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Why I turned down my Y Combinator interview
- deleted 8y ago[deleted]
- sacheendra 8y agoOne of the requirement listed to apply via the author's company is native fluency in English. How do they evaluate that? If it's some test, I am not aware of any test which measures this. If it depends on where you are born? Is that kind of stratification legal?
- doughj3 8y agohttps://en.wikipedia.org/wiki/Test_of_English_as_a_Foreign_Language https://en.wikipedia.org/wiki/Test_of_English_as_a_Foreign_L... I have seen this used in Grad school applications by ESL students.
- hiccuphippo 8y agoThere's also the ECPE https://michiganassessment.org/test-takers/tests/ecpe/ https://michiganassessment.org/test-takers/tests/ecpe/ But neither test "native"-ness. Just fluency.
- stingraycharles 8y agoOf course it’s legal and there are numerous language proficiency tests. I don’t see what the problem with that could possibly be, just like requiring a candidate to have a certain amount of proficiency in Python.
- foldr 8y agoRequiring "native fluency" could be interpreted as requiring the candidate to be a native English speaker, which would obviously be discriminatory. That's probably not the intent, but it's a bad choice of wording. If they mean "as fluent in English as a native speaker", then that's arguably much too high a standard.
- jessaustin 8y agoOne wonders about the "fluency" of whoever wrote that requirement...
- rsweeney21 8y agoEnglish was always my worst subject. :)
- jessaustin 8y agoHa! If you decide to change it, I would just drop the "native". (IANAL)
- cldellow 8y agoThere are plenty of tests that achieve this. My university got a lot of international candidates whose first language wasn't English and who hadn't been educated in English up until that point. As a result, they established a process to assess your fluency so they could accommodate you with additional training on English to ensure you'd be successful. https://uwaterloo.ca/future-students/admissions/english-language-requirements https://uwaterloo.ca/future-students/admissions/english-lang... lists 6 standardized tests that prospective students could use to demonstrate proficiency.
- foldr 8y agoThe issue is the term "native", not requiring fluency in a given language. None of those tests will certify you as having "native" fluency in English.
- cldellow 8y agoYes, I should have been more detailed in my response. You're right that all of them give a quantative score, not a qualitative score like "native". There are qualitative scales where one of the labels is "native fluency". For example, the Interagency Language Roundtable has level 5 (native/bilingual fluency) which means the speaker has "complete fluency in the language, such that speech on all levels is fully accepted by educated native speakers in all of its features, including breadth of vocabulary and idiom, colloquialisms, and pertinent cultural references". Other people have devised concordances that map the quantitative scores from things like TOEFL onto the ILR labels. ILR level 5 is a very high bar, though, as you point out elsewhere. It is unlikely that Facet truly needs someone at that level, they'd most likely be fine with level 4 or level 3 speakers. But reaaaaaaaallllly, I suspect we're all ironically missing the point of the communication. On the one hand, we can construe it narrowly and it may be technically flawed. On the other hand, it's marketing copy and I suspect most readers treat it informally, especially since their audience is entrepreneurial people who want to do contract work -- a pool who is likely to ignore the strict letter of the requirement and apply anyway.
- foldr 8y ago
- arciini 8y agoA lot of points resonate with me, but here are some counterarguments to me that resonated quite well: 1. As a first-time founder, YC (the community + the program itself) is a great education. I've learned a ton about different growth channels at a "growth bootcamp", about different possible business models (through the companies that have come and done talks and those in our small group), and about the pitfalls of a startup (through the former founders who are both in the batch and presenting at the talk). All of these have compressed a lot of informal learning into formal/less-informal lessons 2. You still get to choose how to run your company, unless you give up majority voting shares of your company and/or board control. Even that decision is ultimately up to you. It's important to go into every conversation having a good idea of what is best for you and your company, and then to consider what is best for the investor. You will face pressure, but it's essential to have your own perspective in mind and be steadfast in crucial circumstances 3. The community and credentialing is amazing. YC has a reputation that helps to hire and partner with other important companies and people 4. I put this last, but to some founders, this is the most important part. If you are raising money, Demo Day is just a completely unique circumstance to do it I definitely don't regret doing YC, but I seriously considered not doing it before. I'd bootstrapped all of my past companies, but points 1 and 2 here were the ones my friends mentioned that convinced me to do it
- lnsru 8y agoGood luck bootstrapping biotech or robotics company! Of course it’s better to be sole owner, but it does not work when building product takes years.
