As a 3 time early employee of a YC funded startup I'm going to go ahead and say that the first customers benefit is as much a problem as a benefit because it presents the illusion of having a viable business. A lot of early customers only joined because of my startup's ties to YC and it always hid a problem with acquiring new customers. In 2 out of 3 experiences it took years of our lives wasted to figure out that the company couldn't be a success all the while trying to replicate whatever growth we had initially when that really was just from that first YC based TC article.
Basically you need to know if you can be viable without YC before you want get those early YC customers because eventually you're going to need customers that come to you who don't know what YC is.
VeilEm, would you email me so I could ask you a few questions about your experience? Andrew@mixergy.com
You raised a counter-intuitive issue and I want to understand it.
I do interviews on Mixergy.com and I need to hear about experiences that contradict mainstream thinking so I can make sure what's taught in my interviews is true to reality.
Similar experience, different conclusion. We were not prepared to handle customers when getting into YC. However, the process told us in 3-4 months, what would have otherwise taken us at least a year.
Our customers were nowhere close to the "YC Crowd" either.
The problem you had sounds like the mistake that was made was in what you learned from those customers. It's not an acquisition strategy, it's a strategy to get early users who will give feedback on the product. Figuring out how to sell it into non-YC companies is a separate challenge, but it comes after building a useful product.
The products were already useful, there just wasn't a viable enough market for them. It's hard to know that this is a problem when you have 5% growth for a few months and think you've gotten something that works only to see it slowly trickle to flat growth over time that may end up paying your bills in 10 years from now.
If you are able to have growth before getting into YC you will be better off than depending on YC to jump start your growth. Do you not think that lots of people are signing up to YC to get that jump start in growth?
It's hard to know that this is a problem when you have 5% growth for a few months and think you've gotten something that works only to see it slowly trickle to flat growth over time that may end up paying your bills in 10 years from now.
This is a problem almost every project faces after launch (getting through the trough of despair) - finding enough customers/users almost always takes years of hard graft. Perhaps it is amplified a lot by joining YC though.
People use YC for a myriad of reasons. Some use it to raise capital so they can build a product that requires upfront capital. Some use it to jump start growth for a product they know is useful already. Some use it because they are complete noobs, are technically capable but have never built a product before. Those are all places YC is hugely helpful.
I pondered the same point. If YC community isn't your target market, then this benefit is also of limited use or worse, damaging via creating illusion of demand which evaporates when you hit your target market.
You need to think of it as product development. It's hard to get users to use a product that no one has heard of. The YC network will actually try it out. This is important because even if they aren't your target market, it's still use of the product - which will always teach you something.
If the things you learn from YC community usage is inapplicable to your target market, then that is not useful learning. It is useful for business if their use context overlaps with that of your target base.
There's one missing point on this post that I believe is important. I don't blame them for not putting on there either though since it's a bit intangible:
YC really encourages commitment. Commitment to your idea and co-founders. That commitment inspires a lot of motivation to do a lot with little in a very small amount of time.
You go from a rag tag group working on weekends and evenings due to school or your day job to a competitive, hungry machine ready to usurp your market leader.
The effect of the peer pressure amongst your batch mates continuously making progress each week is substantial.
Commitment to co-founders is great, but commitment to your idea is a double-edged sword. It can lead to teams less willing to pivot because they're so committed to the concept they applied with.
(Source: Been on the teaching team of a few accelerator programs and seen founders make poor choices due to commitment to their ideas, despite advice otherwise from mentors and their market).
This is indeed double sided as most ideas will take years to fully flesh out. Not everything works out immediately. So while not pivoting is a risk, I believe it's equally risky to give up to early before fully testing your product in the marketplace. I find most startups are willing to abandon products before they launched to a real audience and/or due to negative feedback from industry insiders (people in the tech bubble).
Steve Blank always spoke about testing technology in markets and using that as the feedback loop. But I've worked with and also heard of stories of founders pivoting before they get to that point or after only testing a small subset of the market.
