I loved it when they started including non-profits, and I'm loving that they're including biotech/medical now. They (Gingko/Glowing Plant/Bikanta) sound insane and very risky, which is exactly the ideas the best incubator in the world should be funding.

Casual observation, none of the above describe themselves as "X for Y".

Honest question: Is $120k really that big of a risk when you're already giving away money for free to non-profits?

It isn't, but the abundance of funding cash everywhere hasn't really translated into more insane (technically) ideas being funded lately, YC or elsewhere. At least that's been my impression, and it feels like YC is changing that with their recent batches.

I can't figure out the reason why some of these companies got selected into YC. I can see why Bikanta, Helion Energy, Ginkgo Bioworks, BitAccess, and ProductHunt might get in. However, some other companies look like run of the mill startup.

I use non-YC companies on https://news.ycombinator.com/show, ProductHunt, and AngelList for comparison. In comparison the quality signal of recent YC companies (the ones not mentioned above and some others) is not that high* compared to Non YC companies. I looked at the profile of the founders, their twitter and github pages and most importantly the product; nothing stands out so much.

*I am not saying the YC companies are bad, I am just saying they seem to be of the same quality as what is out there. I would expect recent YC companies to have a higher quality signal than what is out there.

> Backpack is a company that arbitrages the cost of goods in different countries by using international travelers as a distribution network

I don't understand this one - with a world focused on security and import taxes, how does this work out?

Many airports only do spot checks on bags and they're specifically looking for their own citizens smuggling locally-expensive luxuries in by the suitcase.

This will be a short-lived company because if you have a significant volume of stuff you don't declare you will either be taxed on the spot or arrested. If you have a discrete amount of stuff then you'd need eg, 5 or 6 people to fulfill an order for 10 iphones, and if 1 of them eats a $1000 customs bill the entire order approaches worthless.

It is encouraging illegal activity, though, correct?

Yes. The entire purpose is to save money by not paying taxes on items by illegally not declaring those items when you enter a country.

It may break US exporting laws and embargos, or international laws too. It's almost certain the founders and everyone near them is going to end up arrested and probably imprisoned like any other smuggling organization.

Hyperbolic much? At least a portion of the purpose access to items that might be difficult or impossible to obtain. Further, it's entirely legal to bring home modest quantities of various items for possible resale, in some cases at a profit, others not.

- Well,I have a partial understanding of this. Its typical for people travelling back to South East Asian countries to buy stuff that are super expensive there ( like mentioned in the original explanation , MacBooks are expensive ; Xbox , Playstations , Premium Watches , Booze (due to local taxes) ; mostly electronics and high end fashion stuff.

- With respect to import taxes : You wont be stopped by the customs unless you are carrying a crazy amount of electronics ; Like if you carry a couple of laptops - and justify it as one for personal and one for work ; they let you go. With respect to this service , I guess its upto you to be cautious & decide how much to carry.

- And there are a lot of Duty free airports; And the purchase made at Duty free airports are mostly overlooked at the destination airport.

you dont know the german BGS ... if you dont have a receipt for anything electronic that doesnt look like its 5 years old you are basically fucked. additional to the tax you have to pay you get a hefty fee because its treated as tax evasion. you can do a lot of stuff ... but not tax evasion.

Hmm .. This is expected though! The customs in developed countries are far more stringent . But I m not sure if this is targetted at European customers at all . Is the price difference between USA and Europe big enough for any one to try this service ?

But thats not the case in developing countries. Products priced at an affordable cost in USA , could be insanely expensive in developing countries.

MBP Retina 15", top of the line $2,499.00 in the us, 2,499.00€ ($3,327.94) in germany . its exactly the savings range that they are targeting

Wow ! That's huge, I did not expect such a big difference between prices in Germany and USA . Thanks for pointing this out -

1. Are these due to local taxes in Germany ? 2. Is this price difference common in other parts of Europe as well ?

i just checked this particular item but all the countries that use € are all 2499€ and the others (uk, swe..) are about 2500€. i guess the difference here comes from the actual curreny differences.

i think its mostly taxes, because when i add the 19% VAT that i would have to repay when entering germany with a us bought laptop (i think laptops are toll free, not sure ... but some electronic devices have tolls) im at ~$3000

Don't forget trade within the EU is "free", so I - being located in the UK - could buy a laptop in Germany and import it free and legally (bar shipping costs). Therefore, the arbitrage would be simple and legal. Importing from the US, on the other hand, carries significant import charges as I found out the other day when I imported a BeagleBone Black.

Backpack is basically a network for tax evasion and smuggling stuff. sounds ... fishy.

Airbnb is also a network for (hotel/business) tax evasion too.

well at least in germany you are supposed to declare this income. but that is the same with any form of rent that you gain based on your property. so it doesnt matter if i rent out a property that i own for the whole year via a classified ad in the newspaper or for 1 week via airbnb.

declaring income is one thing, but hotels in most areas collect specific hotel taxes levied by a municipality, and airbnb people aren't collecting and remitting specific hotel taxes.

