Why you should not apply to YC | Hacker News Reader

Why you should not apply to YC

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455 pointsgeorgehill200 comments

This is a repost from the authors blog before the W24 deadline:

https://news.ycombinator.com/item?id=37869760

Thanks! Macroexpanded: Why you shouldn't join Y Combinator - https://news.ycombinator.com/item?id=37869760 - Oct 2023 (320 comments)

The fact that this was reposted only 6 months later makes this a dupe by HN's standard (see https://news.ycombinator.com/newsfaq.html). Normally we would mark it as such, which removes a thread from HN's front page.

I'm not going to do that, though, because the principle described here is more important: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....

"We moderate less, not more, when YC or a YC startup is the story" is the first rule of HN moderation. That does not mean we don't moderate at all—that would be too big a loophole. But we always moderate less than we otherwise would.

A related principle is that we trust readers to be smart enough to make up their own minds. Between this thread and the one I posted yesterday (https://news.ycombinator.com/item?id=40091622) I think HN commenters are doing a good job of that.

Edit: although it follows from the above, I should probably say explicitly that the [flagged] marker on the post is because of flags that came from users, not moderators.

It’s annoying he doesn’t even revise when he is clearly wrong, e.g. around the idea that YC doesn’t encourage pivots: https://news.ycombinator.com/item?id=37870099

I've always been sort of leery of the idea of pivots, because a pivot for a company really doesn't make a lot of sense to me unless it's more of a course correction, and/or heavily utilizes the company's built-up IP (eg Slack, the famous pivot from a gaming company to a productivity tool that they made for themselves).

What would make more sense for everyone is for the company "pivoting" to simply shut down, return the unused money to the investors, and reincorporate to do the new thing. That new thing would then go get investment for itself from investors who are more aligned with the new mission.

To me, pivot feels like YC saying: hey, we thought you were above the cut, that's why you're here. We know the low likelihood of an idea exploding, let's just get you focusing on other promising blocks as soon as we hit bedrock.

I'm assuming this isn't terribly uncommon, considering the hitrate and actual sunk cost.

I see the author's viewpoint from a milder formula: learn, earn, or quit. YC seems to be a perfectly fine place to learn a certain kind of methodology. It can be difficult to balance the value flow, especially when goodwill is involved, but there aren't many places that will give you half a mill and a chance at a dream.

YC has always said they invest in founders not their products.

I can see pivots being worthwhile for existing investors if the business needs more investment. If the pre-pivot is a worthless thing you own 7% of, it would be better to inject another bundle to own 14% for a new thing instead of starting afresh and owning 7% of nothing plus 7% of a new thing.

The thing is that usually pivots are pre-vesting for the founders, and usually the company has less in the bank when they initially raised. In those conditions, the entirety of the company's assets will be returned to the investors when the company dissolves.

It is a good point that it can get you a larger share of a success, though.

This comment in the thread is in disagreement with your point:

> As a former employer for a YC funded company that was shut down against the founder's wishes, forced to via the investor board; I can say that this article does not universally wrongly characterize the YC experience.

I have heard of YC doing pivots, so "dig a hole in the same spot until you reach the boiling magma" doesn't characterize it either. However, that doesn't make YC look good from the perspective of a founder wanting to be in control. What I remember hearing from YC is of cases where a partner tells you to pivot, not where they let the founders decide to pivot themselves.

Edit: I realized the main comment linked to jibes with what I was saying:

> The overwhelming feeling is: be humble in the face of reality, try something and try to try it in a way that you can assess whether it’s working — quickly/cheaply — then try something new.

...try something new that's recommended by the YC partner(s)

I am more positive than negative on YC though. There is no perfect balance between being too hands-on or too hands-off for a startup accelerator.

> What I remember hearing from YC is of cases where a partner tells you to pivot, not where they let the founders decide to pivot themselves.

Post-batch you can talk to your partners as often as you want or never again - they stay out of your way unless you explicitly reach out. They make this quite clear during the batch as well.

During the batch you do talk to your partners as part of the structure. They do give (really good!) advice, but you're always told it's your company. I can see them giving advice based on their experience on where you might want to dig instead, but I've never heard a founder being forced down a direction they didn't want to go. After all, why would that be the optimal path?

Surprisingly, the OP of this twitter thread is the same as the link above!

Yes, you noticed. Although I very much disagree with Daniel's post, it is always good to have two different perspectives.

Respect to Dang for not taking it down.

To me, this tweet seemed much more anti startup trying to grow big than anything anti-YC. Only using the tweet for marketing as mentioned at the bottom.

At first, it's against dedicating your life to your startup (which presumably you are already doing or at least want to do) and then states that YC actually has a good success rate for unicorns.

Then he talks about doing some brainstorming to find ideas and product market fit, but at least from my perspective YC doesn't advocate for this at all, but rather talking to customers, getting their buy in and then making something that solves customer problems. Aka, not brainstorming at all.

And then goes on to say that YC has lots of young people rather than older (more likely to be successful founders). But doesn't do any of the data diligence on percent of founders by age by industry and by YC vs. not.

And finally he focuses on saying that only the unicorns were success stories and no one else, while advocating that you should aim for a smaller goal. But doesn't acknowledge any data of companies from YC that aren't unicorns but are still operating, sold for less than a billion, etc.

I personally think that looking from the outside that YC is not for everyone and is geared towards the VC route. But if you want those things, then these arguments aren't valid for why you wouldn't apply.

This sort of became an anti-VC rant, definitely, and also a little unfair to the product YC offers. It's a legitimate product in the market, not a scam, and the 22-year-olds who do it are not getting duped.

My biggest issue with YC is that the deal isn't very good. Giving up 7-10% for $500k is pretty crappy for any company that has a decent shot at becoming anything good. That is why I have only ever applied to YC when my company ideas were very speculative. If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.

If you already have the ability to go talk to a VC and an idea/product/company that is good enough to make it into YC, you don't need YC for your company. If you can sell YC on investing in you, you can sell your product.

However, it does make sense to do YC right out of college to get the networking benefits and the credibility signal. That's why so many 22 year olds do it. It sacrifices your stake in your first company in exchange for helping you as an individual later in your career.

I did YC when I was 27 after trying to do a tiny bit of fundraising, and kinda agree with you, but I think you can replace "22 year old" in your comment with "anyone not super-well-networked in the startup scene".

The truth is, even if you have pedigree (top-tier college, worked at FAANG and startups), the very first time fundraising is going to be pretty hard and annoying unless you've already been going to a lot of founder meetups, want to start something in a hot field, or have VC's in your personal network. This is especially true after the money wave from pre-2022 receded.

I do feel like I probably could've raised on better terms, but I'm not sure it would've improved the trajectory of my life or expected value. YC taught me a lot about fundraising that I didn't know I didn't know. Compared to other VC's we've worked with (who have all been pretty great), YC has provided more specific advice to our stage, better technology, and a slightly better network.

ultimately, was YC worth it in retrospect?

For me, definitely! It helped us raise our first round of funding, without which we may have failed during the pandemic. I also learned a lot and found the online platform useful.

> If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.

But that's literally the point. You suddenly get a huge network that would help you get through the early stages.

It's certainly true that many founders would find better terms elsewhere. However, it's also true that most companies fail. So negotiating better terms usually doesn't matter nearly as much as making the company more successful. (The same rationale applies to employee equity grants)

Like you said, for people with no connections, whether just out of school or not, it's valuable.

Agreed. YC from my POV is attractive not for the money but the motivation. The peer influence (encouragement, competition, accountability) is what I feel would improve my chances of building something amazing.

But I can’t disagree with the Tweet’s argument that what’s good for YC (swinging for home runs) isn’t good for the vast majority of founders (but it is what those founders want, and why the lottery is a thing).

