Y Combinator's Founding Principles
ycombinator.com
ycombinator.com
Like many universities, the value of YC to founders is mostly signalling and network. What you actually learn at YC is a minor component of the value (since you could learn most of it just by reading or watching videos)
As YC batches get larger, the signalling value of being a YC company goes down. If everyone is special then nobody is.
As YC batches get larger, I suspect the value of the YC network also goes down. This is maybe a little bit counter-intuitive, but I think a large influx of less highly-selected startups will dilute the network and prevent it from functioning effectively.
Unfortunately YC is not completely aligned with founders here. There is a strong temptation for YC to increase batch size. YC gets 7% of a company for far below market price. So increasing batch sizes makes short-term economic sense. However, if YC increases batch sizes too much and harms its brand, it will eventually break its own model. So increasing batch sizes could be seen as form of spending down the brand equity.
This all hangs on a few premises that may or may not be true: 1) You can't have larger batches while keeping quality constant. 2) YC doesn't directly influence the success of participants that much. 3) If the value of YC drops, good founders will eventually stop applying
I suspect an argument like this has been going on inside YC for quite a while. And the blog post was written by the original founders to try to settle the dispute in favour of the pro-scale faction.
This is who YC funds. That's like saying it might be interesting for technology companies.
Except YC funds plenty of founders with kids.
It does help to have a low personal burn rate. If you have high expenses, it’s difficult to quit a decently well paying job to start a startup. But that doesn’t have anything to do with YC. If anything, it’s marginally easier with YC backing because at least you can slow down the personal burn.
It was, hands down, the best and most important thing our company has done.
And we were profitable before YC began, so we didn’t need it.
The value of getting accepted and how that acts as a filtering mechanism to prime venture firms. The network: YC alumni, investors, executives in the industry, mentors, etc.
In other words, getting into YC will usually: enable you to raise venture capital from the best VC firms far more easily; it'll open doors that you previously likely could not open (especially for newer entrepreneurs); it'll help you with recruiting talented and experienced employees (critical to success); it's a halo, by getting accepted into it, you get to borrow reputation from what YC has built up.
In a year since YC we've more than tripled the team to more than 30 people now, of which again: most have kids. Ultimately for us, the network among other things has been the best part. I would definitely do it again.
That being said, my anecdotal opinion: A weak point for YC is enterprise. If you want additional customers, there are a few big YC companies, but not many. Even then, when we did it, we found some help and still got great advice.
If you sell to startups though, it's actually a great way to get customers.
Something that hasn't really been around long enough yet, but also potential is the new vertical accelerator. Our batch was a bit too early for it, but they are trying to solve real problems these companies h ave.
I think this misunderstands how most people learn -- people generally learn much more effectively by "active learning," aka actually trying to do the thing they are learning, and getting dynamic guidance alongside that active process, not canned lecture / video content.
1) I think the value of most universities (top universities) is the quality of the students they are able to attract. It turns out that becoming friends with smart and motivated people can be very very helpful. It also turns out that most skills in life are learned on the job - not in school. YC is very similar in this regard.
2) Being a participant in YC in '07 and 12 I can tell you that the value of YC increases as it gets bigger because there are more smart, motivated, and successful people to learn from and be motivated by. Also especially for b2b companies - there are a lot of potential customers - see Gusto.
3) YC has no incentive to increase in size if it can't maintain a high-quality program because top founders only want to participate in a program with other top founders. If we do something that convinces top founders to stay away - then we lose.
4) There is this strange assumption that YC had higher quality founders earlier in its life. I think that assumption is biased by the fact that it takes 10 years to build a successful company and so the breakout successes always look like they are from the distant past.
5) "a large influx of less highly-selected startups" - where is your data to back this up? There are significantly more applications to YC now than 10 years ago. The acceptance rate is significantly lower than it was before.
It says right in the post - YC's goal is mass production of startups via incubation.
If YC lives up to its potential, I suspect the startups that actually end up going through our accelerator will be just a small fraction of all the ones we've meaningfully helped out in one way or another.
But ycombinator itself in lots of ways turned out to be a credential network like an old school law firm. Even including early associates becoming promoted to partners, etc.
But the ycombinator application process itself at least still doesn't rely on much if any credentialism.
"When we were kids I used to annoy my sister by ordering her to do things I knew she was about to do anyway. As credentials are superseded by performance, a similar role is the best former gatekeepers can hope for. "
Maybe that is close to the role Y Combinator has ended up with as it expands. Getting a slice of startups that would be persuing the same thing with or without Y Combinator, in exchange for acting as a credential and signal to investors.
