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Y Combinator has lost its soul: A YC founder's perspective

• awillen 6y ago
  The idea that check sizes should be small so people should be forced into dire financial situations is a terrible one, and one that would absolutely hurt diversity. You're going to end up with a bunch of rich white dudes as founders (because very, very obviously the other way that people can afford to take smaller checks is if they have a lot of money in the bank). The smaller class size issue is probably fair, but reducing check sizes as a filtering method will absolutely filter out socioeconomically disadvantaged people. Just a terrible suggestion from somebody who I would wager heavily is not unsure of where his next meal is coming from.
  • dbbk 6y ago
    Yeah I noped out of this as soon as I saw it. The guy is suggesting investing in startup founders but not giving them enough to live while they get that company off the ground. What is the point of that? Completely self-defeating.
    • czbond 6y ago
      It is not YC’s job to support the company. That is the founders job. I’d suggest money supporting the company at seed diverts from a focus on monetary fit asap. $25k is enough to scrap by for enough months which should be the initial goal
      • TomMarius 6y ago
        The problem is there are many brilliant people that can't just scrap by - with a mortgage and family. But I respect the VC's right to choose the kind of people they sponsor.
        • forbiddenvoid 6y ago
          Yeah, the idea of creating an environment that only favors young, privileged, unattached folks has always been pretty off-putting for me. Larger checks certainly attract the 'free sabbatical' folks that the author seems to dislike so much, but it also enables entire classes of potential founders to have access to capital that enables them to focus on their business rather than their kids' stomachs.
          • jasonwatkinspdx 6y ago
            It's why we've had a glut of startups doing lifestyle products that appeal to mid/late 20's bros with lots of disposable income. These... haven't been great startups as a generalization.
          • peterwoerner 6y ago
            Counterpoint. As a father of a baby, I have significantly less energy and time for work. With starting a company you tend to have to plow a ton of hours and energy into the endeavor, especially if you want to move at bottleneck speed. With the baby there are many weeks where I have a difficulty working a mere 40 hours. That being said, I have significantly more insight (due to experience) than I did when I was more free and willing to work 60+ hours a week and was willing to live off of 20k a year.
            • hkt 6y ago
              As a father of a 4 year old I don't think it is my job (or yours) to vet who gets the help they need when they decide they need it. You may not have felt you had the time and ability to commit, but why should you be able to speak for anyone but yourself?
              • peterwoerner 6y ago
                Very valid.
            • kaitai 6y ago
      • whymauri 6y ago
        YC is an incubator, not a game show.
        • throwaway5752 6y ago
          Yes. They invest seed money. They help you turn an idea into a series A. Maybe it has lost it's soul because the round structures are so much looser, or the greater availability of angel money. Seed money used to be a godsend because you had a good idea that wasn't at a scale enough to interest traditional VC and you didn't know an angel. YC was particularly great because it had the emphasis on the network and the larger number of investments allowed it to distribute risk across the class. They purpose was not to build a company or make a good living, it allowed you to create a company you wouldn't have been able to, otherwise. I agree with the gp post, the goal is not to fund a sustainable company, it's to get one off the ground.
      • save_ferris 6y ago
        No, it just diverts focus from building a successful company to figuring out how to eat. Forcing entrepreneurs to risk devastating personal bankruptcy just isn’t kosher, and there’s zero evidence that it creates healthy companies. It just encourages founders to take even more risks, which aren’t always ethical (i.e. Instacart’s predatory pricing and tipping model).
        • sushshshsh 6y ago
          While this strikes me as possibly true, maybe even probably true, I would prefer to see actual simple data about this. Sure it would be hard to get but here's the schema I imagine would be needed. Founder ID, Founder bank account balance average during company's first year, Founder health metrics array [acute visits to hospital or clinic for diet/mental health issues], Outcome of company --- If we notice that founders with low bank balances, lots of health events in their life, and unsuccessful business outcomes are popping up in the data, and then conversely founders with 100k in their personal bank on day 1 are never visiting the hospital and their companies are doing fine, then I think we could call check size a definitive contributing factor. This would fly in the face of "ramen profitability" as a virtue. EDIT: and i think there are enougg startups out there (40,000 probably??? ask crunchbase) to have a meaningful sample size
      • jasonwatkinspdx 6y ago
        This is absolutely terrible advice. There are a few professional services that can have a dramatic impact on the early success of a startup. You need the best PR firm you can get to return your calls. That ain't cheap, but it has a rather huge impact if used properly.
        • _curious_ 6y ago
          "You need the best PR firm you can get to return your calls." Saying someone "needs" something (ie paid PR) in order to succeed could also be deemed terrible advice.
          • jasonwatkinspdx 6y ago
            This has been one of the critical differences between the startups I've worked at that have found successful exits and those that floundered. A good PR firm can you get a national audience for pennies compared to paying for ads.
            • _curious_ 6y ago
              I believe it, though there is plenty of opportunity for earned media - its not PR firm, ads, or nothing...
      • bananaface 6y ago
        It's not about "who's job it is", it's about supply and demand. The founder could probably get a 300k salary at Google or a six-figure stipend with another investor. If Y-Combinator wants to compete they have to provide something that outweighs that.
        • cameronbrown 6y ago
          How is it YC's problem? The founder is choosing to start a company and asking YC for money. Clearly they're not short of startups on the supply side of their equation.
          • bananaface 6y ago
            You're not thinking about it the right way. It doesn't matter if they have "enough" applicants. They're trying to fill the positions with the best candidates out there - who they will just have to compete for. The more barriers they put up, the shittier the candidates they will get.