I can't help but think as quantity has gone up, quality has flattened. I was just browsing a list of the last few classes and don't see a (m)any obvious winners. I know it takes awhile but you'd think a few would stick out.
My understanding is that YC focuses on people more than ideas...e.g. the first version of JustinTV was a live stream of someone's life. Twitch was many years later.
fwiw — and I say this as a cofounder in probably the least successful YC batch of all time — the stuff coming out of the program these these is years ahead of what it was then.
I would undoubtedly do YC again if I start another company in my lifetime even though many of the listed benefits last for life after you are in once. The value wasn't as crystal clear to me when applying as it was after going through. I can't speak for others, but I would imagine a very high % of founders who have gone through YC would agree.
Ditto - in fact, one of the main reasons we did YC was because we talked with a lot of alumni who said they would do YC for their next startup without hesitation.
The 7% really is not relevant. Getting useful people (for many contextual definitions of 'useful') to care about your success could be a direct reason for your success.
That's really the model of YC overall - the money is just "don't die before you start because of something so simple as money"
> Getting useful people (for many contextual definitions of 'useful') to care about your success could be a direct reason for your success.
That is what it seems like. In the early phases of a company, founders meet a lot of challenges they never could have prepared themselves for. Having a community of people who've gone trough the hurdles give you advice and guide you is what makes startups succeed. The money certainly helps, but it is the condensed knowledge and tried methods of problem solving that really drives YC companies.
A founder's most important duty is to survive and then thrive, in that order, no? Following that, I would argue that YC helps out immensely in other ways more important than financial survival, though the cash helps with the first duty quite well.
I like the last one the most. I think it captures the spirit of Silicon Valley very well.
When one company in YC does well, the whole community benefits. Because YC has such a strong track record, early adopters, investors and press are often more willing to take a look at YC founders, even if they’re first time founders. To maintain the strength of the community as it grows, we developed a set of principles that YC founders are asked to live by.
Why is this a good thing? Shouldn't we be striving for a merit based system and not a system that benefits the few people that are able to get through the YC interview process?
I'm not sure what you are calling for here. The YC interview process is a merit-based system.
It doesn't matter who you are, where you went to school, or what family connections you have. It's an open application available to anyone in the world to sell some venture capitalists on the merit of your ideas. How does it get any more merit-based than that?
I'm sure those things do actually matter(family connections could turn into a Friend's and Family round; the school you went to could mean you learned how to hack when others didn't).
I am not an insider, but I view this as, "Starting something is hard. We make it a little easier for you. You make it a little easier for the next group."
There are so many random things that can befall a startup, that any support network is great. This is no different than Steve Jobs mentoring people, because others mentored him.
> Getting down voted for merely asking a question and trying to provoke actual thought?
Please resist commenting about being downvoted. It never does any good, and it makes boring reading.
> I feel like I've already outgrown it and I haven't even been a part of it that long.
If your account is less than a year old, please don't submit comments saying that HN is turning into Reddit. It's a common semi-noob illusion, as old as the hills.
It does seem like that wording could potentially cut two ways though.
"We're the good-old-boys network, and if we like you, we will show you the secret handshake to get into the club, and our club has made-men in the investor and media communities."
Undoubtedly I am way off base here, but I wonder if others got a similar vibe from that statement, and if there would be a good way to reword that.
Over the long run, this eats itself. It would result in a lot of low-quality but highly connected 'juiced' companies getting too much of a boost from brand but then flopping by failing to actually deliver on their hype. In the end this dilutes the brand, and is self-correcting. YC would end up with a reputation as an over-hyped old boy network past its prime, etc.
Sure you can ride into town on a big white horse but if you can't handle your gun... :)
It can take a while to manifest. Like a bank account, large pools of goodwill and brand equity take a long time to drain. But eventually the draining happens. The tech industry is so fast that 'a while' might be 'a few years.'
Is it that different that a Harvard or MIT alum taking a call from a student looking for an internship? They take the call because someone took their call years before. Are they over-hyped old boys networks? I'll leave that to others.
