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There does seem to be something interesting about how less successful* YC alumni now seem to be becoming partners. And, of course, Sam Altman himself is the ult

by pw 10y ago

There does seem to be something interesting about how less successful* YC alumni now seem to be becoming partners. And, of course, Sam Altman himself is the ultimate case of this. And, on the one hand, it certainly makes sense. All of these people have been through the YC process and used it to achieve a measure of success. Also, the Drew Houston's of the world are generally available to be partners precisely because of their success (they have companies to run, after all). On the other hand, it can seem a little incestuous, and that's certainly something to guard against given the nature of tech in general. Too often it seems like organizations become victims of their own success precisely through this sort of "inbreeding". *: "less successful" meant very charitably as they're only less successful when compared to i.e. Dropbox and are certainly more successful than most YC founders, let alone all founders.

jjtheblunt 10y ago
e.g., not i.e., you meant. but, yes!
- pw 10y ago
  Yes, thank you :-)
Alex3917 10y ago
> Too often it seems like organizations become victims of their own success precisely through this sort of "inbreeding". This is definitely a concern with organizations like Teach for America, where they are selecting the students with the best grades to teach at schools and eventually be responsible for creating school policy. This sort of selection has the potential to have a huge negative impact on students that are already being poorly served by the system. With YC it's less of an issue, since it would be hurting YC itself more than the entrepreneurs. E.g. if YC is funding bad startups then it's going to hurt their returns, but if YC doesn't fund your specific startup then it's not going to prevent you from going out and being successful. I have no doubt that Daniel is going to do an awesome job as partner. But regardless, let's not forget that it's at least 10x if not 100x harder to be a good VC than a good entrepreneur, so don't go too hard on YC. :-)
- jayjay71 10y ago
  > let's not forget that it's at least 10x if not 100x harder to be a good VC than a good entrepreneur Why do you say that?
  - Alex3917 10y ago
    Because every year as an entrepreneur you might need to be in the top five or ten companies to have founded a unicorn, but realistically you probably only need to be in the top 500 or 1,000 companies to have a good life outcome. E.g. if it's only you and your cofounder and you haven't raised any money, even if you get literally zero users you can still potentially get acqui-hired for $5M if you're both high-level devs. Obviously not what you were going for, but still a great life outcome for something that only took a year or two. (Unless you had an unusually large opportunity cost in starting the business or are coming from a large previous success or something.) Whereas for a VC, in order to be successful you really have to invest in one of the ten unicorns that gets created every year. But that's not the bad part, the bad part is that 9 of those 10 are probably going to raise their series A from the same firm (Sequoia). Which means that you either need to invest before there is any evidence of traction and gamble on getting super lucky, or else first spend decades building up your reputation to the point where the biggest startups will consistently let you into their rounds as additional capital. When investors all talk about how much better it is to be an entrepreneur they're not just blowing smoke up your ass. There is way more capital than there are good startups, and it's a brutally efficient market where the odds are very much not in their favor. YC is consistently taking a good percentage of the best seed-stage startups that exist, and think about how much everyone complains about how shitty they all are every six months.