The typical AirBnB location is not a commercially-zoned, licensed hotel. Municipalities can update their laws to be more relevant if they feel they are losing tax revenue.

Municipality tax relevance is a far cry from international laws that are already in place.

"Municipalities can update their laws to be more relevant"

Or... people could comply with the current municipal laws and not run commercial enterprises in non-commercially-zoned areas, or even just respect whatever HOA or landlord agreements they are party to.

I think you are over simplifying the complexities involved with this analogy . Backpack seems to break a lot of laws explicitly. I would rally love to see what the founders have researched about different destinations and airports.

I love how you can start a smuggling organization (from the description, it's just that, this is not even legal gray area bullshit, it's legally black) and call it a "disruptive startup" these days in Silicon Valley AND get funded by YC, I mean, what the actual fuck?

No kidding it's a $16 billion market in China alone, that's why people risk on getting EXECUTED to be in the smuggling business.

Edit: this is from their site, they call themselves the "only peer-to-peer platform that gives you access to the global market."

I actually bursted out laughing when I read it, I should start a money laundering service and call it the "only secure platform that unlocks the full potential of your earnings"

Breaking the law seems very much the modus operandi of Silicon Valley startups these days. Just look at AirBnb, Uber, Lyft, Aereo, 23andMe et al.

And rightfully so. Some laws exist to protect the consumer. Most laws exist to extort money and funnel it to a very specific group of people.

Care to explain which of those "most laws" exist to extort money? It's common to hear this sentiment parroted around, but never does it come with anything backing it up. Until that point, people like me have to assume that sentiments such as that are purely self-serving.

Worse, this kind of sentiment is undemocratic. The sheeple pass the laws, and the few Nietzschean supermen with the guts (and money) to do it disregard them, to prove they're wrong.

Not sure if you are being sarcastic or not. I thought democracy == people rules, but it seems like you are suggesting we discard "sheeple"'s opinion and follow the lead of a few "supermen with guts and money".

Not sure who's being undemocratic here.

Also, whenever someone uses the word "sheeple" in their argument they lose all credibilities in my eyes.

Agree with your comment, but an inundation of these type of comments on HN in the past seem like a very good indicator that the company will succeed to the tune of multi-billion$ valuations.

This is actually quite astute. The problems with ideas like Backpack are obvious, but there is probably a safe way to address all the concerns with the right approach.

Personally I would never use Backpack after reading about people who unknowingly took a package to another country that had drugs and spent years in jail despite their ignorance.

However, if somehow there is a way to do this legally and still capitalize off arbitrage. For example, maybe brands have different MAP pricing in different countries, and even with paying taxes and securing the items, there is a gray market opportunity to exploit.

The simple reality is that this is done on a daily basis already, so finding a way to do it at scale in a legal way has massive potential.

If I was YC, I would consider investing a few bucks to try to tackle this problem knowing that there are hurdles to overcome and some creativity required to make it work.

I remember reading one PG's essays a while ago that concluded

1. YC should fund riskier startups

2. Many good ideas sound bad at first.

Funding a criminal smuggling operation seems to fit both criteria.

Free idea for the next batch (or pivot!): often non-US citizens will be willing to work for lower wages in difficult jobs than US citizens. Why not match them up with people who are already driving across the US border, who can help get them in the country?

Here's the link: http://paulgraham.com/swan.html

This is really interesting -- I had the exact same reaction as the majority of the responses to this comment.

Ignoring the tax issue for a moment, I would expect the arbitrage to fluctuate with shipping costs and currency valuations, which is really interesting.

But unfortunately, it's really difficult to ignore the tax issue. In particular, China and the United States are sticklers for this, and getting caught smuggling a high priced item (I forget the threshold) won't be viewed as innocent arbitrage by customs.

This model would work equally well for drugs and human trafficking, so I would assume that most governments will/should have a problem with this form of tariff evasion.

Note: I'm not trying to imply that the founders have anything but the best intentions here. I'm simply pointing out that the very existence of a viable distribution network such as this might be of concern for authorities.

The founders are from Bangladesh, where this is becoming a very common practice, although the practice is rather informal. Usually you'd ask your friends and family to find out if anyone they know will be traveling from US to Bangladesh and then you ask them to buy whatever you want.

In the last two years I have also seen facebook groups pop up to expand the network beyond family and friends so its incredibly smart of them to formalize the process and make it more accessible to everyone.

While it's technically breaking the law, its no more so than AirBnb and Uber/Lyft. And the demand is just as high if not more.

"While it's technically breaking the law, its no more so than AirBnb and Uber/Lyft. And the demand is just as high if not more."

That's is absolutely not correct. Please do not compare individual countries' custom law to your local city's taxi law or hotel code. Lying on custom declaration form is an imprisonable offense in most countries.

When it's an informal practice it works because it's hard to prove and there is no paper trail. But when it's a real company doing the service all the customers data has a paper trail to it with financial records for each transaction, involving the monetary amount paid by the customer, received by the carrier, earned by the company, etc. It's literally a prosecutor's wet dream.