        • czbond 6y ago
          Why would Y comb need to compete with someone who is considering an offer to G? In that case, the founder would leave for the better deal anyways - so it's best to leave before it gets REALLY hard.
          • bananaface 6y ago
            Ok, but now you're filtering out a good chunk of people smart enough to work for G - so your applicant pool just got dumber.
            • czbond 6y ago
              Disagree. If someone's choice either is to work for G, or start the company, it is the founders risk to take and give up that job for the outsized risk and return of starting up. It is not YC's need to compensate a founder for their alternative.
    • seertaak 6y ago
      > Yeah I noped out of this as soon as I saw it. I must be misunderstanding you; I read that as you stopped reading the entire thread because there was a single point you disagree with. Is that what you mean?
      • klyrs 6y ago
        Suppose the first slide of my 10 minute sales deck described building a house out of literal waffles, and letting customers eat those waffles. Would you actually pay attention to the other 9 minutes? Overlooking the fact that if I attempted such a thing it would be amusing as hell. Imagine somebody taking that idea very seriously.
        • CalChris 6y ago
          Waffle House exists [1] and so this sounds likes like a buried lede which is way better than most pitches. I've heard worse, much worse. [1] https://www.wafflehouse.com/ https://www.wafflehouse.com/
          • tedivm 6y ago
            There's a difference between "sells waffles" and "constructions a house using waffles as the building material", and I'm reasonably sure the second one doesn't exist.
            • sjm-lbm 6y ago
              I feel like the point is "you never know when an apparently crazy idea will turn into something reasonable, so you should always stick with someone until the end of their pitch and/or point." Admittedly, I'm not sure that's universally true (we all have a limited amount of time, and it's reasonable to focus that time in places where it is going to give us the most benefit), but I'm pretty sure I see where the commenter is coming from.
              • bananaface 6y ago
    • djsumdog 6y ago
      I think back to Paul Graham's list of things that kill a startup: http://paulgraham.com/startupmistakes.html http://paulgraham.com/startupmistakes.html He does list having both too little money and too much money. I agree, maybe the $25k made sense back before life in California was more expensive than living in Manhattan, and it should be enough to cover more living expenses. Maybe alternatively, YC could provide less money, but basic housing and needs so founders minimals could be met, while also providing them a collaborative environment?
      • KajMagnus 6y ago
        > basic housing What about a YC building complex a bit outside SF? Maybe one close to NY too, and ... two in Europe, two in ... each continent? :- ) "Ycplex"? "Hackerplex"? There could be a gym so people could stay healthy (and what about child care & school?).
    • Nasrudith 6y ago
      I think the idea is to not be an "attractive nuisance" to get strung along by ideas which look good but don't work out. There is some theoretical strategic merit but it doesn't seem to synergize. It seems at odds with the Venture Capital model in the first place of rushing growth over profits and letting the wins make up for losses. Especially if he has a larger pool of capital than when he started (which he should unless he is doing it wrong), smaller checks /and/ wanting more personal attention and less canidates. That just cannot scale up to larger ammounts of money by definition, even if it would yield a better rate of return on investment in dollars. Diversification is another option for fund self-perpetuation but it will likely not have the same yields and cause total portfolio growth to decline with size. As for motivations I guess either trying to eat his cake and have it too.
  • site-packages1 6y ago
    The solution may be wrong, but the idea is right. If people can just casually come into YC with no particular consequences for failure, that greatly reduced drive to succeed. "I'll just go back to FAMGAN after" or "I'll be able to transition from MBA grad + YC to something high paying" I don't think is great for success drive.
    • baq 6y ago
      you can be motivated without going hungry. not being able to afford basic things is extremely stressful and takes time away from doing whatever YC wants them to do - that time is spent making sure that food is on the table. exactly the opposite of what you intend.
      • throwawayway9 6y ago
        Well said, I don't believe it is beneficial increase a person's anxiety to extreme levels just because some people think that makes them work harder.
        • _curious_ 6y ago
          For some founders & entrepreneurs, it forces them to work smarter - not necessarily harder - and that's the goal, to figure out what isn't working right and change it to reduce/eliminate the anxiety caused by an under-performing startup.
      • czbond 6y ago
        Yes - but this is what every company does at founding. Get really lean, survive on whatever it can. Founders should expect company building to be a nervous and anxiety inducing endeavor for 7 years. It is incredibly painful - and not for those who see it closer to a paid sabbatical
        • forbiddenvoid 6y ago
          If that logic were true, then there would be far fewer companies built by founders who already have a successful exit. The success of a company is far more likely to be correlated by the founders not having to put their own wellbeing on the line than the other way around. I think, as a point of failure, that most would agree that a system that allows a few people a 'free sabbatical' but also provides security for those founders who would not succeed without it, but who will with it is a good thing.
  • relaunched 6y ago
    They are doubling down on what works. I'd be very interested to learn if Ycombinator has diversity and inclusion as a value and if they discussed what smaller checks might mean on D&I. It's interesting how the best incubator found that smaller checks out of the gate is beneficial, but you can raise a 30-50 million series B and founders can take a few million off the table, which is also good, so they can go long.
  • Alex3917 6y ago
    It also doesn't make any sense from an investment perspective. Reddit would have been one of the most successful YC companies of all time, except for that they basically had to shut down because they couldn't raise money. This happened to lots of early YC companies that could have otherwise been successful. Had Reddit not sold for pennies on the dollar to Conde Nast, that alone would have probably paid for the extra 100k for every YC startup since.