    - dataman85 10y ago
      Agree with certain aspects, but the risk-reward is clearly easier for VCs who can hedge their bets across multiple startups and earn nice salaries regardless(even after ignoring the carry). As an entrepreneur, you can't hedge bets and unless you have a had a huge B round are probably work at 50% of your market salary.
PhilWright 10y ago
I have to say I have been baffled why Sam Altman is held in such high regard by YC and its community. He co-founded Loopt in the first batch of YC. It was sold years later for less than the money the investors had put into it. So it basically failed and lost money. Except for the co-founders, they walk away with a few million each. Nice pay for at best an average performance. He then becomes CEO of YC. But YC is already a well established and successful outfit at that point so there is hardly any risk involved. The chief requirement is just to not screw up a good thing. So far he has managed to do that. Along the way he makes many more millions because as a YC insider he gets to invest at the earliest stage for the best looking start-ups. I have nothing against the man and I do not begrudge him his millions but lets stop thinking he is a genius. He is an average entrepreneur that has had an amazing slice of luck by being in on YC at its start and making the most of it. I'm sure he is a smart, hard working and a nice bloke. But he is not a genius.
- gms 10y ago
  What if you were made CEO of Apple tomorrow? It's already well established and successful, so there is hardly any risk involved there?
  - k__ 10y ago
    Doesn't your assumption (leading YC is hard) rise the question why he got that job even more, if we assume he performed average in his startup and lost investors money?
  - mandeepj 10y ago
    Yes, there is. https://steveblank.com/2016/10/24/why-tim-cook-is-steve-ballmer-and-why-he-still-has-his-job-at-apple/ https://steveblank.com/2016/10/24/why-tim-cook-is-steve-ball...
- zach 10y ago
  The shortcomings of this noxious but common "prove you're a genius by your ROI" attitude is exactly why Y Combinator has been as successful as it has been. There is no mystery here. PG, JL, TLB and RTM obviously thought highly of many people when entering YC, even more highly when they got to see them up close, and even more so as they worked closely with them. They see their value. And that's why Sam Altman is the CEO of YC. Believe it or not, the YC partners and leadership are actually better judges of ability than the market. It could never work otherwise.
jondubois 10y ago
Yes, it seems that YC is becoming full of optimists. People who likely have a severe personal bias towards believing that "it always works out in the end". This attitude is difficult to keep as you get older and you learn about reality. Obviously when times are good, you want to be lead by optimists who will take bigger risks.
- cylinder 10y ago
  I'm convinced that this optimism bias is what drives "the business cycle."
Arnt 10y ago
Well, assume that YC hires sanely and competently. How would it hire? What kinds of people? First, someone they've had occasion to judge in depth. Alumni are that. A modest exit and the path to it may show competence, and YC is in a good spot to judge it. Second, someone who's lived through both sunny and rainy days at a actual startup. YC participants definitely are startups, and a bad or moderate exit indicates that someone has felt difficult times. Third, people who've just folded their startup or executed a modest exit may be on the market. AFAICT people like Sam Altman ought to comprise a fairly large pool of attractive and suitable candidates.
astrostl 10y ago
In sports, "less successful" athletes tend to dominate coaching and management. Maybe there's something to it.