The biggest thing that sours me on YC is the exclusivity. They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different? As peter theil would say, competition is for losers.

You shouldn’t participate in games that are zero sum and they shouldn’t pretend they have some kind of carefully thought out scientific method to determine who should get in. Half the companies I see in the batch are dog shit. A third of the companies are “ideas only” which is basically now an Opaque beauty contest. Just opt out and boycott these stupid status games

My view to YC is more similar with yours than the OP’s actually.

The red flag I saw is: they basically encourage every one to apply, no matter the stages, areas, backgrounds, etc. Their PR seems saying everyone could have a chance as long as you dream big. But TBH I doubt it would the reality.

The lack of a thesis and target audience feels like more an exclusive club game. The selectiveness is part the product, leading to better chances to get following funding and talents. Ofc nothing wrong with it, but I think people should have a realistic view to it.

I have seen successful YC founders not get in with their next companies. There's a lot of competing applications. Getting in is not easy. But I don't believe it's a club. I have evidence that suggests the opposite.

People need to stop conjuring up evil YC processes just to reassure themselves about not applying. It's fine not to apply! But if you're rationalizing it, consider that maybe you really do want to, and are just scared of rejection? That's normal too.

> They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different?

How is Harvard artificial scarcity? How could YC do this any other way, when they have a limited number of staff and a quality bar to meet?

> Just opt out and boycott these stupid status games

Sorry - I'm struggling to follow. Do you think YC membership is a status game? I thought it was a real program.

Harvard could easily expand their student body. They haven't kept up with population growth. They could easily double or triple their size But it would reduce the prestige. Plus they're sitting on 50bn endowment. In general people look at admittance rate as a proxy for worth. Doubling the size means doubling the acceptance rate. The one thing many people know about harvard is that it's hard to get into, and by design. InI'm imagine yc is similar.

I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.

> I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.

That just depends on how you define "meaningfully evaluate". That definition makes it feasible or not, I think. Companies perform some level of evaluation at scale on hiring, and it's not perfect, but it's not bad, I think.

It doesn't matter. YC isn't some not for profit BS. They're not handing out free money. If its a beauty contest, it's because they think the start ups are beautiful.

Expect them to take a half a million dollar bet on you based on their own metrics; as scientific or gut as they allow. Just because you think they're dog shit doesn't mean they are. And some partner at YC saw something in them and _that's_ what matters, no?

There are a lot of ideas (virtually all of them) for which I’d give up 2-3% for $0 to go through the YC process and network even if I intended to bootstrap or think of the $500K as getting them the “other” 5% (or an ~$10M valuation).

Then go for it. I don't know if you've ever applied for YC, but it sounds like fun. I regret not doing it right out of college.

There are few people I think are as consistently wrong as Daniel Vassallo. His writings on cloud are an exercise in fanaticism, and it looks like he’s turned that failed venture into yet another course.

People selling you courses and community are mostly grifters.

The content here has nothing to do with YC in particular, and makes a few interesting claims:

1. YC founders are all young, impressionable 20yos

2. YC encourages you to make up problems to solve

3. That an exit less than a billion dollars is a failure

All of which are easily dismissed by watching actual content from YC.

4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome

Honestly what an opportunity!

"1. YC founders are all young, impressionable 20yos"

Exactly the demographic he's targeting with his "courses". Easier prey for his engagement farming.

5. Saying YC doesn’t encourage businesses to pivot or explore until they find product market fit.

Yeah this one got me. I have nothing to do with YC but I was hired to consult to a couple of really nice young guys who were YC alumni. They worked their asses off doing All The Right Things - talking to customers, reaching out to people with deep experience :) - and when they realised it wasn’t going to work out, they pivoted right away.

This is the exact opposite of digging in one place for the rest of your life, and as someone who has done a few startups, I was super impressed by their attitude and their ability to let go (even though I was out of a gig!)

I think they’re going to do great whatever they do, and at least some of that will be because of what they learned at YC.

>4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome

Slight logical problem, or unclear or poor wording here:

A chance is quite different from an outcome.

The first is in the future (chance), while the second is in the past (outcome).

A (1.25% or other) chance means something may happen.

An outcome means something did happen.

Also, a 1.25% chance in the past does not in the least imply the same chance in the future. See stock trading, for example.

To make it more clear, you were talking as though a chance is actually an outcome.

>4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome

Has YC published age demographics for batches somewhere I’ve missed? They’ve talked a bit about it, but I haven’t seen hard numbers.

Helpful comment

> People selling you courses and community are mostly grifters

"Mostly". It could be argued that that is the purpose of HN

I do not know, but I am glad of it

And I'm not buying

(Absolutely not complaining)

Spot on, what a fucking grifter. A shame to this community.

OP has a history of railing against YC, largely for engagement's sake:

https://twitter.com/search?q=from%3Advassallo%20YC&src=typed...

(I have never applied to YC — my closest affiliation is that I reviewed YC applications for prospective applicants while at Stripe — but I do find engagement farming really annoying.)

I personally also strictly disagree with their feedback: "try many small things, experiment, tinker, and build a portfolio of multiple income streams".

This is very much the indie-hacker route, but honestly, if you have one thing that's working out, it's usually better financially (though maybe less fun if you like purely doing engineering/product work) to try to grow it than to build a portfolio.

As someone who went through YC, but started out more on the indie-hacker side, I want to mention that going through YC in particular does not close the door to just continuing to build a successful, growing business without raising one round after the other.

I think some indie-hacker influencers encourage this kind of us vs. them thinking about VC's, and the truth is somewhere in between.

I know of many businesses who have decided (either by choice or through a lack of fundraising options) that the ideal way to grow and scale their business after YC is to not fundraise. It's something that YC partners explicitly acknowledge. They understand that an alive business can continue to grow, whereas a dead business is just dead.

Exactly this. And the irony is that he himself follows the very same standard playbook: play around, do several "small bets" and then go all in on the most successful one. But he sells you the idea that you need to be your own VC and have multiple income streams.

His other projects are mostly dead by now and my bet is that he won’t have another one ever. He’ll probably save a lot of money from his course, put it in an ETF and call it "see I diversified my income" lol.

i don’t think you understand his point at all. tinker until you find that thing. maybe keep tinkering after. a single source of income is very fragile.

I had followed him for years and recently stopped (and even blocked) because he’s become a prolific engagement farmer. Given how pointed his takes have become, there is little chance he’s changed in so little time to become this opinionated. I doubt he believes much of what he writes about. When all you do is sell courses, no publicity is bad publicity. It’s all a numbers game and he knows it.

If this is what you think, good riddance. I think carefully about what I write publicly, and stand by what I say.

I’m curious if that analogy actually makes sense. Why would you pay people to dig their entire lives in one spot? Why wouldn’t you just do the more efficient way and have founders mine their own 100 yard fields?

I agree the incentives of VC want are to swing for the fences and they get the benefit of diversification. I just don’t think the analogy works…

What is engagement farming?

Two common implementations of engagement farming are a) very contrarian/misinformed opinions to bait people to respond negatively and b) simple Q&A prompts like "What opinion about AI would get people mad at you?" which encourage people to respond. The organic discussion (positive or negative) is generally favored algorithmically so it gets boosted, and in the case of Twitter, there is a monetary incentive to do so, as Twitter Blue accounts can earn revenue from tweet views.

The tweet author performed the former very recently and caused a news cycle by complaining about MKBHD's Humane Pin review with a bizarre take: https://daringfireball.net/linked/2024/04/16/vassallo

fancy clickbait

It used to be called "trolling," before trolling was redefined to "publicly disagreeing with important people." It's maximizing the ratio between the characters you type and the characters typed in response to you.