- badpun 8y agoAre VCs investing in companies that are years from "traction"?
- lnsru 8y agoI know robotics company, that worked with grants, was funded by their first client and then VCs came in. VCs gave them runaway of another 3 year.
- JabavuAdams 8y agoWhat about subcomponents? I.e. becoming a supplier for these industries? Can you bootstrap an actuator company?
- lnsru 8y agoI am currently analyzing how to launch robot affector business in Germany. With physical goods I must be present during sales pitch, video is not enough. It collides with my current corporate job, but it is doable. What kind of actuators do you sell?
- JabavuAdams 8y agoI don't sell any. I just went back to school for Physics and am finishing up first course on EM. I'd like to simulate and build motors from scratch.
- lnsru 8y agoYou need decent manufacturing capability for decent motors like these: https://www.siemens.com/press/en/feature/2015/corporate/2015-03-electromotor.php?content%5B%5D=Corp https://www.siemens.com/press/en/feature/2015/corporate/2015...
- docker_up 8y agoI think the biggest difference between today and 20 years ago when I first go into Silicon Valley is that most founders are generally already planning their exit. There are a lot of startups whose mentality is "get big quick enough so that we can get bought out by Google/Facebook/Amazon/etc". And unfortunately this is a legitimate play because it leads to quick payouts so it motivates founders and VCs alike. It's a fair mentality but it changes the nature of the game because most founders back in the 20th century wanted to helm their company until their last dying breath. So the fact that this person is already targeting a $50M exit makes it less interesting to me. I just don't think I would get excited working for someone I know with that short term of a mentality.
- isalmon 8y ago>> I think the biggest difference between today and 20 years ago when I first go into Silicon Valley is that most founders are generally already planning their exit. There are a lot of startups whose mentality is "get big quick enough so that we can get bought out by Google/Facebook/Amazon/etc". Exactly the same mentality 20 years ago, except back then it was mostly about the IPO.
- docker_up 8y agoFair point. IPO was the goal during the dot-com boom/bust (I saw this all first hand as well) but at least the founders weren't looking to ditch the company right after. The VCs were of course, they're always the snakes in the grass no matter what the backstory is.
- tptacek 8y agoMy experience is that there was a fairly brief window in which founders believed an IPO was a plausible way to flip a company, and that before, during, and after that, the more common objective was to build a company to flip to some other firm that already had done an IPO. When we started our multicast company in early 1999, none of us believed for a second that an IPO was in our future, and our VC pitches (mostly guided by the VCs, some of whom ended up funding us) were almost entirely about who might end up buying us.
- EGreg 8y agoCan someone elaborate on this? It makes no sense to me: The risk profile of your company increases dramatically when you take VC funding. You start spending more money than you are earning, your focus shifts to raising your next round, and your VC now has veto authority over the sale of your company. Your company is now a ticking time-bomb. You can literally NOT do those things. All the VC has is signaling. Theh can’t block your future raises, only have drag/tag along rights, first refusal or whatever.
- josh_carterPDX 8y agoIt's more complicated than that. Most companies that go through a program like YC are pretty early. Entering and accepting the funding means that often times companies have inflated valuations. Being accepted into a top tier program is not enough to pull in investors in many cases especially if it means that the valuation is inflated and the company is still working on product market fit or early revenue.
- rsweeney21 8y agoVCs purchase a different class of stock than you have as a founder, called preferred shares. It is standard to require a majority of the preferred shares to authorize a sale of the company. See this article for a standard, clean series A term sheet. https://blog.ycombinator.com/a-standard-and-clean-series-a-term-sheet/ https://blog.ycombinator.com/a-standard-and-clean-series-a-t...
- CalChris 8y agoApproval of the Preferred Majority required to ... including a Company Sale. However, that is a Series A term sheet. When you turned down YC, wasn't that at the seed stage? You would have still retained control until you converted later. But are you saying that even only accepting a SAFE puts you on an inevitable path?
- rsweeney21 8y agoIf you raise seed funding, the expectation is that you will continue to raise money to fuel your growth. Even if your SAFE or convertible note doesn't have those terms in it, your first priced round will and all previous investors will inherit those rights through their preferred stock.
