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Y Combinator's Founding Principles

294 points by craigkerstiens 9y ago

tptacek 9y ago
Say what you will about YC, but they've pretty much managed to live up to these; they were in that sense well-chosen.
- unclebucknasty 9y ago
  What else will I say about YC?
- edanm 9y ago
  Not to detract from YC's adherence to good principles... but I think this post was written now. Just putting it out there because if seems from your comment that you're assuming these were written in the past, which is what I assumed before reading the article and seeing the "October 2017" date on it. Would love to be told I'm wrong if I'm misunderstanding the publication date... Edit (based on comments): I agree that this accurately summarizes YC's principles as stated over the years. I was just mentioning/wondering whether this specific list was ever put in this form before. I absolutely think this is a good list of principles and it has guided YC, if not explicitly in this form all these years, certainly in spirit.
  - chaostheory 9y ago
    You can say it was written in the past. pg and Jessica have written about YC's philosophy multiple times in greater detail over the years. This post just summarizes all of their writing. imo most of the post is still accurate except for one: "by helping founders to start them." I could be wrong, but I feel today's YC is more about helping companies get from seed to series A and beyond instead of just getting started. Not that this is a bad thing, but it's different from old YC. It's also understandable since the former is much harder to scale and building products is much cheaper today. I think the other big allure for joining YC, aside from the promise of helping you grow, (at least for me) is that it's like a union for startup founders. Unlike other firms, YC won't screw you. In fact, they will fight for you if anyone else attempts to screw you over.
    - throwawayknecht 9y ago
      > union for startup founders. "Any industry that still has unions has potential energy that could be released by startups... industries afflicted by unions are sclerotic so have left lots undone."
      - pc86 9y ago
        Typically when you quote someone you attribute the quote to them.
        throwawayknecht 9y ago
        I felt like the GP's citation was probably enough - "pg and Jessica have written about YC's philosophy multiple times in greater detail over the years." (Graham is regularly quoted on HN without citation, especially in threads about his writing, which is how I classify this one.)
        tptacek 9y ago
        He's pretty obviously referring to what Graham said, and not favorably (this is one of the more disappointing Paul Graham twitter quotes).
  - Alex3917 9y ago
    These were the principles YC was founded with. That is, in 2005.
  - pchristensen 9y ago
    I followed pg's writing in basically real time since 2005. He wrote basically these principles, said them in interviews, re-told them in talks at Startup School and others, the whole time. This is a concise summary of a decade of intention and actions.
    - throwawayknecht 9y ago
      What's in this article has been said before, but not everything said before is in this article. Paul threw a lot of darts, and while they do have clusters, this is just as much him drawing the bullseye. His comments about naughtiness / "what you can't say" / etc., for example, don't play particularly well right now between back-to-back Facebook advertising scandals, and Kalanick, and aren't in here. But he's talked about that as much as many of the things that are in here.
      - philwelch 9y ago
        “What you can’t say” wasn’t even about startups or investing in the first place.
        konschubert 9y ago
        It also wasn't an invitation to build a company company with a toxic culture.
        throwawayknecht 9y ago
        It absolutely is. The culmination of the "why" section is basically "because you will run a business better": "In any competitive field, you can win big by seeing things that others daren't. And in every field there are probably heresies few dare utter. Within the US car industry there is a lot of hand-wringing now about declining market share. Yet the cause is so obvious that any observant outsider could explain it in a second: they make bad cars. And they have for so long that by now the US car brands are antibrands—something you'd buy a car despite, not because of. Cadillac stopped being the Cadillac of cars in about 1970. And yet I suspect no one dares say this. [11] Otherwise these companies would have tried to fix the problem."
- ronilan 9y ago
  I'll say. Y Combinator's principles remind me of this: "Ambition[1]. That can be a virtue when it drives us to excel. Resourcefulness[2], courage, perhaps not on the battlefield, but... there are many forms of courage. Devotion[3], to my family and to you." [1] http://www.paulgraham.com/ambitious.html http://www.paulgraham.com/ambitious.html [2] http://www.paulgraham.com/relres.html http://www.paulgraham.com/relres.html [3] http://www.ycombinator.com/principles/ http://www.ycombinator.com/principles/ source: https://www.youtube.com/watch?v=C5j1wduFWl0 https://www.youtube.com/watch?v=C5j1wduFWl0 :p ;)
- deleted 9y ago
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- unclebucknasty 9y ago
  My previous reply was downvoted into oblivion and flagged, but my question was sincere. You started your comment with: >Say what you will about YC Which implies that there are negative (perhaps commonly known) things being said about YC. I'm not familiar with any and was simply asking what these might be/why you'd chose that phrasing?
jamestimmins 9y ago
I'm curious what the reason was for publishing this specific piece at this particular time. Was it in response to something external?
- skadamat 9y ago
  upcoming batch applications?
- a13n 9y ago
  Marketing for the YC application due tomorrow.
- segmondy 9y ago
  If you don't stand for something, you will fall for anything. The way to begin showing what you stand for is to speak it, put it forth in writing and let everyone know, then start demonstrating it via actions. The world at large will check you and call you out if you don't live up to it. It doesn't hurt to reaffirm your principles. Could have been motivated by someone reading "Principles - Ray Dalio"
- adora 9y ago
  I can see how people might think the timing is clever. But in reality, the four founders are no longer full-time so they just decided to put this together. It's a good reminder of what YC has been and should always be about and what they wouldn't want us to deviate from. In general, writing this down is a good idea for any company. It helps get everyone on the same page.
dilemma 9y ago
Signed by pg and others but not by Sam.
- firloop 9y ago
  More importantly, it's signed by the founders of YC.
- kcorbitt 9y ago
  Sam was not one of YC's original founders, which is the group that wrote this document.
- ridruejo 9y ago
  These are the original founding partners, Sam came onboard later.
tw1010 9y ago
