It's a great idea. However, unless I'm mistaken, I believe his auction mechanism is not any of the standard "revenue maximizing" OR "social utility maximizing" mechanisms. The "maximum amount you would pay for this meal" suggests the meal's value to you.

However, for all K=# of seats, his Kth-price auction does not have the property that inputting your truthful value is your dominant strategy. The price should really be the bid of the K+1th person--otherwise, the Kth person can lower his bid in any outcome to the K+1th price/value (in descending order) and still obtain the seat. So it is not even a Nash Equilibrium to submit your truthful value.

So let's see how we can make the auction consistent with the desire to get everyone to bid their truthful value. If instead, the auction price was based on the 9th highest bid (which we assume to be the value) OR the reserve price (whichever one is higher), then it is everyone's dominant strategy to bid their value.

I don't want to rehash examples taught in an introductory Auction Theory class (which I greatly enjoyed), so if you're interested, take a look at http://en.wikipedia.org/wiki/Vickrey_auction

It's basically a fancy name for what I described, plus a few modifications and extensions.

More simply, in a second-price auction, there is 1 winner, and you clear at the 2nd highest bid.

With 8 winners, they should be clearing at the 9th highest bid.

Of course you don't have to do it this way, but it's the least game-able outcome.

It's clear they had the second-price/Vickrey style in mind, and they came awfully close to getting it right.

It's actually the multi-unit analogue of the first-price sealed bid auction.

Note that in FPSB you also don't have an incentive to report your true value, but it is revenue maximizing and efficient in expectation assuming risk-neutral bidders [1].

The basic gist of the proof is that everyone has an incentive to shade their bids down in proportion to the probability that their bid sets the price. The amount you shade is monotone in your valuation, so you end up with the same relative ordering of bids.

And the punchline is that you get the same winner and the same expected revenue for the Vickrey vs. FPSB.

[1] http://en.wikipedia.org/wiki/Revenue_equivalence_theorem#Rev...

Yeah, it might be what they were after, but their text (How much are you willing to pay?) suggests that your dominant strategy is to input your true value.

If that's what they're after, the text is misleading in my opinion...

They taught this principle to all new google hires and interns as part of orientation when I interned there, whether you were working on ads or not. It was a nice "this is how the company you work for pays you" type thing, I liked it.

(and you are not mistaken, unless I am mistaken)

GrubWith.us removes your period as soon as you type it, so if you try to enter (say) 100.00, it is actually a bid for 10,000 -- I consider this a VERY BAD THING in this context.

Beyond that, it's bugged:

    $(".only_numbers").keydown(function(e) {
        var key = e.charCode || e.keyCode || 0;
        // allow backspace, tab, delete, arrows, numbers and keypad numbers ONLY
        return (
           key == 8 || 
           key == 9 ||
           key == 46 ||
           (key >= 37 && key <= 40) ||
           (key >= 48 && key <= 57) ||
           (key >= 96 && key <= 105));
    });

You're able to type ! @ # $ % ^ & * ( ) into .only_numbers boxes.

And you can't press cmd+a to select all, or ctrl+a to go to the beginning of the line, and argh all manner of awful.

Have you dropped them a mail?

Starving entrepreneurs outbidding each other to sit with two rich guys? It is just me or does this seem backwards?

People seeking knowledge, experience, and advice outbidding each other to sit down with people with knowledge, experience, and advice. For charity. Doesn't seem so backwards to me.

Start-up knowledge, experience and advice comes from entrepreneurs, not VCs. Read their bios, they are financial and marketing professionals. Nothing wrong with that, but they are not the kind of people who started companies from nothing and now are VCs (like PG for example).

It should be the other way around: They should be buying lunches for entrepreneurs. Scouting deals is their job after all.

You don't consider Alfred Lin an entrepreneur?

Since the possible set of bidders includes non-starving non-entrepreneurs and everything in between, the vector relationship is direction-less and thus incapable of being 'backwards'.

That being said, this has been a staple of charity 'silent auctions' for a while. I and 79 of my closest friends had lunch with Dean Martin in Las Vegas one year as part of a MD telethon related charity event. That was like 1977 I think.

From the point of view of encouraging entreprenurial growth it is probably counter productive, you've got a lunch, with some guys who understand running a small business, but are you really going to be able to develop enough shared context to make any improvement over your current plan? I think it is unlikely and a trip to the library to read some of the things they have published (or accounts of how they did what they did) would give you a stronger benefit as the thoughts on paper are concise and on target, and not competing with 4 other people for attention.

Now if you're a founder doing a funding round and you think your pitch is going to take more than 30 seconds and you've been trying for weeks to get them to just take the damn meeting so you could pitch them, well this could be one way to work that.

Personally, I prefer a system where merit determines who gets the lunch with the VIP. That's why we built http://letslunch.com

Just last Friday, two entrepreneurs had lunch with Drew Houston and Trip Adler. Because they paid the most? No. Because they got rated highly by their peers.

I wonder if you can use money from your angel round to buy a seat?

I'd like to keep working on my own idea until they are bidding on having lunch with me.

I like that attitude, I'll buy you a market price beer.

Deal. Are you in sf?

NY right not but I will back in SF on the 11th. My email is in my profile hit me up.

Is this a pivot for grubwith.us? I know the founders original idea was to connect people via family-style restaurant meals. But I've signed up for 3 meals now, and all were because I wanted to meet someone specific (Harj, other YC founders, Robert Scoble). It's a brilliant marketing idea, and a great example of why YC backs founders, not ideas. I could see these mini-fundraiser dinners being a huge market.

Although it is presented as a sealed bid/blind bid auction - when you submit your bid the following page seems to indicate the current minimum bid - which at the moment is $56.

Nevertheless I think this charity bid model is a great use for the grubwith.us system.

I took that more as a "reserve" price to make sure Tres Agaves has their costs covered. I didn't expect it to go up as the bidding commenced. I could be wrong though.

yep -- this price will not change. it's a fixed min bid price. we will be clearer next time. thanks!

Something something Color. There, I said it. Now we don't need to humour any cheap jokes.

GrubWithUs for charity. I like this idea. I once had breakfast with the entire Detroit Red Wings team when I was a kid. What a fun charity event that was.

I'm also curious as to how much these particular plates will end up going for considering all of the corporate cards out there held by CEOs who probably wouldn't mind schmoozing with Sequoia.

I love this idea. This model could certainly expand to celebrities to capture the interest of the mainstream. Celebrities were largely responsible for Twitter's hockeystick growth.

Side note: I went to my first Grubwithus earlier this week and had a great time. If you have the opportunity, I definitely recommend you give it a try.

Damn, I wish this was in a few weeks time, I'm travelling to SF on April 22nd and would've loved to have met both Alfred Lin and Mark Dempster!

If you're going to pay to eat with VCs... Wonder what the final price will be, for some reason I'm thinking 100.00 won't cut it!

Isn't that a bootloader, that loads VCs on startup, and leverages equity resources as the company shell starts up?