I guess there is no change, since the advantage YC sees in multi founders is probably only for the time interval before these disputes, at which point they are already doomed. But what I may be missing: could amicable breakup ever help a company avoid the dead pool?
Another thing I find missing from the discussion: is this move also meant to push new founders to profitability faster? PG seems to be mentioning it more lately ([2], [3] etc.).
[0] Honest question- I hope it does not spark another single vs. multi founder debate.
[1] http://www.youtube.com/watch?v=JK3sVFs6_rs
[2] The best solution is not to need money. http://news.ycombinator.com/item?id=4067297
[3] The best thing to measure the growth rate of is revenue. http://www.paulgraham.com/growth.html
In another comment, you mention founders scrapping over the carcass of their failed startups; what is it exactly they're fighting over? Surely the money has run out and anything left should be returned to investors in good faith? Are they fighting over Cinema Displays, Aeron chairs, etc, and by reducing the amount of the note you're reducing the amount of accoutrements these fledgling startups accumulate, and thus can fight over in the event of failure?
I assume he's talking about cases where the founders fall out well before the money has run out.
Previously, when there was little (money or IP) left, they'd just go their separate ways and start something new.
But with money still in the bank, founders may believe the company still has some value and a future, and will fight to assume control of it.
So yeah, YC can really be that stressful.
Surely, we can respect the complexity of founder relationships, and yes, at times their tenuousness - and not trivialize them as matters that can be solved by making it easier for a VC to write-off the investment. It just feels like an aspirin for a different problem...
Basically, if you take 60 startups, give each $80k and put the $4.2 million (60 * $70k) in the bank. When that batch of YC startups gets to $20k left in the bank on average, figure out which ones show promise and which ones should be deadpooled. Assuming a 2/3 deadpool rate, that leaves 20 startups to divide the $4.2k among, or approximately $210k in convertible debt per startup to reach the next milestone.
This is more inline with your essay about the future of funding, in which you speculate that funding will become more continuous.
I would say that they were definitely valuable to us, if for no other reason than to get a chance to talk with investors before there was anything really at stake. The way investor meetings go is something that's hard to explain and something you just have to experience. This gave our class the opportunity to get a little used to how investors think and the way they interact with potential investments. While that may seem to be somewhat intangible, it's hard for me to estimate how much that initial experience helped ease us into doing it "for real" later.
(The alternative I would've given that hypothetical VC would've been to pay somebody with professional business mediation or even personal counseling experience to specialize in the part of the problem they were finding painful. This option is admittedly less open to the average VC because they would have to solve the Design Paradox well enough to identify a good mediator/counselor. I have a rant about groups not explicitly recursing on their most important obstacles and trying to solve them on an ad-hoc basis instead focusing strongly enough to start a subproject that can invoke specialization and a person whose explicit responsibility is to solve that problem, but it probably doesn't belong here.)
Plus we're human, and we don't want to spend all our time mediating disputes. It's very boring.
I don't think outsourcing dispute mediation would work. There's too much context, and founders seem to want to make their case to us personally.
The reason I find that ambiguous is that for YC, mediating disputes between failing startups is not as important as the main obstacle they are trying to solve, which is the RoI problem. So, they could indeed outsource the mediation/counseling problem to someone else, and even if someone else didn't do as good a job as they themselves did because they didn't identify a good enough mediator - well, making sure that a failing startup separates fairly is not that big a deal anyway.
I'm curious what it might do to valuations. Now the startups have 12 months of runway instead of 18-24 months depending on the number of founders. This means that at demo day, investors know they could potentially squeeze startups a bit more because the runway is shorter. Hopefully the sheer competition will mitigate VC propensity to keep telling investors, "Hey come back next month with updated numbers" until the startup is willing to take money at any valuation.