I love YC, obviously. But does anyone with more literary prowess than me have any insight into why they chose to formulate their sentences so weirdly in this post?
- kyleschiller 9y ago
  I'm glad someone else noticed this. The whole thing felt really strangely phrased. It's possible that it was written by committee, (i.e. everyone editing a Google doc), which often leads to this kind of writing. Alternatively, maybe they just didn't want it to sound too much like PG's writing style. Still, phrases like "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." don't exactly flow.
  - rhapsodic 9y ago
    >Still, phrases like "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." don't exactly flow. Nor does this: "Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques to startup funding."
    - rl12345 9y ago
      I think that sentence is good, it's just a matter of changing the 'to' to 'and'. "Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques [and] startup funding."
      - rhapsodic 9y ago
        >I think that sentence is good, it's just a matter of changing the 'to' to 'and'. Which was pretty much my point.
    - jonbarker 9y ago
      Which mass production techniques did startup investors need? Assembly lines? Lean Six Sigma? The Toyota Production System? Not a trolling question, actually interested in any specific examples.
uptownfunk 9y ago
Curious as to how YC has done in comparison to other incubators? Any benchmarks available?
- _sentient 9y ago
  They are about 10x the next best (Techstars) based on valuation of the companies they've funded (~$80B vs ~$8B). Valuation isn't a perfect metric, but it's a reasonable proxy for performance.
  - jacquesm 9y ago
    Those numbers only makes sense when places in the context of the number of investments made and the total investment made.
    - akharris 9y ago
      I think the numbers make sense with or without the total number of investments figure since the large outcomes in venture are driven by a small number of companies, and not the pack. That said, the total number of companies funded isn't that different. We're at ~1400 and according to the below, TS is at 1000: https://www.techstars.com/content/accelerators/growing-worldwide-network-techstars-impact-report-2016/ https://www.techstars.com/content/accelerators/growing-world....
      - neerkumar 9y ago
        It is so hard to actually get the VC business model. If in all these years, every single YC company had failed except for Airbnb, YC would still be 4X better than the second best competitor.
        lultimouomo 9y ago
        To put the same fact in different words, if they had not invested on Airbnb and Dropbox, they would not be the leading incubator.
Kevin_S 9y ago
I've always been really impressed by YC and have followed the company for a long time now. I just hope that long-term their strategy works. It has already scaled pretty well, but it feels like there will be a next big step for them soon. I'm just not sure what that will be.
mkolodny 9y ago
> Startups are on balance a good thing. Their founders and early employees can be much more productive than they’d be working for an established company. I found this super vague. In what way will people be more productive at a startup than they would be at an established company? And why does that mean that startups are a good thing? One way you could make this clearer is replacing the phrase "can be much more productive" with a more specific goal that's more obviously good. Will startup founders learn and grow more in a shorter period of time? Will they have a larger positive impact on the world than they will at an established company? And if so, why?
- kyleschiller 9y ago
  "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." Also interesting that they goal doesn't include helping startups be more of a good thing. To be clear, I generally believe that YC will help there be more good startups, but it is kind of weird phrasing.
  - edanm 9y ago
    I think that would come too much in conflict with another principle: "We must remember that we’re investors, not bosses. We can advise and persuade, but not command." As I understand it, YC is pretty hands off. It's mostly an (usually amazing) advisor you come to with questions when you have them, plus alumni network, plus dinners/demo day. I don't think they can really make people be good instead of bad. I think if anything, they simply won't fund people that they believe will not do good.
    - jacquesm 9y ago
      > I think if anything, they simply won't fund people that they believe will not do good There have been some pretty visible counter-examples to that, fortunately not in the last two batches.
- edanm 9y ago
  If you mostly believe in capitalism, then the link is basically: people being productive = more stuff gets done, and if they're earning money for it, that means people are happy to pay for it. So basically, productivity is a good thing in general. I'd wager most economists would say that productivity is the single most important thing to improve in general, though they'd be talking about the economy in general, and YC is interested in taking specific people and making them more productive. The same principle applies though - more stuff is done, and if someone is paying for it, it must in genearl be good. (There are obviously exceptions to this - cheating/scamming/doing illegal things, etc).
abtinf 9y ago
Is there a reason this was published now? Were YC’s principles recently challenged?
- rqmedes 9y ago
  ycombinator application deadline? I am so disappointed I didn't complete my application in time, oh well there is always next year
  - nostrademons 9y ago
    I think you still have 20 hours. It's 8 PM Pacific on Oct 3, which is today (Tuesday).
Geekette 9y ago
"YC is also a startup itself, and (what’s more difficult) must remain one." As an organization centred on fostering creation of startups, YC can claim to making effort to adhere to startup mentality itself. However, as a 12-year old company that has greatly expanded over the years, YC itself isn't a startup and claiming otherwise seems a bit disingenuous. Based on post date (Oct 2017), I assume this was just published (vs a repost from 2005).
- tptacek 9y ago
  YC (and Paul Graham in particular) have always had a semantic challenge with the word "startup". I agree that their definition can be shifty, opaque, and not especially useful.
- akharris 9y ago
  "Startup" is more a state of mind than an exact coordinate in age and size. There are brand new companies that wouldn't call themselves startups, and companies worth 10s of billions of dollars that are commonly referred to as such. While we may be 12 years old, we constantly experiment with new ideas, programs, and processes within YC to see whether or not we can get meaningfully better at what we do. That feels like a startup to me.
  - j45 9y ago
    Startups are about the ability to constantly innovate. In the early days, everything is new and innovating towards a business model. A lot of people find something and stick with it, instead of continuing to innovate on existing momentum to remain relevant.
- Mz 9y ago
