If you go through the most recent YC batches, it's insane how much of their "customer list" is just other companies in the same or recent batches
danpalmer 19 hours ago [-]
Having been in a YC company that wasn't in the SaaS space, this never made sense to me/us. So many YC products were just way out of a reasonable price bracket, there's only so many $30/m subscriptions you can buy per employee. Talking with their sales teams was funny because they grossly over estimated our budgets.
UnfitFootprint 7 hours ago [-]
Not that I’ve ever partaken in any US startup, but $30/m? If the employees are earning average YC salary that seems like a drop in the ocean, even with 5-6 subscriptions
alpineman 1 days ago [-]
Yeah, they raise a massive round on traction from other YC companies then need to find the real Product Market Fit (enterprise and others) after that round. It's actually very inefficient
bluegatty 8 hours ago [-]
This is an unfair characterization.
Cohorts are not 'raising massive rounds' on selling to a couple of poor YC startups that 'don't want they product but pay for it anyhow' <- the implication there is very wrong.
They're selling to people who are using their product, but probably have bit of an open mind about things, and are willing to overlook hiccups. A bit like how buyers often have a 'national preference' in some cases.
Every startup ecosystem should do this, it's probably one of the top things any system could do to try to get things going.
RobRivera 1 days ago [-]
The flywheel!
dominotw 1 days ago [-]
yc circular funding scam
philipallstar 15 hours ago [-]
Exactly. It's like employees of an oil company buying gasoline for their vehicles. Just no value created.
brazukadev 4 hours ago [-]
The employees are proud drivers of Teslas.
metoobruh 18 hours ago [-]
A "self-licking lollipop."
iririririr 14 hours ago [-]
to be fair-ish to them, that's the playbook of all VCs.
that's why every mayor vc firm has one datalake, one cdn, etc etc.
they know their investment will go to these, why not keep it in their own ecosystem by some verticalization?
...the absurdity with Ai is when even competitors join in
JimsonYang 1 days ago [-]
One of Micheal and Dalton video does address this
Even if you larp revenue, when you get acquired or go public auditors will figure stuff out. Or worse you go to prison. Its like cheating in college-youre just hurtung yourself and others
python_charmer 18 hours ago [-]
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bluegatty 8 hours ago [-]
There's nothing wrong with that, it's probably a net positive.
Small companies buying and selling each other's services is probably the #1 thing that other ecosystems should emulate.
Getting your first 3 customer is hard, you need an open and empathetic system for that - a 'cohort' is exactly that.
11 hours ago [-]
meric_ 1 days ago [-]
It's the YC playbook. I guess it works, Corgi for example a "AI" insurance company with like only 5 real engineers and a bunch of growth people. Their main customer is other startups mostly YC. Same with Delve.
Thanks for the article, I assume you are the author.
I think the main question about Corgi is: are they underpricing risk so severely that they go bust? And honestly, we have no idea.
For all we know startups are buying overpriced insurance from Corgi because they have a better brand and are easier to deal with than Berkshire's army of underwriters.
Though it's also worth noting that the main reasons startups buy insurance is not because they want insurance, but because enterprise customers demand insurance. Which is to say, it's not out of the realm of possibility that funded startups are not actually that price sensitive, because they just want to get the deal signed and move on.
We got our insurance elsewhere because we're a little older, so I have no actual opinion of Corgi, but there's a lot of stuff that enterprise customers demand that is driven by some compliance checklist. Delve took this to an extreme, but directionally, they were providing the service customers wanted, and at least in the insurance market, you can just pay more to paper over your problems rather than addressing the core risks in a way where there is no fraud. We pay for random shit we don't need that delivers no value for enterprise customers to tick boxes, for all I know Corgi fills the same need.
reticulates 15 hours ago [-]
Yes, I am the author.
Yes, insurance is mostly a box ticking exercise for most startups. My concern with Corgi is that even after accounting for how unimportant insurance is to startups, they are so blasé about their underwriting that for the small number of startups that will eventually need the protection insurance offers, there is a substantial amount of exposure to Corgi going under.
A typical startup needs D&O insurance to satisfy their investors -> the startup approaches Corgi -> Corgi's sales team negotiate more comprehensive insurance that covers many more of the risks that the startup faces that would not be insurable by traditional underwriting -> the startup uses their insurance coverage to justify risk taking.
Historically, the type of risks startups took were of little legal consequence but that has changed with AI. The social and political appetite for taking down AI companies is only getting stronger. We're already seeing OpenAI and Character.AI subject to multiple lawsuits over teenage user suicide.
All it takes is a single large judgement against a single Corgi insured company to liquidate the whole Risk Retention Group and then any ongoing litigation that Corgi was covering, is suddenly uncovered, and uninsurable elsewhere. The potential fallout from a startup losing coverage mid-litigation could be substantial when that litigation is government sponsored, the corporate veil isn't very useful when a government is looking to make an example of a company.