    • awillen 6y ago
      Great point. People think a willingness to take extreme financial risks is somehow a useful personality trait when it comes to entrepreneurship because of selection bias. People who take that risk and make it tell that story. People who take that risk and don't make it aren't heard from. People who don't take that risk also aren't heard from. There are lots of people with great ideas and the ability to execute on them who also have a deep sense of financial responsibility that precludes them from going 50k into credit card debt.
      • mgkimsal 6y ago
        > People who take that risk and don't make it aren't heard from when you do, it's often quite heartbreaking. have read a few online, and knew one personally - kept going in to further debt, ended up getting divorced and creating a huge rift in his family, etc.
      • CerealFounder 6y ago
        It's all just legacy from the insane power dynamic that comes from a relatively broke entrepreneur and an investor with money. The only thing that seems to stem true about the myth about "founders should be paid too much" is that when you suddenly have more resources than you ever had, you tend to be exposed to new distractions.
      • sangnoir 6y ago
        And often, getting credit card debt is not a material risk, but a minor embarrassment when they ask their family to bail them out and/or move in the guest house for a few months, rent-free. When poorer folk take the "same" risk, they can be ruined for decades.
  • doorstar 6y ago
    We have a silicon valley success story in our family. His parents were telling me how he built everything up out of nothing, clearly unaware of their own contribution. He could pour all his money into his start-up because if he'd lost every dime he could have moved back in with them. He'd have his own bedroom, bathroom, and a fresh-cooked meal every night. He could have stayed with them as long has he wanted. Very few people have that kind of soft-landing.
    • pal_9000 6y ago
      Exactly what i wanted to post. Also excludes everyone who is married or has to feed their family.
    • Jommi 6y ago
      I don't know think this is as clear. Can you link me to some researcher where a stronger social net leads to better entrepreneur outcomes? Because looking at country level data, USA, with it's terribly scary and risky path of entrepreneurship completely outperforms welfare state countries like the Nordics. You could say the difference is from capital markets, but still even the difference in startups that are not successes is humongous.
      • btilly 6y ago
        Do you have statistics demonstrating that, per capita, the USA outperforms Nordic countries on entrepreneurship? I don't either way. But I have run across the counterintuitive fact that Nordic countries outperform the USA on how many people per capita are worth at least $30 million. And at least some of them got there through entrepreneurship.
        • djhn 6y ago
          Can't ignore old money. Nordics (most obviously Sweden and Denmark), Baltics (Lithuania) and many CEE countries (Poland) have hundreds of old aristocratic families with family trees two to four times as old as the US.
      • 6y ago
  • gorpomon 6y ago
    Agree-- the idea that limited means "always" fosters resourcefulness is a gross sentiment that has long been debunked. For many folks limited means just means extra stress with no added chances of success. Maybe the founder saying this is motivated by less money, but most people aren't and this would just further limit diversity.
  • yters 6y ago
    Maybe the point of economic filtering is to only accept single young men, who can devote every waking moment to their startup without any concern for dependents and such. You can get great velocity from such a pool. Myself, with family, mortgage, etc. I would never be able to achieve that kind of velocity if I were accepted to YC. So, even if I had incredible ideas, as people around here keep saying, and PG makes clear in his Viaweb essay, it is not about the ideas but about execution. Thus, the economic filtering for those who are unencumbered and thus can really execute on their idea or something that YC comes up with makes a lot of sense.
    • Jommi 6y ago
      I don't understand this point. Do you think anyone at any life situation should have equal opportunity of becoming a successful entrepreneur? You do realize that by having a family and owning a house, you're pretty much on a completely different financial and stability level than a single young male.
      • yters 6y ago
        I am just saying the small grant makes a lot of sense from the YC worldview. And, if someone has family, house, etc. to provide stability do they need YC financial assistance?
        • jfk13 6y ago
          Family and house do not necessarily provide stability; they may just provide added responsibilities. I can't feed my house to my kids.
          • yters 6y ago
            That's why farming was the original startup!
    • treis 6y ago
      >Maybe the point of economic filtering is to only accept single young men, who can devote every waking moment to their startup without any concern for dependents and such. Maybe I am missing something here, but why can't women do that too?
  • mytailorisrich 6y ago
    > white dudes Not sure what skin colour has to do with the topic. Could we stop assigning racial etiquettes and discriminating based on skin colour? Not to mention racial stereotypes in this case.
    • Pelic4n 6y ago
      Sorry that hurts your feelings but white households are much more rich than black households. According to the federal reserve, both mean and median net worth of black families are under 15% of the mean and median net worth of white families: https://www.federalreserve.gov/econres/notes/feds-notes/recent-trends-in-wealth-holding-by-race-and-ethnicity-evidence-from-the-survey-of-consumer-finances-20170927.html https://www.federalreserve.gov/econres/notes/feds-notes/rece... If you force start ups founders into dire financials situations, those who can afford it are way more likely to be white than black. That's why 75% of start up founders are white. Still not sure how skin color has to do with the topic?
      • mytailorisrich 6y ago
        It's not a childish question of hurt feelings. This is bringing race into a discussion where it does not belong, this is perpetuating racial bias and racial discrimination. Your comment does the same. I have flagged the original comment because I think this has no place on HN or anywhere.
        • cultus 6y ago
          Pretending that racial inequities don't exist perpetuates racial bias. I can tell this is a topic you have never thought deeply about.