  I see nothing disingenuous about it. I think it does a good job of capturing the idea that if they get too bureaucratic and set in their ways, that is what they will model and teach and it will undermine their goals by undermining new batches. I homeschooled my sons. I talk to them a lot about such ideas. For example, we talk about how the subtext of a lot of games winds up being stereotypical corporate things like "I hate my boss" and "Life is a completely pointless pursuit of money." That tends to show through, no matter how hard they try to dress it up in wild fantasy settings. You teach what you are. You can't really get away from that.
mgpc 9y ago
Alternative perspective: Like many universities, the value of YC to founders is mostly signalling and network. What you actually learn at YC is a minor component of the value (since you could learn most of it just by reading or watching videos) As YC batches get larger, the signalling value of being a YC company goes down. If everyone is special then nobody is. As YC batches get larger, I suspect the value of the YC network also goes down. This is maybe a little bit counter-intuitive, but I think a large influx of less highly-selected startups will dilute the network and prevent it from functioning effectively. Unfortunately YC is not completely aligned with founders here. There is a strong temptation for YC to increase batch size. YC gets 7% of a company for far below market price. So increasing batch sizes makes short-term economic sense. However, if YC increases batch sizes too much and harms its brand, it will eventually break its own model. So increasing batch sizes could be seen as form of spending down the brand equity. This all hangs on a few premises that may or may not be true: 1) You can't have larger batches while keeping quality constant. 2) YC doesn't directly influence the success of participants that much. 3) If the value of YC drops, good founders will eventually stop applying I suspect an argument like this has been going on inside YC for quite a while. And the blog post was written by the original founders to try to settle the dispute in favour of the pro-scale faction.
- ausjke 9y ago
  120K for 7% at SF area is indeed not attractive, not to mention you must move there and find your own working space etc. It might be interesting for the very early stage startups and money-hungry (no-kids-yet) young founders. Yes the connections and advice are priceless but still money talks the loudest for most start-ups.
  - sillysaurus3 9y ago
    It might be interesting for the very early stage startups and money-hungry (no-kids-yet) young founders. This is who YC funds. That's like saying it might be interesting for technology companies. Except YC funds plenty of founders with kids.
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bactrian 9y ago
Another founding principle of YC is that its for the upper crust of society. Exceptions are made, but in general, the poor need not apply. YC actively excludes poor people through socioeconomic discrimination. YC truly is "the Harvard of accelerators" as their homepage proudly quoted.
- segmondy 9y ago
  That is pretty accusatory, they have invested in companies from 3rd world countries. Flown many of those founders at YC's expense and funded them. Flutterwave, OMG Digital, Paystack, Platzi, etc. Please do explain how they exclude poor people? The application fee is $0. You could from $0 in your pocket to $100,000+ for 3 months.
  - bactrian 9y ago
    You can tell they descriminate based on who they hire and fund. It's the country club crowd sprinkled with safe seeming outsiders that act as token representatives. It's not merit based but class (aka "culture") based. It's a market opportunity for a fund that doesn't think of rich people as being better than poor people. A lot more geniuses among the poor than the rich. What's worse is they're incredibly thin skinned and lacking in introspection or humility. Typical rich people.
bbd 9y ago
As a startup founder, I wish every startup can be part of YC. But at the same time, I hope YC does not end up investing ALL promising startups (which become big later) -- because if that is the case, it will be a disaster for any other startups that fail to get in YC, the unfundable signal is way too strong to investors. In that sense, I appreciate companies like Buffer, Uber/Lyft etc.
- ecesena 9y ago
  Even if YC could get to a point where they fund all-and-only the successful startups, if you're not funded in one batch it doesn't mean that you can't learn, fix your issues, and get funded (and thus successful) later on.
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amirhirsch 9y ago
I wonder about the efficacy of directing hopeful youths into entrepreneurship. The median outcome for founders is basically poverty, which is not a problem for those who have less utility for money and more desire for independence and who want the freedom to pursue dreams. But the harsh reality is that you need to make money to survive and YC often funds founders before they have validated their economic opportunity. They also provide founders with all the kool-aid they need to justify unreasonable optimism. The cost of increasing the number of early-stage startups and directing a higher percentage of them towards positive outcomes is that it also increases the likelihood of the worst-case outcome: failing slowly. Maybe it's easier to find injections of money to keep petering along, and maybe the cost of failure feels higher. So founders pinch even tighter, constantly anticipating the train derailing making just enough money to hurl down new track in front of your engine. Just enough to survive, but not enough to thrive and go faster. Maybe it's a quixotic quest fighting for every inch to find customers, funding, and not really advancing technology or your product. There's some schadenfreude to seeing others around you fail, especially one's who have raised more funding than you. There's also some jealously when your founder-friends advance to greater wealth and maybe a little jealousy towards the risk-averse among your friends who stayed at Google for 4 years and can now angel invest in your next startup. You have some experience now and should do better this time, but you can't cash in your existential dread.
- hasenj 9y ago
  PG actually has a talk where he does advice young people that maybe starting a startup may not a good idea, at least not for everyone, because it's all consuming.
- j45 9y ago
  When they say go hard or go home, statistically entrepreneurs learn they will go home regardless. The game, then becomes about staying alive as long as you can, by adding and creating value for others that lets you keep the doors open. Either way, agreeing to put in more work than you may think it will take, is important, attitude has much to do with opportunity as luck and preparation.
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riemannzeta 9y ago
I can't help wondering: was this posted in response to Dalio's plea for more "shapers" to share their principles?
peterburkimsher 9y ago