But there is a big peer-network component to it too, which is more similar to universities than to law firms. There are sort of semesters and the startups identify by "class year." Though that probably happens a bit a the bigger law firms too. Entering associates get a network out of it even if they don't go on to make partner and end up in government positions or positions at other firms.
While this sounds true to an extent, YC can provide more tailored feedback than a university generally does. Most of what one does in university is generic and can be learned through tutorials, but YC can provide custom feedback to a specific startup's situation. (And good educational programs will also focus on providing feedback on individual projects.)
Would love to be told I'm wrong if I'm misunderstanding the publication date...
Edit (based on comments): I agree that this accurately summarizes YC's principles as stated over the years. I was just mentioning/wondering whether this specific list was ever put in this form before. I absolutely think this is a good list of principles and it has guided YC, if not explicitly in this form all these years, certainly in spirit.
I think the other big allure for joining YC, aside from the promise of helping you grow, (at least for me) is that it's like a union for startup founders. Unlike other firms, YC won't screw you. In fact, they will fight for you if anyone else attempts to screw you over.
"Any industry that still has unions has potential energy that could be released by startups... industries afflicted by unions are sclerotic so have left lots undone."
(Graham is regularly quoted on HN without citation, especially in threads about his writing, which is how I classify this one.)
His comments about naughtiness / "what you can't say" / etc., for example, don't play particularly well right now between back-to-back Facebook advertising scandals, and Kalanick, and aren't in here. But he's talked about that as much as many of the things that are in here.
"In any competitive field, you can win big by seeing things that others daren't. And in every field there are probably heresies few dare utter. Within the US car industry there is a lot of hand-wringing now about declining market share. Yet the cause is so obvious that any observant outsider could explain it in a second: they make bad cars. And they have for so long that by now the US car brands are antibrands—something you'd buy a car despite, not because of. Cadillac stopped being the Cadillac of cars in about 1970. And yet I suspect no one dares say this. [11] Otherwise these companies would have tried to fix the problem."
I'm not interested in looking to Paul Graham for advice on how to handle general issues in society (and am usually disappointed by what he has to say about them), but I'm also not interested in pretending that YC has been unsuccessful because it's politically convenient to make him a villain.
My claim is that YC has many principles that led to its financial success, and not all of them are, or are really compatible with, other principles mentioned in this essay.
("Good" as used in this essay also shares a kind of empty essentialism with Google's "evil" - a focus on BEING good or not BEING evil, rather than the trickier question of how to DO good / avoid DOING evil - https://www.theatlantic.com/technology/archive/2013/10/what-...)
College campuses that were once bastions of free speech have become so hostile to hearing differing opinions that it's common for people to pull fire alarms or even wear masks and commit violence upon attendees. Canada and European countries have increasingly turned to punishing various stigmatized political speech. China has greatly tightened the screws in enforcement of speech in private chat groups and use of VPNs.
Even more chilling is that speech codes are now being enforced globally. Not long ago, a Swedish author whose books strongly criticized the CCP was kidnapped from Thailand and detained in China. On a grander scale, China punished the entire country of Norway both diplomatically and economically for 6 years for a rights activist being granted the Nobel Peace Prize.
Perhaps the most extreme issue is the attempt to enforce anti-blasphemy laws on a global scale. Artists, authors, clergy and even comedians are increasingly at risk of being murdered by jihadists, regardless of what country they live in. Compounding the problem, western academic institutions are coming under increasing pressure not to offend any powerful group. Rational criticism of religious doctrine is often mistaken as racism and criticism of non-western states is mistaken as imperialism.
In times like this, it's extremely valuable to have both a good sense of what is okay to say publicly and how far that may diverge from what is true. That's exactly what the essay was about.
Y Combinator's principles remind me of this:
"Ambition[1]. That can be a virtue when it drives us to excel. Resourcefulness[2], courage, perhaps not on the battlefield, but... there are many forms of courage. Devotion[3], to my family and to you."
[1] http://www.paulgraham.com/ambitious.html
[2] http://www.paulgraham.com/relres.html
[3] http://www.ycombinator.com/principles/
source: https://www.youtube.com/watch?v=C5j1wduFWl0 :p ;)
You started your comment with:
>Say what you will about YC
Which implies that there are negative (perhaps commonly known) things being said about YC. I'm not familiar with any and was simply asking what these might be/why you'd chose that phrasing?