It's how vague the word "community" is in context. What community? Y-Combinator founders/alumni? The startup community? The tech community at large? The Bay Area? America? The global community?
I honestly wish YC and HN handled a few things better (wrt "old boys network" vibe in specific), but I think it is pretty ridiculous to interpret their position that way. They are helping lots of people start new companies. If anything, they are a threat to The Old Guard, not its defenders.
Once a startup has made enough progress to be competitive for YC proper, that startup could just raise a round from reputable angels. Why bother with YC at that point?
As a founder of an early stage startup, YC just seems much less compelling than it did, say, 5+ years ago. If you aren't far along yet, makes sense to submit an application for the same reasons you might buy a lottery ticket, but if you're further along, what it takes to be truly competitive seems identical to what it takes to just raise an early round.
I think YC is a huge positive macro force in the ecosystem, but on a micro level it doesn't seem clear why applying makes sense anymore.
you get more than just seed money being part of YC
It's not clear to me how much value that adds over, say, raising from a few reputable angels in the Valley.
As a non-alum, it looks like the YC applicant pool has become so competitive — on maturity, not ambition or potential — that by the time they want you, you don't need them. Not that you ever need anyone.
One exception I can see is that if your startup will mostly have other startups as customers, YC could effectively gift you your first customers.
the bump in valuation you get is bigger than the 7% slice of the pie YC takes.
People often seem to get too hung up on what percent they own. While you should pay attention to this, it's more valuable to direct your effort toward how big you can make the pie.
the bump in valuation you get is bigger than the 7% slice of the pie YC takes
Not sure if that's true anymore.
People often seem to get too hung up on what percent they own. While you should pay attention to this, it's more valuable to direct your effort toward how big you can make the pie.
Agreed and I tell friends that all the time. It's orthogonal to the point I'm making.
Not only is it still true, it is probably getting more true. I've had multiple YC and non-YC CEOs tell me this. And look at the announced valuations in the last batch for raising on safes.
I am curious about how many applicants are they getting in this round, S16. Also what kinds of companies are YC most interested in nowadays, given their accumulated experience, and the current market conditions.
It's too early to tell how many will come in for S16, but what we're looking for hasn't changed. We like smart, tight-knit teams who are effective and resourceful and have a track record of getting things done. In this batch (W16), there are companies in almost every category -- from enterprise software to biotech to aerospace.
I got to ask, exactly how is this good for our economy to have an elite group which when you get membership into you get preferential treatment?
Why not just let people compete on their own merits rather than the merits of the group they belong to?
"Elitism is the belief or attitude that some individuals who form an elite—a select group of people with a certain ancestry, intrinsic quality or worth, high intellect , wealth, specialized training or experience, or other distinctive attributes—are those whose influence or authority is greater than that of others; ."
I think you might be mistaking reality with fantasy. Call me a pessimist, but in my reality people look at all sorts of social cues and shortcuts to make decisions.
You can either acknowledge reality and let it work for you, or ignore it and let it run you over.
You're kind of arguing against meritocracy here. The elite groups exist everywhere. Aren't Ivies elite by your definition? Why should they exist and provide better career opportunities to their students?
YCombinator doesn't exist to favour one group of people arbitrarily. It exists so that it can identify the most promising startups and help them a little through their journey. IMHO.
Because you want to start a business that supports itself with profits instead of outside monetary investment.
Because you want to build a great version of some X but don't necessarily want to disrupt or reinvent an industry.
Because you want to be financially secure and not risk your financial future on an idea that isn't guaranteed to work.
Because you like traveling or taking time off or playing around with a lot of different ideas and aren't at the place where you want to commit to working full-time on a company for five years.
etc...
This isn't a knock against YC at all, there are just other ways to grow and scale a business than hyper-growth + raising outside capital, and sometimes even if you have a great idea, bootstrapping can be a better approach for you depending on what kind of person you are and what point of your life you're at.
