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Why does YC needs to grow into 2000 companies/ year program? I feel they should tackle it like a University. Stanford does not try to grow 10x from 20k students

by ameyamk 11y ago

Why does YC needs to grow into 2000 companies/ year program? I feel they should tackle it like a University. Stanford does not try to grow 10x from 20k students to 200k students. Part of the appeal is exclusivity (besides of course its hard to scale). I'd rather see YC at 200-300 companies a year - and ensuring these companies continue to grow/ succeed after the batch is over rather than churning out 1000 more.

wslh 11y ago
Since nobody can accurately predict which companies will succeed, putting more companies in the pipeline will give you , generally speaking, more companies at the end.
- stfu 11y ago
  But in the end they are not able to pay the same amount of attention to 2000 startups vs 200. Or having really a hard time providing the same quality team. Does that in the end mean that it doesn't really matter for the success of a YCombinator startup that they can just walk randomly into Paul Graham's office and ask for advice?
  - nzoschke 11y ago
    You are right, it doesn't matter. pg gives general advice to everyone on his blog. So do all the other YC partners. The constant feedback you need to build a successful business comes from you, your cofounders, your team and most importantly your customers. Investors, board members and advisors all help too. But it's the people that live the business day in and day out that make it a success.
  - wslh 11y ago
    > But in the end they are not able to pay the same amount of attention to 2000 startups vs 200. But this is the same issue everyone has when running their business! It is a problem of execution that you need to solve (or failed at) when you scale. Can you say that Google can't pay the same level of attention to their search engine once they started AdWords?
akshatpradhan 11y ago
>Part of the appeal is exclusivity There are too many complex problems in the world that need to be solved for the desire of exclusivity to exist. I think 2000 companies/year is too few. There are so many good problems that need to be solved and they just need a little bit of midas's touch. This sounds pretty reasonable to me.
- ThomPete 11y ago
  There are indeed. But is YC really going after those? As far as I understand they are def interested in research etc. But I have still to see any real complex or hard problems they are trying to solve. Or am I missing something?
  - elliotec 11y ago
    Do you think it's lack of YC seeking them out or lack of startup founders tackling these problems?
    - w1ntermute 11y ago
      There are plenty of startups solving hard and complex problems. The issue is that they're usually not amenable to the Silicon Valley VC model of "sell it to the next biggest fool."
    - ThomPete 11y ago
      I think it's a lack of synergy between the angel model and the price of solving really big or complex problems. YC in my understanding is catered at companies who are solving natural next steps at the right time, not necessarily problems with a 5-10 year horizon. I am always reminded how Interval Research went from 10 years research to market horizon to suddenly 3-4 years. For all the Silicon Valley is good it it seems to be best at creating relatively obvious solutions for fairly trivial problems. If more big and complex problems were solved Elon Musk would be the rule not the exception. This is what's kind of sad about SV these days. It might drive the digital economy but one might ask in what direction.
paulsutter 11y ago
Apparently exclusivity isn't one of their goals. What's the practical value of exclusivity? Would you ever choose exclusivity over effectiveness?
- smt88 11y ago
  Exclusivity has so much practical value than the entire university system in the US is built around it. If you participate in a program that's considered to be exclusive, you will have an easier time standing out when competing in the future. It applies to people, and it applies to companies.
  - paulsutter 11y ago
    If YC isn't exclusive enough for you, I'm sure you can find a more exclusive accelerator. In the eyes of customers, I don't think it would give you an "easier time standing out when competing", but I guess everyone is entitled to place their own bets.
    - smt88 11y ago
      Not in the eyes of customers, but in the eyes of future investors. I don't think customers should know or care what accelerator a company went through, although Cinder does advertise itself as "YC-backed" in order to convince customers that it's not a Kickstarter scam.
deleted 11y ago
[deleted]
salmonet 11y ago
Force-fitting their old model into today doesn't make sense. YC has different core competencies now and the startup landscape is different. The separate early-stage fellowship won't dilute the brand at all, YC Core will still be as prestigious as it always was because it will still be exclusive.
jacquesm 11y ago
Because if they don't expand acceptance with the number of applications being done for every class they would end up being a program that you have almost no chance of getting into if you apply. They might miss out on quality that way, there is most likely a fairly fixed relationship between #applicants and #accepts in order to make the formula work.
- danieltillett 11y ago
  Yes Jacques this is a very good point. If YC is perceived to be a total lottery then nobody with any talent will bother applying. Personally I think this problem is best solved by making the selection criteria narrower. Rather than expanding, YC should be narrowing its focus. Of course this requires that they narrow to the right area which is very hard problem.