At least in China, these kind of organized smuggling rings do exist, but they exist very much underground with no paper trail, because if caught, the ring leaders (founders of Backpack in this case) would be subject to from prison terms to execution depends on the amount of tax they evaded.

isnt theorem and greentoe very similar?

- If there is a lot of risk involved in carrying stuff through backpack , does it offer a certain insurance policy for the travelers ? What if the product gets seized by customs ? or you are levied a large unexpected fine ? The service doesnt seem to offer any advice on these at all.

A few things can happen. You can be charged the appropriate tax, which can be on-the-spot hundreds or thousands of dollars. This is not a fine, this is just the tax you are required to pay to enter the country with those items. This is generally the outcome when you have eg, a new laptop plus your old laptop.

You can also be fined, arrested and imprisoned for smuggling. This is what you can expect if you have 4 laptops and 3 iphones in addition to your own and you didn't declare anything to customs.

Foreigners have a higher chance of talking their way out of it as long as there's some plausible reason why you have so much "personal stuff".

Chances are fantastic you'll go to prison if they find you work for a smuggling ring, like if your photo is on backpackbang.com as one of their mules.

Reading all of the other comments ; this sounds pretty illegal right - Why would YC back the start up in that case ?

If you don't travel a lot you probably just don't know. I've filled two passports. I've technically smuggled lots of stuff for myself including a computer I specifically flew to Chicago from Costa Rica to buy as it was cheaper.

Edit: actually if you don't have yourself/friends/family in poor countries so you're aware of the local prices you could be completely unaware of this stuff and the tax/legal obligations for importing them.

Fair enough, I do realize this is possible ! ( especially when you are flying to developing countries ). But you hinge on your luck to not get caught ( and depending on your 'navigation skills' - you can get out of the scenario ).

I m only curious to know about the "legalities" involved ; I m pretty sure this would have been addressed in the pitch. I was only looking for an answer that said : Here are the countries and Here is a list of things you can carry to those destinations without breaking any law.

Or if this fell into the "break first, fix later" philosophy of other shared economy startups as well.

By the way this is what a legal version looks like:

http://aerocasilla.com/

I buy something on amazon, they send it to AeroCasilla's warehouse in Miami, AeroCasilla bring it to Costa Rica and their customs and text me when I can pick it up.

I suppose you pay additional shipping to AeroCasilla ( for shipping from Miami to Costa Rica ) & also pay additional customs at the port of Entry ?

YC is getting involved in some serious tech and markets. Long gone are the days of web apps. Deep insight, experience, and skill in today's heavyweight industries are what matter now. Really happy to see this change and very impressed with the first portion of this batch.

What does YC bring to tech heavy startups except connections to funding ? because most of the risk there is technology risk , not market risk, and YC is no tech expert at those subjects.

I'd be interested in trying out MTailor if they had an Android client and will ship to England. Is an Android client in the works?

TicketLabs will have an uphill battle against TicketMaster, but man do I hope they succeed.

How do they combat the scalper problem? I don't see anything on the website... Any ideas?

How is Ticketmaster Evil in the first place ? Do they pocket a lot of commission ?

I can't speak to their overhead, but the fees certainly seem excessive and in some cases insulting (e.g. at-home ticket printing convenience fees).

They have also been criticized, sued, and investigated for anti-trust practices. In fairness, I don't think any of these challenges have been successful (though some have been settled and the terms are not public).

Hmm .. Fair enough ! I do recollect paying more for being able to print at home (or) to get it on the mobile app. But what's evil on the side of the musicians . Do they get swindled like this too ?

I am the only who is thinking that we most be near the end of a cycle when the business ideas become more and more blantly illegal? I mean: Backpack - tax evasion. Unwind Me - the world's oldest profession.

Here are two new ideas for the next round at ycombinator:

Wind me up - natural herbs and mushrooms for expanding your mind brought to you in an anonymous brown package at the confort of your home. Not sure where you are? Don't worry - our iPhone app is location aware.

Smackpack - having trouble with your neighbours? We send two guys to talk with them about the noise they made last night or collect any debt they may have incurred. Use our welldesigned iPhone app with in-app purchases and referral programmes.

Well, I guess thats a pretty harsh take on unwind.me Has there been any reports of such things happening ..? using unwind me .. You could make a similar statement about AirBnb too.

You named two out of the dozens of companies funded as your examples. Of the two you named you are assuming unwind.me is a cover for sexual services. Have any proof of this? No, you don't. It's quite disrespectful to people in that profession to assume doing their job will turn into offering sexual services. Come on.

And what about tax evasion? You still pay taxes on the items that are bought. The point is getting access to items not normally available in other countries for international shipping. Again, any proof of tax evasion? I don't think so.

Take your negative comments to Reddit or 4chan where you can mindlessly share mindless opinions with no merit. This isn't the place for that. If you want to have a productive discussion, offer some proof to back up your wild claims.