"And since the only way to be consistently benevolent is to actually be a good person, YC’s employees must be." YC has been involved in controversy regarding the political stance of its employees. https://news.ycombinator.com/item?id=12726970 https://news.ycombinator.com/item?id=12726970 I'm not here to make a judgment about that situation (we've heard enough already), just to say that there are times when the vague "good person" principle has been disputed in the past.
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- adnam 9y ago
  YC has also made ethically-questionable investments in the cannabis industry.
  - throwawayknecht 9y ago
    Also payday loans. Also, repeatedly, laundry services that fail to scale but shut down all local laundromats while they have the money to price below-cost. I would again recommend this Atlantic article about how Silicon Valley interprets "goodness" in a "tautological and narcissistic" way - https://www.theatlantic.com/technology/archive/2013/10/what-is-evil-to-google/280573/ https://www.theatlantic.com/technology/archive/2013/10/what-...
    - hawkice 9y ago
      I think reasonable people could disagree with both points you could be making here: (1) That marijuana or payday loans are immoral. (2) Something that is _debateably_ bad should be avoided, even if you've resolved that debate to your satisfaction. If you reject both of those (I do), then I'm not sure what the concern is.
      - throwawayknecht 9y ago
        I can't speak for adnam but I would consider YC's cannabis-related investments questionable for reasons beyond just "it has to do with pot." If you are going to make your fortune selling pot, IMO you have a moral obligation to assist those (predominantly young men of color) whose lives have been ruined cracking that market for you. Meadow is just another gross Uber-esque intermediary (not to mention the YC partner working as part of the most tough-on-drugs executive branch in decades). More generally, if you want to establish yourself as a "good person" I think you need to make the argument when you fund the thing as to why your loans aren't predatory, or your pot isn't white people getting rich on the back of black lives, or your laundry service won't leave a community unable to wash their clothes. Part of "doing good" is working with people affected to establish your bona fides. YC doesn't attempt this; they are concerned with "being good" which, as the article covers, is a semantic game that lets you justify any behavior you want.
ausjke 9y ago
Is there a portfolio of all the entities YC founded so far? to have a big picture on what fits the best there.
vacri 9y ago
> YC is also a startup itself, and (what’s more difficult) must remain one. ... YC has to be fast, cheap, informal, and focused on essentials. It's always interesting seeing how different people define 'startups'. Generally there seem to be two groups (though there are others) - the "designed to grow fast" group, and this group, where the definition is indistinguishable from "being a small business".
middleout 9y ago
my 2c, as a casual, third party observer: Kudos: afaict, yc is a "good actor" in contrast to "bad actor" VCs that have received recent notoriety yc does its part in putting out knowledge into the world re: how to build startups (cynically, this is to promote brand, PR) yc funds non-profits yc promotes diversity esp relative to its SV peers Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone yc is incredible for the 1% that get in, to the detriment (broadly) of the 99% that don't. they get a disproportionate amount of attention, capital and support yc is a VC firm (+bootcamp), but with a vastly superior economic model, which is pretty incredible given how good VC economics are the part about it not being about the money rings hollow. my guess is it's 90-95% about the money. YC partners have made hundreds of millions (in the future, YC will probably mint a few billionaires) of dollars. every batch, 7% of the equity of 100-150 "cream of the crop" startups goes to a handful of partners. if YC's primary goal was social impact, the batch would look a lot different -- not saying yc doesn't do good, but i think a typical VC is at least straightforward that their goal, and fiduciary responsibility is to make $. i think YC sugarcoats this for branding purposes when they de-emphasize this. the narrative around SV has really taken a turn for the worse. income inequality is a real problem, and also getting worse. one could easily argue SV is exacerbating this, and YC is a factory of many of the startups causing this. the future is already here, it's just unevenly distributed
- nwenzel 9y ago
  I’ll disagree with one point that I have direct personal knowledge of. > Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone Not true for me. I knew no one and certainly did not have PMF (revenue equaled $0 when we were accepted). I learned about YC because I saw someone on a plane reading TechCrunch which led to PG’s essays which led me to YC which led me to apply. What I did have was deep industry knowledge and an awesome cofounder with whom I had built a progressional services business. Pro Tip: if you want an edge on the YC application, keep your application short but dense enough that you teach the reader something. Straight from PG: VCs know a little about a lot, so if you can teach them something new, they’re intrigued.
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RickSanchez2600 9y ago
You forgot the Google Prime Directive to "Do not do any evil" in which morals, ethics, and doing good for the community are within the goals and business plan of the startups. After Brandon Eich was forced to resign at Mozilla when they found out he donated to a charity against same sex marriage, it should have clued us all into knowing that you have to look at other areas besides marketing, engineering, programming, math, science, etc and consider public relations as well. One of my friends has a business and computer science degree which are two areas to learn to know how to handle this sort of stuff. He claims your target market customers are more than just the people who pay for your product and service but also those who are affected by it, or use it, or are affected by the use of it, as well as not polluting the environment, obeying all laws of the local, state, and federal government, society, culture, religions, GLBTQ people, minorities, diversity, etc. He claims if your startup is not doing these things it might fail or you might be forced to resign as Eich was. Of course feel free to disagree with me as my electrical engineering professor told me "Ethics don't matter, do the job as best you can, and f* ethics."
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throwawaybiz 9y ago
I used to be super excited about YC from a values standpoint for years. I applied to work for a bunch of YC startups about 4 years ago. What I was generally told was that they never heard of my college or the companies I worked for so I was a no go. That doesn't seem to be fostering diversity, or making the world a better place, or completely separate from the type of bullshit practiced by big companies. (I still like to lurk here because its a good tech news filter, but when YC posts self horn tooting posts its kind of irritating)

