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Hi, I work at YC. I think this article is a bit misleading, so I wanted to take the opportunity to give you some of the data. I'm happy to answer any question

Hi, I work at YC. I think this article is a bit misleading, so I wanted to take the opportunity to give you some of the data. I'm happy to answer any questions on this topic. 1) YC's acceptance rate for applications has remained basically constant since 2015 (< 2%). This batch is not bigger because we accepted a higher percentage, but because we got way more applications. The primary reason we got more applications is that over 15K companies participated in our startupschool.org program and many of them applied to YC. Our general policy at YC is to grow the batch size proportional with the number of good applications we get, and this larger batch is just a natural consequence of that policy. 2) We have been wanting to move demo day to a new larger venue for a long time now. The reason is not that there are too many startups, but that there are too many investors who want to come. We have enough demand from investors to fill the previous demo day auditorium several times over, and this new space means we can allow many more investors to come, which is better for the companies. 3) As the batch at YC has grown, we've grown the number of partners proportionally and plan to continue to do that. The ratio of companies to partners is actually lower now than it was a few years ago, and we've increased the amount of time we spend per company. 4) I think the ultimate measure founders should care about - and certainly the one we do - is the success rate of YC companies on average. If we grew the YC batch and the success rate went down, that would be bad. So this is something we track extremely carefully to make sure that does not happen. And so far, it hasn't. Based on the last 1-2 years of companies, the success rate of YC companies is the highest it's ever been. Also for general background, I'd really recommend reading a great short statement Paul Graham wrote about why we think growing YC is better for both us and the founders: https://www.ycombinator.com/atyc/#size https://www.ycombinator.com/atyc/#size

