Applications open for the summer 2014 YC batch
ycombinator.com
ycombinator.com
The above question popped out at me this year.
I don't know a lot about the groups that YC accepts, except what I read in the occasional press-release or HN post. But I have noticed a pattern: it seems that many (and perhaps most?) of the YC companies I've read about recently had already launched and found success prior to YC, sometimes years prior.
This pattern might only indicate that I'm reading about those kinds of YC startups, and that completely new companies that launched post-YC don't get as much of my attention.
Nonetheless, I've found this pattern to be at odds with what I thought YC was about — pre-launch investment and mentoring of brand new companies.
It makes sense to invest in people and companies that have already found success. Even if such companies pivot to something completely new, they have a track record and a user base to work from.
Has YC made an informal pivot itself, to funding companies that have already launched and found traction rather than in great teams of founders that probably aren't even incorporated yet?
The reasons are well known: the cost of developing software (at least the initial prototype) have dropped far enough that a great many people can afford to build a prototype themselves.
Further, the cost of market validation has also dropped enough such that a great many companies can achieve some market validation without outside capital.
Put together, it's a reasonable expectation that a dedicated entrepreneur will put in both the minimal time and money to both build a prototype and prove that real customers exist who view the solution as valuable.
However, the cost of building a big business is still high. Specifically, ramping up development, hosting, marketing (team and spend), sales, etc. still costs enough money that outside capital helps.
This last point is key and answers the question of "why would I raise capital if I did all of the work of building a prototype and getting my initial customers?".
Lastly, the ultimate goal is to succeed. There are a number of different paths to success, but one of the worst failures is not outright failure of a company.
If you think about the possible outcomes of a business, there are basically 3:
1. Complete failure...business shuts down
2. Moderate success...$2 million, $5 million up to maybe $25 million
3. Success... $25 million plus with the ultimate goal of doing 9 or 10 figures a year
#1 sucks. Maybe more without venture capital as its your money you lost, but it's good in no way.
#3 is great whether or not you get venture financing. Depending on your financing, you'll walk away with $5 million or more personally.
#2 can either be a wonderful success, or the worst failure (worse than #1). #2 is great if you bootstrapped. If you bootstrapped, you'll walk away with $5 million or more in your pocket. If you grow to $10M+ in revenue, then you're financially free.
However, #2 sucks if you raised significant capital. Most likely, you hate the company because you'll walk away will nothing even though the company has had some success. Investors will hate the company because the investment is sucking up time, focus and will never be a winner.
In this light, waiting to raise capital until a company is a little bit more mature is a boon for entrepreneurs. If you have a #1 then kill it and move onto the next opportunity. If you have a #3, then go raise (or don't).
But, if you have a #2 then you know you can get rich by bootstrapping, which will prevent you from making the mistake of raising capital for a non-venture fundable business.
Actually the trend in the venture business is actually the opposite. The biggest change in the last few years has been the increase in pre-series A investments, both by "super-angels" (which are structurally mini VC funds) and existing VC firms.
I may have done a poor job of wording as I used the word stage which has a specific meaning. What I meant was the first investment (seed) has moved from idea stage to prototype.
With the clarification, do you think it is accurate?
We make a conscious effort not to be influenced by early progress though, because there is no correlation between how far along a company is when they apply to YC and how well they end up doing.
Given how many reapplications YC gets, it seems that it should only invest in companies it thinks would do so well in the next 6 months that they won't apply in the next round.
If YC is getting fewer misses on companies that are rejected but go on to do well, how much of that do you ascribe to the selection process and how much do you ascribe to YC's increasing ability to get multiple passes at startups?
Along the way we learned a lot about why YC is important, what it does for you (and what it doesn't) and why the application process is one of the best ways to think through creating your startup.
We've been really lucky to have great alumni help advise us and give us feedback on our applications (yes, all of six of them, thanks Jason Freedman!).
So hit me up if you want me to look over anything, it's the least I can do: hello@sandersak.com
EDIT - I may be slow on the reply until after demo day ;)
But yeah, if you get an interview (you're already doing pretty well!), the 42Floors founders practice interview is the best training you can get for it.