- lettergram 8y agoIt really depends on your business. My company is building a system for businesses and working with VCs (or YC, if accepted) would be valuable for us. It’s a sales tool, essentially. In addition, there are cases such as building rockets or a factory or other regulated industries where you need capital. If you can bootstrap, do it. However, many people don’t have the upfront investment, connections, or education (in the case of YC). I agree with the author if we were discussing standard “dumb money” VCs. But in this case, we are discussing YC, it’s community, reputation, and educational resources. You don’t technically need to take more money, just take the 7% hit and gain access to more resources. It may be worth it (it also may not), it depends on the situation.
- m_ke 8y agoThese days going through Y Combinator practically guarantees success for B2B/SaaS startups. Their network is so big now that you can hit growth targets that most VCs look for just by selling to other YC companies. Then you can throw the late stage logos on your landing page and use that to lure in enterprise customers.
- solarkraft 8y agoBut the barrier to entry is still decently high. You can't just take a bullshit company, put it through YC and have it succeed.
- m_ke 8y agoThat's true, but it's practically impossible to bootstrap a "bullshit" company and have it succeed. If you get into YC you're guaranteed intros to anyone in their portfolio, press coverage from valley PR machines like techcrunch and will have a much easier time cold calling if you need to because you have the YC stamp of approval. You'll also have a much easier time raising on good terms because no VC is going to pass up a meeting with you.
- aboutruby 8y agoI don't think other companies are going to buy into the new companies's products if those are not good. It's one thing to be able to reach to YC companies/founders, another to convince them to use your product.
- edouard-harris 8y agoAmong many of YC's advantages, they do signal boost your company in a lot of important ways. But if you don't make something people want, no accelerator in the world will save your company from dying.
- m_ke 8y agoMy statement was conditioned on getting into YC, which is really hard to do if your product sucks or has no traction. Even with a weak product you'll be in a much better position because you'll able to meet with a lot of other founders/potential customers and get valuable feedback.
- shafyy 8y agoI was expecting a shitty article after a clickbaity title, but was positively surprised. Not new information, but well argued!
- fictionfuture 8y agoI agree. To support it, my first company was bootstrapped and did around $10m in revenues but then was ultimately killed by competition and ecosystem issues. I pocketed most this money (after taxes) ... had I raised money I'd be broke right now...
- grwthckrmstr 8y agoKudos to you for building a company to $10mn revenues. I hope to achieve similar success in the coming years and honestly, I'd pat myself on the back of I just hit $1mn revenues with decent profits.
- jasode 8y ago>Venture backed companies only have about a 1% chance of reaching a $1B valuation. [...] I’m sorry, but you aren’t the 1. You are the 99 and your startup isn’t going to become a unicorn. [...] Why play a game that has such terrible odds of winning? Because people have always liked to pursue things that interest them regardless of the odds. (cue Han Solo's "Don't tell me the odds!") Why do aspiring writers work on novels with long odds of it ever being a bestseller on NYTimes -- or even being published by a reputable publisher for that matter? Because, writing is what that person wants to do. Telling them it's a "waste of time" isn't going to change their mind if writing is what makes them happy. Why does the high-school basketball player keep working on his jump shot even though the odds of NCAA players getting picked in one of the 60 slots of the NBA draft is ~1%? It's because playing basketball is what interests him. Same for aspiring actors pursuing Hollywood fame that probably won't happen, researchers toiling away on scientific breakthoughs that may never materialize, startup founders building elusive unicorns, etc. Yes, the similar DHH essays promoting "bootstrapping" and "slow growth" are always highly upvoted on HN because VCs are widely perceived as detrimental. However, both your and DHH's philosophy leaves out a crucial detail: What is the entrepreneur interested in working on? If the interests happens to be a business that can be bootstrapped, then great. Pursue that option. However, if it's a business that requires millions to build out infrastructure (e.g. many consumer-facing websites), somebody with deep pockets (e.g. VCs) is the typical financing option since banks won't provide loans.
- rsweeney21 8y agoThere are many ways to bootstrap consumer facing websites and other businesses that require a lot of early capital, you just have to be creative. I'm just trying to get people to think outside the "VC is the way" mindset because it burned me and because the experience wasn't what was promised.