Multiple Corgi customers are already involved in expensive litigation and while I believe that is not covered by their Corgi policies because it predates Corgi's launch, it is a sign that expensive litigation is well within the realms of possibility for their customers.
Eridrus 11 hours ago [-]
I think that's a reasonable concern, but I feel like there's no meat to this accusation in in the article.
They found a way to sidestep regulations in a non-traditional way, they're using AI for underwriting, but like I said, there's no actual evidence the underwriting is wrong.
Is a startup gets insurance for something they couldn't get insurance for elsewhere and then Corgi goes belly up, the startup is our their premiums but otherwise in the same place.
For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.
Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure. If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.
I agree that insurers definitely faces the urge to underprice risk because the shoe will drop later, but there's no actual evidence here that they're mispricing risk of that people buying it really think it's going to save them if they do something risky.
reticulates 10 hours ago [-]
> Is a startup gets insurance for something they couldn't get insurance for elsewhere and then Corgi goes belly up, the startup is our their premiums but otherwise in the same place.
That’s not accurate if the startup is making a claim against their insurance. And even in cases where the startup hasn’t yet filed a claim, losing insurance that cannot be replaced could be catastrophic. Corgi are insuring things that are uninsurable elsewhere. If your startup relies on being insured against hallucination risk, and you lose your hallucination risk insurance, then what?
> For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.
There aren’t and there can’t be. A Risk Retention Group requires that all insured parties are equal members, Corgi cannot divide customers up based on risk profile. The entire premise of a Risk Retention Group is the risk is shared across all members. Hence, it is wildly unsuitable for how it is being used by Corgi.
> Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure.
Newfront built a $1.2bn business on startup insurance.
> If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.
We live in a brave new world. Startups are doing more and more politically and socially risky business, like AI medical advice. You are assuming that a startup being sued and losing their insurance is whatever, just shut down the company, but the founders are at risk, and losing legal coverage mid litigation has a material impact on their ability to defend themselves. Good lawyers can keep founders out of prison, no lawyers cannot.
ElProlactin 15 hours ago [-]
> I think the main question about Corgi is: are they underpricing risk so severely that they go bust? And honestly, we have no idea.
You should read up on what a risk retention group is and how it works. To me, it's even worse than you think.
> For all we know startups are buying overpriced insurance from Corgi because they have a better brand...
Is this tongue in cheek?
> ...and are easier to deal with than Berkshire's army of underwriters.
Or they provide "insurance" for things that the world's most experienced insurers don't want to touch, or won't touch without a lot of underwriting. Which in itself is a red flag.
16 hours ago [-]
python_charmer 18 hours ago [-]
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CodesInChaos 11 hours ago [-]
> As of 2026-07-13, Corgi’s promise of a lawsuit against the author for this post has not materialized. Readers are encouraged to draw their own conclusions about Corgi’s choice to try and suppress articles with the use of baseless legal threats.
Did you write in more detail about that threat somewhere?
reticulates 9 hours ago [-]
"Corgi builds insurance structures that allow us to best serve the needs of our customers. For technology companies, operating a technology liability line through a Risk Retention Group is not unusual, improper, or exotic; it is a standard insurance structure for specialty liability risks where similarly situated businesses benefit from tailored underwriting, specialized coverage, and risk alignment. The suggestion that Corgi customers are unknowingly taking on “balance sheet risk,” member-assessment risk, or responsibility for unrelated insureds’ liabilities is false.
Your draft’s statement that “Corgi will help you share that risk,” combined with the question whether customers understand the risk of other companies in the group, does not merely describe RRGs in the abstract. It falsely implies that Corgi leaves customers exposed to open ended financial liability for other insureds. That implication is defamatory and false. RRGs are regulated insurance carriers subject to financial, reserve, governance, and regulatory requirements. They are not informal risk sharing clubs where policyholders unknowingly become responsible for each other’s balance sheets.
The RRG structure unique to Corgi. Major insurance groups use different insurer structures for different classes of risk because different risks are best served by different structures. Berkshire Hathaway, which the draft itself invokes, has affiliated insurance operations involving Risk Retention Groups in specialty liability markets, including medical and legal professional liability. That underscores the point: RRGs are a widely recognized insurance structure for specialty liability lines, and allow insurers to provide more tailored coverage options rather than issuing a generic policy.
The draft’s statement that Corgi “innovated with AI in a regulated industry by cutting corners” is also false and defamatory. Corgi raised millions pre-revenue and spent nearly two years building and obtaining regulatory approvals for its insurance operations, including approvals and requirements relating to reserves, pricing, liquidity, governance, and compliance. That is the opposite of “cutting corners.” Any allegation that Corgi used AI to evade regulatory approval, underwriting standards, reserve requirements, pricing controls, liquidity controls, or other compliance obligations is false.