Is an ideal response one so thoroughly perfect that nobody has anything to say after it? Or is leaving some room for continuation good until it's excessively so?

The problem is being more concerned with the response than with what one is typing.

For example, your comment

So you're more connected to YC than 99% of the people commenting in here, I don't think that your viewpoint can be seen as objective.

To be clear, I reviewed applications _on behalf of Stripe Atlas customers applying to YC_, not on behalf of YC. (I have never chatted with anyone in YC, besides presumably on Hacker News.)

he does it on pretty much any topic he can get engagement with actually. a repulsive human being in person.

Daniel? He’s been a friend of mine in person for over a decade. I knew him long before his exit from tech into working for himself. He’s a wonderful human being, a kind and gentle man who enjoys mentoring people and being with his children.

He’s also building his business I assume, which I guess entails a certain amount of salesmanship and playing the game if your business is in the orbit of social media. I’m always surprised by the personal hot takes

More like personal dumb takes.

I admired him in his early days too. Yet lately he really stands out as a fucking idiot in my twitter timeline every once in a while to the point of having to block him.

A full-grown adult man just chasing clout, what a fucking clown.

Agreed. I used to go on Twitter almost exclusively for his content. Now I have him blocked. What an embarrassing fall from grace all in search of the next like and follower. Addiction to engagement claims another one. Society is materially worse off converting talented workers into social media course selling charlatans.

So what do you suggest, suppressing or censoring dissenting voices?

Your comment also doesn't add anything to the conversation, does it?

There may be a pertinent ulterior motive to the tweet thread, which is relevant to the discussion.

Shocking how a person who's deeply thought through something and has developed a strong stance against something may also have created a solution to help fill in the gap where VC industrial complex may be beneficial, e.g. networking and education.

I'd argue it's more of a service for them to engage than them cowering away afraid of certain judgement.

Arguably 400+ other people who upvoted the post agree; even though it's been flagged.

Hahah he's like "YC is a big scam" but when you keep scrolling...

> I charge you a one-time payment of $375, and you get access to my community

It basically invalidates the entire post. Maybe some good points were made about investing in general but they should be delivered by someone who doesn't run an Andrew Tate style self-help scheme, and shouldn't be advertised in the very post criticizing YC of being inauthentic.

YC is infinitely more prestigious and well-connected than this guy's $375 program - and how dare he talk about YC coming after my "personal economy" when he's charging $375 for "access to a community". Last I checked HN is free and I bet there's a lot more valuable info here than that self-help nightmare forum.

Furthermore, we know YC is exclusive. But the fact that YC is so Ivy League and startup focused is also why HN is not just a random subreddit, or some Twitter hatefluencer pyramid scheme.

HN is free because it’s a top of funnel for YC. They’re not doing out of the goodness of their hearts.

Haha my thoughts exactly.

Overall I doubt his characterization. It's an okay model but I think the way that YC probably actually works is more like: a network of secret back-channelers with inside info and connections, read a bunch of crazy old treasure maps, pay off landowners, form search cliques, hire people with good shovel-arms, develop tunneling methodologies, and end up swiss cheesing the entire field until the subsurface is a honeycomb of search paths, and maybe they come away with some gold, after agreeing beforehand how it would be divided if it were found.

YC is more like ants, but he makes it sound like robots.

But even that doesn't really cover it, as the whole idea of a zero-sum game where you are searching for something that already exists is broken and wrong. It's false. What you're actually doing (YC be damned, in anything!) is creating something new! You're not finding the gold that's there, you're making it. Out of nothing. And then profiting from it!!! :)

Well said, you've inspired me this morning, and for that I thank you.

I owe you a $375 beer or coffee.

Sounds fancy! :)

In case you’re serious I’ll add a Stripe link later! :)

https://buy.stripe.com/dR6cNY31v8eL9Y4bKe

I think this “tweet” is totally unbalanced. And I think he misses some of the significant downsides.

He is moaning about Venture Capital, not YC. You can use the YC money and bootstrap. Although obviously YC is pushing the Venture Capital drug and will filter for Venture Capital seeking founders/opportunities.

My experience of an incubator showed me that incubators disable founders. Incubators put back into school where the teachers tell you they know everything. Many mentor relationships are dangerous too. It damages your psyche and is hard to escape the desire to get the best advice/mentoring. Learning to be a founder is all about making your own good and bad decision. The right attitude is hard to maintain, and hopefully YC builds it (no idea if it does). Get advice but learn how to ignore most of it (even geniuses get most things wrong).

7% for $500k is a great deal if you use it carefully: use the network and experience to your advantage and you should get more than an extra 7% growth. Take care that other flashier startups don’t steal your star employees.

YC gets preferential shares, but founders get common shares: so alignment is wrong. YC has the financial incentive to team up with Venture Capitalists against founders. Not saying they do, but it is a bad signal that YC gives.

You need to watch YCs behaviour with the few winners to learn the outcomes for YC versus founders - on average only the few winners matter financially. The final results for the reddit.com IPO are really weird given reddit was in the first YC batch: https://archive.is/https://www.businessinsider.com/who-got-r... (Sam Altman had 9% ownership).

Finally, PG has written multiple essays about how startups need to shoot for the moon. I have seen zero information come out from YC about median returns for founders, or an analysis of the $ earned against the time invested for the vast majority of founders (the ones that do not successfully start unicorns). Some light on this subject from YC would be welcome. Too much of the external YC writing is clearly self-serving while saying they help founders (the whole VC industry is like this though).

I am in New Zealand so I have little experience with YC (watched one guy from here accept and flame out - but I had a bad signal about him anyway).

> YC will proudly tell you that you are more likely to end up with a billion dollar business if you join them. That may be true. What they’re more reluctant to tell you is that only about 50 companies met that expectation out of the 4,000 or so that went through their program. That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot! See the problem now?

No. Those are frankly astonishing odds, and success exists on a spectrum between the extrema of abject failure and a billion-dollar business. Framing outcomes as one of two, mutually exclusive states feels disingenuous. (Also, minor nit: that's not how probability works.)

I'm ignorant of the startup space, so the author's conclusions might be generally accurate. I don't know. But the piece sets off red flags for me, so I'm distrustful of it. Kudos for introducing me to the concept of ergodicity, though!

Being nominally a billion dollar VC backed company isn’t success until you’ve got a 7 figure exit, it’s just a number someone made up.

So sure, you can have a “successful” exist without becoming a unicorn, but that doesn’t mean the odds end up very good or you wouldn’t have been better off financially working for Google.

Pretty sure 7 figures would be a massive failure in that case

Founder’s don’t keep a high percentage of the company through multiple rounds of funding, employee stock options and YC prefers multiple founders.

Zuckerberg had 28% of Facebook at IPO but the other 4 founders had far less of a stake. Sub 10% of 1 billion is 7 figures.

> Sub 10% of 1 billion is 7 figures

8 figures, not 7

I meant sub 10% of 28%, which is what the other FB founders got but you’re right that could be low 8 figures even after taxes.

Except you also take a pay cut for several of those years so your benefit from a billion dollar IPO over non startup really can be 6 figures if you’re not the CEO.

* can be 7 figures if you’re not the CEO.

Though obviously if the unicorn is worth 20B things look vastly better even with a 2% stake.

Surely someone must have the statistic on how many YC companies had an exit/are still running, right? I bet it beats the industry average by a long shot.

It varies by cohort and age of companies. But the 10 year average is:

- 58% alive

- 8% acquired

- 34% dead

Also consider that out of those 4000 startups many are not unicorns yet. The long term percentage might be closer to 2.5%. And the latest batches have many AI startups which I suspect will have an ever greater unicorn success rate.

