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Comment by edw519 | Hacker News Reader

Why was 66 ok and 84 not?

Maybe it had less to do with magnitude than direction.

I look forward to reading about yc start-ups, but increasingly find myself shaking my head, wondering how some of them will ever amount to sustainable businesses. I've always attributed this to the fact that yc must know a whole lot more than me.

But pg's recent disclosure that so many yc start-ups have co-founder issues really got me wondering. I find it unimaginable that any team can work itself into such a good position and then blow it away over seemingly petty issues. Is it possible that some trend other than scale is at work here?

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One thing to remember is that the goal in many cases is not to build a sustainable business, but prove that there is a market for this thing (of any size). It's not unrealistic for some of the more oddball single utility "companies" to find themselves aquired and rolled up with other strategic acquisitions, and the lot of them presented as some sort of B2B enterprise package worth far more when summed up.

In other words, with VC backed companies, the thing these companies are making isn't really the product in many cases is it? It's the companies themselves. Just like a gear isn't really much, but add some springs, and a few other odds and ends and you have a watch that people will buy. But it takes a bigger picture visionary to figure out that the company that makes gears and the company that makes springs should be both acquired to make that watch company. Till then, they have to try and find their way by either spending their investment dollars till they can find that visionary, or find a market supplying micro-miniature gears to other watch making companies.

The founders and investors are rewarded for taking the high risk of finding out that there is a market for micro-miniature gears after the acquisition. But until then everybody wonders why one would want to get into gear making in the first place?

YC is basically in the meta-business business.

The real goal of YC is likely to create a great productive and interesting life for the organizers. If the previous number was too hectic and they're scaling back, congratulations to them for choosing quality over volume.

Paul Graham's recent essays on growth and startup ideas reflect a much deeper and more nuanced insight into the startup process than you give him credit.

There have always been lots of startups working on crazy sounding ideas, since the first batch. I don't think the proportion of those has changed.

(If anyone is wondering why we don't just reject all the startups with crazy sounding ideas, Airbnb was one of them.)

I don't understand why Airbnb was considered as a crazy idea and I hear literally everyone refer to it as an example of crazy idea. I always thought it was a genius idea from the first time I heard about it. But the way I see things, it doesn't matter what the idea really is as long as there is a market (not too big nor too small) and the team's ability for solid execution of the idea (kick ass product, partnerships and vision).

Market is semi-legal. How do you gain traction? Network effects (that whole traction thing (re: gaming/tuning Craiglist)), liability, etc.

Retrospective analysis biases "initial" perceptions post-facto.

You probably heard about it post-yc. It was initially a thing for renting out airbeds (airbedandbreakfast.com)

I think even that is a great idea...albeit with a much smaller market capability than what airbnb is now.

That's pretty much what http://www.couchsurfing.org do, but for free. Clearly there is both supply and demand for such a marketplace. Were airbnbs or YC aware of couchsurfing?

It used to be "sleep on the floor during conferences on air mattresses, with the host providing airbeds". I personally would have had a hard time extrapolating from "surge capacity for huge numbers of people during events" to "routine spare-room or whole-house rental", which seems a lot more like homaway/vrbo/etc. to me., a good business. The former is more like couchsurfing combined with the Red Cross, and IMO not good as a business.

It wasn't a crazy idea at the time. couchsurfing.com had been a thing for years. "couchsurfing with a better UI" doesn't sound like a billion dollar idea, but it doesn't sound crazy either.

What everyone else said, PLUS it was a marketplace startup in a crowded space. Marketplace startups are ridiculously hard to curate, Airbnb did some really great hacks (with Craigslist especially) to finally make it work.

But there were many people who thought this kind of thing could be huge, and plus the non-profit Couch Surfing was pretty big at that point if I'm not mistaken.

The craziest ideas are usually "frighteningly ambitious" ones, I guess. So, it's easy to understand that these are the ones you, guys, like most.

Ok, so what were the predictors of failure?

IMO, if you can talk about these features/predictors, they are true predictors. Otherwise, if people can game the system if they knew these features, I'd think they're more artifacts about your current process than attributes of failing startups (and if it turns out that these features are actually causative of failure, rather than just predictive, everyone can be a better startup too).

The fact that one can conceal a flaw doesn't mean it's not a real flaw.

In your defense, after the first few rounds of YC I remember VCs and bloggers squawking about all YC companies being features and not products, and that you were deliberately mass producing acqui-hires.

To me, it's clear that the quality of the average YC company has gone up.

"Things are always breaking at YC, because our strategy is to find bottlenecks by hitting them."

Can you share the details of what broke and how?

