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Comment by pg | Hacker News Reader

This was an attempt to describe everything we do, so if there's anything I didn't cover, please let me know.

(Sorry it's so long. I was surprised myself how long it turned out, but we do a lot.)

Besides music labels, are there other industries you try to steer startups away from, either through not accepting them or through nudging them in other directions? I'm looking specifically at medical applications, but I imagine there are others too.

No others are quite as bad. We'd be dubious about startups building stuff for the government, for example, because there is such a horrible mismatch between startup culture and government culture. But we'd still fund a startup building stuff for the government if they weren't naive about what selling to the government would entail.

Thanks and agreed. I'm surprised I haven't seen many (any?) medical applications from YC companies given the margins available over consumer applications. Do you think it is the uncertainty of the FDA regulations or just a space that Silicon Valley doesn't tend to mine as frequently? Make something patients want is particularly alluring to me.

I would guess the reason is that such applications are foreign to most potential applicants.

Make something patients want is particularly alluring to me.

I am curious as to what you have in mind. (I tried to find an email address for you and couldn't. Sorry to junk up this thread. You can email me -- from one of the websites in my profile -- if you don't want to post it here.)

I added the email to my profile. Specifically I'm interested in analytics platforms to help patients manage their health stats. I'm working on something specific with a great team, but I think there are a lot of opportunities in this space. Let data determine health status, where possible.

I think it's mostly just not something typical YC applicants are interested... which is really weird, because health issues are going to be a huge concern in the western world for the next 50 years at least.

Part of it may be that you need medical connections to do the much of the work. We work directly with a ton of different doctors/hospitals (for a team of only ~15 devs), and still have issues with building the right things, 510k submissions, etc...

But yeah, medical applications are getting neglected by the startup community at the moment.

That's true, the health care industry is a massive opportunity waiting to be tapped. Not just in the western world, even in the developing world, where the incidence of insurance is increasing.

Many developing countries have had none or next to nothing health insurance till recently. But the market penetration of the healthy insurance is increasing (but still very low now). Because of that more people who could not afford advanced diagnosis or treatments earlier are able to afford them now.

Imagine the potential size of the industry when 1 billion people in India and 1.4 people in China (not to mention a billion or more in other developing countries) can afford as good health care as the 300 million in US, the 450 million in Europe, etc

Telemedicine, decision support and more favorable regulatory environment could be a VERY interesting mix for 2nd / 3rd world (and rural medicine domestically.)

I don't know of any successful medical startups that didn't have strong involvement (usually as founder) of an MD, usually with some experience and connections. Perhaps it's possible for a group of twentysomething techies who are complete medical-industry outsiders to produce a new disruptive product, but it's at least uncommon and makes things harder (especially to get regulatory approval and buy-in among physicians). And I'd guess the overlap between YC applicants and MDs with significant experience is quite small.

Many medical plays require large capital investment. Regulations, bizdev, and long sales cycles are all huge barriers to entry. Advertising to Doctors is incredibly expensive, and it is hard to monetize consumer applications that will scale (some people are trying their hand at medical compliance, but I haven't heard of a great business model yet.)

23andme is a great medical startup, but it is a capital-intensive business that has to spend time and money on Washington.

We (Epocrates) are working on an Electronic Health Record system as an additional product. Our core team is small, but we have the resources and brand of a midsize company. We have 40% of US physicians using our existing reference software and we are going to leverage our brand to provide a usable and moden system that increases the level of patient care and effectiveness of Doctors. We're a mixed RoR/Java/Mobile shop. We're currently hiring RoR developers, so please feel free to contact me if you are interested in this space and want to make a real impact on US healthcare.

I'm a software dev. for a medical device company and when I read pg's comment about the mismatch between startup culture and government culture, the first thought I had was "add medical to the list."

The medical device/software field is certainly interesting, exciting even at times, but it progresses at an absolutely glacial pace for the most part. You're dealing with slow, conservative institutions (hospitals, etc) and government agencies. Unless you hire people specifically to deal with those soul-crushing interactions, you'll probably want to shoot yourself.

I get the concern about inciting the wrath of music labels. However, can you elaborate on your comment in footnote 5? Is there an unofficial policy of avoiding music startups, or just an extra special sanity check? What if the startup pre-clears (or is in the process of clearing) licensed use of label catalogs before the program?

The copyright problems related to music labels are nothing compared to the legal shenanigans of the contracts between labels and groups. They are horrific. The closest analogies would be share cropping or indentured servitude, though at least there is an out if the band fails.

The way a lot of record labels work is that they will give a band a cash advance. The band uses that advance to pay for living expenses. They are also forced to use it for various costs such as studio time, recording, producing a music video, etc. The band earns a percentage of the gross revenue for album sales (say 7%), the label earns a larger percentage. The band pays back their advance using their share of the earnings. Stop me if it seems like there's something a bit off about this arrangement.