  - gmarx 11y ago
    People continue to apply to Harvard. The problem YC has will be similar. At some point the thing changes from being a thing that improves its students to a credential or at least a marker. Once you make that transition, smaller size is needed to maintain the perceived value of the marker
    - danieltillett 11y ago
      Harvard has an self-described problem where a large percentage of the students they would admit don't apply (particular those from low income backgrounds) because they think they won't get in. Sure YC will keep its pipeline full, but if it is worried about getting the best then it needs to adjust what it is doing.
prawn 11y ago
Why 200-300? Why not 20-30 so they can really focus? And if the answer is 200-300 because it seems like something they could realistically support, then what's against them scaling to support 2000-3000? Especially with their inclusion of overseas companies likely to tackle broader markets.
crdb 11y ago
Because angel investing is a numbers game, and extending funding beyond those who traditionally have access to it has always been YC's edge (whether or not they saw it as such). You can fund 1,000 companies for 30k and if one becomes Uber [3] and all the others fail your 7% stake might be worth as much as 145x your initial investment. 30 million is only a half dozen Yahoo parties, many countries have wasted multiples of that on fancy "entrepreneurship encouraging" offices. When Georges Doriot financed DEC in 1957 [1], he got 70% for his $70,000 ($600,000 in 2016 [2]). These were proven scientists with a track record of successful research. It was considered a landmark deal because it was not blue chip, and the founders were not connected. How many smart people languished in corporate or government labs instead of starting another DEC or Microsoft? What was the opportunity cost of the lack of capital availability? Then you have YC v1.0, which invested $20k for 7%... which we easily forget today was a non-controlling stake, and thus groundbreaking (or at least trend-setting). YC set the terms for the rest of the world to follow (slowly - I still meet, here in Singapore, angels who want complete control from the seed round onwards). Founders could actually still control their company after taking outside money! Of course there were the ancillary benefits of the network and so on, but to me the really groundbreaking idea was also that significant expansion of the number of companies that could get funded. Working class scholar at MIT whose daddy doesn't know Tim Draper? No worries, you just need to fill in the form, YC will get in touch. Competition, and inflation (both general inflation, and of opportunity cost from the two tech booms) drove that up to $120k, still for 7% - which even today is a very good deal for a pre-product company, and allowed thousands of founders to have access to a much better deal than they would otherwise. Who is left out at this point? Pre-product companies that need money to get the MVP done, and foreign companies where seed investment is done on much worse terms than in the US for a variety of reasons that are regularly discussed here. They don't need much; as has been amply written about you can get ramen profitable on 20-50k with many ideas, and this is literally years of living costs in much of the world. But that capital is just not available because wealth is concentrated in (often foreign) land, bonds and blue chip companies. 1.5% is laughably small, doubly so when you consider this is basically free money unless you become a fairly decent success. YC is not the only company who understands this. The very idea of 500 Startups - "if you have an angel, you're eligible" - is about numbers over any attempt at reading the future. I can't wait to see how it works out. And how people will copy it. And I love the philosophy of it: YC is expressly saying that no, not all talent is concentrated at "Stanford" - that there are many variables in life (such as geographical location or social background) that will impede a large number of talented people from having access to the resources necessary to capitalise on that talent. [1] https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#Origins https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#... [2] http://www.dollartimes.com/inflation/inflation.php?amount=70000&year=1957 http://www.dollartimes.com/inflation/inflation.php?amount=70... [3] http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation http://www.bloomberg.com/news/articles/2015-12-03/uber-raise...
briantmaurer 11y ago
The important part of exclusivity is not in number, but in quality.
nzoschke 11y ago
YC offers funding, advice, and a network. This can scale to 2000 companies. If YC does they will make more money and have more global impact. They don't build your business, team or really do anything to guarantee your growth or success. Success has to come from founders.
johnm1019 11y ago
I think it's great that YC is thinking big and taking a risk by doing something no one has done before. The US economy wins whether they succeed or fail at this experiment, and the value creation if they succeed will be huge.
dillchen 11y ago
> I feel they should tackle it like a University. Stanford... YC is still an order of a magnitude smaller than YC. 200 startups per year, so maybe 600 founders at the max. Even if YC is trying to build in exclusivity, there's much to be gained before they hit Stanford's scale. Also, I don't think it will be that hard to scale advice for their startups. All that's needed is to add more partners. Although this might complicate their org/management structure.