> And the latest batches have many AI startups which I suspect will have an ever greater unicorn success rate.

I am resolutely of the opposite opinion

In two decades AI will be incredible business

It will be clusterfucks and graveyards in the meantime

I am very moved by the dot com comparison

One or two huge successes, and bleached bones and "WTF were you thinking" spread thickly

>AI startups

Which are all thin wrappers around OpenAI. None of those will be unicorns.

This is the same guy who went viral criticizing MKBHD last week right? Here is a good information on what is happening: https://news.ycombinator.com/item?id=40060554 from that discussion.

There is incentive to take a public view that is anti current (or trend or popular or right) thing to do that makes you go viral.

Part of being an interesting contrarian is that you have to actually be right about stuff. Simply espousing the opposing view to the popular view is going to be wrong more often than not.

I came here to point this out.

I'm automatically skeptical when this came from the author of one of the dumbest tweets I've ever read.

Pointing this out seems to popular in comments, and doesn't seem to add anything to the conversation.

I disagree with OP. Treat YC as a school where you learn and network. It is not a zero-sum game. If you made it big, you've hit the jackpot. If not, you still gained valuable experience and skills applicable to the industry and other areas of life. It's like going to a college. If you didn't find a job right out of college, it doesn't mean you've wasted four years of your life.

The expected value of doing a startup is very high when your career is just starting. You are well-educated with very marketable skills. You don't have people depending on you. If you are building something and picking up transferable skills, all while being surrounded by the most driven people (and paid), I don't see why someone wouldn't try their luck with YC (or any other startup incubators).

So I bit on this guys ad. First red flag? Using GumRoad. Which is basically course grift central. Immediately you have the option to buy other courses from his recommendations (with a coupon of course!)

What a joke. He has only made 16 videos out of the hundreds listed in the "Course".

It's hilarious how EVERYONE is trying to sell courses, and none of them are good.

> It's hilarious how EVERYONE is trying to sell courses, and none of them are good.

This is, unfortunately, a real business for many..

Creator Courses: Selling Dreams as Products: https://youtu.be/ZmixszMNFgM

The Rise of Fake Gurus: https://youtu.be/L9Gpr7PEnbs

Let me give the other side of this because I used to believe this too

I'll start with the most important first

1. When you take YC money you get to pay yourself. You wont be paying yourself FAANG money (if that's still achievable nowadays who knows) but you are paying yourself to build a company you own the majority of. So yes, they want you to dig to the center of the earth to find gold but you are being paid to do so.

2. I don't think starting a niche startup is meaningfully easier than starting a startup seeking uber growth. While a tech startup might require more up front knowledge I don't think startup ceos are working harder than the baker that's waking up at 4 am every day.

3. YC has a very good success rate and I think it's related to services they provide founders and the network.

I think if your business falls into the category of hyperscale startup and you are a first time founder I really think YC is worth it. They seem to have a system that works.

I concur that the system works.

The point of the article is who does it work for?

Personally, I agree with you. If you're just coming out of college this is a great way to get a couple years of salary and a chance to work on whatever you like. Give it a few years, if it doesn't work out it hasn't really cost anymore than a post-grad course in terms of time.

Basically you can view the whole program as a simple "job" with pay, with a 1% chance of going big. That's probably worth taking a punt on.

99% will fail, so frankly I wouldn't spend more than 5 years on this path, but if you're young you can afford that time.

Honestly this approach seems a lot more attractive than putting up my own life savings to start a business. Or working without income for a year or whatever.

And a startup doesn't need to make 1 billion per year to be a success. How about one that makes 100 million? or even 10 million? If the company is sold, the founders will be rich (not ultra rich, but have a million or more).

And, for ycombinator, the number of "startup exits" is: 351 (according to this page: https://explodingtopics.com/blog/startup-stats). Am no expert at startups, but this may mean that out of the 4000 that when through ycombinator, ~9% where valuable enough for investors to take profit. That sound pretty good to me.

> or even 10 million > the founders will be rich

A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.

Ah, I see. And actually, I do know a little about startups (even though I said I'm no expert), and thought that most founders who sell their businesses for something like 10 million can make a comfortable amount of cash. But didn't realize that if they use VC's, the VC's can take so much!

So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money? (Talking about the minimum needed to make a million for a couple of founders).

I guess the break-even line is exiting for more than you raised. If you raise 20 mil, and sold for 20 that's different to raising 5 and selling for 10.

Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round.

Until you can't raise anymore, at which point the exit is likely underwater.

But you got paid a salary along the way, so thats not to be ignored.

Often founders don't get to choose when to sell. e.g.:

  Investors usually get vetos over certain big decisions, like selling the company, regardless of how many board seats they have.

And investors can force-feed money that founders don't want for a variety of reasons. Read articles by: https://siliconhillslawyer.com

Ah, can see that investors can force the company to shoot for the moon, instead of just trying to right-size the business and sell it. Very interesting!

Yeah: VC incentives do not match with founders incentives - share classes are just one obvious signal of that. Good article on that conflict: https://siliconhillslawyer.com/2019/02/18/relationships-and-...

> ~9% where valuable enough for investors to take profit

Or aquihired.

Best analysis I have seen of YC: https://jaredheyman.medium.com/on-the-life-and-death-of-y-co...

Disappointingly YC hasn't provided any good analysis for founders or employees.

YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align).

I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options.

Finding good information is difficult and YC don't help.

Good to know, thanks for the info!

I imagine it's not much fun with YC on you constantly telling you to make more, scale, or pivot to you make our investment worth it. I find the clients that pay the least demand the most

agreed:) But on the flip side, as long as the startup is sold in the end and you as the founder make a good amount of money (meaning over a few hundred of thousands), think it's probably worth it

I hope, perhaps against mainstream opinion, that the myopic focus on the young will be proven flawed.

I see the launches and highlights YC posts on LinkedIn and elsewhere and see no one like me, yet am confident I would both benefit from it and be more likely to build something amazing than the majority (that being a particularly uninformed opinion, since I know only a few personally).

yes, you are correctly taking alternatives into consideration here.

while the author is Tru about the reasoning they fail to elaborate on the alternative.

take a job with youghly the same pay as working in your own startup? that would seem terrible.

obviously, if you have opportunity with a much higher expected pay, then that should be the go to opportunity.

Taking a job is indeed an alternative. You pay yourself, but you get little control on what you work on (apart from choosing which company to work for). However, you can usually leave easily with a 2 week notice without many downsides.

Getting accepted into YC is quite similar to getting a job. You get paid (less), but you get more control on what you work on. Even though technically you have full control, you don't really do that for moral and ethical reasons. You will want to do things that have a chance of paying off big time, because that's why your investors trusted you with their money. And if you get fed up, it's not as easy to leave. What about your investors? What about your reputation? Will you want to let these people down? Etc.

It feels to me like YC's name-drop doesn't have a purpose beyond just attention/view grabbing, despite there being a few nuggets of solid reasoning sprinkled throughout the post.

> That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot!

This isn't the least bit unique to YC, it's just the cold reality of any high-growth startup.

If OP had framed this as "Moonshot Startup vs Lifestyle Business" it would have felt more like a good faith argument. Even "Do you have the risk tolerance to be a founder" would have worked. But basing a thread titled "Why you shouldn't apply to YC" off an illformed assumption of the readers risk tolerance is naive at best (and likely malicious given OP is selling competing services).

Also that sentence on "you need to go through YC three times in your lifetime, so you need 26 lifetimes" is absurd. I got a migraine trying to understand his line of reasoning.

The reasoning is a bit reductive, it makes sense if you think of success as binary (you become a billionaire or you don’t, which in fairness is what yc and many VC firms push).