Say what you will about YC, but they've pretty much managed to live up to these; they were in that sense well-chosen.

unclebucknasty 9y ago
What else will I say about YC?
edanm 9y ago
Not to detract from YC's adherence to good principles... but I think this post was written now. Just putting it out there because if seems from your comment that you're assuming these were written in the past, which is what I assumed before reading the article and seeing the "October 2017" date on it. Would love to be told I'm wrong if I'm misunderstanding the publication date... Edit (based on comments): I agree that this accurately summarizes YC's principles as stated over the years. I was just mentioning/wondering whether this specific list was ever put in this form before. I absolutely think this is a good list of principles and it has guided YC, if not explicitly in this form all these years, certainly in spirit.
- chaostheory 9y ago
  You can say it was written in the past. pg and Jessica have written about YC's philosophy multiple times in greater detail over the years. This post just summarizes all of their writing. imo most of the post is still accurate except for one: "by helping founders to start them." I could be wrong, but I feel today's YC is more about helping companies get from seed to series A and beyond instead of just getting started. Not that this is a bad thing, but it's different from old YC. It's also understandable since the former is much harder to scale and building products is much cheaper today. I think the other big allure for joining YC, aside from the promise of helping you grow, (at least for me) is that it's like a union for startup founders. Unlike other firms, YC won't screw you. In fact, they will fight for you if anyone else attempts to screw you over.
  - throwawayknecht 9y ago
    > union for startup founders. "Any industry that still has unions has potential energy that could be released by startups... industries afflicted by unions are sclerotic so have left lots undone."
    - pc86 9y ago
      Typically when you quote someone you attribute the quote to them.
      - throwawayknecht 9y ago
        I felt like the GP's citation was probably enough - "pg and Jessica have written about YC's philosophy multiple times in greater detail over the years." (Graham is regularly quoted on HN without citation, especially in threads about his writing, which is how I classify this one.)
      - tptacek 9y ago
        He's pretty obviously referring to what Graham said, and not favorably (this is one of the more disappointing Paul Graham twitter quotes).
- Alex3917 9y ago
  These were the principles YC was founded with. That is, in 2005.
- pchristensen 9y ago
  I followed pg's writing in basically real time since 2005. He wrote basically these principles, said them in interviews, re-told them in talks at Startup School and others, the whole time. This is a concise summary of a decade of intention and actions.
  - throwawayknecht 9y ago
    What's in this article has been said before, but not everything said before is in this article. Paul threw a lot of darts, and while they do have clusters, this is just as much him drawing the bullseye. His comments about naughtiness / "what you can't say" / etc., for example, don't play particularly well right now between back-to-back Facebook advertising scandals, and Kalanick, and aren't in here. But he's talked about that as much as many of the things that are in here.
    - philwelch 9y ago
      “What you can’t say” wasn’t even about startups or investing in the first place.
      - konschubert 9y ago
        It also wasn't an invitation to build a company company with a toxic culture.
      - throwawayknecht 9y ago
        It absolutely is. The culmination of the "why" section is basically "because you will run a business better": "In any competitive field, you can win big by seeing things that others daren't. And in every field there are probably heresies few dare utter. Within the US car industry there is a lot of hand-wringing now about declining market share. Yet the cause is so obvious that any observant outsider could explain it in a second: they make bad cars. And they have for so long that by now the US car brands are antibrands—something you'd buy a car despite, not because of. Cadillac stopped being the Cadillac of cars in about 1970. And yet I suspect no one dares say this. [11] Otherwise these companies would have tried to fix the problem."
ronilan 9y ago
I'll say. Y Combinator's principles remind me of this: "Ambition[1]. That can be a virtue when it drives us to excel. Resourcefulness[2], courage, perhaps not on the battlefield, but... there are many forms of courage. Devotion[3], to my family and to you." [1] http://www.paulgraham.com/ambitious.html http://www.paulgraham.com/ambitious.html [2] http://www.paulgraham.com/relres.html http://www.paulgraham.com/relres.html [3] http://www.ycombinator.com/principles/ http://www.ycombinator.com/principles/ source: https://www.youtube.com/watch?v=C5j1wduFWl0 https://www.youtube.com/watch?v=C5j1wduFWl0 :p ;)
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unclebucknasty 9y ago
My previous reply was downvoted into oblivion and flagged, but my question was sincere. You started your comment with: >Say what you will about YC Which implies that there are negative (perhaps commonly known) things being said about YC. I'm not familiar with any and was simply asking what these might be/why you'd chose that phrasing?

I'm curious what the reason was for publishing this specific piece at this particular time. Was it in response to something external?

skadamat 9y ago
upcoming batch applications?
a13n 9y ago
Marketing for the YC application due tomorrow.
segmondy 9y ago
If you don't stand for something, you will fall for anything. The way to begin showing what you stand for is to speak it, put it forth in writing and let everyone know, then start demonstrating it via actions. The world at large will check you and call you out if you don't live up to it. It doesn't hurt to reaffirm your principles. Could have been motivated by someone reading "Principles - Ray Dalio"
adora 9y ago
I can see how people might think the timing is clever. But in reality, the four founders are no longer full-time so they just decided to put this together. It's a good reminder of what YC has been and should always be about and what they wouldn't want us to deviate from. In general, writing this down is a good idea for any company. It helps get everyone on the same page.

dilemma 9y ago

Signed by pg and others but not by Sam.

firloop 9y ago
More importantly, it's signed by the founders of YC.
kcorbitt 9y ago
Sam was not one of YC's original founders, which is the group that wrote this document.
ridruejo 9y ago
These are the original founding partners, Sam came onboard later.