by ameyamk 11y ago

wslh 11y ago

Since nobody can accurately predict which companies will succeed, putting more companies in the pipeline will give you , generally speaking, more companies at the end.

stfu 11y ago
But in the end they are not able to pay the same amount of attention to 2000 startups vs 200. Or having really a hard time providing the same quality team. Does that in the end mean that it doesn't really matter for the success of a YCombinator startup that they can just walk randomly into Paul Graham's office and ask for advice?
- nzoschke 11y ago
  You are right, it doesn't matter. pg gives general advice to everyone on his blog. So do all the other YC partners. The constant feedback you need to build a successful business comes from you, your cofounders, your team and most importantly your customers. Investors, board members and advisors all help too. But it's the people that live the business day in and day out that make it a success.
- wslh 11y ago
  > But in the end they are not able to pay the same amount of attention to 2000 startups vs 200. But this is the same issue everyone has when running their business! It is a problem of execution that you need to solve (or failed at) when you scale. Can you say that Google can't pay the same level of attention to their search engine once they started AdWords?

akshatpradhan 11y ago

>Part of the appeal is exclusivity There are too many complex problems in the world that need to be solved for the desire of exclusivity to exist. I think 2000 companies/year is too few. There are so many good problems that need to be solved and they just need a little bit of midas's touch. This sounds pretty reasonable to me.

ThomPete 11y ago
There are indeed. But is YC really going after those? As far as I understand they are def interested in research etc. But I have still to see any real complex or hard problems they are trying to solve. Or am I missing something?
- elliotec 11y ago
  Do you think it's lack of YC seeking them out or lack of startup founders tackling these problems?
  - w1ntermute 11y ago
    There are plenty of startups solving hard and complex problems. The issue is that they're usually not amenable to the Silicon Valley VC model of "sell it to the next biggest fool."
  - ThomPete 11y ago
    I think it's a lack of synergy between the angel model and the price of solving really big or complex problems. YC in my understanding is catered at companies who are solving natural next steps at the right time, not necessarily problems with a 5-10 year horizon. I am always reminded how Interval Research went from 10 years research to market horizon to suddenly 3-4 years. For all the Silicon Valley is good it it seems to be best at creating relatively obvious solutions for fairly trivial problems. If more big and complex problems were solved Elon Musk would be the rule not the exception. This is what's kind of sad about SV these days. It might drive the digital economy but one might ask in what direction.

paulsutter 11y ago

Apparently exclusivity isn't one of their goals. What's the practical value of exclusivity? Would you ever choose exclusivity over effectiveness?

smt88 11y ago
Exclusivity has so much practical value than the entire university system in the US is built around it. If you participate in a program that's considered to be exclusive, you will have an easier time standing out when competing in the future. It applies to people, and it applies to companies.
- paulsutter 11y ago
  If YC isn't exclusive enough for you, I'm sure you can find a more exclusive accelerator. In the eyes of customers, I don't think it would give you an "easier time standing out when competing", but I guess everyone is entitled to place their own bets.
  - smt88 11y ago
    Not in the eyes of customers, but in the eyes of future investors. I don't think customers should know or care what accelerator a company went through, although Cinder does advertise itself as "YC-backed" in order to convince customers that it's not a Kickstarter scam.

deleted 11y ago

[deleted]

salmonet 11y ago

Force-fitting their old model into today doesn't make sense. YC has different core competencies now and the startup landscape is different. The separate early-stage fellowship won't dilute the brand at all, YC Core will still be as prestigious as it always was because it will still be exclusive.

jacquesm 11y ago

Because if they don't expand acceptance with the number of applications being done for every class they would end up being a program that you have almost no chance of getting into if you apply. They might miss out on quality that way, there is most likely a fairly fixed relationship between #applicants and #accepts in order to make the formula work.