      • deleted 6y ago
        [deleted]
  • _curious_ 6y ago
    "You're going to end up with a bunch of rich white dudes as founders (because very, very obviously the other way that people can afford to take smaller checks is if they have a lot of money in the bank)." There are many founders of various social identities who are not rich yet have managed to succeed with bootstrapping or small seed/accelerator investments because they are capable. To assert that some people are inherently advantaged or disadvantaged as founders and/or entrepreneurs based on such factors as race and gender is the definition of prejudice.
  • Blake_Emigro 6y ago
    My understanding of it is that much of the money is supposed to be for Google and Facebook ads - something which I would never want to have to pay out of pocket for in the US market. So it's not just that the founders can pay themselves a ramen salary or better, but that there's a big early marketing budget built-in.
  • Spooky23 6y ago
    IDK, in my observation as a working-class white dude, comfortable white people are less likely to start an entrepreneurial venture. Why take the risk when you have easier employment options? There were pretty obvious, observable backgrounds/personality types that were starting businesses in my circle. Mostly SMBs like trading/retail firms, personal services, etc. Well do to people assume that the masses are a bunch of hardscrabble foster children. Those folks exist. But the reality is that most people have families and have support systems to fall back on -- perhaps not as comfortable a fall-back as the kid where mom and dad are dentists or F500 executives, but not intolerable. Startups aren't really businesses, so maybe they are different. Optimizing for successful venture funding cycle is a different problem.
  • cryptonector 6y ago
    If you have no capital to bring, then you will have no equity either unless you provide labor for free. Labor compensated with equity is capital, since you have to pay your living expenses out of savings or loans that you are liable for. And you'll just be an employee of sorts, except with less pay and more risk. Why bother? If you're unsure where your next meal is coming from, then you probably aren't currently a good candidate to be a founder. Maybe later you will be, but first things first: accumulate a bit of wealth. Venture capital isn't a government welfare program. You might get YC or others to pay a sort of a social tax by providing a sort of welfare, but the founders won't be owners (see above).
    • awillen 6y ago
      Yeah, it's commonly known as sweat equity. You do the work, and other people provide the money, then you split up the equity accordingly to the relative value of the two different types of contributions (I mean that's oversimplying but it's generally accurate). If you're unsure where your next meal is coming from, you may still have a great idea and the ability to execute on it. If someone gives you enough money that you have the leeway to do those things, then everyone wins. Obviously venture capital isn't welfare... no one has begun to suggest that it is. VC puts money into companies in exchange for equity because those companies need money. If the companies didn't ever need money, there would be no need for VC. The idea that VC should only fund people who already have plenty of capital available to them fundamentally misunderstands the entire model.
      • cryptonector 6y ago
        Obviously VC exists because the founders don't have enough capital, but not because the founders have zero capital.
    • cactus2093 6y ago
      The way YC currently works is something like $125k for 7% equity. So founders can pay themselves enough to live on and still own 93% of their company. This wasn't a hypothetical that the parent comment you're replying to made up. So whatever bizarre first-principles argument you're trying to make, which I am not really following, already doesn't match the current reality.
  • oyra 6y ago
    Man... Diversity for the sake of diversity won't make anybody richer, just the opposite. The root of the 'diversity' movement is barbaric socialism, marxism. Marx, Lenin, Mao, Pol Pot all fought for disadvantaged working class; today's marxists fight for socioeconomically disadvantaged people, and they will gladly fake 'disadvantage' and attribute them to random group of people. The result of such fights will be similar to those achieved by Lenin, Mao, Pol Pot. What has to be ensured is an equal opportunity for everyone regardless of color, sex, religion etc. As of today, we have it in this country and in the most civilized capitalist world.
  • phkahler 6y ago
    I think the money needs to cover your rent. It should not be enough to hire technical people to build the product - that was supposed to be the founders thing. In that light, SF is the wrong place because the rents are so high.
  • codegeek 6y ago
    I think the financial argument is an interesting one. It is true that you need to be financial stable so that you can really focus on the startup BUT on the other hand, too much money can spoil you and you could end up burning the cash without lot of trial and error which can be useful starting up.
  • hinkley 6y ago
    > rich white dudes Rich, young, socially connected, white, dudes. That's a full Bingo card.
  • kkolanm 6y ago
    Completely agree with the point except the needless use of racial stereotyping on an economic issue. The reality is that millions of white people come from impoverished backgrounds. And millions of Indian, Asian, and yes even Black and Latino people are from wealthy backgrounds. Polices designed to help economic diversity will necessarily and disproportionately help certain racial minorities and that’s all for the good. If you want to actually help the world stop making it about race when it is not. And feel free to make it about race when it actually is.
    • pedalpete 6y ago
      Diversity doesn't only mean race, it also means socio-economic backgrounds, which is what I think the original comment was referring too. But also, most of the data in VC does suggest that racial/gender diversity is seriously lacking.
  • jariel 6y ago
    I would imagine that even the check sizes they offer still don't solve this problem.
  • santoshalper 6y ago
    That's a great point, but I do think there is a legitimate counterpoint - that by shifting most of the risk from the founder (where $25-$100k is a lot of money) to the VC (where it ultimately is very little money) potentially eliminates a filter criteria and could create perverse incentives or lead to a scattershot approach. "I believe in this idea so much I am willing to gamble my short-term financial future on it" is a great way to find out what people really care about. The diversity issue is real though. As is the broader issue of wealthy people being able to take on much more risk than normal people, leading to a reinforcement cycle (winners keep winning) and a winner take all outcome. Which, now that I think about it, pretty much describes US capitalism perfectly.