tw1010 9y ago

I love YC, obviously. But does anyone with more literary prowess than me have any insight into why they chose to formulate their sentences so weirdly in this post?

kyleschiller 9y ago
I'm glad someone else noticed this. The whole thing felt really strangely phrased. It's possible that it was written by committee, (i.e. everyone editing a Google doc), which often leads to this kind of writing. Alternatively, maybe they just didn't want it to sound too much like PG's writing style. Still, phrases like "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." don't exactly flow.
- rhapsodic 9y ago
  >Still, phrases like "Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." don't exactly flow. Nor does this: "Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques to startup funding."
  - rl12345 9y ago
    I think that sentence is good, it's just a matter of changing the 'to' to 'and'. "Y Combinator represents the union of two ideas that had not previously been combined: the application of mass production techniques [and] startup funding."
    - rhapsodic 9y ago
      >I think that sentence is good, it's just a matter of changing the 'to' to 'and'. Which was pretty much my point.
  - jonbarker 9y ago
    Which mass production techniques did startup investors need? Assembly lines? Lean Six Sigma? The Toyota Production System? Not a trolling question, actually interested in any specific examples.

uptownfunk 9y ago

Curious as to how YC has done in comparison to other incubators? Any benchmarks available?

_sentient 9y ago
They are about 10x the next best (Techstars) based on valuation of the companies they've funded (~$80B vs ~$8B). Valuation isn't a perfect metric, but it's a reasonable proxy for performance.
- jacquesm 9y ago
  Those numbers only makes sense when places in the context of the number of investments made and the total investment made.
  - akharris 9y ago
    I think the numbers make sense with or without the total number of investments figure since the large outcomes in venture are driven by a small number of companies, and not the pack. That said, the total number of companies funded isn't that different. We're at ~1400 and according to the below, TS is at 1000: https://www.techstars.com/content/accelerators/growing-worldwide-network-techstars-impact-report-2016/ https://www.techstars.com/content/accelerators/growing-world....
    - neerkumar 9y ago
      It is so hard to actually get the VC business model. If in all these years, every single YC company had failed except for Airbnb, YC would still be 4X better than the second best competitor.
      - lultimouomo 9y ago
        To put the same fact in different words, if they had not invested on Airbnb and Dropbox, they would not be the leading incubator.

Kevin_S 9y ago

I've always been really impressed by YC and have followed the company for a long time now. I just hope that long-term their strategy works. It has already scaled pretty well, but it feels like there will be a next big step for them soon. I'm just not sure what that will be.

mkolodny 9y ago

> Startups are on balance a good thing. Their founders and early employees can be much more productive than they’d be working for an established company. I found this super vague. In what way will people be more productive at a startup than they would be at an established company? And why does that mean that startups are a good thing? One way you could make this clearer is replacing the phrase "can be much more productive" with a more specific goal that's more obviously good. Will startup founders learn and grow more in a shorter period of time? Will they have a larger positive impact on the world than they will at an established company? And if so, why?

kyleschiller 9y ago
"Y Combinator’s goal is to cause there to be more startups, by helping founders to start them." Also interesting that they goal doesn't include helping startups be more of a good thing. To be clear, I generally believe that YC will help there be more good startups, but it is kind of weird phrasing.
- edanm 9y ago
  I think that would come too much in conflict with another principle: "We must remember that we’re investors, not bosses. We can advise and persuade, but not command." As I understand it, YC is pretty hands off. It's mostly an (usually amazing) advisor you come to with questions when you have them, plus alumni network, plus dinners/demo day. I don't think they can really make people be good instead of bad. I think if anything, they simply won't fund people that they believe will not do good.
  - jacquesm 9y ago
    > I think if anything, they simply won't fund people that they believe will not do good There have been some pretty visible counter-examples to that, fortunately not in the last two batches.
edanm 9y ago
If you mostly believe in capitalism, then the link is basically: people being productive = more stuff gets done, and if they're earning money for it, that means people are happy to pay for it. So basically, productivity is a good thing in general. I'd wager most economists would say that productivity is the single most important thing to improve in general, though they'd be talking about the economy in general, and YC is interested in taking specific people and making them more productive. The same principle applies though - more stuff is done, and if someone is paying for it, it must in genearl be good. (There are obviously exceptions to this - cheating/scamming/doing illegal things, etc).

abtinf 9y ago

Is there a reason this was published now? Were YC’s principles recently challenged?

rqmedes 9y ago
ycombinator application deadline? I am so disappointed I didn't complete my application in time, oh well there is always next year
- nostrademons 9y ago
  I think you still have 20 hours. It's 8 PM Pacific on Oct 3, which is today (Tuesday).

Geekette 9y ago

"YC is also a startup itself, and (what’s more difficult) must remain one." As an organization centred on fostering creation of startups, YC can claim to making effort to adhere to startup mentality itself. However, as a 12-year old company that has greatly expanded over the years, YC itself isn't a startup and claiming otherwise seems a bit disingenuous. Based on post date (Oct 2017), I assume this was just published (vs a repost from 2005).

tptacek 9y ago
YC (and Paul Graham in particular) have always had a semantic challenge with the word "startup". I agree that their definition can be shifty, opaque, and not especially useful.
akharris 9y ago
"Startup" is more a state of mind than an exact coordinate in age and size. There are brand new companies that wouldn't call themselves startups, and companies worth 10s of billions of dollars that are commonly referred to as such. While we may be 12 years old, we constantly experiment with new ideas, programs, and processes within YC to see whether or not we can get meaningfully better at what we do. That feels like a startup to me.
- j45 9y ago
  Startups are about the ability to constantly innovate. In the early days, everything is new and innovating towards a business model. A lot of people find something and stick with it, instead of continuing to innovate on existing momentum to remain relevant.
Mz 9y ago
I see nothing disingenuous about it. I think it does a good job of capturing the idea that if they get too bureaucratic and set in their ways, that is what they will model and teach and it will undermine their goals by undermining new batches. I homeschooled my sons. I talk to them a lot about such ideas. For example, we talk about how the subtext of a lot of games winds up being stereotypical corporate things like "I hate my boss" and "Life is a completely pointless pursuit of money." That tends to show through, no matter how hard they try to dress it up in wild fantasy settings. You teach what you are. You can't really get away from that.