Even if you won't share your strategies for detecting & fixing the bottlenecks, I'd love some background on what they are.

> so many yc start-ups have co-founder issues

My guess would be that it's the number of "companies in simultaneous crisis" that grew beyond control. I used to warn new managers that somewhere just above 8 employees is the point where you always have one that is going through a serious illness in the family, divorce, addiction to drugs/video games, or something else that will take up all of your attention (if you let it).

Extrapolating to companies, I'd bet that the senior YC staff can handle, say, 5 companies in crisis (e.g., "co-founder issues") but growing to 10 was just too much and things started falling through the cracks. Or became unfun, since when you're handling crises you're ignoring the stars, which is a very common new manager mistake.

And unfortunately you can't scale the VCs to handle more crises; you either need more time from senior YC-crew or you have to find the equivalent of a human resources department to handle those issues and just stop trying to fix them yourself.

This is an interesting consideration with expedition/adventure team size. There is a tradeoff with redundancy (someone will have a spare x) that keeps the group moving, and the increasing liklihood of somone haveing a problem at any given time. You need to minimize the latter, b/c not just its slower/more comlex, but it eliminates the redundancy (your 1 spare is now used gone, but larger group still to worry about, etc). This is often why an ideal team size is 2, not 8-10.

I was at the first startup school (in Cambridge) and I remember thinking that about reddit whereas the one I thought most promising (click fraud detection) seems to have flopped.

Other than making a bet on the people, I wonder if YC also has no idea about which startups will succeed.

ClickFacts still operates, although it doesn't have such astonishing story as Reddit does. More info: http://thenextweb.com/insider/2012/08/05/y-combinators-first...

Reddit is still not profitable.

It's an amazing edifice of the Internet, but it is not profitable.

I wouldn't be surprised if that quickly changes, since the ad placeholders (center right of page) have recently become revenue-generating ads.

> sustainable businesses

Given that a lot of YC seems to come from PG's own experience, which involved selling Viaweb to Yahoo, I'm not sure "long term sustainable business" is necessarily what these guys are going to shoot for. And I think that's ok too: some people are just cut out for taking a business from 0 to 80, but not managing it long term.

You think that the experience of selling 1 company (viaweb) trumps over the experience of funding over 300 companies across 7 years, 2 of which are worth at least 1 billion dollars?

Thats like saying, given that Apple experience comes from building the first computer they must not know anything about mobile.

YC experience comes from doing YC itself.

Apple did not build the first computer.

pendatic. His point was that YC's expertise with advising startups comes from doing YC, not from selling Viaweb to Yahoo (it was, but only at first)--just as Apple's expertise doing the iPhone came from doing the iPhone, not from making computers (it was, but only at first). Whether Apple made the first computer or not is irrelevant to the point he was trying to make.

How is that a minor detail? The first electronic computer was built in 1946. Apple hasn't even existed for half of the time electronic computers have existed on Earth.

Seriously folks, this is some dumb, dumb stuff. Even the senator who gave the infamous "tubes" speech probably knew that the Apple didn't invent computers.

> You think that the experience of selling 1 company (viaweb) trumps over the experience of funding over 300 companies across 7 years, 2 of which are worth at least 1 billion dollars?

No, but I really got the impression as YC grew over the years, from what was reported of it, that PG modeled it, at least initially, after his own experience. Doubtless it has changed over time as they've learned.

My point was merely that there is not necessarily a "build a company to last years" in the group's "DNA".

"A piece of software to build eCommerce websites that takes a portion of revenue." doesn't sound like a long-term sustainable business?

The Viaweb crew took an exit - a good exit, in my opinion - but their business model was sound, profitable, and strong.

> The Viaweb crew took an exit - a good exit, in my opinion - but their business model was sound, profitable, and strong.

Seems that way to me too. But they opted for an exit, rather than deciding to work at it long term.

I think the world is better off with YCombinator, rather than some evolved form of Viaweb, myself, but the point was merely that for them, not doing something "long term" is not a failure.

Teams don't usually blow it away over petty issues. What they do is manage to ignore/avoid/be blind to serious issues for stretches, especially when things (on paper) seem to be going well.

That does happen. But having been in my fair share of partner disputes, banal and stupid issues blow up teams just as often.

When you're on the outside looking at a team, it must seem as if the members share a purposeful determination. And they often do. But just as often, the startup effort simply becomes a new norm, inhabited by human personalities, inclined towards squabbling just like dorm roommates.

Membership in a startup team can amplify drama as much as suppress it. It fuels personal squabbles with a sense of import. The best way to resolve the overwhelming majority of conflicts is to walk away and let them cool down naturally. But in a startup, it's easy to tell yourself "we have to resolve this problem right now; the fate of the company is at stake!"

