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Perhaps I'm not giving the batch enough credit (there are some incredibly interesting companies in there) but it strikes me there is still a lot of fluff in bet

Perhaps I'm not giving the batch enough credit (there are some incredibly interesting companies in there) but it strikes me there is still a lot of fluff in between the gems. I can't help but think YC would see that, so - unless they expect those companies to be acquired quickly - other than if it is an attempt to corner the incubator market (once they are in every deal, they have all the leverage over both startups and VCs) I fail to understand why they need their batches to be this large. They could have a batch half the size or smaller and pour more gasoline on fewer (better) fires. A few of the companies seem like ones that could have bootstrapped or funded via kickstarter. They don't strike me as businesses that will make venture capitalists back their money in any considerable way. All that being said I absolutely love the shift toward hard tech and Africa. But I can't believe there's another 60 to come...

danieltillett 11y ago
I agree. There are a lot of great businesses in this group, but not too many potential unicorns. I really hope this signals a VC shift towards backing real businesses.
ramykhuffash 11y ago
A lot of today's big tech companies looked like "fluff" in the beginning. I assume YC picked the companies based on more than what their current product offering is.
- ryanSrich 11y ago
  I think "fluff" is the wrong word. However I find it extremely difficult to imagine some of these companies earning > $1bn, which is what VCs are looking for. If you're not gunning for > $1bn in valuation you're essentially killing your company by giving away equity to VCs.
- mkohlmyr 11y ago
  I think if you add the word "profitable" to the first sentence, the "a lot" changes to "some". But I will give you that "some" :) Fluff was probably the wrong word. When the perception you want to build around your incubator is about massive, life-improving, world-changing businesses (or at least that's my impression). There are some ideas I would consider leaving on the table for other investors and incubators. - plush phones for toddlers / really loud speakers (kickstarter). - Slack or Zapier acquisition targets. - Chatroulette for phonecalls. - The next Whisper / Secret / YikYak / Gossup / Babbly / Cloaq - Yet another live streaming service. - A meal subscription service which makes me buy an oven to join? No offense intended to any founders or investors. If I'm wrong that's great!
  - TheOtherHobbes 11y ago
    I wonder if there are sector quotas, or at least sector tick boxes: Social Developing World Middle Class US Consumer B2B ...and so on. Of the set, I think the Developing World group is the most interesting. The markets there are huge and largely untapped, and a hit really does have the potential to change the world. The Middle Class US Consumer group seems the least interesting. Some of the hardware projects wouldn't be out of place in a Sharper Image catalogue.
deleted 11y ago
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jeffmould 11y ago
Not to knock on the group of companies, but I tend to agree. I think the larger the YC cohorts get, the more it becomes evident that the interview/selection process is heavily weighted towards the team and not the product. My take is that they are playing the odds game. With a bigger cohort they can risk more on the team instead of focusing on the product. The theory being that if they select 120 companies, the chances of having a few unicorns is increased. The smaller the cohort, the more they have to look at the product so the risk is minimized that none of the companies are unicorns. With that said, I completely agree that I would like to see them return to smaller batch sizes. I think the larger cohorts almost give an assembly line feel to the process. Again, not diminishing the accomplishment of any of the companies, but I think the larger cohorts is almost doing a disservice to the founders.
- mkohlmyr 11y ago
  I agree they are betting on teams. Teams that are able to do "something". I guess I would prefer to see them take on a smaller number of teams and encourage them to go after bigger visions with more seed capital behind them. As I think about it more it seems to me that vision is really the problem, and maybe some of the teams have a vision that is limited by their experiences and surroundings.
  - jeffmould 11y ago
    Yep. The problem they may start running into with putting all the eggs in one basket with the team approach, is it can lead to a potential misconception about the program as a whole. Investors have favored YC companies because of the quality of the program and companies it is able to product. If the quality starts to go down with products, it hsa the potential to hurt better companies coming out of a cohort.
tomhoward 11y ago
This comment has been made about pretty much every batch of YC, right back to when it was only 8-15 companies. The response is the same now as it has always been in the past: YC knows it can't predict in advance which companies could be home runs, so its approach is to "bet on the field" (which, thanks to power-law returns, actually works in startup investing in a way that it doesn't in horse race betting). Remember, Airbnb and Dropbox were roundly panned when they first appeared out of YC, and in both cases were very nearly not accepted at all (Dropbox was rejected on the first application. Airbnb was accepted even though YC thought their home-sharing business was stupid and would most likely fail. YC accepted them because they were impressed that Airbnb had bootstrapped themselves by selling breakfast cereal). Plenty of other companies that looked like winners early on have failed, and others that looked ridiculous have gone on to become very successful. But nobody knew which would be which at demo day. To understand more about YC's m.o., read these PG essays: http://paulgraham.com/swan.html http://paulgraham.com/swan.html http://paulgraham.com/altair.html http://paulgraham.com/altair.html
- stuckFounder 11y ago
  > Remember, Airbnb and Dropbox... This comment has also been made pretty much every batch. Trotting out companies that were picked before the growth strategy was implemented as evidence that the growth strategy is a good idea doesn't make sense. Dropbox and Airbnb were massively successfully with in 2-3 years. What are the big successes from 2013 to the present?
  - peripitea 11y ago
    Cruise and Zenefits jump immediately to mind.
    - stuckFounder 11y ago
      Cruise was started by Twitch co-founder, again pre-dating the strategy. And Zenefits, LOL.
      - 11y ago
traviswingo 11y ago
I've been getting the same feeling lately. There are definitely a handful of companies in this batch that are solving real problems, but I can't help but feel the majority of them are not true value-ads in a world where real problems exist.
- JCordeiro 11y ago
  This was exactly my take-away after reading through this list. Industrial safety inspections done by robots and affordable, modern zero-energy homes are the kind of difficult real world problems that will make the world a better place when solved. On the other hand, I don't know if glass-by-glass wine delivery or another college social network are solutions to real "problems" that needed to be solved. Now of course, it's still early for a lot of these startups and I can be proven wrong. But the potential impact of a something like a smart oven with a companion subscription meal service seems really small compared to an idea like a marketplace for farmers in India to sell directly to institutional buyers
- swalsh 11y ago
  I took away the exact opposite reaction. I think there are a handful of fluff startups in there, but there seems like a bunch going after real problems. What really impresses me is how many are working on problems that Silicon Valley doesn't even know exists.