Obviously you can fail to become a billionaire and make some non life changing amount of money and even make what to a lot of people is life changing, but for this outcome (which is still uncommon) you would be better off not trying to become a billionaire.

Whatever else, it is to YC’s credit that they don’t censor criticism of themselves on their own platform.

Just because you see some doesn’t mean they don’t.

And don't mention a dislike for "that one thing" too many times.

I don't know what one thing you're referring to, but a core principle of HN is to avoid repetition, and especially the repetition+indignation combo, which is the commonest and most tedious thing on the internet. So to me it sounds like you're referring to HN working as intended, regardless of what the thing is.

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

Oh certainly, and the way you have designed it is doing what you want - it seems to work for you - along with causing unmeasurable externalized consequences, but to each their own.

Repetition doesn't bother me personally, especially when understanding that what's repetition for one may be novel for another. I can understand you being in your position of having to scour HN reports - and that you'll likely see a far higher percentage of content and comments than most, etc, and that it could certainly take a toll and easily become annoying.

Now there are two phrases I'm curious to know what you mean by!

"that one thing" and "unmeasurable externalized consequences"

I have lots of thoughts written in draft notes, hopefully someday in the next few years it'll be worthwhile to compile it all and polish into a blog post; part of it has been studying behaviour associated with how various platforms similar mechanisms vary - HN vs. Reddit vs. Facebook vs. etc.

Nah, they don’t get points for not censoring criticism of themselves. It would just be negative points if they did.

No doubt but I additionally see it as a pretty American cultural trait as well.

The post just got flagged and taken down from public view.

That's because the community in the end rejected it overwhelmingly, as anyone who reads the comments in this thread will understand. Admins did nothing, other than refrain from intervening.

Normally a post of this sort would never stay on HN's front page. In the end it spent 4 hours on the front page. That's because we suspended our usual quality control, as I explained at https://news.ycombinator.com/item?id=40100680.

dredmorbius's sibling comment already made the point, but I wanted to add more in the hope that no one ends up with the wrong idea.

By HN members, not moderators:

<https://news.ycombinator.com/item?id=40100680>

"There's no such thing as bad publicity."

Hmm, I think this criticism maybe has a kernel of truth, but

- I think the "ergodicity" concept is kind of being abused. As I understand the term, ergodicity describes systems whose dynamics cause them to eventually visit all states in a way that lines up with some probability distribution. In MCMC one uses this to argue that a chain that runs long enough can be used to generate samples from a distribution.

- But the response to his actual concern I think should be something more like income pooling. E.g. my understanding was there was some movement towards this for minor league baseball players, who have a modest chance of really large incomes. I think poker players also make similar arrangements. But critically, pools make sense when all the participants in each pool have pretty equivalent odds of making getting a large payout. With very early founders of course smart, reasonable people could have wildly different ideas of who is in equivalent tiers.

  - You could try to ask a bunch of informed investors to rate or rank, and hope that average estimates are good -- but if those investors don't also have the opportunity to invest in a way commensurate with their ratings, they have no incentive to be accurate.

https://www.npr.org/2019/10/25/773532516/some-baseball-playe...

> One of the bad learnings you get from YC is that there’s a formula for success, and it looks like this: First you do some brainstorming.

This isn’t how YC works at all…

If this guy had gone through YC, maybe he wouldn’t be trying to sell an online course.

Yeah this thing is rife with “I have no clue what YC actually advocates”

We applied to YC and were rejected, which was probably good for us (less dilution, etc.). That said, you get some pretty unfair advantages being a YC company.

My cofounder has 20 years in the industry and I have a solid tech background with a track record of success. We had leads at the time; a demo product, etc. We raised without YC and have been doing well.

One of competitors (little experience, no product, no customer leads) got into YC. Immediately they were considered credible. They are getting effectively the same interest with nothing and that’s what YC offers. They are good at branding and offer you their brand, advice and network. All of which is well worth the cost if you have nothing to start with.

Now ultimately the best product will win and I’m confident in ours. That said, for someone starting out with little network or connections it’s worth YC.

> Now ultimately the best product will win and I’m confident in ours.

That's unfortunately not true. The better funded company has an advantage because they can get ahead in GTM. The further ahead they get, the harder it will be to catch up. If you find yourself in this situation and they offer you a merger, strongly consider it.

I think all the disagreement is just a matter of demographics. If you are 22 and time is on your side, go nuts. The intangible benefits of YC (networking, etc) have time to pay off. It’s not like you would have been making insane money at BigCorp anyway that early in your career. You can afford some income instability. No real downside, just be realistic about your chances of a huge exit/unicorn status.

But for “everyone else”, it makes zero sense. You have kids? You’re mid/late career? Forget about YC/VC funding. Much better ways to spend your time and effort.

What are those better ways to spend time and effort?

It depends on your goals, but this is David’s core point. If your goal is an independent income stream or building a business, at many (most?) life stages, shooting for the moon is not practical - too risky to put all your eggs in one basket. Too many ways to fail and waste years. You’re better off diversifying your bets, not dissimilar to VCs themselves. Try small ideas and scale them up if they work/seem promising.

And of course if your goal is just building wealth and having security, maybe working for a BigCorp is indeed the better choice of time/effort. You can make a lot of money in FAANG and get a dynamite family healthcare plan + retirement contributions to boot.

From the man who said MKBHD was irresponsibly criticizing a “nascent” tech project that has hundreds of millions in funding and built a dud

I said MKBHD was irresponsible for using a highly sensational headline (worst product ever reviewed) when he has such as large influence. I never said what you're implying.

Sometimes the truth is sensational. I hope you know you lost at least one long time follower after your recent stretch of engagement farming. You’ve fallen off. Good time to lay off the tweets and look inward.

I gained hundreds of better followers. The engagement farming is in your imagination.

Better followers are those that will buy what you peddle, right? You’re a sell out. At least at Amazon you created real value.

Please explain how someone whose job is to share their opinion is being irresponsible for sharing their opinion.

You’re going to need to substantiate “irresponsible” a lot more than “he said an opinion that he actually factually holds to a lot of people”.

Who was harmed? What was the source of that harm? What was the moral or ethical failing that caused the harm?

I think you have cause and effect mixed up.

Confusingly, this tweet is about why you should join YC. History is full of young men on boats, in the wilderness and in formation to have a small chance at glory. All of those guys were giving up a lot more than a 7% stake, and eating worse than ramen, and living worse than a cramped apartment.

The reason you shouldn't do YC is simpler. It commits you to the VC track. Whatever you build is eventually going to suck because of enshittification.

YC = VC

If the VC thing doesn't bother you then try for YC for sure. It is overwhelmingly the best way to do that unless you're a rich kid who can leverage his connections. And even if you are that rich kid it's still the best way.

> It commits you to the VC track.

That's not true. YC always supports what founders want to do. If founders don't want to raise VC, YC supports them in that choice.

I didn't mean it as a top-down thing but as an aligned goals thing. If you do this you're basically paying a 7-10% tax on everything you do, forever, without the hyper-growth to justify/offset it. It's like selling out to Hollywood and then only doing bit roles. If you do YC, you should take VC. You would be stupid not to. I mean, YC is VC, right? It's a consistency thing.

No-YC and no-VC makes sense. Yes-YC and yes-VC makes sense. Yes-YC and no-VC does not make sense.

Paying 7-10% tax is a fabulous expense for founders if that leads to company growth >10% (ignoring smallprint). Certainly that's a reasonably likely outcome. "Hyper growth" is irrelevant.

Do the benefits exceed the costs? That's a harder thing to judge.