Any article suggesting otherwise, including by implying that Corgi misleads customers, conceals the RRG structure, exposes policyholders to undisclosed balance-sheet risk, or uses RRGs and AI to evade proper underwriting or regulatory obligations, is false and highly damaging.
To be clear, if you publish these false statements or defamatory implications, Corgi will sue you personally and will pursue all available claims and remedies against you and any other responsible parties. Corgi has enforced its rights before and will do so again. You should not mistake this for an abstract legal reservation."
From their head of legal.
cj 21 hours ago [-]
TLDR: The insurance market is highly regulated, with measures in place to protect customers if your insurance company becomes insolvent. Corgi does not have those protections, because they've figured out how to offer a product similar to insurance without being regulated like a normal insurance company.
Innovation!
mrandish 24 hours ago [-]
I've been out of the valley (circular) loop for a bit so I'd never heard of Corgi. OMFG...
22 hours ago [-]
gadders 12 hours ago [-]
From the article: "The founders Nico and Emily ... have been recognised by Forbes 30 under 30
UH OH
24 hours ago [-]
1 days ago [-]
bluegatty 8 hours ago [-]
Nvidia / OAI etc. are selling each other product which have a fair market value.
They're not moving money around with 'no services rendered'.
It does however mean that the situation is 'highly leveraged' - and therefor risk is more concentrated, and, they do disclose.
Nominally there's nothing wrong with investing in one's own supply chain.
It makes a lot of sense for a value chain player with huge cash position and therefore a lot of power to take a % ownership of a buyer.
Consider for a moment - what if Nvida acquired OpenAI? They would be two divisions in the same company. Would anyone consider it wrong for surpluses from one to be invested in the other? No. The moment it's 'managerial accounting' instead of 'balance sheet accounting' - nobody would care.
Imagine Google or AWS acquired Nvidia - maybe in 2017 so it would seem more realistic in terms of price - would any of this seem financially dubious? No.
Of course - those mega mergers would be bad for competition, but that's a separate question.
There's nothing inherently wrong going on here, as long as it's on the books and people understand the inherent structural risk of coupling etc..
mjfisher 1 days ago [-]
It says something about the state of the world that I was genuinely uncertain whether this was actually a joke right until the last paragraph.
Very well done.
gardnr 1 days ago [-]
I too was nervous until I clicked through and had a read.
abalashov 1 days ago [-]
Okay, that's genuinely funny. Sadly, it might be a little subtle for the folks who need to feel the mockery most.
DiscourseFan 23 hours ago [-]
Yeah but like, most of us work in tech and sure a lot of this money is getting “wasted,” but on what and who? Often on people who spend it elsewhere, a little bit gets siphoned off every time for living costs, luxuries, and side projects of individual employees, or other benefactors thereof. I wouldn’t call this excess a “bad” thing, the excess is what allows us any reprieve in the rat race, time to spend with loved ones, time to engage or worthy pursuits. It funds professor’s salaries (and administrator’s!), its what pays artists, its why all these engineers retire early and make posts about porting Doom to a microwave. Of course it would often be better if this excess was taken elsewhere, so that we wouldn’t have people dying needlessley just because they lost out in life, but even that wouldn’t require a fraction of the wealth of our society generates on top of its basic needs. Excess is not a bad thing!
danny_codes 7 hours ago [-]
The excess money goes into assets that people need to survive/thrive. In SF/Bay Area a lot of it goes into land appreciation (housing prices). The end effect is rampant homelessness (did you know a full 1% of SF is homeless), delayed family formation, and an ever-growing state bill to subsidize landowners.
Excess isn't a problem, it's the distribution of the excess. Right now (in America) pretty much all of it goes to the top couple percent. The bottom ~40% of Americans have, by all practical measures, experienced a reduction in standard of living compared to 1980. Like, yes, they can afford more trivialities. TVs are cheap, particle-board furniture is cheap, and so on. But the actually important things like healthcare, education, and housing have moved further out of reach.
So yes, it's nice that my Anthropic friends can retire to work on, in one case, their fantasy novels. I'm very happy they can focus on something they love (and I look forward to reading their books). However, that much capital concentration leads to a hefty chunk of our (really rather rich) country struggling to service basic needs (like having a roof).
DiscourseFan 4 hours ago [-]
Yeah I know. Them's the breaks, right?
How big of a chance do you think those books will be about a gentle and kind but supremely powerful entity guiding the world? Of course it would be best if the book only appears to be based on that premise, and while the entity is quite powerful, it is being supported by a cabal of individuals who claim they are merely its caretakers but actually derive extraordinary social power by controlling it, and it is revealed that in other lands there are other such entities, and what appeared to be an general peace is actually an illusion created by this powerful group of people using their entity, that they are engaged in near constant warfare, directly or indirectly, with other entities; but, even they believe so deeply that what they are doing is right that they think they are only the entity's caretakers, and that there are only wars because other people want to use their entity for personal gain!
