Y Combinator, Silicon Valley’s Start-Up Machine
nytimes.com
nytimes.com
Really? That's it? Get funding or go home?
Man. Those crazy entrepreneurs who persist and grow "organically." So unsightly.
There is one thing factually wrong, or at least incomplete .. you don't get $100k (formerly $170k) for 7%. You get $11-20k for 2-10% plus $80k (formerly $150k) at an uncapped valuation. Usually that % will be low.
The fundamental epiphany of YC/pg is that that we are no where near the limit on the # of startups .. and that encouraging hackers to become entrepreneurs is a win-win for hackers, investors, users and the world in general. YC will (continue to) be incredibly successful as long as it remains faithful to this.
Also, never knew about pg's fear of flying .. very cool and inspiring thing to learn.
1. The heavy-handed metaphorical comparison of YC to a summer camp: "During that time, campers, or founders, have regular meetings with each of Y.C.’s counselors, or partners," "The director of this camp," " basketball-court-size dining hall,"
2. "The Y.C. term culminates with Demo Day, or D Day." N̶o̶ ̶o̶n̶e̶ ̶a̶c̶t̶u̶a̶l̶l̶y̶ ̶c̶a̶l̶l̶s̶ ̶i̶t̶ ̶D̶ ̶D̶a̶y̶.̶
3. "or persist and grow 'organically' — an unsightly word in the valley of silicon." - The correct word would be "bootstrap." - and it's a totally acceptable word in the tech circles I've been in.
EDIT: Ah, I stand corrected. I worked at a YC company in the past and I had never heard anyone (the YC founders I met) call Demo Day as D-Day. The snark is really uncalled for.
There's a convenient little box you can ask for confirmation of that right at the bottom of this very page.
The magazine enjoys a much wider audience than most of the technology articles found here. Articles from the magazine are often framed as stories, following the path of individuals to show the purpose of the article. This also helps hold the attention of the reader through the article's longer length.
The embellishments you list out here are other tools the writer and editors use to appeal to the magazine's reader base.
"How can a company that earns no money be worth a billion dollars?" - Hotmail. Those who forget history are doomed to repeat it :)
Really, is this a power law? Looks to me like a simplistic application of expected value.
If, for example, the distribution of outcomes was uniform between 0 and 100 billion, the startup would be worth 50 billion. Because the distribution roughly follows a power law, 1 billion is a better estimate.
I have been running with my start up for about 9 months. Its almost ramen profitable.
spoiledtechie with gmail
anyone have any insight?
I'm writing a follow up to my first blog post (wiwillia.com) where I'll get a little more into the details of why we chose to raise.
[edit] this comment was posted (somewhat so) in the hopes that one of the partners will respond with their thoughts and if they plan to address this and if so, how so?
There is a meme where running a startup is like gambling where the only option is going all in, both for participating in the startup and for the ideas they execute. Quit huffing the glue, and pass the glue.
If you can accelerate the growth of your business by taking VC money and hiring more people, why wouldn't you? Contrary to your first statement, there are plenty of startups in markets that are currently in "landgrab" mode.
Brooks' Law, for one thing. I if I was in the situation you describe, I would try more to use the money to buy time, not so much people.
Is it possible you're identifying a follow-on effect where funding would allow a company to buy both headcount and time with which to get the new people up to speed? Making a late project later is only an observation, and speaks nothing to how hard or soft (invented) deadlines might be within a particular company.
The current stage: VC's come in, or, like to come in when the startup appears to not even need them. If it is already growing, adding users and all thats needed to make that grow exponential is throwing cash at it they love to come in.
That is pretty arguable and not definite.
And it's not true, incidentally. We don't have all the data yet but it's clear valuations remained high last batch.
They took what others just see as a clone of weebly and have added enough USP to prove that it's all execution. They had customers even while sitting in the little Cafe in SF and have growing fast through sheer force of will ! Biggest thing, humble, not afraid to ask for help and thick as thieves.
These guys are what every entrepreneur should be trying to attain in a team !
Once you've seen the worst-scenario first-hand you realize it's not that bad, and you can shoot for the moon without any fear.
Go to the hinterland once a month for cheap gorging on good food; fast the rest of the month in SF?
Not sure if that's saying much given how many I read, but perhaps it is :)
The ~$20k is for 7% (of common stock); the $80k is under START Note terms, essentially convertible debt which inherits the cap/discount of the next note you do. It's conceivable that just means an uncapped note, so adds onto your Series A.