It's also probably the case that a lot of long-term simmering "important" issues actually started out as manageable problems that could have been dealt with, but for poor conflict handling early on; either the issue is broached and turns into a scalding fight, or fear of that fight keeps the team from addressing it early enough.

You would think this would mean founders with stable marriages would have an advantage. :)

I might view it in reverse: having been in a start-up is an advantage/practice for stable marriage.

s/stable marriage/early mission to Mars

There's a metaphor that's going to get me hit with a couch pillow in here somewhere.

tptacek, whenever I read your stuff, I think "he gets it".

I bet stable founders have more stable relationships with their SO's.

Dave Ramsey writes about how his company uses dinners with spouses as a part of their interview process. They won't hire anyone "married to crazy". They also fire anyone who cheats on their spouse. I found his book quite misogynistic and offensive (not to mention having the worst title ever), but I wonder if he's onto something.

The idea of YC (or any company) using personal relationships as part of their filtering process makes me extremely uncomfortable, but it's interesting to think about.

I was just thinking about this today. To interview a potential co-founder I'd have a meal with the person and their SO. Then I'd observe the dynamic between them. Does the potential co-founder treat the SO poorly? Or is it reversed? Ideally they treat each other well. But there's more subtle hints to observe. Do they interrupt each other? If so what's the fallout?

The point is to assess the person's "people skills." I think "people skills" or in general "emotional maturity" is by far the most important factor in someone you need to work with on an intense level. Be that co-founder, SO etc.

Or how they treat the staff at a dinner. Many other routes vs making some people uncomfortable that you may "require" a dinner with a SO. If they don't have a SO, what, invite a friend to an interview?

Good point. I wouldn't formally require the SO. I'd just phrase the invite to make it clear that my SO and I would like to have dinner. If they have an SO but don't bring them that's another potential signal (could be good or bad).

The whole idea some people have of meeting a cofounder a few times (especially in an artificial environment like a hackathon) and then making an all-of-nothing decision is flawed, IMO. The best process is to spend a LOT of time with the person, and work with him on progressively larger projects. Yes, how they interact with people is an important factor, but I'd try to spend many months (or years) on the process, not a few meals.

To sort of support this, I know a VC that won't work with any divorced person until two years after the divorce. He says it takes that long to get back on course. And he has been through one, so he knows.

I understand that investing in a person is very different from employing them, but this still creeps me out. It would be disturbing to see this become another valley meme (it is probably illegal to discriminate against employees based on marital status, for what it's worth).

For a place that exists because of an engineer field, the Valley seem pretty prone to cargo cult thinking, fads, and superstition.

I get your point, but there a lot of non-engineers in this business. I'm also not sure that engineers have that much of an edge in avoiding cargo cult behavior over other professions with a similar overall level of education and compensation. I'm talking about engineers as a class, not an idealized Engineer.

Was not in the valley; actually in the midwest.

And this was entirely in the context of a startup.

Wow. Getting divorced seems rough enough already; sucks to be judged unemployable on top of that.

Was only in the context of a startup.

I wouldn't take on a cofounder/exec hire/major investor without spending a little time with them and their partner. Not because I think I'll detect some red flag, but because my wife is great at reading people and might observe something important.

Dave Ramsey probably either doesn't really do this or has never asked a lawyer about it, and is in any case offering incredibly bad advice. It is unlawful to discriminate against someone on the basis of marital status. When you invite a candidate out to dinner with their spouse and then later decline them, you've communicated two things:

* That you were serious enough about the candidate to take them and their spouse to dinner; in other words, that you were probably inclined to hire them.

* That it is possible that the dinner, which only could have been an issue for candidates with spouses, had something to do with the decision not to hire.

Investment decisions are very different from employment decisions. You can probably discriminate against investment opportunities for any reason whatsoever, including race or religion. But dinners with spouses as part of an interview process seems like a great way to get sued repeatedly.

IANAL but I don't believe marital status falls in the protected category. http://en.wikipedia.org/wiki/Protected_class

Not federally, but yes, for purposes of employment, in many states including California, New York, Illinois, and Washington.

As tptacek says, many states do ban discrimination on the basis of marital status, and they have a good reason to - historically most businesses refused to employ married women at all on the rather sexist basis that they should be at home raising kids.

I suspect the more likely reason is that they didn't want to lose employees who decided to quit to go home and raise kids.

In my previous job I asked my dev lead from Mumbai to help me with interviewing candidates to join us on a project here in California. On a conference call with a female interviewee, he asked if she was married. He hadn't asked the previous two candidates (males) that we'd interviewed.