  • bananaface 6y ago
    People who take huge financial risks are IMO much more likely to be just kinda stupid than rationally confident & committed. It strikes me as a really dumb way of filtering for smart people.
  • michelpp 6y ago
    I came here to say exactly this and I couldn't have said it better!
  • simonbarker87 6y ago
    The financial purgatory expected by angels is ridiculous and one we never subscribed to and is far too much like a parent child relationship than an adult to adult relationship. Investors who want their founders in a tonne of personal debt and living on baked beans are hurting their investment and stroking their ego. Investors are trying to sell money, companies are selling a possibly enormous return on that money, it's a win-win and founders should be treated like the professionals they would be in industry. Start ups have basically unlimited upside risk for investors and totally limited (to the amount of money invested) downside risk for them (and in the UK very healthy tax breaks for investing), the founders on the other hand loose years building a product that may prove worthwhile, don't make them carry years of financial pain and repercussions because they tried to grow your $5-$100K.
  • foxtr0t 6y ago
    Counterpoint: founding a startup and being financially secure isn't some inalienable right. As you point out, writing small checks will skew the population of founders, but by doing otherwise for the reasons you've brought up, you're addressing a symptom very inefficiently. It might be more effective to take an approach similar to affirmative action. I think the idea is totally valid. Pouring money into a small set of founders can have diversity implications as well, it's hard to guarantee you're distributing investment equitably if the batch size is small.
  • phamilton 6y ago
    The other big difference on check sizes is that YC started during now documented collusion in silicon valley. Now, the check size really doesn't matter a ton to the FANG engineers looking for a sabbatical. Building a 100k cushion to fund said sabbatical is pretty easy when you're making 400k at Google. I think there's no real way for reducing checks to have meaningful impact at this point.
  • Thorentis 6y ago
    > You're going to end up with a bunch of rich white dudes as founders Is there any reason you included "white"? Are black people not able to be rich, or are white people more interested in tech, or are black people discriminated against by YC, or... what?
  • norswap 6y ago
    I agree with this point wholeheartedly, though I wish it could be made without making "rich white dudes" as some kind of slur.
• deleted 6y ago
  [deleted]
• MikeTaylor 6y ago
  Did @pg respond to any part of this thread?
  • moneywoes 6y ago
    No
• someperson 6y ago
  What exactly does he mean by "tech climber"?
  • throwanem 6y ago
    Get-rich-quick grifters, would be my guess.
    • vayeate 6y ago
      Possibly that these smart young people view everything like highschool. Everything is a formula driven contest to outshine your peers for the limited spots at prestigious schools. Get the perfect grades, study nonstop for the SAT, find the perfect volunteer experience, get dad to shmooze with his senator friend for that shiny recommendation letter, get into Harvard. Same thing on loop. After the prestigious internships and summa cum laude, they graduate into a FANG job at 21. I think the criticism is that these people are conformists. They're good at following an obvious system to the T but has never innovated or taken risks in their life.
      • kiplkipl 6y ago
        This attitude continues into job interviews: the thought that, if you work hard enough and have enough talent, you should get the job you want. In reality, you might just not be a match.
      • nlh 6y ago
        That’s a good insight. The problem, though, is that this pattern kinda works (until it doesn’t). Get your FAANG job at 21, follow the pattern to get promoted, get promoted, make more money, compete to buy a nice house, get married, have kids, compete to get your kid into the “best” preschool, then the “best” private school. Compete to get into the “best country club”, then retire and...play golf all day?
        • vikramkr 6y ago
          At that point you've got enough wealth built up that if you've played things right you have a part time job managing your own portfolio. And a lot of people on that route that I've met have vague ideas of doing charity work or something at that point.
• kemayo 6y ago
  He lost me with the whole "make founders take on massive personal debt to survive" tweet. Removing that particular stressor, particularly from people from poorer backgrounds who lack the access to that kind of credit is how we get a better sampling of ideas.
  • lifeformed 6y ago
    Yeah, he calls it a "filtering function"... yes, to filter out people without safety nets.
    • czbond 6y ago
      Not a filtering function - I know of a few founders who scrapped by on Medicaid and food stamps for years to build a successful business by they had no savings
      • KoftaBob 6y ago
        But why put founders through that added stressor if YC easily has the resources to prevent it?
        • czbond 6y ago
          They don’t know at onset if a company deserves that much money. $25k is enough to see what people can accomplish in 3 months - maybe they take less equity. Most companies either have wrong leaders, wrong market, wrong skills, wrong business ideas but big dreams. That amount is enough to filter through the above.
      • tfehring 6y ago
        The fact that it's an imperfect filtering function doesn't mean that it's not a filtering function.
      • eggsnbacon1 6y ago
        yeah a lot people can't do that. Specifically anyone caring for someone, so like 50% of adult population. A huge proportion of adults are caring for a parent or child. Its also impossible if you have any health problems, or need to save for retirement or have student loan debt. Its really only possible if you're young and healthy, so this would filter out probably 80% of adult population
• smithmayowa 6y ago
  Yc taking advantage of their b2b alumni network is common sense in my own opinion, they are playing to their strength in fact.
  • site-packages1 6y ago
    It's helpful, I have spoken to maybe 5 companies of the current batch who were introduced through the YC network and are working on problems that would help us succeed.
• cultus 6y ago
  The author here almost seems like a parody of un-self-aware white male tech arrogance. From the Twitter bio: "On a 100 year mission to escape earth, become immortal 🧬, create artificial life, and discover the fundamental secrets of the universe." This kind of absolutely wacky egoism and Dunning-Krugerism really makes sense, given that he thinks founders all have safety nets to go into huge debt and poverty.