(This part isn't mentioned like the $14-20k funding is http://ycombinator.com/apply.html)
I envy you guys
It seems that the race to get into a coveted program like YC has become crowded. Almost every other startup that I met during last one year (50 odd in two cycles) had applied to the YC program [premise-A], some gotten the interview [premise-B] and some gotten into the program [premise-C].
Role of premise - A: Crowded race makes way for best YC 'applications', and I have seen PG/YC liking the way the quality of applications have gone up. Sure. However, the quality of application does not necessarily reflect the quality of technology startup.
There are several areas where these two indices are not aligned perfectly:
For example, there are people who can write and tell really high quality stories, given the amount of time at hand, but they're the ones who should probably be doing literature and not technology startup (rant?). Then there are other have-nots: The statistical bias of past YC batches seem to be away from the relatively older entrepreneurs or heterogeneous teams. This leaves out a bunch of gems.
Long story short: A crowded race forces not-so-great start-ups to focus on getting into the program successfully and the great-ones to keep out/avoid/shy away and focus on building their business instead. And sometimes lose on what could have otherwise been a great partnership.
Then the process is in two batches. Great companies were not built in batches so there seems to be a process conflict. Someone who is feeling great about their startup in June-July would be depressed by December when winter applications reopen. Perhaps a rolling-in applications model [1]?
Role of premise - B: I know a couple of really awesome guys who went for their interviews and came back with a no. While there would have been genuine reasons, or simply bad luck, for these people getting rejected but I saw at least a few of them outgrowing their 'pariah' status and deciding to go for it and build it all by themselves. Cockroaches?
How should I put this? This situation is like a river flowing across the plains. The river-bed gives shape and path to the flowing water, but flowing water too, in the long run, gives shape to the river bed and alters its course.
Role of premise - C: There is role of who gets in, how many get in and how they do it. Given that the size of batches have gone up, I do believe that number of sentences exchanged with PG/partners per startup must have gone down. Or it is skewed between the white and black swans. And that could be a huge set-back for some. Make-or-break fluctuations are so tiny and yet so important. Even though this is a scalability challenge for an accelerator program like YC, but I guess there has to be a hard limit on how many are taken in. Which is bad because there is no limit on the number of applications though.
I guess writing more on this will take a lot of time. These are some of the thoughts which I am sure are well understood at the combinator. It's just an outside-in view from where I am coming from.
[1] http://techcrunch.com/2012/08/18/how-instacart-hacked-yc/ [writing in progress]
The relevant detail here is that I've had ~20-30 people/yr ask for advice on applications, and aside from "be concise and straightforward; emphasize your strengths in every answer; be clear and don't assume people will have the patience to decode some rhetorical trick", "wtf, I can't see your video because you left it as 'private'" and "I can't actually hear your audio" are common.
If none of the founders at your startup can write at a basic, clear level - YC applications are no works of literature - and the founders cannot hold a conversation (that tjeu prepared for) in front of a camera (let alone a spontaneous real life conversation), then the founders have no business starting a company that one day might have 5, 10, 20, 50, 100, or 1000 employees.
It is a common misconception that introverts have some fear of holding conversations and give presentations. An introvert is merely someone who doesn't necessarily enjoy those things and for whom those activities are tiring.
If you're bad at presentations, it's not because you're an introvert. It's because you don't know what you're doing. Holding a stage, as any well-practiced performer will tell you, takes attention, skill, and work. Talent helps, but that just makes it easier to develop what's essential: skill.
You wouldn't pay to hear a performer practice scales. Nor (generally speaking) would you pay to hear a performer who hasn't practiced scales. But disagreement about the cause of bad presentations aside, I fully agree; leading (as opposed to managing) an organization demands the ability to tell a story that can bring together a broad range of people and interests to make the thing work as a whole. And that's a skill so important it borders on an art.
I didn't read this whole comment, but that part at least is false, because we've hired new partners at a higher rate than batches have grown. We now have 5 people doing for 50-startup batches what I used to do alone for 20-startup batches.
It's kind of sad that admins are unable to take criticism or face real questions and are overreacting to it.
https://news.ycombinator.com/item?id=5650171
but in fact they were not. The comments of the user you mention do not appear dead to me (I have showdead turned on).
It is unbelievable to me that PG did not read the whole comment. Nevertheless, this is not a good sign for tech start-ups.
Re: Premise B, there are plenty of people that get rejected at one point, keep going, and join later on. The Strikingly guys got rejected once.