mgpc 9y ago

Alternative perspective: Like many universities, the value of YC to founders is mostly signalling and network. What you actually learn at YC is a minor component of the value (since you could learn most of it just by reading or watching videos) As YC batches get larger, the signalling value of being a YC company goes down. If everyone is special then nobody is. As YC batches get larger, I suspect the value of the YC network also goes down. This is maybe a little bit counter-intuitive, but I think a large influx of less highly-selected startups will dilute the network and prevent it from functioning effectively. Unfortunately YC is not completely aligned with founders here. There is a strong temptation for YC to increase batch size. YC gets 7% of a company for far below market price. So increasing batch sizes makes short-term economic sense. However, if YC increases batch sizes too much and harms its brand, it will eventually break its own model. So increasing batch sizes could be seen as form of spending down the brand equity. This all hangs on a few premises that may or may not be true: 1) You can't have larger batches while keeping quality constant. 2) YC doesn't directly influence the success of participants that much. 3) If the value of YC drops, good founders will eventually stop applying I suspect an argument like this has been going on inside YC for quite a while. And the blog post was written by the original founders to try to settle the dispute in favour of the pro-scale faction.

ausjke 9y ago
120K for 7% at SF area is indeed not attractive, not to mention you must move there and find your own working space etc. It might be interesting for the very early stage startups and money-hungry (no-kids-yet) young founders. Yes the connections and advice are priceless but still money talks the loudest for most start-ups.
- sillysaurus3 9y ago
  It might be interesting for the very early stage startups and money-hungry (no-kids-yet) young founders. This is who YC funds. That's like saying it might be interesting for technology companies. Except YC funds plenty of founders with kids.
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bactrian 9y ago

Another founding principle of YC is that its for the upper crust of society. Exceptions are made, but in general, the poor need not apply. YC actively excludes poor people through socioeconomic discrimination. YC truly is "the Harvard of accelerators" as their homepage proudly quoted.

segmondy 9y ago
That is pretty accusatory, they have invested in companies from 3rd world countries. Flown many of those founders at YC's expense and funded them. Flutterwave, OMG Digital, Paystack, Platzi, etc. Please do explain how they exclude poor people? The application fee is $0. You could from $0 in your pocket to $100,000+ for 3 months.
- bactrian 9y ago
  You can tell they descriminate based on who they hire and fund. It's the country club crowd sprinkled with safe seeming outsiders that act as token representatives. It's not merit based but class (aka "culture") based. It's a market opportunity for a fund that doesn't think of rich people as being better than poor people. A lot more geniuses among the poor than the rich. What's worse is they're incredibly thin skinned and lacking in introspection or humility. Typical rich people.

bbd 9y ago

As a startup founder, I wish every startup can be part of YC. But at the same time, I hope YC does not end up investing ALL promising startups (which become big later) -- because if that is the case, it will be a disaster for any other startups that fail to get in YC, the unfundable signal is way too strong to investors. In that sense, I appreciate companies like Buffer, Uber/Lyft etc.

ecesena 9y ago
Even if YC could get to a point where they fund all-and-only the successful startups, if you're not funded in one batch it doesn't mean that you can't learn, fix your issues, and get funded (and thus successful) later on.

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amirhirsch 9y ago

I wonder about the efficacy of directing hopeful youths into entrepreneurship. The median outcome for founders is basically poverty, which is not a problem for those who have less utility for money and more desire for independence and who want the freedom to pursue dreams. But the harsh reality is that you need to make money to survive and YC often funds founders before they have validated their economic opportunity. They also provide founders with all the kool-aid they need to justify unreasonable optimism. The cost of increasing the number of early-stage startups and directing a higher percentage of them towards positive outcomes is that it also increases the likelihood of the worst-case outcome: failing slowly. Maybe it's easier to find injections of money to keep petering along, and maybe the cost of failure feels higher. So founders pinch even tighter, constantly anticipating the train derailing making just enough money to hurl down new track in front of your engine. Just enough to survive, but not enough to thrive and go faster. Maybe it's a quixotic quest fighting for every inch to find customers, funding, and not really advancing technology or your product. There's some schadenfreude to seeing others around you fail, especially one's who have raised more funding than you. There's also some jealously when your founder-friends advance to greater wealth and maybe a little jealousy towards the risk-averse among your friends who stayed at Google for 4 years and can now angel invest in your next startup. You have some experience now and should do better this time, but you can't cash in your existential dread.

hasenj 9y ago
PG actually has a talk where he does advice young people that maybe starting a startup may not a good idea, at least not for everyone, because it's all consuming.
j45 9y ago
When they say go hard or go home, statistically entrepreneurs learn they will go home regardless. The game, then becomes about staying alive as long as you can, by adding and creating value for others that lets you keep the doors open. Either way, agreeing to put in more work than you may think it will take, is important, attitude has much to do with opportunity as luck and preparation.

