4 ms·

Your conclusion is odd about 15% over 10 years. The conversion rate is declining. Doesn't that mean ycombinator is failing? I mean worse than being stagnant,

Your conclusion is odd about 15% over 10 years. The conversion rate is declining. Doesn't that mean ycombinator is failing? I mean worse than being stagnant, the value of ycombinator to startups is declining over time. The conversion rate is going to zero, if you ask me.

RA_Fisher 9y ago
Yeah, more recent vintages 2012-2015 have had much lower conversion rates. These batches will probably peak out closer to 10% after a decade.
randall 9y ago
The goal of a VC is not to have a high conversion rate... it's to find the big winners. Airbnb + other 'big wins' are 1 in 1500 or higher, but account for the vast majority of returns. YC started out with a sub-dozen class size. Now it has more than a hundred per batch. The conversion rate is going down, but the hit rate, which is all that matters, likely is going up. More hits with more failure == more success for yc.
- deleted 9y ago
  [deleted]
- orthoganol 9y ago
  You're excluding brand dilution as a function of class size. Knowing you are going to be one of 100+ companies going through the program each semester makes you less enthusiastic to join if you already have a very promising or successful company, and it makes it harder for VCs to determine signal; "It's from YC" stops being good enough. A big reason for the class size explosion is almost certainly for network effects, a fleet of ready customers who support YC and drive growth out of the gates. It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable?
  - toomuchtodo 9y ago
    > It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable? What would the attributes be of an elite founder?
    - omarchowdhury 9y ago
      Sell their startup for an outsized sum during a bubble to a failing giant only for it to be defunct within a short time? Just to go by viaweb's example. That would put at least Mark Cuban in the contending since they both sold to the same failing giant.
  - justonepost 9y ago
    Yes, for sure. Especially with SS coming along which could dilute further. Maybe YC will shrink their class sizes and use SS as a feeder. My worries about SS is how much it will be used as an idea repository for the real batches.
- justonepost 9y ago
  Sure, great for VC lousy for founders. I agree with the post above. Why would great founders join ycombinator?
was_boring 9y ago
They let in far more companies now and have different tracks available than before. Is a lower conversion rate worse? I think the true judge of that would be is the overall ROI going down.
gwern 9y ago
It's only failing if the absolute number of the pool of cash YC swims in is smaller than it would have been if invested elsewhere like stock market indexes. Returns always fall as you get larger, but you're making even more money. Far better to have 10% ROI on a billion dollars than 10000% ROI on a few bucks. The question is not what the average is, but what the alternatives are.

RA_Fisher 9y ago

Yeah, more recent vintages 2012-2015 have had much lower conversion rates. These batches will probably peak out closer to 10% after a decade.

randall 9y ago

The goal of a VC is not to have a high conversion rate... it's to find the big winners. Airbnb + other 'big wins' are 1 in 1500 or higher, but account for the vast majority of returns. YC started out with a sub-dozen class size. Now it has more than a hundred per batch. The conversion rate is going down, but the hit rate, which is all that matters, likely is going up. More hits with more failure == more success for yc.

deleted 9y ago
[deleted]
orthoganol 9y ago
You're excluding brand dilution as a function of class size. Knowing you are going to be one of 100+ companies going through the program each semester makes you less enthusiastic to join if you already have a very promising or successful company, and it makes it harder for VCs to determine signal; "It's from YC" stops being good enough. A big reason for the class size explosion is almost certainly for network effects, a fleet of ready customers who support YC and drive growth out of the gates. It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable?
- toomuchtodo 9y ago
  > It creates the space for another brilliant investor to launch a rival YC that caters to a small size of elite founders. Isn't that almost inevitable? What would the attributes be of an elite founder?
  - omarchowdhury 9y ago
    Sell their startup for an outsized sum during a bubble to a failing giant only for it to be defunct within a short time? Just to go by viaweb's example. That would put at least Mark Cuban in the contending since they both sold to the same failing giant.
- justonepost 9y ago
  Yes, for sure. Especially with SS coming along which could dilute further. Maybe YC will shrink their class sizes and use SS as a feeder. My worries about SS is how much it will be used as an idea repository for the real batches.
justonepost 9y ago
Sure, great for VC lousy for founders. I agree with the post above. Why would great founders join ycombinator?

was_boring 9y ago

They let in far more companies now and have different tracks available than before. Is a lower conversion rate worse? I think the true judge of that would be is the overall ROI going down.

gwern 9y ago

It's only failing if the absolute number of the pool of cash YC swims in is smaller than it would have been if invested elsewhere like stock market indexes. Returns always fall as you get larger, but you're making even more money. Far better to have 10% ROI on a billion dollars than 10000% ROI on a few bucks. The question is not what the average is, but what the alternatives are.