danieltillett 11y ago

I agree. There are a lot of great businesses in this group, but not too many potential unicorns. I really hope this signals a VC shift towards backing real businesses.

ramykhuffash 11y ago

A lot of today's big tech companies looked like "fluff" in the beginning. I assume YC picked the companies based on more than what their current product offering is.

ryanSrich 11y ago
I think "fluff" is the wrong word. However I find it extremely difficult to imagine some of these companies earning > $1bn, which is what VCs are looking for. If you're not gunning for > $1bn in valuation you're essentially killing your company by giving away equity to VCs.
mkohlmyr 11y ago
I think if you add the word "profitable" to the first sentence, the "a lot" changes to "some". But I will give you that "some" :) Fluff was probably the wrong word. When the perception you want to build around your incubator is about massive, life-improving, world-changing businesses (or at least that's my impression). There are some ideas I would consider leaving on the table for other investors and incubators. - plush phones for toddlers / really loud speakers (kickstarter). - Slack or Zapier acquisition targets. - Chatroulette for phonecalls. - The next Whisper / Secret / YikYak / Gossup / Babbly / Cloaq - Yet another live streaming service. - A meal subscription service which makes me buy an oven to join? No offense intended to any founders or investors. If I'm wrong that's great!
- TheOtherHobbes 11y ago
  I wonder if there are sector quotas, or at least sector tick boxes: Social Developing World Middle Class US Consumer B2B ...and so on. Of the set, I think the Developing World group is the most interesting. The markets there are huge and largely untapped, and a hit really does have the potential to change the world. The Middle Class US Consumer group seems the least interesting. Some of the hardware projects wouldn't be out of place in a Sharper Image catalogue.