Worthwhile reading https://paulgraham.com/articles.html which has many articles expounding the benefits (understandably biased and unfortunately mostly pro VC).

There are unfortunately very few decent articles or good data on the costs. Here's one good article against the YC SAFE: https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-...

Sometimes compromises are needed!

Not many businesses can find $500k another easier way.

all you need to read: "I charge you a one-time payment of $375, and you get access to my community, which includes live workshops, recorded classes, a group chat, and a few other things."

This tempted me to apply. I feel like all the arguments came to the opposite conclusion that the facts should lead one to.

That’s what motivated reasoning (for clout, in this particularly sad case) will do to ya!

You should apply. Worst case scenario you’ll have spent a few hours tightening your thinking about what you’re trying to achieve.

Care to share examples?

Accelerators can be a great fit for some people at a certain stage of their life, development, or understanding of these systems; it really depends on what your end goal is too.

"You shouldn't take a ~5% chance of getting $500,000; you should take a 100% chance of losing $375!"

In each section I got maybe 1/3rd of the way through before reading something that was just so wrong and exposed his lack of knowledge and skipped to the next section.

Which is a bummer! I got excited by the title but disappointed by the content.

I’d love opinions from people who have actually gone through YC and their arguments against applying to YC.

Points for using the term "Non-Ergodic". I wish it were used more often.

The post is well written, mostly cohesive, and with a willingness to express ideas counter to the status quo.

TL/DR: Don't bother trying to go big, even if you believe in your idea, because difficulty. Instead, pay me $375 for performatted business platitudes and chat with a bunch of randos.

This dude is posting for clout or something.

In one thread he gets into histrionics about an overfunded VC hardware startup getting a bad review and in another thread he criticizes the existence of such companies.

TBH, if you're already holding a product in your hands, that you created, it's really hard to tell if you're holding an anchor or lightning in a bottle.

Using VC money to make that determination is kinda a no-brainer.

OTOH, if you're still in the exploratory phase (I am), is it wise to tie yourself to the mast of a ship that is already sinking?

In the latter scenario the smallbets.com proposition looks better.

The tweet is saying that only 1.25% make it to a billion, but a startup doesn't need to make 1 billion to be a success. How about one that makes 100 million? or even 10 million? At these levels of revenue, if the company is sold, the founders will still be rich (not ultra rich, but have a million in the bank or more).

Nothing is more tedious that a po'd pedant. OP is a person who fell in love with the word "ergodic", and just both couldn't let it go; and even then uses it badly. If you want to say "unfair", or "inequitable", just say that. It's simpler and more honest and doesn't make you look like a jargon spouting smarty-pants. What on earth does "non-ergodic" even mean to a normal reader? Even after that, OP buries the lede. Put what you want to say in the first paragraph. Otherwise everyone is so bored by the time you get to it they just don't care. It's Twitter, not the New Yorker. Any New Yorker editor worth their salt would have reversed it. Apply or don't apply to YC, but don't base your decision on whether it's ergodic or not. Who on earth knows what that means?

It's entirely different than unfair. Communism would be a fully-ergodic system, but it's also very unfair and undesirable.

This is a very strange use of "ergodicity", which would be more suitable for an essay titled "How every possible startup idea will be tried at least once". Using a probabilistic term to describe deterministic activity (i.e. choosing where to dig, checking the soil, giving up if no treasure is found) indicates to me that the author is reaching for some high-minded mathematical justification for his perspective.

The native ad for a $375 course further erodes credibility, and his recent statement that Youtube product reviewers like MKBHD should feel compelled to protect the fortunes of a VC funded company appears quite hypocritical [1].

1. https://twitter.com/dvassallo/status/1779928354118111278

I never said or implied in any way MKBHD or other reviewers should feel compelled to protect the companies they review.

I went back to the Twitter thread to understand your perspective better - agree that the title could be worded differently. I think the immense amount of contention on that thread was from you making a statement on what should be the responsibility of such reviewers - i.e. that they have some responsibility to protect entrepreneurship.

As much as we'd like to believe, most entrepreneurship is not in the form of AI pins and apps and gadgets, it's people starting small businesses and handling some existing facet of commerce. If MKBHD started making videos titled "The worst mom and pop store I've ever reviewed" then there might be a more compelling debate about ethical behavior by reviewers. In this case, it is a heavily funded product experiment by wealthy venture capitalists, so people are a lot less sympathetic when they hear "give them a chance, v2 will be better".

Also, this is by no means a new phenomenon - here's a TechCrunch review of the iPhone from 2007 titled "We Predict the iPhone Will Bomb": https://techcrunch.com/2007/06/07/the-futurist-we-predict-th...

you shouldn't join that guy's $375 thing.

whoa, that was easy, can you believe i just saved you $375?

if you're feeling generous for my saving you a WHOPPING $375, i only ask for a small small tip request of $3. win win for both of us. i saved you some cash, and now you've got $372 in your pocket. :handshake:

Let's just assume the facts are as he says in the most charitable interpretation. You either have a 1.25% chance of a $1 billion company and a 98.75% chance of a $0 billion company. The expected value of a 1.25% chance of $1 billion is $12.5 million, so treat that as an (unrealistic) lower bound on your company's valuation.

There's no real explanation of why that isn't a good deal for an entrepreneur. You don't get to keep all that, but $500,000 dollars from YC for a 7-10% stake of companies (as others have said) with an expected value of $12.5 million is a deal that gives YC a maximum of $725,000 in value, given that 10% of $12.5 million is $1.25 million.

The question to ask is whether being part of YC adds $725k in value to your company; i.e., is it the cause of those startups being worth that much? Based on what others are saying in the thread, this seems to be true, but I'd love to know if people who were a part of YC felt like the assistance was worth that much.

My point is that it's difficult to believe that the average wealth of the entrepreneur is worse off by joining YCombinator even assuming all of the facts proposed in the thread are true.

YC adds almost no value. They capture all of the startups that would have been founded anyway (and many that wouldn't, because they are idiotic ideas) and tax them. Then, inevitably, some of those hit it big and YC takes the credit. Does the doctor that delivered Steve Jobs at the hospital get to claim credit for Apple? They don't. But YC does. They're a doctor that has talked their way into delivering all the babies in the city, and taking a tax on their future income as adults.

The average wealth of the entrepreneur is actually maximized by having them go into a career in FAANG and not launching a startup at all--or launching a startup from a stronger position with a real VC that values their company at more than $7M. A $7M valuation in today's tech world is an absolute joke. It's scandalous the exploitation that's going on here.

> YC adds almost no value

For some definition of "almost"

I am not in the market, but if I were 22 in San Fran doing what I was doing when I was 22 in Auckland, I can see tonnes of value

Networking and mentoring mainly

My first thought looking at https://smallbets.com/ is to clone it and populate it with AI bots pretending to be the other members. In fact, if my little AI clones are good, it's not even that unethical. Long as they provide the same $375 worth of value and the customer doesn't want a refund?

If you just want to make money, one of the most successful strategies is to learn how to manage, via MBA or otherwise, find a company that's losing money primarily because of management problems, and take it over on some deal where you get a cut of the improvement. Turnarounds can be very profitable for all concerned, and the success rate is reasonably high, maybe 50%.

> One of the bad learnings you get from YC is that there’s a formula for success, and it looks like this: First you do some brainstorming. Then you come up with a good idea that can scale to a billion dollars

What if we have an unusual social media idea for which the reason it works also means it stops working once it's worth a billion dollars?

(Specifically, once it's that valuable, it's too high visibility, and is hit with too much adversarial manipulation, destroying what was most valuable about it. Then it's just a generic property, little different than the competition.)

(Obviously, HN itself has had better success and longevity than most, despite its rising visibility. OTOH, the Reddit front page seemed to get taken over ages ago, and then they still had to chill for more than a decade before IPO.)

