Why YC
ycombinator.com
ycombinator.com
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.
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?
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.
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.
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.
YMMV - it worked for us at Mixpanel.
(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).
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.
Ironic that Zenefits is the last major breakout.
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"
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.
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.
"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.
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.'
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.
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?
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.
Whether or not that's enough of a reason is for you to decide.
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.
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.
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.
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; ."
You can either acknowledge reality and let it work for you, or ignore it and let it run you over.
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 the cool kids are doing it.
- Because the brand will look good on a business school application.
- Because $120K can pay for a fancy apartment and a lot of parties.
- Because Mom and Dad will leave you alone for 3 months.
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).
He was providing bad reasons that someone could use to justify applying to YC
I have tons of respect for the people who make it through the process, and drop everything to try and start something great.
(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 value you get out of YC isn't really the money.
7% is a lot.
You're making an assumption that with YC your company would be worth $10m+ and without, $100k. That assumption isn't really valid to me.
- 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:
http://media-cdn.tripadvisor.com/media/photo-o/04/a5/d7/5a/c...
We are located here and likely will be for a while:
Click on my handle and drop an e-mail if you want to meet.
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.
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.
Anything more is a waste of time.
- 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.
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.
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.
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)
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.