deleted 11y ago

[deleted]

jeffmould 11y ago

Not to knock on the group of companies, but I tend to agree. I think the larger the YC cohorts get, the more it becomes evident that the interview/selection process is heavily weighted towards the team and not the product. My take is that they are playing the odds game. With a bigger cohort they can risk more on the team instead of focusing on the product. The theory being that if they select 120 companies, the chances of having a few unicorns is increased. The smaller the cohort, the more they have to look at the product so the risk is minimized that none of the companies are unicorns. With that said, I completely agree that I would like to see them return to smaller batch sizes. I think the larger cohorts almost give an assembly line feel to the process. Again, not diminishing the accomplishment of any of the companies, but I think the larger cohorts is almost doing a disservice to the founders.

mkohlmyr 11y ago
I agree they are betting on teams. Teams that are able to do "something". I guess I would prefer to see them take on a smaller number of teams and encourage them to go after bigger visions with more seed capital behind them. As I think about it more it seems to me that vision is really the problem, and maybe some of the teams have a vision that is limited by their experiences and surroundings.
- jeffmould 11y ago
  Yep. The problem they may start running into with putting all the eggs in one basket with the team approach, is it can lead to a potential misconception about the program as a whole. Investors have favored YC companies because of the quality of the program and companies it is able to product. If the quality starts to go down with products, it hsa the potential to hurt better companies coming out of a cohort.

tomhoward 11y ago

This comment has been made about pretty much every batch of YC, right back to when it was only 8-15 companies. The response is the same now as it has always been in the past: YC knows it can't predict in advance which companies could be home runs, so its approach is to "bet on the field" (which, thanks to power-law returns, actually works in startup investing in a way that it doesn't in horse race betting). Remember, Airbnb and Dropbox were roundly panned when they first appeared out of YC, and in both cases were very nearly not accepted at all (Dropbox was rejected on the first application. Airbnb was accepted even though YC thought their home-sharing business was stupid and would most likely fail. YC accepted them because they were impressed that Airbnb had bootstrapped themselves by selling breakfast cereal). Plenty of other companies that looked like winners early on have failed, and others that looked ridiculous have gone on to become very successful. But nobody knew which would be which at demo day. To understand more about YC's m.o., read these PG essays: http://paulgraham.com/swan.html http://paulgraham.com/swan.html http://paulgraham.com/altair.html http://paulgraham.com/altair.html

stuckFounder 11y ago
> Remember, Airbnb and Dropbox... This comment has also been made pretty much every batch. Trotting out companies that were picked before the growth strategy was implemented as evidence that the growth strategy is a good idea doesn't make sense. Dropbox and Airbnb were massively successfully with in 2-3 years. What are the big successes from 2013 to the present?
- peripitea 11y ago
  Cruise and Zenefits jump immediately to mind.
  - stuckFounder 11y ago
    Cruise was started by Twitch co-founder, again pre-dating the strategy. And Zenefits, LOL.
    - 11y ago

traviswingo 11y ago

I've been getting the same feeling lately. There are definitely a handful of companies in this batch that are solving real problems, but I can't help but feel the majority of them are not true value-ads in a world where real problems exist.

JCordeiro 11y ago
This was exactly my take-away after reading through this list. Industrial safety inspections done by robots and affordable, modern zero-energy homes are the kind of difficult real world problems that will make the world a better place when solved. On the other hand, I don't know if glass-by-glass wine delivery or another college social network are solutions to real "problems" that needed to be solved. Now of course, it's still early for a lot of these startups and I can be proven wrong. But the potential impact of a something like a smart oven with a companion subscription meal service seems really small compared to an idea like a marketplace for farmers in India to sell directly to institutional buyers
swalsh 11y ago
I took away the exact opposite reaction. I think there are a handful of fluff startups in there, but there seems like a bunch going after real problems. What really impresses me is how many are working on problems that Silicon Valley doesn't even know exists.