What's so special about Y Combinator? | Hacker News Reader

What's so special about Y Combinator?

martin.kleppmann.com

99 pointsmartinkl41 comments

I attended one of the earlier "Startup School" events a few years ago at Harvard. Unfortunately, things didn't work out for my startup concept (I ended up working for the government, of all things), but I found the meeting inspiring.

Here I was, a twenty something attending a free conference, sitting a few feet away from and talk to Steve Wozniak. A few minutes later, I'm in the middle of a fascinating conversation with Chris Sacca, only to head back into the lecture hall to listen to a really impressive series of speakers with alot of passion and great ideas.

Honestly, it was an amazing event, and pg managed to assemble a great group of really approachable and interesting folks on a Saturday afternoon. I found it inspiring, and while I'm not involved with them at all, it sounds like YCombinator is an institution that makes a meeting like that happen everyday.

If you're still around Boston, I started a similar event at MIT called Startup Bootcamp. http://startupbootcamp.mit.edu/

(Register at the bottom, and you'll hear about the next event this September.)

All of the past talks are on YouTube: http://www.youtube.com/startupbootcamp

The last one had some great speakers. Really enjoyed Bob Metcalfe's talk.

It's funny, I so frequently forget that Y Combinator is not just news.ycombinator.com. Even how I word that makes me chuckle as I realize how contrary to reality it is. For me YC is simply a content aggregator that with a remarkable accuracy and consistency delivers content that I'm interested in, that I find relevant. Oh, it also is some kind of investment firm on the side I guess, or something--whatever.

Ironically, it seems the core of YC--the essence that make it so valuable is the same from either Kleppmann's [an entrepreneur emphasis on YC] or my own[emphasis on news.yc] perspective. It comes down to the community of smart and intelligent people. More specifically to the openness and sharing of knowledge and idea's between those people. It seems like it could be all to easy to want to horde the secrets of one's experiences and success. To keep to themselves those secrets of wisdom to avoid competition and rivalry. Instead, we see sharing of the information--fine detailed analysis of mistakes and success to encourage and help others to achieve or avoid success and pitfalls. It's like there is a general good will intention for furthering and advancing the industry as a whole. I really like that.

It probably sounds wishy-washy and hard to quantify, but I really think the "goodness" of the people in YC -- both the partners and the vast majority of the founders they fund -- is a hugely undervalued advantage of the program.

A fixed point combinator (or fixpoint combinator[1] ) is a higher-order function that computes a fixed point of other functions. A fixed point of a function f is a value x such that f(x) = x. For example, 0 and 1 are fixed points of the function f(x) = x2, because 02 = 0 and 12 = 1. Whereas a fixed-point of a first-order function (a function on "simple" values such as integers) is a first-order value, a fixed point of a higher-order function f is another function p such that f(p) = p. A fixed point combinator, then, is a function g which produces such a fixed point p for any function f:

    p = g(f), f(p) = p

or, alternatively:

    f(g(f)) = g(f).

http://en.wikipedia.org/wiki/Fixed_point_combinator

Why did you choose the name "Y Combinator?"

The Y combinator is one of the coolest ideas in computer science. It's also a metaphor for what we do. It's a program that runs programs; we're a company that helps start companies.

http://ycombinator.com/faq.html

Thanks for sharing this, Martin. I agree. But let me play a devil advocate and ask you question. Take a look at the history of the biggest startup hits like Microsoft, Google, Facebook, etc. Do you really think that investor matters in these cases? Why?

Both Google and Facebook were funded by some pretty influential investors. Andy Bechtolsheim was one of Google's first investors and had co-founded Sun Microsystems over 10 years earlier. Peter Thiel founded PayPal and went on to fund Facebook. I'd venture to say that those companies had opportunities that might not have been present without those investors.

I'm not sure who Microsoft's first investors were, but consider this. "No startup can be the next Microsoft unless some other company is prepared to bend over at just the right moment and be the next IBM." - http://www.paulgraham.com/gh.html

And someone, I think maybe Marc Andreessen, said Google wouldn't have become Google without Altavista's management flying it into the side of a cliff at the right time.

"It seems to me the business guys who did the most for Google were the ones who obligingly flew Altavista into a hillside just as Google was getting started."

(http://paulgraham.com/bronze.html)

Now that I know more about the history of Google, I wouldn't phrase it so extremely, because it's unfair to Omid Kordestani and Salar Kamangar among others.

Oops, that was you too - thanks for the correction.

Investors didn't help Microsoft (because Microsoft didn't have any) but from what I've heard they did help Google and Facebook.