Who knows, your friend might be very clever.
4 hours ago [-]
anotherhue 1 days ago [-]
I was able to close my first series A after just a few hours of using this. I wish the rate limits were higher though.
desktopentree 24 hours ago [-]
I had serious concerns as an accountant until I realized how familiar everything sounded.
jfil 9 hours ago [-]
I took quite a few accounting courses in University. For every topic we covered, our business school ensured that we wrapped up by examining a case of fraud involving that mechanism. I am grateful that now I know what not to do, and that professional accountants are well versed in all the lates types of fraud so that they can stay away from it.
bryanrasmussen 16 hours ago [-]
This reminds me a lot of good old Bonneville Pacific Corps model for getting rich, which worked for years and did make them rich until they tried to merge with one of those naturally suspicious and rule following German firms
lets all help each other out become billionaires now /s
mkw5053 9 hours ago [-]
What is this style/design called? I keep seeing it pop up more and more (and have to assume it's a side effect of vibe coding).
georgel 8 hours ago [-]
Claude Design outputs like this.
stronglikedan 8 hours ago [-]
I don't know, but I find it to be one of the most legible color schemes since Solarized light mode, so I'd be happy if everyone used it.
9 hours ago [-]
tangenter 9 hours ago [-]
Memphis Slop
kordlessagain 8 hours ago [-]
[flagged]
tangenter 7 hours ago [-]
Upvoted. The secret origin story of Kord as he feels belittled by an anonymous online commenter, one of a handful who flagged his submission to HN. A Great War is about to waged on the internet. Absolute cinema is in our grasp, we must be alive to witness it.
mcmcmc 23 hours ago [-]
Third post in three day, not counting the ones that have been removed:
it is the same link so you are complaining about a HN system failure which should have upvoted the first submission.
chaboud 23 hours ago [-]
Clicks on link. Reads this thinking it's gotta be a joke... continues reading not sure if it's a joke. Relieved to find out it's a joke.
I guess that's the joke.
Heavies have been playing this "pretend internet money" game off and on for decades. In investment analysis, details matter.
didntknowyou 5 hours ago [-]
i thought it was a prank website but then realise this was real
sherlock-holmes 21 hours ago [-]
i was gonna crash out before i read this and realized that it's a joke lol
> Before LARP, growth was constrained by whether customers actually paid us. That's no longer a bottleneck we think about
virajk_31 16 hours ago [-]
A sent 10K to B, B sent 10K to A, where is 10K coming from? and if it's a circle then how would you report higher revenue..
juliangmp 11 hours ago [-]
That's the neat part: the money doesn't have to exist at all.
And once you go through enough hops and convince the world that this thing which your company happens to be pioneering will forever change the world and everyone will use it the money circle isn't even relevant because the entire goal was to make your stock prices skyrocket and now you're valued at ridiculous levels!
Just make sure to get out of it all before any Investor actually wants to see real profit being made.
jonah 8 hours ago [-]
You get more money in, so you have higher revenue. Your spending also increases by an equal amount, so your profit is unchanged.
jagged-chisel 1 days ago [-]
> … the fake version and the "strategic partnership" version are separated mostly by vibes, scale, and whether a bank structured it.
I have a new business idea …
opem 1 days ago [-]
I was genuienly confused till the pricing and tipping section.
atleastoptimal 17 hours ago [-]
Do people actually believe that the revenue for these companies is "fake"? Do they think financial analysts don't have anything but revenue to look at to determine the substance of their growth?
KasianFranks 17 hours ago [-]
I'll bite. Can you send us 1% back?
rarisma 22 hours ago [-]
Its a simple spell but quite unbreakable
Animats 1 days ago [-]
It worked for NVidia.
kylecazar 1 days ago [-]
The creator of this has a good note on how the Nvidia situation relates, under his diagram of their circular deal:
"To be clear: every deal here is legal, publicly announced, and defended by the people in it — Anthropic CEO Dario Amodei called the structure "nothing inappropriate in principle." Critics compare the pattern to 1990s dot-com vendor financing and warn it can inflate the appearance of demand. As Bloomberg puts it, a circular deal is legally different from a fraudulent "round-trip" — regulators' term for sham trades with no economic substance designed to inflate results. LARP is a joke about the round-trip. This is the legal cousin it rhymes with."
browski 1 days ago [-]
Nvidia makes real things, grinds to push computing forward and are coincidentally wrapped up in the latest hype cycle in a big way
Software-only startups make nothing but hype and (these days) merely copy-paste existing frameworks and libraries into an AWS account, fill in predefined config parameters, generate zero net new knowledge
Studied applied physics and EE in college, been in high tech eng for almost 3 decades and lived through the evolution of software truth still being discovery into streamlined template filling.