After the call I told him that was illegal here and he can't ask that question in an interview. He was shocked. He said Indian women are expected to devote time to their families once they are married. Single women have much more time to devote to the project and would be much better for our team.

I've known that women have been discriminated in this way for a long time, but I had never encountered it personally until then.

That was my first thought. "Isn't this illegal????"

Federal laws that prevent discrimination as an employer don't apply to investors.

I meant in the case of Dave Ramsey. That guy is crazy.

As far as I can tell it has nothing to do with marital status, ie married or single. It has to do if the person is crazy. You can hire or not hire people based on personality and fit with the company, so I'm not sure why the spouses personality and their relationship fit for the company would be off limits.

It obviously does discriminate against people by marital status, because if you're not married, you're not liable to be rejected based on the spouse-dinner filter.

It's a little like suggesting that you're not filtering based on religion if you ban yarmulkes.

I'd say its closer to finding out the single guy is in a gang and since he spends time with crazy people you don't want him. But I guess your point is at least a bit valid. That being said, it seems only a few states have a problem with using married status in hiring.

"shaking my head, wondering how some of them will ever amount to sustainable businesses."

pg wrote about this -- the best startups seem like bad ideas but are good ideas. They seem lame. I don't think there is any way for you to judge a startup by "reading about" it. You haven't met the founders, etc.

For the best companies, the MVP will be like the tip of an iceberg. A small, innocous thing that is visible. But will large mass/depth to the idea. Like IBM negotiaing will Bill Gates on DOS. So, yes there is something to this...most articles don't capture the founders deeper insights (if it exists), and often thats intentional (strategic disclosure).

"I find it unimaginable that any team can work itself into such a good position and then blow it away over seemingly petty issues."

Why are you calling them petty?

Do you find divorce similarly unimaginable? Most co-founders know each other less well than most newlyweds and spend way more time together.

And I find it unimaginable that people divorce over petty issues as well.

IMO, having been involved in a co-founder dispute, in hindsight the issues were not at all petty and reflected major differences in attitudes and long-term goals of the co-founders. They SEEMED petty at the time, because people, specifically young people, tend to do a poor job of identifying core causes for interpersonal disputes. One risk of investing in young founders is that this sort of thing will happen at a higher rate than if they were older, but for a number of reasons that PG has discussed at length, the pros of generally investing in younger founders trump the cons relating to emotional immaturity.

Goals change over time. Maybe one person thinks their best exit is via the publicity of running the operation, while another person thinks their best exit is via selling the company, while another thinks the best exit is to extract profits from the company.

And companies don't found themselves to be easy to break up, for the same reasons people don't set up prenups on marriages.

People going into YC with obvious dysfunctions aren't going to get a "yes". The remaining groups are those that:

a) are good at managing stress and disagreement - so don't show any

b) haven't yet had a major stresses that will cause problems - so don't show any

Since dealing well with stress and disagreement is a learned skill I would imagine that YC's focus on younger founders may make the (a) group fairly small.

Getting accepted into YC immediately puts companies into a stressful situation (moving, spending 24/7 on startup, the "this is our chance to make it" vibe, etc.) - so folk in (b) who haven't had to figure out how to deal with disagreement well are going to have problems.

I think it is scale. The success of YC is built on the success of their startups. Therefore, I don't see YC as a not a long term (I'm talking 20+ years) sustainable and scalable business model. Is their process reproducible? Yes. Are there deliverables reproducible? No.

If YC wants to continue to grow (financially), it could possibly:

1. Diversify - Perhaps start a pure VC wing

2. Segregate - Provide specific expertise in verticals (travel, hospitality, sports, etc), horizontals (like consumer web, mobile, etc), or regions (emerging markets, global markets, etc)

That being said, I can't help but think that YC employees probably struggle to understand it's ultimate financial growth strategy while at the same time realizing that in it's current state it's already an extremely valuable business and provides those involved with loads of continuous personal satisfaction both financially and psychologically. So while it may sound like I'm discrediting the organization, I'm dually jealous of the "good problems" they have.

"The reason we accepted fewer applications was that in summer 2012 we grew too fast." I am curious; from a ROI perspective, are there any limits how big each YC batch could go or put another way why is "fast" fast? Can YC grow as a partners-based organization as much as demand exist or does PG's attention draw a limit, as would occur in a star-shaped organization structure.

What are some indicators as to whether a startup can and will survive co-founder drama? Co-founder drama is more common than not. YC has such a profound reputation and emphasis on co-founders, maybe the application should just directly ask for examples of past experience with co-founder drama and what people would do differently for the future.

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