I don't quite understand the criticism of YC, but I'm nobody, and maybe little bit naive here, but they offer you $500K in exchange for 7% of a potential business (of course it's more complex than that, but bear with me). Looking at the application form, nothing stops a farmer from, say, rural North Korea from applying, notwithstanding other issues of a more, ah, political nature.

While $500K maybe isn't much for some people, it sure is a heck of a lot of money for someone like me, not to mention all the other benefits, being able to explore your ideas and start a business without the immediate worry you'll either die of stress or become homeless next time rent is due, for instance.

All that for a measly initial investment of maybe 10 minutes of your time?

If your YC startup fails you can possibly still pivot or try again. I don’t understand his thesis at all.

> But that’s not how you find business opportunities in the real world. You can’t just say I’m going to pivot, and suddenly a good opportunity lands on your lap from heaven. You get good ideas by embracing randomness for a long time, until something looks like it has a fighting chance of paying off. The pivot idea you were forced to come up with is extremely unlikely to be one.

This is in general true, but I fail to see how that's against the idea of pivoting as advocated by YC. We find out interesting pivoting ideas by doing, and one of the most effective way is to get ideas by exploring adjacent areas while we invest deeply into an area the we are are interested in. That is, we discover by doing. Is that what the startups do?

Same engagement baiter who said product reviewers should all be shills. Nothing of value here.

The key issue I take away is the success rate: 1.25% and assuming that fact is accurate, I suggest the following:

If the goal of your company is to be a billion dollar business, then I would say that just applying for and getting into YC is enough, and you should not join YC.

YC apparently is very good at picking winners, but not necessarily making winners--being selected by YC means you have a higher chance of of succeeding, but attending YC does not.

However, I would expect that there are tangible and non-tangible benefits for going through YC that are not readily apparent when looking solely at becoming a billion-dollar business, and those would be the reason to join YC should they matter to your startup.

Why does this guy keep getting so much attention on Hacker News? Isn’t this the same guy that tried to shame MKBHD (an actual small business owner/founder)? He’s clearly just engagement farming, probably for his “course”.

With all the retail investor mania of lately and so much money on tech people, perhaps we could do a sort of startup Olympics with bets.

Founders and teams could publish their terms and what they offer in stock. It could be a decreasing function of price of shares with early birds getting cheaper shares. And open source due diligence. Make it a big show to get free promotion for the startups and opportunities.

But the SV VCs would probably try to sabotage it and Wall St. would probably throw their SEC attack dogs. Perhaps it could thrive in a less compromised country like Singapore or Switzerland.

Previous discussion (coincidently 6 months ago):

https://news.ycombinator.com/item?id=37869760

Overly zealous opinions of any form are, to me, often eyebrow raising. Yes the acknowledgement of self-promotion gives the guise of candor, but does make clear the attempt to gain by standing on the shoulders of giants to reach the stars. To YC or not to YC is a personal decision that one should make on their own assessment of cost/benefit of doing business - and not be based on the emphasis of talking heads, no matter how they attempt to appeal to the emotions.

Getting into YC is probably one of the few cases where it does make sense to go the traditional VC route. It's like getting into an elite-level school. Most colleges are crazy expensive to the point that the value proposition of a degree starts to look tenuous even for STEM degrees.

However a degree at an elite school still has some currency plus benefits like a network of equally hard working, smart, and likely well connected peers that is pretty valuable.

This post seems to hint at a larger conversation about the accessibility of opportunities like YC for people from different economic backgrounds.

While it might be easier for those with financial safety nets to take entrepreneurial risks, perhaps there should be more discussion on how to make such opportunities more inclusive. How can organizations like YC ensure that everyone, not just the financially privileged, have the chance to innovate and succeed?

7% of your company for 500 Grand startup money a Network on a moonshot idea?

that's unbelievably good!

If he finds this bad... then he finds venture capital and bank lending bad in general.

Good? My two startups were 2m for 5% shares. Pretty standard.

First money in at a 40M valuation? Assuming this is pre-seed, that seems like the investor is taking on a lot of risk based on the distribution of outcomes.

My understanding is that the standard deal is more like $2MM at 20%. Raising that at 5% is an insanely good ideal.

The fact that you can get such large amounts of money for such a small amount of equity in general is good.

what were your startups?

I sell onions on the internet, and I approve this message.

I'm waiting for your onions!

Vidalia ftw!

This is the nub of the matter. I could have saved myself a decade. The only thing from YC that survived our relationship was the incorporation of the company.

I still think there's a massive gap in the market for an ergodic startup community where the young ambitious people tell the Gen-X's to go fuck themselves with a police baton and instead enjoy the benefits of pooling the risks & sharing the rewards.

I imagine the problem is how do you pool the risk without being able to assess with confidence who will succeed and who will fail? And how do you prevent freeloaders who don't expect to succeed wanting a share?

And if you could make that determination accurately, why wouldn't you use it to avoid pooling risk among all but an extremely small pool?

The point you're missing entirely is that risk is an independent variable which is not related to any factor under control of the participants.

His comparison to the military is weird. It’s well known that from a strict money to time exchange it’s not a great deal. But the target market is also 19 year olds who don’t have social capital, not Harvard undergrads. So yes, improving your future options and skills is a greater value than cash.

That’s true of YC too.

This post is an ad.

Some of his point might be true, BUT:

If you have a great idea, if you are onto something, then the best chance of success comes from having resources to execute, credibility and to share the endeavor with others who are literally invested in the outcome.

Join a CEO group and set up a cross-holding of stock between the companies in the group. Now you’re all digging for gold at the same time. You don’t have to be a VC and you also don’t have to be that person with 26 lifetimes to spare.

The problem with this is VCs give you money, and some (like YCombinator) also give you advice. The CEO group gives you no money. Also, how do you prevent parasites from entering your CEO group?

I’m not saying a CEO group is a replacement for venture capital. You can join a group of CEOs whose companies are all venture backed. As for ensuring parasites don’t join your group… that can’t be guaranteed.

This is an ad.

But the bigger thing is most of us don't actually have investment ready products. I'm echoing my comments tester, but if a VC offered me 2 million today I'd have no idea what I'm done.

He started by getting the deadline date wrong so not off to a strong start

Actual: Apr 22 at 8pm PT

Him: The deadline for YC S24 is tomorrow (tweet from 11:25 AM PT Apr 20, 2024)

Probably because this is just a repost as mentioned in sibling comments.

My goal in this comment is to vet Daniel Vassallo's section on ergodicity. I follow and agree with the setup:

> First, you have to understand a very important concept: in some systems, what’s best for a group is not necessarily what’s best for the individuals who make up the group. In other words, the total wealth of a group of people could be increasing, while almost everyone making up that group could be seeing their wealth diminish.

But do the following sentences follow? Do they even make sense?

> When this happens, we say we have a non-ergodic system. If the system was ergodic, what’s happening to the collective would also translate to all individuals.

I'm pretty sure these sentences don't follow. I am struggling to think of even a charitable interpretation that would make such a connection. This is not out of a lack of interest -- I would like to see a connection. I think I'm more willing than many to find such connections; I have studied EE, physics, SwEng, CompSci, economics, and more. But, alas, I see no connection -- and not even a plausible path to explore to find one.

So, after reading only this much of Mr. Vassallo's writing, my BS-detector alarm bells are ringing. I'm going to go read https://plato.stanford.edu/entries/ergodic-hierarchy/ instead.

Please let me know if I'm missing something. I am genuinely trying to be rational and open to good arguments. I admit that I'm developing a gut-level distaste for Daniel's writing, but I don't want this to unfairly bias me about a possible insight on ergodicity here.