deleted 8y ago
[deleted]
Judgmentality 8y ago
Hi Jared, Thank you for taking the time to write this. I appreciate the info, and while this is not meant as a criticism I am curious how you measure for success. > 4) I think the ultimate measure founders should care about - and certainly the one we do - is the success rate of YC companies on average. If we grew the YC batch and the success rate went down, that would be bad. So this is something we track extremely carefully to make sure that does not happen. And so far, it hasn't. Based on the last 1-2 years of companies, the success rate of YC companies is the highest it's ever been. If fundraising at a higher valuation is one of the components used to determine success, I wonder how much the frothier market could contribute to being misleading here? Obviously a smaller cohort wouldn't necessarily solve this and I realize we can't really control for macroeconomic factors, but I could see it skewing the data (depending on how you measure it). Of course, if success is measured simply by liquid ROI my point is moot. You guys have all the data and know way more than I do, but it seems YC has moved away from funding scrappier startups that might survive an economic setback whereas the much more growth-at-any-cost companies may not survive a hiccup in funding quite so easily. Again, this is just a thought and you have all the data, so I don't pretend to be as informed as you.
- snowmaker 8y ago
  I do think that's possible, and that is one of the confounding factors we spend a lot of time worrying about and trying to control for when we do the data science on this. One of the ways we do this is by licensing data about all the startups in the world and then normalizing our own data against the market overall. Getting a true apples-to-apples comparison is difficult because the world doesn't stay the same. The funding market has changed dramatically since YC started, and the companies we're funding have changed a lot too - they're much more diverse now. We've tried to control for this but you are right that when building a complicated model, you can never be 100% certain and need to stay humble about your ability to correctly control for all these factors. We won't know for sure for many years; for now all I can say is that we've looked at this from many angles and the early indicators look good.
  - lifeisstillgood 8y ago
    >>> licensing data about all the startups in the world ... Can you share where you get such data? It sounds incredibly interesting on one hand and academically useful on the other?
    - lawrenceyan 8y ago
      Probably some combination of Pitchbook, Crunchbase, and other similar aggregators.
paulcole 8y ago
You talk about the “success rate” of YC companies? What is success in this context?
- snowmaker 8y ago
  That's a great question. We don't look at a single success rate; we look at a wide variety of success rate metrics. It's important to point out (thanks @ferrelty) that there are many forms of success itself. A company that takes an early acquisition for $2M, or a company that becomes a profitable life-style business, won't make YC much money. But it may be life changing for the founders and a big success for them. We like to consider those companies successes, and tons of YC founders choose paths like that and we always support them. There are other kinds of success too - YC funds nonprofits, and when those are successful, we don't get any return at all but we think it's very valuable and important. Still, from the standpoint of YC's business model, we need at least some companies to get big in order to make our organization sustainable. In this case, the "success rate" metrics I was referring to are more that narrow financial kind - the question of whether the same percentage of companies are on track to become big successes. We measure that by comparing each batch to prior batches, adjusted for time. So for example, if we're looking at the W2016 batch now, we want to compare it to the W2011 batch as it looked in February 2014. We compare batches in lots of ways: fundraising and valuation, revenue, profitability, growth rate, exits.
ferrelty 8y ago
> Based on the last 1-2 years of companies, the success rate of YC companies is the highest it's ever been. But what constitutes a “successful” outcome? I assume it is not merely a monetary measure, because as we know, just because something is financially successful doesn’t mean it’s good for us or for the planet. These days it’s even debatable if Facebook should be considered a success (for anyone except Mark Zuckerberg). So what is the measure of success? And can you really make an estimation of that 1-2 years after founding, as you have done?
- xiphias2 8y ago
  Facebook is one of the most successful companies in the last 10 years by any possible metric. The fact that you like it or not doesn't change whether it's successful or not.
  - deleted 8y ago
    [deleted]
  - ferrelty 8y ago
    I know several very early employees (first 20) who, other than the financial windfall they received, regret that the company became what it is now.
    - badcede 8y ago
      Other than that, Mrs. Lincoln?
  - egypturnash 8y ago
    It's pretty successful at decreasing the happiness of people who use it. And pretty successful as a targeted propaganda delivery network. Also pretty successful at pushing people towards briefer, shittier, and less-nuanced discussions of things that matter, though not as successful at that as Twitter. And pretty successful at wedging ads into every possible corner of the portion of the public discussion commons that it has taken over. All of these things have made Facebook a lot of money but there is definitely an argument to be made that Facebook has decreased the Gross National Happiness[1] of both the US and the world in general. 1: https://en.wikipedia.org/wiki/Gross_National_Happiness https://en.wikipedia.org/wiki/Gross_National_Happiness
rajacombinator 8y ago
I have no opinion or interest in the size of YC batches. But just wanted to point out that this: >The primary reason we got more applications is that over 15K companies participated in our startupschool.org program Comes across as insincere and hurts the credibility of the rest of your response. It’s just not plausible that a brief online course made a major difference in the number of YC worthy companies out there. Just go with the real reason. (Eg. We have more money and partners, we happened to get a strong application batch, etc.)
- snowmaker 8y ago
  It actually did. It surprised us too! We can track this directly so there's no uncertainty over the result. We're not entirely sure why it worked so well, though.
  - edoceo 8y ago
    Brand Indoctrination. They went to your school, then applied to the next step after a few months of getting your message.
  - rajacombinator 8y ago
    Alright, I take back my comment after looking at the Startup School site a bit more. It seems to offer somewhat more than the basic course I assumed. Looked interesting enough that I joined the waitlist!
- threeseed 8y ago
  I did Startup School and they definitely tried to upsell you to YC. It’s more than likely true.

deleted 8y ago

[deleted]

Judgmentality 8y ago

Hi Jared, Thank you for taking the time to write this. I appreciate the info, and while this is not meant as a criticism I am curious how you measure for success. > 4) I think the ultimate measure founders should care about - and certainly the one we do - is the success rate of YC companies on average. If we grew the YC batch and the success rate went down, that would be bad. So this is something we track extremely carefully to make sure that does not happen. And so far, it hasn't. Based on the last 1-2 years of companies, the success rate of YC companies is the highest it's ever been. If fundraising at a higher valuation is one of the components used to determine success, I wonder how much the frothier market could contribute to being misleading here? Obviously a smaller cohort wouldn't necessarily solve this and I realize we can't really control for macroeconomic factors, but I could see it skewing the data (depending on how you measure it). Of course, if success is measured simply by liquid ROI my point is moot. You guys have all the data and know way more than I do, but it seems YC has moved away from funding scrappier startups that might survive an economic setback whereas the much more growth-at-any-cost companies may not survive a hiccup in funding quite so easily. Again, this is just a thought and you have all the data, so I don't pretend to be as informed as you.