• george_morgan 6y ago
  His perspective seems built around ego. It's no longer the special club he wanted it to be, it's not "hard enough" for the people he sees as "wrong" to participate. He liked YC when it was a band no one else had heard of etc. etc. Without knowing the metrics for how YC judges the performance of its intake and their future objectives, there's no way of making sensible recommendations for how (or if) it should change.
• atarian 6y ago
  Check sizes are 125k now; you won't be able to hire a rockstar dev but you have something to hang onto for a year if you budget wisely: https://www.ycombinator.com/deal/ https://www.ycombinator.com/deal/
  • xwdv 6y ago
    You can absolutely hire a rockstar dev, you need to think in terms of cashflow. You may not be able to pay a full year of salary, but you can still pay their full weekly salary as you go until you either run out of money or produce enough revenue to get to that point.
    • _curious_ 6y ago
      Agreed, it's not even about the money. My last company had a technical cofounder who by all means was highly sought after and managed a team of 15-20 other developers in their primary dev consulting company meaning not only did they rock technically but also had biz acumen. That individual worked FOR FREE for 3 years 25 hrs/week before collecting any money. Don't ever think you have to pay a developer some market salary (or any salary) upfront. If the idea + company + team is legit, they will jump at the chance to be involved.
      • ricardobeat 6y ago
        > Don't ever think you have to pay a developer some market salary (or any salary) upfront "A developer" should definitely be paid market rates, otherwise they are a founder and should be rewarded accordingly with equity. I think this mindset of "getting work for free" is very damaging to the person holding the short end of the stick. Someone who already has a well paid job, is willing to do a startup on the side, and actually be effective at it is extremely rare. What you'll usually find is someone at the beginning of their career that doesn't really understand what they are getting into.
        • _curious_ 6y ago
          "otherwise they are a founder and should be rewarded accordingly with equity." Of course - as they were. My point was on cash money comp. Never said they worked for free hence their title of technical cofounder which implies equity. "...and actually be effective at it is extremely rare. What you'll usually find is someone at the beginning of their career that doesn't really understand what they are getting into." The onus is on the founding team to be sufficiently compelling to attract such a rare breed and if they execute correctly there is no short end to the stick to be had.
• erik_landerholm 6y ago
  As someone who did yc in s09 and w19, it was very different. But, you get out what you put in, like most things. These generalized critiques are useless. B2b is thriving at yc because it’s easier and more in the wheelhouse of developers. If there were tech climbers there I didn’t meet them. There are so many people the useless are easy to avoid. We got 6 months of work done in 3 months and the bigger check vs 09 was very helpful.
  • redisman 6y ago
    Also if you look at how the US economy works, all the money is in businesses, not consumers - compare the current stock market to the unemployment numbers for example. B2B was always going to out-compete B2C in the long run.
• deleted 6y ago
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• blueyes 6y ago
  This is the Twitter version of bad journalism. * pick something famous * say it's dead * cherry pick the worst things about it * get your 10 minutes of fame All it costs you are some burnt bridges. I've met several really smart founders from recent batches who are building something interesting. Making blanket statements like this is not particularly helpful to YC. Famous institutions always attract climbers. That's inevitable, but it doesn't invalidate the institution.
• sobellian 6y ago
  I went through YC in S14 as a co-founder of a hardware company. I agree that YC optimizes heavily for SaaS companies, but smaller checks would probably exacerbate this trend. Hardware companies need to not only subsist on the $120k but also develop prototypes. That's difficult enough, but it is completely impossible on $25k unless the co-founders are independently wealthy or have already raised money.
• ema 6y ago
  One thing that made YC great was that it was started to allow the original 4 partners to learn how to be investors. The first batch wasn't intended to be profitable, it was intended to reveal what works and what doesn't. (Luckily for YC it got a lot right by accident). Sure YC could go back to small batches and small investments but they can't go back to "let's figure things out with only rough theory as a guide" because YC is no longer the startup born out of ignorance and curiosity it once was. You can't forget lessons learned and dial back your sophistication. The magic of early YC isn't lost forever but it will be refound among the next group of rich people who are willing to spend a bit to figure out if this investing thing is to their taste.
• KoftaBob 6y ago
  He says "the check sizes are too big" as if they're giving prelaunch startups $50M or something. The $125k that YC gives startups is nowhere near big enough to remove the drive/urgency to succeed. If startups are coming into YC with a more mature product than in the early years (and it seems that way), then adjusting the focus towards fundraising actually makes sense. Not to repeat what's been said in other comments, but to say that founders should be willing to put themselves in deep financial risk to prove their drive...that just comes from an incredibly privileged mindset. It reminds me of the people saying that if their school is going online-only, students should instead take gap years to build something, incorrectly assuming that no one needs that student loan money for living expenses.
• williesleg 6y ago
  I wish people would just code and stop writing crap.
• qppo 6y ago
  $25k is like 2 developer months + ops overhead. I don't think that's going to buy anything but high margin/quickly realizable ideas like B2B SaaS and developer tools.