- jasode 8y ago>There are many ways to bootstrap consumer facing websites and other businesses that require a lot of early capital, you just have to be creative. Yes but other financing options such as crowdsourcing (e.g. Kickstarter, or blockchain initial coin offerings), or charging consumers via subscription payments ... all have their disadvantages compared to VCs. Another factor that may handicap your business is how your competition is financed. E.g. if your competition has $10 million in VC money but your business sticks to "bootstrapping" out of principle to stay anti-VC, you will be outspent in scaling out and may fail anyway. Really, the critical advice is to be smart about analyzing the VCs and their financial terms before accepting their money. If VCs don't make sense for your particular business, don't do it.
- kerng 8y agoOver the years there was a shift from let's change the world by creating great technology to let's make a quick buck. The motivation seems to have changed, and its showing...
- xiphias2 8y agoI believe ,,let's change the world'' was most of the time a way for employers/shareholders to make employees work insane hours. Elon Musk is changing the world, works insane hours, but still lives the billionaire lifestyle by lending against his Tesla stock, while the other employees just get the insane hours part.
- randomsearch 8y agoFair point, but bad example.
- danvoell 8y agoI don't view YC as a VC, am I wrong? This whole post is about VCs pushing you to the brink. YC doesn't push companies too hard, do they? Why not do YC and NOT raise VC money afterward but take advantage of the network?
- rsweeney21 8y agoYC is a non-traditional VC, but still a VC. VCs expect a certain growth rate (2-3x annually for the first five years) that almost always requires follow on funding. You could do what you are describing, but if you are up-front with your plans to grow slowly, most VCs will pass on you.
- ksikka 8y ago1. What are you basing this answer on? 2. If you don't want to meet their expectations, what can they actually do?
- rsweeney21 8y ago1. Hundreds of pitch meetings with VCs. Plus they are pretty open about their expectations. 2. Fire you. Sue you for fraud. Talk badly about you in the media. Not saying they would, but there is a lot a deep pocketed VC could do to make your life miserable. It's generally a bad idea to lie to your investors. :)
- thisisit 8y agoI think the amount of VC bashing in the post is unwarranted. It makes it sound like VCs make fat salaries on the backs of other people - either in form of investment or startup founder's hard work. The fact is that some founders, including the author, feel that VC confirmation is a validation of their idea/business. So, while founders shouldn't raise huge amount of money for niche projects they do it anyways because that's how they see validation of their idea.
- throw8585851 8y ago>It makes it sound like VCs make fat salaries on the backs of other people B..but that's what they're doing They're betting with demands
- _bxg1 8y agoI'm not an economist, but the SV economy (which has become a nontrivial chunk of the US economy) just doesn't seem like it can keep doing this forever. The driving ethos is to throw everything related to building a sustainable business out the window, in the interest of cashing-out as fast as possible. Slash-and-burn capitalism. That's not how you create jobs. That's not how you grow an economy. That's how a few people get very rich very quickly. "Move fast and break things", as it were.
- anonuser123456 8y agoThose few people only get rich by providing useful services at scale, and those useful services definitely cause the economy to grow.
- chubot 8y agoJoel Spolsky wrote about this 16 years ago: https://www.joelonsoftware.com/2003/06/03/fixing-venture-capital/ https://www.joelonsoftware.com/2003/06/03/fixing-venture-cap... The fundamental reason is that VCs do not have goals that are aligned with the goals of the company founders. This creates a built-in source of stress in the relationship. Specifically, founders would prefer reasonable success with high probability, while VCs are looking for fantastic hit-it-out-of-the-ballpark success with low probability. ... Even though the second model has a lower expected return, it is vastly preferable to most founders, who can’t diversify away the risk, while VCs who invest in dozens of businesses would prefer the first model because it has a greater return. This is just Econ 101; it’s the same reason you buy car insurance and Hertz doesn’t. Though to be fair, he also explained why he took VC for StackOverflow at Startup School 2012. Basically this: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-... tl;dr StackOverflow has a network effect and needed to scale fast.
- deleted 8y ago[deleted]
- tin7in 8y ago"Venture capital gets so much attention in the media that it’s easy to forget that it’s not actually necessary." I'm running a small bootstrapped company and am helping a friend's project with fundraising. Some of my friends are also VCs in London, so I see both sides of the table. Very often I am part of discussions about fundraising with founders who barely have any traction with their products but are obsessed with fundraising. I wish there are more stories about actual product building instead of people closing funding rounds.