snowmaker 8y ago
I do think that's possible, and that is one of the confounding factors we spend a lot of time worrying about and trying to control for when we do the data science on this. One of the ways we do this is by licensing data about all the startups in the world and then normalizing our own data against the market overall. Getting a true apples-to-apples comparison is difficult because the world doesn't stay the same. The funding market has changed dramatically since YC started, and the companies we're funding have changed a lot too - they're much more diverse now. We've tried to control for this but you are right that when building a complicated model, you can never be 100% certain and need to stay humble about your ability to correctly control for all these factors. We won't know for sure for many years; for now all I can say is that we've looked at this from many angles and the early indicators look good.
- lifeisstillgood 8y ago
  >>> licensing data about all the startups in the world ... Can you share where you get such data? It sounds incredibly interesting on one hand and academically useful on the other?
  - lawrenceyan 8y ago
    Probably some combination of Pitchbook, Crunchbase, and other similar aggregators.

paulcole 8y ago

You talk about the “success rate” of YC companies? What is success in this context?

snowmaker 8y ago
That's a great question. We don't look at a single success rate; we look at a wide variety of success rate metrics. It's important to point out (thanks @ferrelty) that there are many forms of success itself. A company that takes an early acquisition for $2M, or a company that becomes a profitable life-style business, won't make YC much money. But it may be life changing for the founders and a big success for them. We like to consider those companies successes, and tons of YC founders choose paths like that and we always support them. There are other kinds of success too - YC funds nonprofits, and when those are successful, we don't get any return at all but we think it's very valuable and important. Still, from the standpoint of YC's business model, we need at least some companies to get big in order to make our organization sustainable. In this case, the "success rate" metrics I was referring to are more that narrow financial kind - the question of whether the same percentage of companies are on track to become big successes. We measure that by comparing each batch to prior batches, adjusted for time. So for example, if we're looking at the W2016 batch now, we want to compare it to the W2011 batch as it looked in February 2014. We compare batches in lots of ways: fundraising and valuation, revenue, profitability, growth rate, exits.

ferrelty 8y ago

> Based on the last 1-2 years of companies, the success rate of YC companies is the highest it's ever been. But what constitutes a “successful” outcome? I assume it is not merely a monetary measure, because as we know, just because something is financially successful doesn’t mean it’s good for us or for the planet. These days it’s even debatable if Facebook should be considered a success (for anyone except Mark Zuckerberg). So what is the measure of success? And can you really make an estimation of that 1-2 years after founding, as you have done?

xiphias2 8y ago
Facebook is one of the most successful companies in the last 10 years by any possible metric. The fact that you like it or not doesn't change whether it's successful or not.
- deleted 8y ago
  [deleted]
- ferrelty 8y ago
  I know several very early employees (first 20) who, other than the financial windfall they received, regret that the company became what it is now.
  - badcede 8y ago
    Other than that, Mrs. Lincoln?
- egypturnash 8y ago
  It's pretty successful at decreasing the happiness of people who use it. And pretty successful as a targeted propaganda delivery network. Also pretty successful at pushing people towards briefer, shittier, and less-nuanced discussions of things that matter, though not as successful at that as Twitter. And pretty successful at wedging ads into every possible corner of the portion of the public discussion commons that it has taken over. All of these things have made Facebook a lot of money but there is definitely an argument to be made that Facebook has decreased the Gross National Happiness[1] of both the US and the world in general. 1: https://en.wikipedia.org/wiki/Gross_National_Happiness https://en.wikipedia.org/wiki/Gross_National_Happiness

rajacombinator 8y ago

I have no opinion or interest in the size of YC batches. But just wanted to point out that this: >The primary reason we got more applications is that over 15K companies participated in our startupschool.org program Comes across as insincere and hurts the credibility of the rest of your response. It’s just not plausible that a brief online course made a major difference in the number of YC worthy companies out there. Just go with the real reason. (Eg. We have more money and partners, we happened to get a strong application batch, etc.)

snowmaker 8y ago
It actually did. It surprised us too! We can track this directly so there's no uncertainty over the result. We're not entirely sure why it worked so well, though.
- edoceo 8y ago
  Brand Indoctrination. They went to your school, then applied to the next step after a few months of getting your message.
- rajacombinator 8y ago
  Alright, I take back my comment after looking at the Startup School site a bit more. It seems to offer somewhat more than the basic course I assumed. Looked interesting enough that I joined the waitlist!
threeseed 8y ago
I did Startup School and they definitely tried to upsell you to YC. It’s more than likely true.