I found this super vague. In what way will people be more productive at a startup than they would be at an established company? And why does that mean that startups are a good thing?
One way you could make this clearer is replacing the phrase "can be much more productive" with a more specific goal that's more obviously good. Will startup founders learn and grow more in a shorter period of time? Will they have a larger positive impact on the world than they will at an established company? And if so, why?
Also interesting that they goal doesn't include helping startups be more of a good thing.
To be clear, I generally believe that YC will help there be more good startups, but it is kind of weird phrasing.
"We must remember that we’re investors, not bosses. We can advise and persuade, but not command."
As I understand it, YC is pretty hands off. It's mostly an (usually amazing) advisor you come to with questions when you have them, plus alumni network, plus dinners/demo day. I don't think they can really make people be good instead of bad.
I think if anything, they simply won't fund people that they believe will not do good.
There have been some pretty visible counter-examples to that, fortunately not in the last two batches.
I'd wager most economists would say that productivity is the single most important thing to improve in general, though they'd be talking about the economy in general, and YC is interested in taking specific people and making them more productive. The same principle applies though - more stuff is done, and if someone is paying for it, it must in genearl be good.
(There are obviously exceptions to this - cheating/scamming/doing illegal things, etc).
If you're a highly educated yet junior cog at BigCo you will be decently to well paid but unproductive. Buddy of mine was a superstar at Cal and worked on HR software at Google. He's now a well thought of co-founder at a well thought of startup. He is more productive. His talents are put to better use. Buddy of my brother went to Moscow State (Stanford if you speak Russian). Fixed bugs at JavaSoft. Maintenance. Her talents were wasted.
BigCo can do big things which requires a large pool of talented folks. But for the individual that might be a waste of that talent.
I think that specifying a metric would dilute the message; replace it with whatever your goal is. Working at a startup may help you be more productive in achieving it simply because there are fewer people/processes to hinder you. Not everyone has the same goal, but being able to point to something useful and say "I did that" is meaningful to me.
"I get more done in a week here than I did in a month at [BigCo]"
^ That's a direct quote from someone who recently came to us from a large established company. They really liked seeing the noticeable impact of their personal contributions. I didn't ask them to compare the two work environments; they were just blown away by how much they could accomplish when they weren't being held back.
If you want to work at a small company because you feel like you'll have a greater impact, picking a startup is a great way to ensure you'll be dissatisfied with your job every couple years. Pick a genuine SMB instead.
YC has been involved in controversy regarding the political stance of its employees.
https://news.ycombinator.com/item?id=12726970
I'm not here to make a judgment about that situation (we've heard enough already), just to say that there are times when the vague "good person" principle has been disputed in the past.
Also, repeatedly, laundry services that fail to scale but shut down all local laundromats while they have the money to price below-cost.
I would again recommend this Atlantic article about how Silicon Valley interprets "goodness" in a "tautological and narcissistic" way - https://www.theatlantic.com/technology/archive/2013/10/what-...
(1) That marijuana or payday loans are immoral.
(2) Something that is _debateably_ bad should be avoided, even if you've resolved that debate to your satisfaction.
If you reject both of those (I do), then I'm not sure what the concern is.
More generally, if you want to establish yourself as a "good person" I think you need to make the argument when you fund the thing as to why your loans aren't predatory, or your pot isn't white people getting rich on the back of black lives, or your laundry service won't leave a community unable to wash their clothes. Part of "doing good" is working with people affected to establish your bona fides. YC doesn't attempt this; they are concerned with "being good" which, as the article covers, is a semantic game that lets you justify any behavior you want.
Sorry, I don't quite understand. Which of these is your view:
1. YC/Meadow is harming black people by connecting marijuana-buyers to doctors and dispensaries.
2. YC/Meadow are more responsible for the problems caused by the marijuana industry than the rest of us, simply because they interact with it more. You're not obligated to help all those people harmed in the marijuana industry, but YC/Meadow is.
If you hold the second view, I'm curious whether you'd find this article[0] on "the Copenhagen Interpretation of Ethics" convincing. Excerpt:
> The Copenhagen Interpretation of Ethics says that when you observe or interact with a problem in any way, you can be blamed for it. At the very least, you are to blame for not doing more. Even if you don’t make the problem worse, even if you make it slightly better, the ethical burden of the problem falls on you.
[0] https://blog.jaibot.com/the-copenhagen-interpretation-of-eth...