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riemannzeta 9y ago

I can't help wondering: was this posted in response to Dalio's plea for more "shapers" to share their principles?

peterburkimsher 9y ago

"And since the only way to be consistently benevolent is to actually be a good person, YC’s employees must be." YC has been involved in controversy regarding the political stance of its employees. https://news.ycombinator.com/item?id=12726970 https://news.ycombinator.com/item?id=12726970 I'm not here to make a judgment about that situation (we've heard enough already), just to say that there are times when the vague "good person" principle has been disputed in the past.

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adnam 9y ago
YC has also made ethically-questionable investments in the cannabis industry.
- throwawayknecht 9y ago
  Also payday loans. Also, repeatedly, laundry services that fail to scale but shut down all local laundromats while they have the money to price below-cost. I would again recommend this Atlantic article about how Silicon Valley interprets "goodness" in a "tautological and narcissistic" way - https://www.theatlantic.com/technology/archive/2013/10/what-is-evil-to-google/280573/ https://www.theatlantic.com/technology/archive/2013/10/what-...
  - hawkice 9y ago
    I think reasonable people could disagree with both points you could be making here: (1) That marijuana or payday loans are immoral. (2) Something that is _debateably_ bad should be avoided, even if you've resolved that debate to your satisfaction. If you reject both of those (I do), then I'm not sure what the concern is.
    - throwawayknecht 9y ago
      I can't speak for adnam but I would consider YC's cannabis-related investments questionable for reasons beyond just "it has to do with pot." If you are going to make your fortune selling pot, IMO you have a moral obligation to assist those (predominantly young men of color) whose lives have been ruined cracking that market for you. Meadow is just another gross Uber-esque intermediary (not to mention the YC partner working as part of the most tough-on-drugs executive branch in decades). More generally, if you want to establish yourself as a "good person" I think you need to make the argument when you fund the thing as to why your loans aren't predatory, or your pot isn't white people getting rich on the back of black lives, or your laundry service won't leave a community unable to wash their clothes. Part of "doing good" is working with people affected to establish your bona fides. YC doesn't attempt this; they are concerned with "being good" which, as the article covers, is a semantic game that lets you justify any behavior you want.

ausjke 9y ago

Is there a portfolio of all the entities YC founded so far? to have a big picture on what fits the best there.

vacri 9y ago

> YC is also a startup itself, and (what’s more difficult) must remain one. ... YC has to be fast, cheap, informal, and focused on essentials. It's always interesting seeing how different people define 'startups'. Generally there seem to be two groups (though there are others) - the "designed to grow fast" group, and this group, where the definition is indistinguishable from "being a small business".

middleout 9y ago

my 2c, as a casual, third party observer: Kudos: afaict, yc is a "good actor" in contrast to "bad actor" VCs that have received recent notoriety yc does its part in putting out knowledge into the world re: how to build startups (cynically, this is to promote brand, PR) yc funds non-profits yc promotes diversity esp relative to its SV peers Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone yc is incredible for the 1% that get in, to the detriment (broadly) of the 99% that don't. they get a disproportionate amount of attention, capital and support yc is a VC firm (+bootcamp), but with a vastly superior economic model, which is pretty incredible given how good VC economics are the part about it not being about the money rings hollow. my guess is it's 90-95% about the money. YC partners have made hundreds of millions (in the future, YC will probably mint a few billionaires) of dollars. every batch, 7% of the equity of 100-150 "cream of the crop" startups goes to a handful of partners. if YC's primary goal was social impact, the batch would look a lot different -- not saying yc doesn't do good, but i think a typical VC is at least straightforward that their goal, and fiduciary responsibility is to make $. i think YC sugarcoats this for branding purposes when they de-emphasize this. the narrative around SV has really taken a turn for the worse. income inequality is a real problem, and also getting worse. one could easily argue SV is exacerbating this, and YC is a factory of many of the startups causing this. the future is already here, it's just unevenly distributed

nwenzel 9y ago
I’ll disagree with one point that I have direct personal knowledge of. > Criticism: yc is elitist. with a few exceptions (you have PMF), you have to know someone Not true for me. I knew no one and certainly did not have PMF (revenue equaled $0 when we were accepted). I learned about YC because I saw someone on a plane reading TechCrunch which led to PG’s essays which led me to YC which led me to apply. What I did have was deep industry knowledge and an awesome cofounder with whom I had built a progressional services business. Pro Tip: if you want an edge on the YC application, keep your application short but dense enough that you teach the reader something. Straight from PG: VCs know a little about a lot, so if you can teach them something new, they’re intrigued.
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RickSanchez2600 9y ago

You forgot the Google Prime Directive to "Do not do any evil" in which morals, ethics, and doing good for the community are within the goals and business plan of the startups. After Brandon Eich was forced to resign at Mozilla when they found out he donated to a charity against same sex marriage, it should have clued us all into knowing that you have to look at other areas besides marketing, engineering, programming, math, science, etc and consider public relations as well. One of my friends has a business and computer science degree which are two areas to learn to know how to handle this sort of stuff. He claims your target market customers are more than just the people who pay for your product and service but also those who are affected by it, or use it, or are affected by the use of it, as well as not polluting the environment, obeying all laws of the local, state, and federal government, society, culture, religions, GLBTQ people, minorities, diversity, etc. He claims if your startup is not doing these things it might fail or you might be forced to resign as Eich was. Of course feel free to disagree with me as my electrical engineering professor told me "Ethics don't matter, do the job as best you can, and f* ethics."

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throwawaybiz 9y ago

I used to be super excited about YC from a values standpoint for years. I applied to work for a bunch of YC startups about 4 years ago. What I was generally told was that they never heard of my college or the companies I worked for so I was a no go. That doesn't seem to be fostering diversity, or making the world a better place, or completely separate from the type of bullshit practiced by big companies. (I still like to lurk here because its a good tech news filter, but when YC posts self horn tooting posts its kind of irritating)