  • vikramkr 6y ago
    According to the thread it's not supposed to be enough. You're supposed to go deep into credit card debt because that's how you know you're a Real Founder(tm). You know, if you're privileged enough to have limits high enough on your credit cards to go into that sort of debt, dont have people dependent on you, have a safety net to make this not so big a deal, etc. Clearly the best founders are the ones starving themselves so they can lower their risk of having to file for bankruptcy. And the best thing to do to fund a high risk tech startup with uncertain cash flows is apparently debt. Equity financing exists for a reason, you know. And the point of incorporating as a separate entity is liability protection/equity financing etc. For an investor, pushing your founders to increase the risk levels of their high risk companies by levering up with a personal guarantee is ridiculous. They increase the risk level so debtors can get the reward if things work, which is now less likely because of the compounding interest and personal stress.
• MattGaiser 6y ago
  I am somewhat sympathetic to the check size argument simply because I have seen a lot of people drift from accelerator to accelerator to accelerator and mostly focus on getting to their next one. They become really good at the pitch and grant collecting, but have websites that barely work or rarely go and meet customers. There is a perverse incentive in the accelerator spot in itself being a reward. I suppose it depends on what YC wants to optimize for. You can risk giving money to not so serious founders or risk excluding ones who want to cap their risk. I don't get why they would want to ban dev tools and SaaS. The latter especially is a huge segment. Many enormous companies like IBM and SAP are built around those types of offerings.
  • soneca 6y ago
    So don’t change the check size, just filter out companies that passed through other accelerators and still failed to gain significant traction.
  • vikramkr 6y ago
    That's the second third and fourth accelerators fault. If this is their third accelerator app and they haven't done anything useful with the money they were given initially, then YC should reject them. They shouldn't make it harder for everyone else so they can accommodate investments into zombie companies on their third round through the accelerator circuit.
• vikramkr 6y ago
  A smaller check size hurts startups in capital intensive industries. Others already made excellent points about the diversity if founders that can be attracted with a smaller check size, since less money favors people with money already in the bank or with easy "friends and family" rounds. I'd also like to add that smaller sizes work against company and market level diversity as well. If YC is purely for software, sure, but they've been trying to fund hardware/biotech/etc, and you need that cash to build an actual prototype. Smaller class sizes makes sense as a proposal, but if you reduce funding to original levels as well, you'll be stuck with an overwhelming number of overrepresented demographic founders starting b2b SAAS companies. From a financial perspective that locks out a talent pool and limits your investment horizons in a pretty big way.
• toddmorey 6y ago
  Haven't followed YC closely in a while. Has anyone compiled objective data on how it's trending and the success of the program YoY?
  • danenania 6y ago
    It takes like ~10 years to have any reliable sense of whether a batch was successful or not, so it's not something you can easily measure YoY.
• PaulHoule 6y ago
  Is a sign that Y Co is a plant grown too large for its pot and needs to be split up and transplanted. In 2019 the best business model was selling pitchforks to gold miners in San francisco, in 2020 the disruption happened. Big cities have a competitive advantage in terms of exploiting the Bezzle, but when that is gone then what?
• forbiddenvoid 6y ago
  I'm curious if the author has data that the 'free sabbatical' folks are less successful as founders than others. If YC is selecting the wrong types of people/companies for their batches, I think they'll figure it out pretty quick when those companies fail to pan out and their fund suffers as a result. Is the author's YC company's success somehow contingent on YC not having these types of founders?. If so, I have grave concerns about their company anyway. If not, like, what are you complaining about? YC's decision to accept people who match that profile literally has nothing to do with you.
  • pyb 6y ago
    It does, in so far as you are more likely to be successful if your batchmates are a source of inspiration and motivation.
    • forbiddenvoid 6y ago
      I think the impact size of that effect is likely to be very, very small. The whole thread reeks of gatekeeping around (as someone in another comment put it) what it means to be "Real Founder."
• barrald 6y ago
  Would love to know YC's real matriculation rate. I know of several teams that got accepted in and opted not to go, in part because of ballooning batch size and dilutive terms.
  • hitech_dude 6y ago
    > dilutive terms Isn't it $125k/7% ? Which seems OK for pre-mvp or even pre-revrnue ? Worth it just for the network value? Or is the selection so hard that most teams already have real traction ?
  • swyx 6y ago
    then why did they apply? signaling?
    • btowngar 6y ago
      The YC application process in and of itself can be very useful for founders. It forces them to really think about what they're building and why it's going to bring value to customers.
• karl11 6y ago
  I don't think the author is advocating that founders take on a ton of of personal debt, just that historically it was a filtering function that is now absent. I would imagine that this filter function can be replaced by something else that does not also weed out people without any safety net. The point is valid - startups are a risk, and so if all the risk is removed, it will increase the number of people who are coming to YC for status vs. coming because they believe in their idea. As good at interviewing as the YC partners may be, interviewing is no substitute for the harsh reality and incentives imposed by taking a great risk.
• diego 6y ago
  As an investor, all I can say is that having gone through YC is not the signal of quality it was 7 or 8 years ago. This doesn't mean YC is doing anything wrong regarding their investment strategy. It simply means they are expecting a very skewed power law of returns.
• lisper 6y ago
  I find it disturbing that this is getting so much attention. The argument (such as it is) is utterly without merit, unsupported by anything other than the tweeter's personal opinion. It is, quite simply, a troll. And it seems to be working. In fact, the whole cultural phenomenon of paying attention to what people tweet is deeply disturbing. Twitter is not designed to support rational argument supported by data, it's designed to be a morphine drip of novelty, a machine that dispenses mental M&Ms. People who follow twitter are like lab rats pressing a lever in exchange for a drop of sugar water. It's troubling to see this phenomenon invading HN.
  • dang 6y ago
    Normally we'd downweight a submission this lame, but we can't do that because https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=by%3Adang%20moderate%20less%20not%20more%20yc&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu.... We turned off the flamewar detector for the same reason. It's nice that the commenters have pointed out most of the wrongness though.