The way to begin showing what you stand for is to speak it, put it forth in writing and let everyone know, then start demonstrating it via actions. The world at large will check you and call you out if you don't live up to it.
It doesn't hurt to reaffirm your principles. Could have been motivated by someone reading "Principles - Ray Dalio"
The game, then becomes about staying alive as long as you can, by adding and creating value for others that lets you keep the doors open.
Either way, agreeing to put in more work than you may think it will take, is important, attitude has much to do with opportunity as luck and preparation.
As an organization centred on fostering creation of startups, YC can claim to making effort to adhere to startup mentality itself. However, as a 12-year old company that has greatly expanded over the years, YC itself isn't a startup and claiming otherwise seems a bit disingenuous.
Based on post date (Oct 2017), I assume this was just published (vs a repost from 2005).
While we may be 12 years old, we constantly experiment with new ideas, programs, and processes within YC to see whether or not we can get meaningfully better at what we do. That feels like a startup to me.
I homeschooled my sons. I talk to them a lot about such ideas. For example, we talk about how the subtext of a lot of games winds up being stereotypical corporate things like "I hate my boss" and "Life is a completely pointless pursuit of money." That tends to show through, no matter how hard they try to dress it up in wild fantasy settings.
You teach what you are. You can't really get away from that.
I just hope that long-term their strategy works. It has already scaled pretty well, but it feels like there will be a next big step for them soon. I'm just not sure what that will be.
That said, the total number of companies funded isn't that different. We're at ~1400 and according to the below, TS is at 1000: https://www.techstars.com/content/accelerators/growing-world....
After Brandon Eich was forced to resign at Mozilla when they found out he donated to a charity against same sex marriage, it should have clued us all into knowing that you have to look at other areas besides marketing, engineering, programming, math, science, etc and consider public relations as well.
One of my friends has a business and computer science degree which are two areas to learn to know how to handle this sort of stuff. He claims your target market customers are more than just the people who pay for your product and service but also those who are affected by it, or use it, or are affected by the use of it, as well as not polluting the environment, obeying all laws of the local, state, and federal government, society, culture, religions, GLBTQ people, minorities, diversity, etc. He claims if your startup is not doing these things it might fail or you might be forced to resign as Eich was.
Of course feel free to disagree with me as my electrical engineering professor told me "Ethics don't matter, do the job as best you can, and f* ethics."
Kudos: afaict, yc is a "good actor" in contrast to "bad actor" VCs that have received recent notoriety
yc does its part in putting out knowledge into the world re: how to build startups (cynically, this is to promote brand, PR)
yc funds non-profits
yc promotes diversity esp relative to its SV peers
Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone
yc is incredible for the 1% that get in, to the detriment (broadly) of the 99% that don't. they get a disproportionate amount of attention, capital and support
yc is a VC firm (+bootcamp), but with a vastly superior economic model, which is pretty incredible given how good VC economics are
the part about it not being about the money rings hollow. my guess is it's 90-95% about the money. YC partners have made hundreds of millions (in the future, YC will probably mint a few billionaires) of dollars. every batch, 7% of the equity of 100-150 "cream of the crop" startups goes to a handful of partners. if YC's primary goal was social impact, the batch would look a lot different -- not saying yc doesn't do good, but i think a typical VC is at least straightforward that their goal, and fiduciary responsibility is to make $. i think YC sugarcoats this for branding purposes when they de-emphasize this.
the narrative around SV has really taken a turn for the worse. income inequality is a real problem, and also getting worse. one could easily argue SV is exacerbating this, and YC is a factory of many of the startups causing this. the future is already here, it's just unevenly distributed
> Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone
Not true for me. I knew no one and certainly did not have PMF (revenue equaled $0 when we were accepted). I learned about YC because I saw someone on a plane reading TechCrunch which led to PG’s essays which led me to YC which led me to apply.
What I did have was deep industry knowledge and an awesome cofounder with whom I had built a progressional services business.
Pro Tip: if you want an edge on the YC application, keep your application short but dense enough that you teach the reader something. Straight from PG: VCs know a little about a lot, so if you can teach them something new, they’re intrigued.
edited: yc is elitist. with a few exceptions (you have PMF, second-time founder with exit under belt, obvious deep industry/technical knowledge), you have to know someone
in other words, there are a few types of founders (as listed above) that it's either a no-brainer, or a very good risk-reward/expected value proposition to fund under YC terms (ie. 2m pre-money). for everyone else, anecdotally, you have to know someone
also, i mean this respectfully, but one counterexample doesn't disprove my point. my belief is that we live in a world where connections matter, a lot (whether getting a job, into business school, VC funding, a coveted internship, etc), and that YC is no different. there are always exceptions, of course, but i'm saying this, as a generalization.
