Part of the appeal is exclusivity (besides of course its hard to scale).
I'd rather see YC at 200-300 companies a year - and ensuring these companies continue to grow/ succeed after the batch is over rather than churning out 1000 more.
There are too many complex problems in the world that need to be solved for the desire of exclusivity to exist.
I think 2000 companies/year is too few. There are so many good problems that need to be solved and they just need a little bit of midas's touch. This sounds pretty reasonable to me.
Between NYSE and Nasdaq there are about 3,700 publicly traded companies in the United States total right now. The current funding paradigm will have to change to accommodate that many companies (more IPOs? long-term private funds? who knows).
Here is some more data from the source: http://blog.ycombinator.com/yc-portfolio-stats
The concern is who does the buying? The number of public companies is small (and shrinking btw), how much more acquisitions can they absorb? If it is other private tech companies, the money is just changing hands between VC funds. In either case those sources of funding have to grow or change to provide more acquisition opportunities.
Another way to look at it... In just one quarter [2] the S&P 500 spent more than $150 billion in stock buybacks, that's triple the annual amount of VC investment.
There is a tremendous amount of room for the market to absorb innovative real companies.
[0] https://en.wikipedia.org/wiki/S%26P_500_Index [1] http://nvca.org/pressreleases/annual-venture-capital-investm... [2] http://www.factset.com/websitefiles/PDFs/buyback/buyback_12....
That's another funding exit.
Do people want 2000 different new tech things each year?
As far as I understand they are def interested in research etc. But I have still to see any real complex or hard problems they are trying to solve. Or am I missing something?
http://techcrunch.com/2014/08/14/y-combinator-and-mithril-in...
There's finding the companies/research projects, getting them staffed and sustainably funded, and then years if not decades of work before some of these real complex and hard problems are solved.
I'm not saying any of it is going to work but we're just looking at the first steps in this direction. It'll be a few years before anyone is able to really judge whether it's paying off or not. Unfortunately this is beyond most of our ( myself included ) attention spans, so we'll probably feel like nothing is happening. Fortunately it seems like these folks are putting mechanisms in place that will outlast our collective attention and keep the engine running for the long time span these problems will need.
I'm pretty excited about it.
However the angel model isn't really suited well for solving complex problems it's mostly not even a execution problem (besides as I said elsewhere, that solving the problem IS the execution)
I am happy to see they are moving that way but so far I haven't seen any attempts at solving first principle problems.
I love YC don't get me wrong it just doesn't look like it's something they will ever be good at and thats totally fine.
YC in my understanding is catered at companies who are solving natural next steps at the right time, not necessarily problems with a 5-10 year horizon.
I am always reminded how Interval Research went from 10 years research to market horizon to suddenly 3-4 years.
For all the Silicon Valley is good it it seems to be best at creating relatively obvious solutions for fairly trivial problems.
If more big and complex problems were solved Elon Musk would be the rule not the exception.
This is what's kind of sad about SV these days.
It might drive the digital economy but one might ask in what direction.
And you're not considering the recent increased YC focus on startups from developing countries. Just from top of mind you have companies selling cheaper solar energy in Mexico, improving online payments in India, lowering interest rates in Africa, treating low-income patients in Central America, etc.
There are dozens of YC companies just getting started that will positively impact the lives of billions of people in the next 10+ years.
I am not talking about execution but about problems as in. Solving the problem is the execution (think cure for cancer)
I am not saying there ren't companies in YC that aren't solving big problems but it's not what they are good at noor what the angel model is good at either IMO.
Personally I think this problem is best solved by making the selection criteria narrower. Rather than expanding, YC should be narrowing its focus. Of course this requires that they narrow to the right area which is very hard problem.
Does that in the end mean that it doesn't really matter for the success of a YCombinator startup that they can just walk randomly into Paul Graham's office and ask for advice?
But this is the same issue everyone has when running their business! It is a problem of execution that you need to solve (or failed at) when you scale. Can you say that Google can't pay the same level of attention to their search engine once they started AdWords?
pg gives general advice to everyone on his blog. So do all the other YC partners.
The constant feedback you need to build a successful business comes from you, your cofounders, your team and most importantly your customers.
Investors, board members and advisors all help too.
But it's the people that live the business day in and day out that make it a success.
And if the answer is 200-300 because it seems like something they could realistically support, then what's against them scaling to support 2000-3000? Especially with their inclusion of overseas companies likely to tackle broader markets.
What's the practical value of exclusivity? Would you ever choose exclusivity over effectiveness?
In the eyes of customers, I don't think it would give you an "easier time standing out when competing", but I guess everyone is entitled to place their own bets.
When Georges Doriot financed DEC in 1957 [1], he got 70% for his $70,000 ($600,000 in 2016 [2]). These were proven scientists with a track record of successful research. It was considered a landmark deal because it was not blue chip, and the founders were not connected. How many smart people languished in corporate or government labs instead of starting another DEC or Microsoft? What was the opportunity cost of the lack of capital availability?
Then you have YC v1.0, which invested $20k for 7%... which we easily forget today was a non-controlling stake, and thus groundbreaking (or at least trend-setting). YC set the terms for the rest of the world to follow (slowly - I still meet, here in Singapore, angels who want complete control from the seed round onwards). Founders could actually still control their company after taking outside money!
Of course there were the ancillary benefits of the network and so on, but to me the really groundbreaking idea was also that significant expansion of the number of companies that could get funded. Working class scholar at MIT whose daddy doesn't know Tim Draper? No worries, you just need to fill in the form, YC will get in touch.
Competition, and inflation (both general inflation, and of opportunity cost from the two tech booms) drove that up to $120k, still for 7% - which even today is a very good deal for a pre-product company, and allowed thousands of founders to have access to a much better deal than they would otherwise.
Who is left out at this point? Pre-product companies that need money to get the MVP done, and foreign companies where seed investment is done on much worse terms than in the US for a variety of reasons that are regularly discussed here. They don't need much; as has been amply written about you can get ramen profitable on 20-50k with many ideas, and this is literally years of living costs in much of the world. But that capital is just not available because wealth is concentrated in (often foreign) land, bonds and blue chip companies. 1.5% is laughably small, doubly so when you consider this is basically free money unless you become a fairly decent success.
YC is not the only company who understands this. The very idea of 500 Startups - "if you have an angel, you're eligible" - is about numbers over any attempt at reading the future.
I can't wait to see how it works out. And how people will copy it. And I love the philosophy of it: YC is expressly saying that no, not all talent is concentrated at "Stanford" - that there are many variables in life (such as geographical location or social background) that will impede a large number of talented people from having access to the resources necessary to capitalise on that talent.
[1] https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#...
[2] http://www.dollartimes.com/inflation/inflation.php?amount=70...
[3] http://www.bloomberg.com/news/articles/2015-12-03/uber-raise...
YC is still an order of a magnitude smaller than YC. 200 startups per year, so maybe 600 founders at the max. Even if YC is trying to build in exclusivity, there's much to be gained before they hit Stanford's scale.
Also, I don't think it will be that hard to scale advice for their startups. All that's needed is to add more partners. Although this might complicate their org/management structure.
This can scale to 2000 companies. If YC does they will make more money and have more global impact.
They don't build your business, team or really do anything to guarantee your growth or success.
Success has to come from founders.