danieltillett 11y ago
Yes Jacques this is a very good point. If YC is perceived to be a total lottery then nobody with any talent will bother applying. Personally I think this problem is best solved by making the selection criteria narrower. Rather than expanding, YC should be narrowing its focus. Of course this requires that they narrow to the right area which is very hard problem.
- gmarx 11y ago
  People continue to apply to Harvard. The problem YC has will be similar. At some point the thing changes from being a thing that improves its students to a credential or at least a marker. Once you make that transition, smaller size is needed to maintain the perceived value of the marker
  - danieltillett 11y ago
    Harvard has an self-described problem where a large percentage of the students they would admit don't apply (particular those from low income backgrounds) because they think they won't get in. Sure YC will keep its pipeline full, but if it is worried about getting the best then it needs to adjust what it is doing.

prawn 11y ago

Why 200-300? Why not 20-30 so they can really focus? And if the answer is 200-300 because it seems like something they could realistically support, then what's against them scaling to support 2000-3000? Especially with their inclusion of overseas companies likely to tackle broader markets.

crdb 11y ago

Because angel investing is a numbers game, and extending funding beyond those who traditionally have access to it has always been YC's edge (whether or not they saw it as such). You can fund 1,000 companies for 30k and if one becomes Uber [3] and all the others fail your 7% stake might be worth as much as 145x your initial investment. 30 million is only a half dozen Yahoo parties, many countries have wasted multiples of that on fancy "entrepreneurship encouraging" offices. When Georges Doriot financed DEC in 1957 [1], he got 70% for his $70,000 ($600,000 in 2016 [2]). These were proven scientists with a track record of successful research. It was considered a landmark deal because it was not blue chip, and the founders were not connected. How many smart people languished in corporate or government labs instead of starting another DEC or Microsoft? What was the opportunity cost of the lack of capital availability? Then you have YC v1.0, which invested $20k for 7%... which we easily forget today was a non-controlling stake, and thus groundbreaking (or at least trend-setting). YC set the terms for the rest of the world to follow (slowly - I still meet, here in Singapore, angels who want complete control from the seed round onwards). Founders could actually still control their company after taking outside money! Of course there were the ancillary benefits of the network and so on, but to me the really groundbreaking idea was also that significant expansion of the number of companies that could get funded. Working class scholar at MIT whose daddy doesn't know Tim Draper? No worries, you just need to fill in the form, YC will get in touch. Competition, and inflation (both general inflation, and of opportunity cost from the two tech booms) drove that up to $120k, still for 7% - which even today is a very good deal for a pre-product company, and allowed thousands of founders to have access to a much better deal than they would otherwise. Who is left out at this point? Pre-product companies that need money to get the MVP done, and foreign companies where seed investment is done on much worse terms than in the US for a variety of reasons that are regularly discussed here. They don't need much; as has been amply written about you can get ramen profitable on 20-50k with many ideas, and this is literally years of living costs in much of the world. But that capital is just not available because wealth is concentrated in (often foreign) land, bonds and blue chip companies. 1.5% is laughably small, doubly so when you consider this is basically free money unless you become a fairly decent success. YC is not the only company who understands this. The very idea of 500 Startups - "if you have an angel, you're eligible" - is about numbers over any attempt at reading the future. I can't wait to see how it works out. And how people will copy it. And I love the philosophy of it: YC is expressly saying that no, not all talent is concentrated at "Stanford" - that there are many variables in life (such as geographical location or social background) that will impede a large number of talented people from having access to the resources necessary to capitalise on that talent. [1] https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#Origins https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#... [2] http://www.dollartimes.com/inflation/inflation.php?amount=70000&year=1957 http://www.dollartimes.com/inflation/inflation.php?amount=70... [3] http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation http://www.bloomberg.com/news/articles/2015-12-03/uber-raise...

briantmaurer 11y ago

The important part of exclusivity is not in number, but in quality.

nzoschke 11y ago

YC offers funding, advice, and a network. This can scale to 2000 companies. If YC does they will make more money and have more global impact. They don't build your business, team or really do anything to guarantee your growth or success. Success has to come from founders.

johnm1019 11y ago

I think it's great that YC is thinking big and taking a risk by doing something no one has done before. The US economy wins whether they succeed or fail at this experiment, and the value creation if they succeed will be huge.

dillchen 11y ago

> I feel they should tackle it like a University. Stanford... YC is still an order of a magnitude smaller than YC. 200 startups per year, so maybe 600 founders at the max. Even if YC is trying to build in exclusivity, there's much to be gained before they hit Stanford's scale. Also, I don't think it will be that hard to scale advice for their startups. All that's needed is to add more partners. Although this might complicate their org/management structure.