Nothing else will be as helpful as a mock interview. Jason's advice is on point, direct, and helpful. He's probably as close as you get to the real thing.
2 Backspac.es - mobile photo storytelling
1 Beacon - fund a writer, read everything on the platform
Backspaces went from 1,000 users (first application) to 60,000 users in the 6 months since we'd first applied. We worked on this full time and we got an interview the second time.
We re-applied along the way because we had progressed and gotten better at everything each time. We never even got an interview until 5th or 6th time.
Note: If you somehow get face time with one of the partners and you impress them, you will likely get an interview. We made that happen and then got an interview.
Although I haven't made it into YC yet I would definitely love to help anyone out even if it just means sharing my thoughts about your idea/startup :)
Shoot me an email @ tony@tonyrice.me or tony@automate.ly
The best thing about startups is you don't need YC to make it happen. You need to work on something you and others find valuable that you're willing to work your ass off for.
Maybe others get in on their first try, and are clearly more able, capable, or validated than me, but that's not really how I gauge why I do things. Neither is getting rejected.
I'm the first to admit that I'm not nearly the smartest person to ever apply to YC. Hell I'm probably one of the dumbest. But there's no reason not to apply. The only downside is getting the rejection letter (and the free mixpanel credits). The upside, at least so far in my experience, has been well worth it.
Especially when you factor in that as an immigrant I had to leave America 3 times, once because I was diagnosed with cancer, and haven't legally been able to take salary from my own company in 2 years.
Try out 1000 of things, do a pivot, pitch investors here and there, apply YC every now and then. Nothing pathetic about that.
I also share SandersAK's opinion: just writing a YC application will force you to think about the "right things" for your business. It's a worthy exercise in its own right.
[1] https://www.lollipuff.com/blog/102/lollipuffs-ycombinator-ex...
EDIT: Awww! I just saw our old MVP screenshots on that blog post. Lollipuff has come a long way since then...
And now you're proving me right. Which rocks.
For example, are "Things Built on Twitter"[2] and "iPad Applications"[3] still a valid way to build a $XX billion company in today's world?
[1] http://ycombinator.com/rfs.html
https://www.penflip.com/loren/yc-application
Wasn't accepted, but it might help anyway.
If anyone's curious, no, I didn't lose all hope and give up when YC rejected me. Third time being rejected, and it hurts less every time :) Still going strong on this idea, refuse to quit.
Remember that the success of your product/company ultimately comes down to you and the market you are in and not necessarily the money that is invested or the often nebulous social status that might come with getting into such programs. What matters is creating something which is of service to and valuable to other people.
It's really interesting to hear what everyone is working on, and it's a rare look at the YC investment thesis. Also interesting to see what these companies have gone on to achieve, YC or not. I was most inspired by the stories of everyone who had travelled from foreign countries to pitch.
"become president of Y Combinator starting next batch"
Thanks
Will people that plan to move back home or have home (non American) markets as their primary markets be considered?
It would be interesting to see how Sama's batch differs from PG's
Many have done this, whether planned or not I don't know in all cases, but I know that Glio has Brazil as their primary market.
We're certainly willing to fund companies building stuff for their home country and that will return to it after YC. GoCardless is probably the most prominent.
-- This is too less time for companies based outside of the US to arrange cheap tickets, visas etc.
Addendum: If there are any noob mistakes you want to point out, I'd very much appreciate it because it's the first time we're applying.
Do you accept them? Do you have conflict of interest or confidentiality policies?
Do you ever have conversations with existing YC companies along the lines of "We had an application recently for product X, you should do that."?
As for the fourth, of course not.
Please forgive me if the question seems redundant. I am reluctant to even ask as YC has a reputation of integrity. However, the mantra that "ideas are worthless" causes concern that perhaps precautions might not be taken to avoid such a scenario (because by implication, it would seem this could be viewed as a non-event). My apologies if I have misunderstood the views of YC on the matter.
As a counter point, if you want to raise external funding, you probably should accept the fact you will likely have to share your idea without protection - as its unlikely any VC will sign an NDA, and you have no idea who they will push your pitch deck to in order to get a 2nd opinion.
Also, we don't set quotas at YC. If we think your non-profit would be a good fit for YC, we'll accept you.