- idlewords 8y agoI would add two things to this argument for building a normal business: * You can make something lasting * If you dislike authority, and like independence, this is the way to go
- deleted 8y ago[deleted]
- pbreit 8y agoNot compelling. 1) Go for the experience. If you get accepted, take the $100k+ and invaluable mentoring. 2) There is no requirement to play the VC's game. Take the money and play your own game.
- liamcardenas 8y agoIt is my understanding that YC only funds companies that have a shot at being unicorns (I am happy to be corrected here). If you are aware of this fact, and a "lifestyle" business is your goal -- is it not dishonest to accept YC money?
- dgudkov 8y ago>Take the money and play your own game. Any example here?
- pbreit 8y agoMinority investors have zero control over you. People think they have to play the VC's game and they simply do not.
- dgudkov 8y agoThe level of control depends on the term sheet. As far as I understand, there is always a degree of control/preference, even when VC's share is minor. I haven't heard of term sheets that would give total carte blanche to the founder.
- avinium 8y agoAs with everything, the devil's in the details. If your funding arrangement allows a minority investor to veto future fundraising, subordinate liquidation preferences, etc etc, they can kill your company. Of course, most deals aren't on such onerous terms - but they do happen.
- pbreit 8y agoIf you look at the companies it funds that is obviously not even remotely the case. You don't have to lie. And even the most lifestyle business still wants to increase sales. I'm not sure the OP would even agree with the label lifestyle business.
- tzhenghao 8y agoI think the case for taking VC money is because some startups have hard and expensive products that require huge upfront capital to realize. This could mean hiring a team of engineers with significant expertise in the area as well as purchasing hardware that aren't entirely off-the-shelf. If you want to build flying motorcycles [1] or rockets, chances are you need some financial aid unless you're Elon Musk. Aside from that, bootstrapping and not raising money could work for you. [1] - https://techcrunch.com/2019/03/07/ycs-latest-moonshot-bet-is-a-startup-building-a-380k-flying-motorcycle/ https://techcrunch.com/2019/03/07/ycs-latest-moonshot-bet-is...
- setgree 8y ago"There are other things that are important to me that I didn’t want to give up, like * I have total control over my company * I can’t be fired" I know what this author is getting at, but as an employee, I like that my boss could be fired if they, e.g., were sexually harassing employees.
- eerburu 8y agoBut how are the chances of an exit with a company of that scale? How big is the market for "niche" companies being acquired for USD 50m, if it was bootstrapped? It seems that there are a lot of acquisitions or acquihires in that range if you are VC funded and are working on innovative tech that makes sense for bigger companies to acquire. But if you are focusing on revenue/profits, and lets say you get to $6-$10m usd in revenue, who are gonna buy you? And an IPO doesn't seem factible since you are not big enough. And if you are outside USA its even a harder sell. I guess it could happen that a lot of transactions of "niche" companies exists in that price range but they are not publicized by journalism because they lack relevance, and that would give you a biased perspective of lower sales of companies, but I wouldn't be that sure of that hypothesis. So, what do you think about the odds of exits strategies for a $30-50m bootstrapped startup?
- rsweeney21 8y agoIf you are profitable, there are a truckload of people that will want to buy you. Private equity, other companies, holding companies. Look at it this way - say I'm super wealthy and I have $100M sitting in my bank account. It earns a tiny interest rate at the bank. Where can I put it to work for me so that it's growing? One option is to buy a company for $100M. For $100M I can buy a company that produces $10M/year in profit (roughly speaking). Now I'm earning a 10% annual return on my investment. I might even be able to grow the company, so when I sell it 5 years later, I sell it for $200M. So I've taken my $100M and turned it in to $250M. That's the great thing about profitable companies. There is almost always a buyer.
- muzani 8y agoVCs are useful in the longer scale of things. Sure you can build a $100M company or so bootstrapped, but by that time your competitor will be at $1B. Whether or not you want this depends on the product you're doing. Several companies tried to make an operating system for touchphones. Out of them only Android was acquired and successful in the long run. Plenty of digital game distribution platforms tried to grow, but were choked out of the market by Steam. The author is working on contracting specializing in American companies. The market for that is big enough. Or if you were, say, a community based baby stuff e-commerce, which can compete with Amazon, that works too. The other thing to note is that YC partners say they go big to have the most impact on society.
- akkadak 8y agoI think you have fear of failure.
- iamkoby 8y agoYC is not a VC, they are more of a community.