by pw 10y ago

jjtheblunt 10y ago

e.g., not i.e., you meant. but, yes!

pw 10y ago
Yes, thank you :-)

Alex3917 10y ago

> Too often it seems like organizations become victims of their own success precisely through this sort of "inbreeding". This is definitely a concern with organizations like Teach for America, where they are selecting the students with the best grades to teach at schools and eventually be responsible for creating school policy. This sort of selection has the potential to have a huge negative impact on students that are already being poorly served by the system. With YC it's less of an issue, since it would be hurting YC itself more than the entrepreneurs. E.g. if YC is funding bad startups then it's going to hurt their returns, but if YC doesn't fund your specific startup then it's not going to prevent you from going out and being successful. I have no doubt that Daniel is going to do an awesome job as partner. But regardless, let's not forget that it's at least 10x if not 100x harder to be a good VC than a good entrepreneur, so don't go too hard on YC. :-)

jayjay71 10y ago
> let's not forget that it's at least 10x if not 100x harder to be a good VC than a good entrepreneur Why do you say that?
- Alex3917 10y ago
  Because every year as an entrepreneur you might need to be in the top five or ten companies to have founded a unicorn, but realistically you probably only need to be in the top 500 or 1,000 companies to have a good life outcome. E.g. if it's only you and your cofounder and you haven't raised any money, even if you get literally zero users you can still potentially get acqui-hired for $5M if you're both high-level devs. Obviously not what you were going for, but still a great life outcome for something that only took a year or two. (Unless you had an unusually large opportunity cost in starting the business or are coming from a large previous success or something.) Whereas for a VC, in order to be successful you really have to invest in one of the ten unicorns that gets created every year. But that's not the bad part, the bad part is that 9 of those 10 are probably going to raise their series A from the same firm (Sequoia). Which means that you either need to invest before there is any evidence of traction and gamble on getting super lucky, or else first spend decades building up your reputation to the point where the biggest startups will consistently let you into their rounds as additional capital. When investors all talk about how much better it is to be an entrepreneur they're not just blowing smoke up your ass. There is way more capital than there are good startups, and it's a brutally efficient market where the odds are very much not in their favor. YC is consistently taking a good percentage of the best seed-stage startups that exist, and think about how much everyone complains about how shitty they all are every six months.
  - dataman85 10y ago
    Agree with certain aspects, but the risk-reward is clearly easier for VCs who can hedge their bets across multiple startups and earn nice salaries regardless(even after ignoring the carry). As an entrepreneur, you can't hedge bets and unless you have a had a huge B round are probably work at 50% of your market salary.

PhilWright 10y ago

I have to say I have been baffled why Sam Altman is held in such high regard by YC and its community. He co-founded Loopt in the first batch of YC. It was sold years later for less than the money the investors had put into it. So it basically failed and lost money. Except for the co-founders, they walk away with a few million each. Nice pay for at best an average performance. He then becomes CEO of YC. But YC is already a well established and successful outfit at that point so there is hardly any risk involved. The chief requirement is just to not screw up a good thing. So far he has managed to do that. Along the way he makes many more millions because as a YC insider he gets to invest at the earliest stage for the best looking start-ups. I have nothing against the man and I do not begrudge him his millions but lets stop thinking he is a genius. He is an average entrepreneur that has had an amazing slice of luck by being in on YC at its start and making the most of it. I'm sure he is a smart, hard working and a nice bloke. But he is not a genius.

gms 10y ago
What if you were made CEO of Apple tomorrow? It's already well established and successful, so there is hardly any risk involved there?
- k__ 10y ago
  Doesn't your assumption (leading YC is hard) rise the question why he got that job even more, if we assume he performed average in his startup and lost investors money?
- mandeepj 10y ago
  Yes, there is. https://steveblank.com/2016/10/24/why-tim-cook-is-steve-ballmer-and-why-he-still-has-his-job-at-apple/ https://steveblank.com/2016/10/24/why-tim-cook-is-steve-ball...
zach 10y ago
The shortcomings of this noxious but common "prove you're a genius by your ROI" attitude is exactly why Y Combinator has been as successful as it has been. There is no mystery here. PG, JL, TLB and RTM obviously thought highly of many people when entering YC, even more highly when they got to see them up close, and even more so as they worked closely with them. They see their value. And that's why Sam Altman is the CEO of YC. Believe it or not, the YC partners and leadership are actually better judges of ability than the market. It could never work otherwise.

jondubois 10y ago

Yes, it seems that YC is becoming full of optimists. People who likely have a severe personal bias towards believing that "it always works out in the end". This attitude is difficult to keep as you get older and you learn about reality. Obviously when times are good, you want to be lead by optimists who will take bigger risks.

cylinder 10y ago
I'm convinced that this optimism bias is what drives "the business cycle."

Arnt 10y ago

Well, assume that YC hires sanely and competently. How would it hire? What kinds of people? First, someone they've had occasion to judge in depth. Alumni are that. A modest exit and the path to it may show competence, and YC is in a good spot to judge it. Second, someone who's lived through both sunny and rainy days at a actual startup. YC participants definitely are startups, and a bad or moderate exit indicates that someone has felt difficult times. Third, people who've just folded their startup or executed a modest exit may be on the market. AFAICT people like Sam Altman ought to comprise a fairly large pool of attractive and suitable candidates.

astrostl 10y ago

In sports, "less successful" athletes tend to dominate coaching and management. Maybe there's something to it.