I believe you mean a list of reasons why participating in YC is not good for your startup prospects?
When we applied, most of our business was in NYC (and it still is today), but we had to move Mountain View for the 3 months of the program. As it turns out, moving was hugely beneficial because it also forced us to free ourselves from many random obligations from our daily lives. I would fly back to NYC regularly, but for specific and determined purposes, which minimized time for distraction.
Some say the equity deal is bad, and in summer 2009 it was an order of magnitude worse (6% for $15K). However, 94% of a success is much better than 100% of a failure, and I am absolutely sure YC saved us from failing multiple times.
If there is ANY true negative consequence of participating in YC, I would say you are placed into a peer group of overachievers that values fundraising for high growth. While there is a LOT of upside to close interaction with dozens of other founders, the negative is that we naturally tend to compare ourselves to our cohort. I never felt any outright competitive pressures from my batch, but at the end of the day, the universal yardstick seemed to be how much funding you could raise from the most prestigious investors.
To be fair, the YC partners stressed that fundraising is a silly measure of success and that getting ramen profitable and default-alive is more important, but it's still demoralizing when (seemingly) all your friends raise money and you are grinding along at a bootstrap pace. For RentHop it was absolutely the right play - our revenue hockeystick didn't begin until 3 years later.
- Major life disruption for at least 3 months, as you must live in Mountain View whilst in the YC program. This makes it untenable for founders who have any other time obligations, like a family.
- Startup living stipend sufficient to split an apartment in MV in lieu of real salary. This makes it untenable for founders who have any other monetary obligations, like a family. Granted, this is a sector limitation, but it's not something that YC had to follow.
Most tech investment seems to be about getting as many naive college kids as possible to offer practically free labor to investors.
That's a pretty uninformed opinion. YC is a collection of smart people trying to build things...
That "fancy apartment" is the cheapest place you can find in Mountain View with 4 people stuffed in, half sleeping on the floor.
How many YC founders go on to business school? I've heard of none, but I'm sure there are a few... But do you have anything backing up that people go to YC for that reason?
I think I went to one party during the course of YC. In fact, all I really did was build product and talk to users. It's one of the mantras of YC and anyone not following that advice certainly isn't seen as a "cool kid".
Probably not worth trying to change your opinion, but you're 100% wrong on every point (except the first if you define "cool kids" as people working hard trying to build things).
The worst reason to apply is if your acceptance will make/break your project. If you're optimizing what you're doing around getting into YC, DON"T APPLY.
Applying to YC (or any accelerator) should be an afterthought. Something you spend half a day on for shits and giggles, and an opportunity to reflect on the meta state of your project. Hit send and forget about it.
The odds of getting in are not high. For most people who aren't ivy league grads, haven't worked at Google or Uber, or don't have 6 digits of revenue, it might not be worth the time.
And if you still haven't figured your business plan, you might want to do it before applying. Pivoting within an accelerator is not a comfortable experience, and would be a waste of time for Demo Day.
Also I'm not sure how well YC works for married entrepreneurs with kids. There doesn't seem to be a lot of married YC founders, but do correct me if I'm wrong.
A lot of the advice they give is already out in the open. So unless you need the cash or connection, you might not want to.
It's well worth the time to apply no matter the outcome (imo). Worst case you have bought a lottery ticket AND thought about your idea in an organized way. There's value in that.
Or how about reasons why not to apply, if there are any? I imagine it's stressful and time-consuming for many people, for example. (Though of course that comes with starting any company.)
I can only speak for myself. Here's why I never applied:
- In its beginnings ZeroTier was a one-man band for several reasons (some circumstantial, some historical). PG has explicitly written against single founder ventures, so I decided I had near zero likelihood of being admitted for that reason alone. Add to that the fact that my degree is from a Midwestern state school and I have not "worked at Google," etc., and I figured the lack of impressive credentials coupled with single founder status reduced the likelihood of admission to the point that I'd be better off spending the time to purchase a PowerBall lotto ticket.