Sending a fledgling startup company to work amidst that hell is not a smart move. Even billionaire multi-platinum bands have trouble.

I agree it is tough to be a band in the era of digital music. I’ll have to respectfully disagree about whether or not our venture is foolhardy. We are early days, but the multiple discussions we’ve had with one major label have been respectful and encouraging.

It was long, but not too long, because it was thorough. I didn't realize you were doing so much. In a way the article is kind of like a long sales pitch for YC without all of the typical sales language hype. Which is nice.

Wow, this list really made me glad we applied for the next cycle.

One question though, what about startups from outside the US? Can you offer advice there visa-wise and such? I know it doesn't really matter for the three month period, but what about after that. It would really suck for a startup to do well on Demo Day, only to be unable to go to any meetings because they can't get back to the US for a few months (I think the wait period is another three months)

Visas are something I don't know much about. The rules seem to vary a lot from country to country. There is a mailing list of YC founders from other countries who exchange advice about the topic. And we've certainly funded startups from a lot of different countries. So if I were you I'd just apply, and if we fund you, you can ask the alumni for advice about immigration stuff.

Thanks, that doesn't sound too bad then.

We're a YC startup going through the visa process right now.

Once you raise enough to pay yourself market salary, the situation transitions from "impossible" to "annoying and long".

So focus on the product, then on funding and/or revenue: the rest will follow.

Doesn't it defeat the purpose of YC if you have to raise enough money to pay yourself market salary before you can enter the US to participate in YC?

Perhaps, but not necessarily; the YC project is about going big, ultimately -- after all, that's the only way YC is going to make some money.

It is possible to bootstrap a company in such a way as to plateau out at, say, 3 people, each of whom gets a decent market salary. However, that company may not have further room to climb for various structural and/or marketing reasons, lack of appropriate connections, funding opportunities, etc. In principle, the purpose of YC is to address that specific gap irrespectively of how much short-term revenue the startup may be generating.

On the other hand, I agree that the amount of funding they provide per se is not particularly useful if you are already generating enough revenue to pay yourself(ves) a market salary.

I wasn't so much thinking about the funding provided by YC; but rather that if you've reached a stage where you can raise enough funding to hire yourself into the US, the fact that YC provides connections to angels and VCs is probably not tremendously useful.

I assume for visa waiver countries those 12 weeks can be done in a 3-month visa-free visit, with the purpose of "seeking investment" or so. Otherwise you'd have missed the cycle after going through the "annoying and long" process of getting a visa.

I think you have the order of events wrong. The connections (and other value) YC provides help you get that funding which lets you hire yourself into the US.

As pbiggar points out above, there's no problem (at least for EU citizens) getting into the US for three months of YC - it's staying there long term that's hard.

I think you misunderstand. It's easy to get in to the US for 3 months, so getting to YC isn't hard. Then you raise, and raising helps you stay long-term.

Ah, that makes far more sense. Thanks!

Is it also easy to get into the US for 3 months, and work legally? What kind of visa (or visa-less thingy) would you use?

What do you mean by "work legally?"

If you mean do a program like YC, it's fine. The reason it works in this situation is because you aren't making any money. The INS does not care if you are "working" if you aren't actually making any taxable income.

If you mean draw a regular salary, it's harder to do that legally but I have a friend in France who runs a 1-man consulting firm that does short term contracts in the USA and he's figured it out. I don't think it was easy in terms of "no work" but it was just filling out a bunch of paperwork.

Thanks for enlightening me!

You are allowed into the US for business on the visa-waiver or the B1 visa (which is easy to get and is the default for non visa-waiver countries I think). But you can't _work_ there. It's a subtle distinction, and I suspect it relies on how the immigration official is feeling that day. Meetings, conferences, meeting investors, networking, etc, are all OK.

Doing the job you normally do isn't allowed, but it seems like it's pretty obvious that people do that.

I've heard about a startup that had to relocate to London after the YC 3 month phase and then wait a substantial time for the INS to work out their papers. That sounds like it could break a company?

I suspect that's the norm rather than the exception. And as such, it can be planned for. It'll certainly slow your expansion (hiring people is hard when you don't know where you'll be located N months from now) but it shouldn't break the company.

Yes, I was wondering about the YC process as being involved in a London start-up, the dream is obviously to take it to YC and the Valley.

Has anyone here on HN got into YC from London?

http://www.songkick.com/ are a london based yc company

Snaptalent, Heyzap, Raportive, Songkick + a couple of others were from london. I think guys from most of those companies are on HN.

>8000 words, but very much worth the read. Thanks for putting in the effort!

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