P.S. Maybe even though Mr. Vassallo's writing is a stretch, there is a reasonable point to be made? Could someone make it succinctly without the baggage of his larger claim?

I recently spent some time looking into ergodicity and my conclusion was that people who write about "ergodicity" in a non-academic setting generally have no clue what they're talking about and they're just using the term to make it sound like their reasoning is more rigorous than it actually is.

This is from the “honest reviews are unethical” whinger.

I found that refreshing. Unfair, of course. They are flogging their own very different product

I really take to the point of moderate success.

If I am going to have huge billion dollar success it is going to have to find me because I seek satisfaction, and I am satisfied with much less

I am a worker. I like working. I like working for other people, I like getting paid a nice big fat salary. I would like it bigger! But I like my job, i like my boss, I like my work, mostly, and that is a fabulous way to live.

Satisfaction!

Being a billionaire does not sound any better

The guy seems to like hot takes to get attention

Ehhh, there's pros & cons, just like anything else.

Maybe some VCs want you to dig to the bedrock, but not all, and everything in life is a negotiation.

I look at YC as grad school for entrepeneurs. You'll learn a ton, build a network, and have a good time for a while. Unlike grad school, there's direct upside, and you won't have to take out loans or live off the lab stipend.

Now would I go to grad school at 40? Maybe, but the calculus is certainly different than at 20.

YC is clearly good for something. You really have to figure out how to make it work for you.

dvassello loves attention seeking posts.

There is some truth to it but the message isn’t clear.

Yeah VCs make money over spread, and economic argument makes sense of Pareto principle.

However this assumes only 40 1B+ exits and the rest get zero.

The Pareto curve means:

- a long tail of startups that failed to make what people want. (YC looses money)

- A decent chunk of startups that did make what people want but wasn’t a sustainable business. (YC loses money)

- A bunch of sweet 10M+ exits (YC breaks even)

- 1% 1B+ exits. (YC gains multiples).

There is a reason why most of the software wealth is concentrated in west coast.

And YC giving $500k isn’t a loan. If your company goes under they don’t ask for it back and bankrupt you. It’s essentially free money to try out an idea. You get paid to test the market.

In what other country does this happen at the scale US does it?

There is the reason why US is at the heart of software.

You don’t even need to be a founder. Employees at a mildly successful startup get make multiples of median wealth in US, and orders of magnitude more compared to global wealth.

Most of US economic growth is coming from tech. Play the game.

I'm not really a fan of posting rants.

Not because I don't have about 10,000 foaming-at-the-mouth rants in me, but because I don't feel it's professional, which is an indicator that I'm not very "new school," in my approach.

It's actually pretty on the point, but I'm not sure that I'd get "Don't Apply to YC" as the result of reading it; just that I should calibrate my expectations and approaches. I probably would find other alternatives, if I was a "lots of small squares" digger, but that's me. I'm not a rich serial entrepreneur, so I guess my opinion isn't particularly relevant.

This part stuck out to me:

> The second bad lesson from YC is the focus on the upside. Because if there’s any formula for success in business, it’s to focus relentlessly on staying in the game rather than on hitting it big. Focus on the downside, and let the upside take care of itself.

I think that's critical, but seldom actually practiced, these days.

I have a friend that is a marvelously smart person, who has created a great product, that he is planning to market and sell for thousands of dollars. It's likely that he'll get it.

But the real test is what happens after the sale. We need to determine things like service, support, parts, and reliability.

Things shouldn't break easily, and if they do, we should be prepared to handle the calls. They may be irate calls, if the device costs a lot of money.

That's where I have about 35 years of expertise. I've spent my entire adult life, making things that last, and can be serviced, if they break. 26 of those years, were at a top-shelf company, producing some of the world's finest optical equipment (expensive as hell, but worth it). A lot of the software we wrote, was to work around hardware deficiencies, or add service points.

So I was giving him tips like "What happens if you get dirt in this fan?", or "How do you test the firmware?", or "I'm not sure that part should be printed with that kind of plastic," etc.

I was politely told to fuck off, and stop being a "dream-killer."

So I keep my mouth shut, and I won't say "I told you so," when things go south. Instead, I'll help him to clean up the mess, because that's what friends do.

S-tier move by YC to promote this nonsense to the front page to make the pro-YC post from the other day look less sketchy.

Predictably, gets flagged!

After reading the OP:

(1) Business Is Okay: For the neighborhood I grew up in, a big fraction of the houses were owned and occupied by families of owners of businesses. (a) Drove into the country, met with farmers, evaluated and bought their cotton, and sold it to, say, companies making medical bandages. (b) Bought junked auto parts, renovated them, sold them to auto parts stores. Later bought, developed, sold real estate. (c) Had a warehouse next to a rail line, got big shipments of beer, sold smaller quantities to bars and convenience stores. (d) Sold, installed new tires to people with flat tires. (e) Ran a trade magazine for the trucking industry.

For more, not in my neighborhood but not far away, (f) opened a sit-down seafood restaurant, built relatively modest houses, started a national motel chain. (g) Sold jewelry to jewelry stores. I dated the owner's daughter -- they lived in a nice house and neighborhood and helped a cousin -- prettiest human female I ever saw, still in love with her. (h) Bought medium trucks with no beds, installed tanks, custom, e.g., for water, fuel oil, gasoline, .... For this last, I tutored the owner's son in high school math -- their house was really, REALLY nice!

It does appear that in the nicer neighborhoods, the fraction of house owners that were successful business owners was high.

Conclusion: "The business of America is business". To get important things done, America wants and needs successful businesses. The successful businesses are not flukes. Necessarily there WILL be successful businesses. The business owners were ordinary Americans, not geniuses, not venture funded.

(2) Key. To have a successful business, build something people want, like, need, and don't have (loose quote from some YCombinator source).

(3) Opportunity. Exploit the sudden revolution in productivity in our civilization, i.e., computers and the Internet. IBM helped automate the routine work of the accounting departments of major businesses -- good PI (productivity increase). PCs killed off the typewriters -- big PI. Email, big PI. Web, huge PI; also great for information, knowledge, entertainment, maybe soon making dense cities less important.

(4) Cheap. In both historical and even absolute terms, current computers, the Internet, and the digital phone network are cheap, really cheap, just dirt cheap. E.g., I got new 8 core processor with a standard clock speed of 4.0 GHz for $100 -- can spend more than that on a family restaurant dinner; can come close on flowers for Valentine's Day. What are the recent numbers, 18 trillion bytes in a standard 3.5" size??? Big, big, big, big, huge PI steps up from history back to punched cards, ledgers, quill pens, etc. Are the PI opportunities already fully exploited?

What to do? Get a good computer with good software tools, a good Internet connection, write some software that will let some people get something they want, need, like, etc. faster, cheaper, better, easier, etc. and get users and/or customers (e.g., advertisers), and revenue. OWN the software. And, go ahead, own 100% of the business, as just an LLC (limited liability company): Soooo, "Look, Ma, no BoD meetings!!!". Can't be fired. Have minimal involvement with lawyers.

VCs? Do they write the software for/with you? Nope. Do they really know what way to please a lot of people that will make a successful business? Nope. Do you need their $500 K to pay for your computer(s) and Internet connection? Likely not. Can a sole, solo founder be successful? Example 1: Plenty of Fish, one guy, sold out for $500+ million.

Central Point: For better financial security, you need to own some/all of a successful business, AND the economy MUST have a lot of successful businesses. Every major US city has lots of such successes -- they are NOT rare.

TL/DR: Don't try to go big, even if you believe in your idea, because its hard. Instead, cough up $375 for templated business platitudes and chat rooms with randos.

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