- I am older, have kids, and am not rich. The Bay Area's real estate costs are simply too high, and I can't relocate on a whim because I would have to uproot family. It would make no sense to move there unless it were a permanent move, and YC's stipend is not sufficient to support a family in the Bay for even one year. Post-YC, being in the bay would cause our burn rate to be unacceptably high. (Almost 2X by my estimations.)
- At the time ZeroTier already had 10% month/month user base and active device count growth and I already had clear ideas about how to grow further and monetize, etc. I didn't feel like I needed that much hand-holding and already had some idea of the advice I'd get, etc.
By the time I became a we and this became a full time venture with everything it needed, we were too far along and YC fails cost/benefit analysis. At this point we'd have a chance of getting in but we don't need to get in.
There's one more point that didn't factor specifically into not applying to YC but is relevant:
I think there's a perspective advantage to not being in The Valley. It's very faddish up there and we'd be much more likely to end up in a situation where everything we build and our entire marketing pipeline is optimized for selling to other startups and Valley companies and that's not a good place to be in when that industry is extremely cyclic.
Our product is very useful to a lot of less faddish, trendy enterprise users and institutions like universities, etc., and we do not need to be in the Valley to reach these customers.
SoCal is underrated IMHO. It has a great talent pool minus the completely flat out insane real estate costs and is about two hours by plane from SF/SV.
I can't stress enough how crazy the RE costs up there are, especially when compared with what you get. First time I visited SV and toured a $3000/mo apartment with a lobby that smelled like dog urine I called it "perhaps the world's only six figure slum." Manhattan is that expensive but you're in Manhattan, not a crap vanilla apartment in a boring suburb. You have to spend over $5000/month there if you have a family to get an acceptable place to live. We currently spend under $2000/month for a clean, modern, nice place and are 20 minutes from this:
There's a lot of tech in San Angeles (I consider it one city), but it's more spread out. We are a distributed network of hundreds of suburbs, not a hub-and-spoke network. :)
We are located here and likely will be for a while:
7% might not be worth it if you've sold a couple companies and are a mortal lock for funding for your next company, but otherwise, this is the weakest objection to YC. The value you get just from having the YC label more than offsets the 7%.
(I'm sensitive to this because it used to be my big objection to YC, because 7% is a large amount of equity to give up for the money they're giving you, maybe even today.)
The initial app takes an hour. Then if you are lucky enough to get an interview it's a few hours if you're local (more if you're traveling) and probably some healthy anxiety leading up.
The biggest recommendation for YC is: if you founded a company in YC, would you do so again (or recommend that other founders do so?)
I would, although I have some very specific things I'd be sure of before doing YC; doing YC "correctly" is worth some effort. (not too early; with specific goals achieved during YC, and with focus on the right things)
Let me explain why YC is coming out with this now.
In the wake of the Zenefits scandal (which is only just beginning) there's going to be a lot of scrutiny on Y Combinator and the entitlement culture (and, hence, the cheating culture) that tends to emerge from an old-boy-network.
They're trying to put a good foot forward and distance themselves from the culture that created Zenefits and (more importantly, in the long term) from the appearance that YC is just a bunch of companies buying each others services at high prices, like artists who'd buy each others paintings at high levels (to bolster each others' reputations) while secretly settling the bill.
I don't fault YC for doing so, and I doubt that they had any official, direct responsibility for the Zenefits fiasco (although I certainly don't buy that Mr. Conrad acted alone.) It's just useful to be able to read between the lines and see what's going on. Y Combinator's PR wing is definitely going to be active as long as Zenefits is in the news.
Meh, that's a stretch. Much of the material on that page dates to 2014. I think a more plausible reason is to attract more talent for the Summer 2016 batch - the application deadline is next month.
Suppressing reasonable dissent isn't a viable long-term strategy. If I were running YC I'd want to hear people's thoughts on how to handle PR situations like this.
Basically you need to know if you can be viable without YC before you want get those early YC customers because eventually you're going to need customers that come to you who don't know what YC is.