People need jobs in this political system so whatever but I know a lot about engineering across contexts and where the bleeding edge is and know SaaS startups are rarely engaged in pushing the edge out further. It's a jobs program to validate political memes
artemonster 11 hours ago [-]
Call us/ we won't pick up
love the humor
10 hours ago [-]
ant6n 1 days ago [-]
What I wonder is what LARP stands for. something like “looped/linked annual revenue platform”? (Don’t answer with something about role playing, it’s definitely not that)
47thpresident 8 hours ago [-]
It is definitely the life-action role playing definition. As in you’re LARPing a successful company with high cash flow. I know it has nothing to do with actual role playing, it’s just the popular way of calling someone a poser on the internet at the moment.
peesem 8 hours ago [-]
it does still stand for Live Action Role Plating, but the meaning of the acronym on the internet has been expanded over the past few months to mean anything like "pretending" or "lying".
What people miss from these things is that there is economic value being created.
For example, if you gift someone a $100 Amazon gift card, but they also gift you a $100 Amazon gift card. Has any gift actually been exchanged? Yes, the sentiment of giving.
Or if someone pays you $100 to eat a pile of shit, and then you use the same $100 to pay them to eat a pile of shit, you both have eaten, but the money is in the same place it started.
In the end, if you paint a big enough picture, all money flow in an economy is circular anyway.
17 hours ago [-]
didntknowyou 5 hours ago [-]
well the point is value is not being created. the stock market is at an ATH, by all metrics productibity has increased, but ask anyone on the ground- the mood is not as optimisitic as the financial instruments say
apsurd 1 days ago [-]
The moving of money across time is 100% central to money's value. Passing digital money around to cook the books is moving money... fraudulently. So yeah, they're not the same unless you're goaling on the semantic purity of the word "move".
weego 1 days ago [-]
I'm confused how circulating legal tender between 2 parties could be cooking books or fraud. Each party can absolutely claim they made money from the transaction. The fact they lost money in a different transaction is a separate concern.
Spooky23 1 days ago [-]
Rather than claim that they passed money around to make money, a nice income statement demonstrates that they made money.
Cooking up fake transactions to make an investor think there is business happening is the definition of fraud.
thewileyone 1 days ago [-]
Gross Revenue is sometimes passed off as Revenue in reports, until you examine the fine print.
antonvs 1 days ago [-]
Neither of your examples shows “economic value being created”.
SkipperCat 20 hours ago [-]
But they did increase the GDP by $200.
deadbabe 1 days ago [-]
The state change is the value.
cindyllm 1 days ago [-]
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zackmorris 5 hours ago [-]
It's interesting that this is a parody, but that no real-world alternatives exist. Some come close, ranked from lowest to highest gatekeeping:
Note how some like kickstarter.com and prosper.com should have been at the top, but sold out or lost their way to cater more to funders than entrepreneurs.
The same problem happened with freelancing, where developers are force to apply to low-paying gigs so many times that it's perhaps no longer lucrative:
I feel that both of these trends have combined to create the k-shaped economy of haves and have-nots that we have today.
Imagine if a team of internet lottery winners formed an investment alliance (perhaps using AI) to compete directly with venture capital firms like Y Combinator, outside of the schmoozing and board micromanagement that come with having to network.
I know I'm not supposed to say that, but that's why the startup ecosystem is so uninspired today vs its peak from 1995-1999, before the 2000 Dot Bomb which returned us to gatekeeping by the wealthy and powerful.
In the early years, the academic/conceptually-correct solution tended to be the right one. Whereas today, winner-take-all effects and survivorship bias dominate, so that capital (unearned income) grows exponentially while wages (earned income) flatline or regress.
Which results in high underemployment rates when workers tread water having to choose between saving 10% of their income to start a business or make rent. I'm having trouble finding statistics for it, but it tends to be about double the unemployment rate, hovering around 10-20%:
In other words, as many as half of the best and brightest minds in the US are trapped in dead-end or (multiple) part-time jobs, if they're lucky enough to have a job.
Which seems odd at a time when there are so many trillions of dollars of investment capital with nowhere to go that they pump up the stock market's biggest companies instead of investing in the millions of people struggling to afford the endlessly increasing cost of living.
5 hours ago [-]
5 hours ago [-]
1 days ago [-]
0xnyn 1 days ago [-]
YC be like: hold my beer
bradyriddle 22 hours ago [-]
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kotberg 1 days ago [-]
[flagged]
dontfeedthemac 1 days ago [-]
you’re literally scamming VCs lol
peesem 8 hours ago [-]
oh no!
Rendered at 23:10:58 GMT+0000 (Coordinated Universal Time) with Vercel.