Traction, Prior Success, or evidence of subject matter expertise. Those sound like pretty good criteria to me. But, YC is actually looking for people who are “sufficiently determined”. Those three things are just evidence of determination.
As for the elitist case. I have no idea other than to say it seems false using a sample size of one (me) and a sample size of one batch (summer 2013).
let me try another way. let's say YC gets 20K applications. let's say 1K (using round numbers) fall into the above categories (PMF et al), and 19K do not.
of the 19k that do not, my guess is that of the ones (ie. the very, very lucky few of the 19K) that do actually get into YC, a high (statistically significant) proportion of those founders were very well connected. that's all i'm saying.
as for your last point, i think we can both agree that we're both just guessing, there's no real #s or transparency to prove or disprove, so maybe we can just agree to disagree.
edit: maybe "elitist" was the wrong word to use. OTOH, YC is widely considered the "harvard of accelerators". while that has many connotations, it would be silly to say that harvard and elitism are not associated
I don't think this is true at all. Me and my co-founder had zero connections (being from Denmark, as far from the Valley as you can get), no previous startup experience, only an early pre-prototype (just barely above idea stage) of our product and obviously zero revenue (so no PMF whatsoever). I would hope that it came across that we had deep technical knowledge, but really how much can you communicate that in a 10 min interview?
We got accepted, and we were far from the only ones in our batch like that, so it is clearly possible to get into YC just on the quality of your idea and how well you can communicate it.
i looked at your company. you and your cofounder had deep technical expertise in an area that was white-hot at the time (obviously not a perfect comp, but that was the year zynga ipo'ed on the strength of mobile gaming). so i am not surprised at all that you got into YC without any connections. im sure there are many deeply technical founders in "hot" areas such as AI, robotics, etc that are currently getting into YC without connections.
note: again, not a perfect comp, but they probably looked at you and thought that this has dropbox-like potential. also, perhaps you will disagree that the space was "white hot" based on your own personal experiences -- my rebuttal to this would be YC was probably ahead of the curve, as it usually is, as that space definitely became white hot if not around that time period, then shortly thereafter.
my point is that there are thousands of founders that apply every year to YC, who do not have PMF, prior exits, or obviously industry/technical knowledge in "hot" areas -- out of these folks, the ones that get in, i am guessing, had really good connections.
i honestly don't think i'm saying anything that outlandish. VCs don't even try to hide that you need to be connected with a "warm" intro to get their attention -- they make that publicly known. while there are always exceptions such as you and your cofounder, i don't think YC (which is for intents and purposes a VC with a better business model, a 3 month founder bootcamp, and afaict no LPs) is any different.
In that sense, I appreciate companies like Buffer, Uber/Lyft etc.
It's possible that it was written by committee, (i.e. everyone editing a Google doc), which often leads to this kind of writing.
Alternatively, maybe they just didn't want it to sound too much like PG's writing style.
Still, phrases like "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." don't exactly flow.
Nor does this:
"Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques to startup funding."
"Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques [and] startup funding."
Which was pretty much my point.
It's always interesting seeing how different people define 'startups'. Generally there seem to be two groups (though there are others) - the "designed to grow fast" group, and this group, where the definition is indistinguishable from "being a small business".
I applied to work for a bunch of YC startups about 4 years ago. What I was generally told was that they never heard of my college or the companies I worked for so I was a no go.
That doesn't seem to be fostering diversity, or making the world a better place, or completely separate from the type of bullshit practiced by big companies.
(I still like to lurk here because its a good tech news filter, but when YC posts self horn tooting posts its kind of irritating)
Exceptions are made, but in general, the poor need not apply. YC actively excludes poor people through socioeconomic discrimination.
YC truly is "the Harvard of accelerators" as their homepage proudly quoted.
Flutterwave, OMG Digital, Paystack, Platzi, etc.
Please do explain how they exclude poor people? The application fee is $0. You could from $0 in your pocket to $100,000+ for 3 months.
It's the country club crowd sprinkled with safe seeming outsiders that act as token representatives. It's not merit based but class (aka "culture") based.
It's a market opportunity for a fund that doesn't think of rich people as being better than poor people.
A lot more geniuses among the poor than the rich.
What's worse is they're incredibly thin skinned and lacking in introspection or humility. Typical rich people.