Microsoft did have one early venture capital investor: https://secure.wikimedia.org/wikipedia/en/wiki/David_Marquar.... They had VC investment since 1981, which was a full five years before they went public.

Here's some video on the subject: http://msstudios.wmod.llnwd.net/a2294/o21/presspass/BillG/Ma...

Yeah, I knew about August, but that sort of late stage investment is not what the thread was about.

"Starting in November 1980, David F. Marquardt of Technology Venture Investors had discussions with Microsoft regarding a plan to change the partnership into a corporation. This resulted in Microsoft becoming Microsoft, Inc., in June 1981. The ownership and percentage of shares was divided between the principals as follows: Bill Gates 53, Paul Allen 31, Steve Ballmer 8 and Vern Raburn 4. Then in September, Technology Venture Investors purchased 5 percent of the company for $1,000,000."

A history of the personal computer: the people and the technology By Roy A. Allan

http://books.google.com/books?id=FLabRYnGrOcC&lpg=RA1-PA...

At Startup School 2010, didn't Ron tell a story about helping young facebook set up a partnership/press event with Apple they couldn't snag on their own?

Sure they did, Paul. But were they vital? That's the question.

That's possibly a misleading question when you're talking about odds. Say you play a game with odds at 20% and something raises your odds to 25%. You win.

Was that thing vital?

You can be hugely successful without YC investment (or any investor). No one seriously thinks YC is necessary - nor do I understand why you'd think Martin thinks that.

However, the question is whether YC can help or not. Could the Google founders have benefited from YC? Could Zuckerberg? In retrospect it was unnecessary, but that couldn't have been known at the time. And I think the answer to that question is certainly yes. All the benefits Martin enumerates in his essay apply equally to people who become very successful.

From what I know, success of a startup is influenced by many, many different facets. If you read something like "Founders at Work", you see that many startups were on the brink of failure at some point before later becoming wildly successful.

In such cases, where the outcome is highly variable and very sensitive to the inputs, it's wise to have as many good cards as you can get. You can't just bet on one thing; every bit of support or advantage you can get could be the thing that makes the difference. (Sorry for the weird mixing of metaphors.)

Do you think you're at that caliber of innovation? If you're at that level, you don't even have to think about YC because your product is so compelling you don't need the help.

Wrong.

1) Innovation is the wrong word: Facebook, Google, and Microsoft weren't "innovative" ideas. Social networks, search, and software were all things that people were already doing. They were successful due to a multitude of factors including talent, ability to execute, and timing.

2) Those three examples aren't YC companies, but the two more recent ones, Facebook and Google, both had to raise VC, which means convincing people that their idea is worth investing in. At no point was it obvious.

The social network wasn't innovative - the clean, uneditable interface with a social graph was. The search engine wasn't innovative - the targetted ads was. The operating system wasn't innovative - the mass market and adoption of it was. These three companies were absolutely innovative, just not on the surface product you consume.

People are missing my point; it's ridiculous to say a blanket statement like "Google, Facebook and Microsoft did it without YC, what say you, entrepreneur!" when you're evaluating them when they are already billion-dollar companies. It's the same thing as someone trolling to say "I don't have to go to college cause Bill Gates didn't!" So when you're evaluating a company that is already successful, of course they won't need the help because their products are already so compelling.

Now if you say "that's not why you're getting down-voted...these products weren't born awesome, they could have used YC then" well then this argument is still flawed. Why didn't Facebook need something like YC? Well it was Feb 2004, before YC even existed. None of these companies HAD a YC to use, so it's not a comparison you can even make valid. Incubators didn't exist for MS, Google, Facebook, Apple, AOL, Netscape...

Of course these people needed to hustle. But they definitely sold themselves - Microsoft was bootstrapped, and Facebook had 100,000 members in 3 months until Peter Thiel caught wind of their efforts and approached THEM. Can everyone use the help? Of course. Facebook did it without YC and could do it again without YC. 99% of entrepreneurs are not in that situation.

This was actually covered in the article and exactly the advantage of YC: the vast network that could take your innovation to the next level and to the mass public. I don't think innovation itself guarantees any business success, it has to be combined with the right execution, especially marketing, PR, etc. One good example is Dropbox: there were numerous companies doing the similar thing as Dropbox, but Dropbox excelled. Granted the technology of Dropbox may be better at some fronts, but to me its critical advantage is that being a YC company, it could leverage a huge network, and became viral before everyone else.

As the entrance barriers for internet innovations become lower and lower, the competition to attract publicity and secure critical mass has become more intense. To me that is where YC offers the most value.