Cohorts are not 'raising massive rounds' on selling to a couple of poor YC startups that 'don't want they product but pay for it anyhow' <- the implication there is very wrong.
They're selling to people who are using their product, but probably have bit of an open mind about things, and are willing to overlook hiccups. A bit like how buyers often have a 'national preference' in some cases.
Every startup ecosystem should do this, it's probably one of the top things any system could do to try to get things going.
that's why every mayor vc firm has one datalake, one cdn, etc etc.
they know their investment will go to these, why not keep it in their own ecosystem by some verticalization?
...the absurdity with Ai is when even competitors join in
Even if you larp revenue, when you get acquired or go public auditors will figure stuff out. Or worse you go to prison. Its like cheating in college-youre just hurtung yourself and others
Small companies buying and selling each other's services is probably the #1 thing that other ecosystems should emulate.
Getting your first 3 customer is hard, you need an open and empathetic system for that - a 'cohort' is exactly that.
I think the main question about Corgi is: are they underpricing risk so severely that they go bust? And honestly, we have no idea.
For all we know startups are buying overpriced insurance from Corgi because they have a better brand and are easier to deal with than Berkshire's army of underwriters.
Though it's also worth noting that the main reasons startups buy insurance is not because they want insurance, but because enterprise customers demand insurance. Which is to say, it's not out of the realm of possibility that funded startups are not actually that price sensitive, because they just want to get the deal signed and move on.
We got our insurance elsewhere because we're a little older, so I have no actual opinion of Corgi, but there's a lot of stuff that enterprise customers demand that is driven by some compliance checklist. Delve took this to an extreme, but directionally, they were providing the service customers wanted, and at least in the insurance market, you can just pay more to paper over your problems rather than addressing the core risks in a way where there is no fraud. We pay for random shit we don't need that delivers no value for enterprise customers to tick boxes, for all I know Corgi fills the same need.
Yes, insurance is mostly a box ticking exercise for most startups. My concern with Corgi is that even after accounting for how unimportant insurance is to startups, they are so blasé about their underwriting that for the small number of startups that will eventually need the protection insurance offers, there is a substantial amount of exposure to Corgi going under.
A typical startup needs D&O insurance to satisfy their investors -> the startup approaches Corgi -> Corgi's sales team negotiate more comprehensive insurance that covers many more of the risks that the startup faces that would not be insurable by traditional underwriting -> the startup uses their insurance coverage to justify risk taking.
Historically, the type of risks startups took were of little legal consequence but that has changed with AI. The social and political appetite for taking down AI companies is only getting stronger. We're already seeing OpenAI and Character.AI subject to multiple lawsuits over teenage user suicide.
All it takes is a single large judgement against a single Corgi insured company to liquidate the whole Risk Retention Group and then any ongoing litigation that Corgi was covering, is suddenly uncovered, and uninsurable elsewhere. The potential fallout from a startup losing coverage mid-litigation could be substantial when that litigation is government sponsored, the corporate veil isn't very useful when a government is looking to make an example of a company.
Multiple Corgi customers are already involved in expensive litigation and while I believe that is not covered by their Corgi policies because it predates Corgi's launch, it is a sign that expensive litigation is well within the realms of possibility for their customers.
They found a way to sidestep regulations in a non-traditional way, they're using AI for underwriting, but like I said, there's no actual evidence the underwriting is wrong.
Is a startup gets insurance for something they couldn't get insurance for elsewhere and then Corgi goes belly up, the startup is our their premiums but otherwise in the same place.
For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.
Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure. If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.
I agree that insurers definitely faces the urge to underprice risk because the shoe will drop later, but there's no actual evidence here that they're mispricing risk of that people buying it really think it's going to save them if they do something risky.
That’s not accurate if the startup is making a claim against their insurance. And even in cases where the startup hasn’t yet filed a claim, losing insurance that cannot be replaced could be catastrophic. Corgi are insuring things that are uninsurable elsewhere. If your startup relies on being insured against hallucination risk, and you lose your hallucination risk insurance, then what?
> For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.
There aren’t and there can’t be. A Risk Retention Group requires that all insured parties are equal members, Corgi cannot divide customers up based on risk profile. The entire premise of a Risk Retention Group is the risk is shared across all members. Hence, it is wildly unsuitable for how it is being used by Corgi.
> Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure.
Newfront built a $1.2bn business on startup insurance.
> If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.
We live in a brave new world. Startups are doing more and more politically and socially risky business, like AI medical advice. You are assuming that a startup being sued and losing their insurance is whatever, just shut down the company, but the founders are at risk, and losing legal coverage mid litigation has a material impact on their ability to defend themselves. Good lawyers can keep founders out of prison, no lawyers cannot.
You should read up on what a risk retention group is and how it works. To me, it's even worse than you think.
> For all we know startups are buying overpriced insurance from Corgi because they have a better brand...
Is this tongue in cheek?
