generated one that we thought was open."
The license that was generated was the "Pear Enterprise License". These guys thought the license didn't matter so their instinct was to ask ChatGPT to generate one that they "thought was open" and they didn't even blink when it generated one with "Enterprise" in the title.
These guys are either dishonest or completely out of their depth.
https://x.com/CodeFryingPan/status/1840831339337302204
It's very possible that they have the wrong vibes and will fail; this is why any VC is smart to bet on multiple teams, even if many are building very similar products. A good portion of those teams will go nowhere and fall apart by themselves. Even the best VC-partner can't always tell how a teams vibes are from the inside until it's too late.
Maybe you're right. I'd like to think that "are these the type of people who turn to ChatGPT for completely inappropriate things" would have made it into the VC screening process, but then again "using ChatGPT for completely inappropriate things" is practically a requirement to get funding these days.
> These guys are either dishonest or completely out of their depth.
More likely both.
Your comment is interesting but seems orthogonal to the problem at hand.
We are talking about a company that clearly showed bad intent and dishonesty in their attitude.
And that's doing a big disservice to the AI space coming from a high-profile incubator such as YC.
If you can't be a good example, you'll just have to be a terrible warning.
Maybe the point isnt to invest in the team with the best ideas, but to invest in the most ruthless/least ethical because thats what the investors believe will win the day?
You've described most "successful" startups.
FTX, Binance, Uber, etc.
The company I was in that raised a $100m C was in a real mess behind the scenes operating in a highly regulated space (one of the reasons I left; I disagreed with certain practices in principle).
Dang, that many startups in that short period of time, how is that plausible? I say that wholeheartedly considering the time it takes to take something from an idea to a PoC to an MVP. Don’t get me wrong, I know there are plenty of quick slap together projects out there, similar to the one been commented here, they are more like a marketing wrapper of bundles from others people’s work, which is something to be frowned upon… specially if you are technically motivated.
Well, IMHO, when considering a project, knowing that you are solving for a customer demand problem is very different than from a VC minded problem. I personally would never advise or be part of such an “Arrangement.” These are my clear principles, and my success will come or fail, but my integrity will never be questioned.
I joined each at different stages. Some I left after short stints because the vibes were just wrong. Some failed and I could immediately tell that the vibes were off after the first bit of turbulence. I'm still at one of the startups because the vibes are good and we've got a good product and team.
I'd say it matters. Life becomes so much harder if you have to justify why your seed/pre-seed startup has a unique advantage, but you're just ripping off the competition. Maybe you have unique hustle. That's a fairly incredible claim - especially in a crowded space like AI.
I think it's at least a warning klaxon. We're entering this market by copying a competitor (not just in UI/UX, but literally byte-for-byte). How are we going to beat them? How do we ensure the same does not happen to us?
AI-powered coding is such a ridiculously crowded arena. I would be pretty apprehensive. Even if I was dead-set on doing an AI startup, I would still look for a different market.
All good points. Problem is, they didn’t attribute after the copy. And that’s literally all they had to do. Now they stand in violation of that license which I admit I don’t know what that means, but it probably isn’t good. I mean, how do you fuck up piggy-backing off open source? I’ve had many companies piggy back off my own project and it’s whatever, because they attribute to the original codebase. But it’s all whatever. Most these discussions are gonna end up in the trash over the next 5 years anyway as rationalistic machines spread more and more.
Most of this tracks with what I've seen over the years...
Most VCs invest in teams first, products/ideas second.
>Here is a lesson-learned as far as "copying" goes: it doesn't matter
LOL. Why is the West complaining about China 'copying' their ideas and products? It seems hypocritical. Why are Western companies crying foul about China?
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Morality, economy, something about China... Perhaps the most HN comment ever on its face, but also could you unpack either of these points? No worries if not, and I can't even decide which one I would like argued for more! I would hope, (only for the sake of the rationality of your points, please do not turn this into something about political correctness), that you are not opposing the Chinese way to morality itself. For the simple reason that it is a fundamental category error! But perhaps more profound a conceit is connecting morality to the economy. Is not our best advances in economics precisely in step with it's secularization, it's scientific nature which needs not for any old ideas of the individual and her maxims or "moral" nature?
I guess, in your system here, what is this thing, economy, that could be harmed by a "lack of morality"? How do we understand it? Which came first? Why and how could there be this connection? I am far from an expert, but this seems to fly in the face of the whole spectrum of thought in this area, from Smith to Marx to Friedman. But would be very interested to understand it more if you have some literature.
Chinese have an open philosophy on knowledge and by proxy, copying that information and imitation. This goes back to the time of Confucius.
Point being: it is somewhat culturally specific to be "anti-copyright". I use that in quotes because it's not exactly that; it's more like Chinese culture's default is to copy and copyright is a relatively recent legal mechanism.
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No personal attacks, please.
https://news.ycombinator.com/newsguidelines.html
You've probably got the wrong impression. My own startups have failed partially because I'm so bad at lying -- even small white lies. Mostly my own projects are just open sourced or maintained for free for a small community of passionate users. I've realized I'm great at building software, built terrible at marketing, sales, and extracting capital.
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> Here is a lesson-learned as far as "copying" goes: it doesn't matter.
There is this tendency among a subset of the tech community to look down on copying. I think this is probably coming from more junior people who recently came out of university where plagiarism is punished, or people in academia such as in PhD programs which are trained to highly value originality.