Martin, you hit on a key point that doesn't get enough attention:

"When we talk to YC, no matter whether we have good news or bad news, chances are that they’ve seen the situation before, and their pattern-matching will enable them to make good predictions."

YC created the accelerator model that many others are adapting/imitating. YC's experience with all kinds of situations gives it yet another advantage over its young competitors (alumni network and support being the top one IMO).

"Y Combinator takes 2–10% of your company’s equity. How do you figure out whether the value you get from YC is worth the cost?"

I am surprised the figure is that low. For the incredibly amount of contacts, experience and general help you get I was expecting atleast 20-30%.

YC could probably take 20-30%. I'm guessing most founders would still do it. But if you took out the top 5% of start-ups from YC, it would be a far less interesting company. So making it a no-brainer for founders is probably a good strategy.

I imagine that the 2-10% figure also helps YC keep its elite status.

Not as many founders would find YC worth applying to if they had to give at the minimum a fifth of the company's equity.

Reading articles like this makes it obvious that Y Combinator is a very special group of people (investors and starters). That being said, I'm always a little skeptical when one of many groups in a field is supposed to be superior in every single way. My question therefore would be what comes close and how close are they?

I'm still looking for more blog entries about the Y Combinator interview experience for my site: http://ycuniverse.com/interviewees.php

If anybody has links to such articles, please forward me the links.

[YC partners are] outspoken, honest, straight-to-the-point and totally bullshit-free.

You can...get encouragement from them in hard times.

I'm wondering if the first ever interferes with the second? E.g., if you worked hard on something and they tell you it's not good.

Honest criticism is encouraging, at least if you approach it with the right attitude. Sure, you might feel down for half an hour, but once you digest the criticism there are two possible responses:

1. "You have a point, I had a niggling feeling that my stuff wasn't good anyway, but now I have ideas on how to make it better."; or 2. "Thanks for your opinion, but you are wrong, and I'm going to prove it!"

Both are motivating outcomes of honest criticism.

Both are motivating outcomes of honest criticism.

I just pointed a few things out to a potential partner and a fellow entrepreneur. Namely, that he might have good ideas, but that he's not a programmer and it shows. Some matters of fact from our conversation:

    - Does not know enough to know what's hard and what's a solved problem
    - Does not have a colleague or advisor he can hash these things out with in
      close collaboration and learn from 
    - Wastes a lot of time with underlings who just tell him "well, if you can 
      draw it out, we can implement it" but don't try to communicate with him further

So I just up and told him those things. I told him he needs an equal who understands the implementation end, and that a good working relationship with such a person would save him lots of time, prevent costly mistakes, and result in unexpected synergies.

In a moment, I decided that I want to see how this fellow reacts to getting a little truth-tap to the head. Unfortunately, I was disappointed, as he immediately started to puff himself up as a defense mechanism.

Oh well, I guess I'll keep on looking.

Experiments often fail, no matter how hard you try. That doesn't mean there isn't anything encouraging left to say.

One thing that hasn't been mentioned -- the philosophical underpinnings of entrepreneurship surrounding the Y Combinator organization. This is actually a big material advantage, provided there's also execution.

What makes YCombinator special is draining away. I've been reading YCombinator since when most of YCombinator's submissions got 0 to 1 or 3 comments throughout its life on the front page.

The millions of reddit and digg users are spending more time on this site and I can see the influence literally increasing every month. By November 2011 the front page of YCombinator will look the same as digg looked back in 2006 and 2007. Ycombinator will have hundreds of thousands of voters, and the lulz will get more upvotes then sophisticated discussion.

The only way to stop it will be to forcefully regulate it, a system like they have over at stackoverflow seems to be working. If YCombinator doesn't implement something like this. Then YCombinator will have to find a new domain name, and only tell the constructive users what it is.

You realize that Martin's post was about the "real" YCombinator, not about the ancillary news.yc site?

news.yc could be completely overrun by 4chan types and YCombinator itself would still be massively valuable to founders.

It's frustrating to see comments being made about the quality of conversation by people who haven't read the article they're commenting on. The points mentioned refer to the program, not hacker news.

Alternatively, it's educating "millions" (hundreds or low thousands is more likely if you're just looking at people who comment) of people about technology, startups, entrepreneurship, while maintaining a community of reasonably high level intelligence.

If people would stop complaining all the time and just teach the newcomers (downvote and a reply explaining why this isn't the kind of behavior expected at HN) would be a lot more valuable than a bunch of "back in my day" complaining.

Haha. You made my day. Please click on the title. It has a link to the article.

Also, the article referred to Y-Combinator as to a tech incubator and not just a news aggregator. Let me know if you need help clicking on the title link ;)

Reply on news.ycombinator.com