> ...and are easier to deal with than Berkshire's army of underwriters.
Or they provide "insurance" for things that the world's most experienced insurers don't want to touch, or won't touch without a lot of underwriting. Which in itself is a red flag.
Did you write in more detail about that threat somewhere?
Your draft’s statement that “Corgi will help you share that risk,” combined with the question whether customers understand the risk of other companies in the group, does not merely describe RRGs in the abstract. It falsely implies that Corgi leaves customers exposed to open ended financial liability for other insureds. That implication is defamatory and false. RRGs are regulated insurance carriers subject to financial, reserve, governance, and regulatory requirements. They are not informal risk sharing clubs where policyholders unknowingly become responsible for each other’s balance sheets.
The RRG structure unique to Corgi. Major insurance groups use different insurer structures for different classes of risk because different risks are best served by different structures. Berkshire Hathaway, which the draft itself invokes, has affiliated insurance operations involving Risk Retention Groups in specialty liability markets, including medical and legal professional liability. That underscores the point: RRGs are a widely recognized insurance structure for specialty liability lines, and allow insurers to provide more tailored coverage options rather than issuing a generic policy.
The draft’s statement that Corgi “innovated with AI in a regulated industry by cutting corners” is also false and defamatory. Corgi raised millions pre-revenue and spent nearly two years building and obtaining regulatory approvals for its insurance operations, including approvals and requirements relating to reserves, pricing, liquidity, governance, and compliance. That is the opposite of “cutting corners.” Any allegation that Corgi used AI to evade regulatory approval, underwriting standards, reserve requirements, pricing controls, liquidity controls, or other compliance obligations is false.
Any article suggesting otherwise, including by implying that Corgi misleads customers, conceals the RRG structure, exposes policyholders to undisclosed balance-sheet risk, or uses RRGs and AI to evade proper underwriting or regulatory obligations, is false and highly damaging.
To be clear, if you publish these false statements or defamatory implications, Corgi will sue you personally and will pursue all available claims and remedies against you and any other responsible parties. Corgi has enforced its rights before and will do so again. You should not mistake this for an abstract legal reservation."
From their head of legal.
Innovation!
UH OH
They're not moving money around with 'no services rendered'.
It does however mean that the situation is 'highly leveraged' - and therefor risk is more concentrated, and, they do disclose.
Nominally there's nothing wrong with investing in one's own supply chain.
It makes a lot of sense for a value chain player with huge cash position and therefore a lot of power to take a % ownership of a buyer.
Consider for a moment - what if Nvida acquired OpenAI? They would be two divisions in the same company. Would anyone consider it wrong for surpluses from one to be invested in the other? No. The moment it's 'managerial accounting' instead of 'balance sheet accounting' - nobody would care.
Imagine Google or AWS acquired Nvidia - maybe in 2017 so it would seem more realistic in terms of price - would any of this seem financially dubious? No.
Of course - those mega mergers would be bad for competition, but that's a separate question.
There's nothing inherently wrong going on here, as long as it's on the books and people understand the inherent structural risk of coupling etc..
Very well done.
Excess isn't a problem, it's the distribution of the excess. Right now (in America) pretty much all of it goes to the top couple percent. The bottom ~40% of Americans have, by all practical measures, experienced a reduction in standard of living compared to 1980. Like, yes, they can afford more trivialities. TVs are cheap, particle-board furniture is cheap, and so on. But the actually important things like healthcare, education, and housing have moved further out of reach.
So yes, it's nice that my Anthropic friends can retire to work on, in one case, their fantasy novels. I'm very happy they can focus on something they love (and I look forward to reading their books). However, that much capital concentration leads to a hefty chunk of our (really rather rich) country struggling to service basic needs (like having a roof).
How big of a chance do you think those books will be about a gentle and kind but supremely powerful entity guiding the world? Of course it would be best if the book only appears to be based on that premise, and while the entity is quite powerful, it is being supported by a cabal of individuals who claim they are merely its caretakers but actually derive extraordinary social power by controlling it, and it is revealed that in other lands there are other such entities, and what appeared to be an general peace is actually an illusion created by this powerful group of people using their entity, that they are engaged in near constant warfare, directly or indirectly, with other entities; but, even they believe so deeply that what they are doing is right that they think they are only the entity's caretakers, and that there are only wars because other people want to use their entity for personal gain!
Who knows, your friend might be very clever.
https://www.utb.uscourts.gov/sites/utb/files/case_opinion/38...
https://news.ycombinator.com/item?id=48869910
https://news.ycombinator.com/item?id=48852458
The joke is getting tired.
I guess that's the joke.
Heavies have been playing this "pretend internet money" game off and on for decades. In investment analysis, details matter.
> Before LARP, growth was constrained by whether customers actually paid us. That's no longer a bottleneck we think about
And once you go through enough hops and convince the world that this thing which your company happens to be pioneering will forever change the world and everyone will use it the money circle isn't even relevant because the entire goal was to make your stock prices skyrocket and now you're valued at ridiculous levels!
Just make sure to get out of it all before any Investor actually wants to see real profit being made.
I have a new business idea …
"To be clear: every deal here is legal, publicly announced, and defended by the people in it — Anthropic CEO Dario Amodei called the structure "nothing inappropriate in principle." Critics compare the pattern to 1990s dot-com vendor financing and warn it can inflate the appearance of demand. As Bloomberg puts it, a circular deal is legally different from a fraudulent "round-trip" — regulators' term for sham trades with no economic substance designed to inflate results. LARP is a joke about the round-trip. This is the legal cousin it rhymes with."
Software-only startups make nothing but hype and (these days) merely copy-paste existing frameworks and libraries into an AWS account, fill in predefined config parameters, generate zero net new knowledge
Studied applied physics and EE in college, been in high tech eng for almost 3 decades and lived through the evolution of software truth still being discovery into streamlined template filling.
People need jobs in this political system so whatever but I know a lot about engineering across contexts and where the bleeding edge is and know SaaS startups are rarely engaged in pushing the edge out further. It's a jobs program to validate political memes
love the humor
For example, if you gift someone a $100 Amazon gift card, but they also gift you a $100 Amazon gift card. Has any gift actually been exchanged? Yes, the sentiment of giving.
Or if someone pays you $100 to eat a pile of shit, and then you use the same $100 to pay them to eat a pile of shit, you both have eaten, but the money is in the same place it started.
In the end, if you paint a big enough picture, all money flow in an economy is circular anyway.
Cooking up fake transactions to make an investor think there is business happening is the definition of fraud.
- https://www.gofundme.com/ (personal / charitable)
- https://www.patreon.com/ (ongoing creator subscriptions)
- https://www.indiegogo.com/ (creative / tech / flexible rewards)
- https://www.kickstarter.com/ (creative / rewards)
- https://experiment.com/ (scientific research)
- https://gamefound.com/ (tabletop games)
- https://www.crowdsupply.com/ (hardware / tech)
- https://www.kiva.org/ (micro-loans / social impact)
- https://wefunder.com/ (startup equity)
- https://www.startengine.com/ (startup equity)
- https://republic.com/ (startup equity)
- https://www.prosper.com/ (loan consolidation)
Note how some like kickstarter.com and prosper.com should have been at the top, but sold out or lost their way to cater more to funders than entrepreneurs.
The same problem happened with freelancing, where developers are force to apply to low-paying gigs so many times that it's perhaps no longer lucrative:
- https://gun.io/ (premium developer-first matchmaking)
- https://www.codeable.io/ (niche / premium wordpress development)
- https://lemon.io/ (vetted startup matching)
- https://www.toptal.com/ (premium / 3% elite tech network)
- https://arc.dev/ (remote technical role matchmaking)
- https://weworkremotely.com/ (high-quality remote tech job board)
- https://www.turing.com/ (ai-driven technical matchmaking)
- https://contra.com/ (commission-free portfolio network)
- https://www.upwork.com/ (open marketplace formed from elance & odesk)
- https://www.fiverr.com/ (productized gigs / digital storefront model)
- https://www.freelancer.com/ (open bidding marketplace)
- https://www.guru.com/ (legacy bidding marketplace )
I feel that both of these trends have combined to create the k-shaped economy of haves and have-nots that we have today.
Imagine if a team of internet lottery winners formed an investment alliance (perhaps using AI) to compete directly with venture capital firms like Y Combinator, outside of the schmoozing and board micromanagement that come with having to network.
I know I'm not supposed to say that, but that's why the startup ecosystem is so uninspired today vs its peak from 1995-1999, before the 2000 Dot Bomb which returned us to gatekeeping by the wealthy and powerful.
In the early years, the academic/conceptually-correct solution tended to be the right one. Whereas today, winner-take-all effects and survivorship bias dominate, so that capital (unearned income) grows exponentially while wages (earned income) flatline or regress.
Which results in high underemployment rates when workers tread water having to choose between saving 10% of their income to start a business or make rent. I'm having trouble finding statistics for it, but it tends to be about double the unemployment rate, hovering around 10-20%:
https://www.newgeography.com/content/004016-underemployment-...
Some demographics (like recent college graduates) are approaching 50% underemployment:
https://www.newyorkfed.org/research/college-labor-market#--:...
In other words, as many as half of the best and brightest minds in the US are trapped in dead-end or (multiple) part-time jobs, if they're lucky enough to have a job.
Which seems odd at a time when there are so many trillions of dollars of investment capital with nowhere to go that they pump up the stock market's biggest companies instead of investing in the millions of people struggling to afford the endlessly increasing cost of living.