  • Apocryphon 6y ago
    "So if you're an outsider you should actively seek out contrarian projects. Instead of working on things the eminent have made prestigious, work on things that could steal that prestige." http://www.paulgraham.com/marginal.html http://www.paulgraham.com/marginal.html
  • MFLoon 6y ago
    It appears to be a literal troll account - "Peter Weyland" is the villain from the Alien cinematic universe.
• reedwolf 6y ago
  An article [0] that takes a critical stance on Paul Graham/Y Combinator, specifically Graham's advice that you should stop focussing on passing tests, despite Y Combinator being entirely built around passing tests. [0] http://benjaminrosshoffman.com/approval-extraction-advertised-as-production/ http://benjaminrosshoffman.com/approval-extraction-advertise...
  • ironchief 6y ago
    I recommend reading this blog post and drawing your own conclusion. My conclusion is PG's "I can lay out what I know to be the right thing to do, and still not do it."
  • dang 6y ago
    The 'tests' YC is focused around are getting users and customers. Startups are strongly discouraged from working on anything else, including fundraising before Demo Day.
• felipellrocha 6y ago
  > 3. When i went through YC (recently), we had a "masterclass" of sorts on growth with @patrickc & @collision . Once of the first questions they asked the group was "how many of you are consumer companies?" > Like... 2 people raised their hands and everyone else laughed hysterically. Are B2C inherently better than B2Bs? What's his argument here? I, for one, was never one to enjoy B2C products (matter of fact, I think most of them are stupid), so I don't understand his disdain for everything not B2C
  • MattGaiser 6y ago
    Some people perceive them as "corporate" instead of "disruptive."
  • aty268 6y ago
    His argument is that B2C is underrepresented and laughed at in YC, despite it being a vital and huge market. He isn't saying one is better than the other. Ebay, AirBNB, Apple, Uber, Github, heard of any? It's too bad you were never able to enjoy B2C products, because these products are worth trying.
    • felipellrocha 6y ago
      I'm not saying these companies provide any value. Looking how I wrote my previous comment, I might've mispoken. What I was trying to say is that early on, whenever someone pitches B2Cs to me, I tend to think they're all stupid. I don't get them. That's not to say they don't provide value. Same thing on the B2B side. They provide a ton of value, so no reason to think one is better than the other.
      • aty268 6y ago
        You don't 'get' how B2C companies work? What does this even mean? You would pass on Uber because you can't understand how a business could possibly sell directly to customers? Why not just say you focus solely on B2B companies? That's a lot more reasonable than trying to argue that B2C is 'stupid', because the market caps of these companies would strongly disagree.
• noahlt 6y ago
  FWIW, the vast majority of YC founders I've met have told me "It was good when I did it, but I don't know if I'd do it today. The batches are so big!" I chalk it up to a pretty typical nostalgia. Everybody is biased towards thinking the experiences of their youth were perfect, and any change is detrimental.
  • Axsuul 6y ago
    There's a term for that: https://en.wikipedia.org/wiki/Rosy_retrospection https://en.wikipedia.org/wiki/Rosy_retrospection
• djsumdog 6y ago
  > You're going to end up with a bunch of rich white dudes as founders Why not just say "rich dudes" ? That is the qualifier. The race might be true too, but it's not what defines the argument.
  • andreilys 6y ago
    There’s very little penalty in doing so and scores points in some circles.
  • polk 6y ago
    I'm surprised you find the race unnecessary, but continue to include the gender. "Rich people" would be all that's required.
    • deleted 6y ago
      [deleted]
    • fnordsensei 6y ago
      Isn’t a random sample out of the set of rich people going to yield a lot of whiteness and dudeness though?
    • kylec 6y ago
      I’m surprised you find the gender unnecessary, but continue to include the species. “Rich individuals” would be all that’s required.
    • steffandroid 6y ago
      The problem with "rich people" as a phrase is that most rich people don't think of themselves as rich - for example, only 13% of millionaires do [1]. As "white dudes" are disproportionately represented within this demographic, I think the inclusion of these qualifiers helps to illustrate the point. [1] https://www.businessinsider.com/most-millionaires-dont-think-they-are-rich-2019-8 https://www.businessinsider.com/most-millionaires-dont-think...
    • stronglikedan 6y ago
• GCA10 6y ago
  There's a Burning Man analogy in the Twitter comments that struck me as quite apt. In fact, it holds for everything from vacation destinations to multi-decade music acts. People who were there at the beginning feel that something magical has slowly been corrupted by success and all the bigness issues that come with it. They aren't totally wrong. But people who get there later still find something of value, and everything is now sturdy enough to support wider participation. I'm okay with seeing it both ways.
  • danenania 6y ago
    Yeah, it seems to be the natural evolution of anything that starts out small and obscure, then becomes famous and cool. I have no doubt that there's some obscure, ramshackle accelerator out there that will someday be as prestigious as YC, just like there is some small, tight knit festival that will eventually become as huge as Burning Man. But taking part early also means foregoing the prestige factor, and accepting that this obscure accelerator/festival will most likely never get big or cool. You can't have it both ways.
• richajak 6y ago
  Several years ago I used to read pg old articles (also Joel S, pgreenspun) without realizing who he was or know what YC was. It clicked with my nerds mindset. I had an impression that he was a champion for the underdog, nerds like me who is smart enough (but not genius), willing to work hard and live frugal. I also had the understanding that ambition to be a unicorn not necessary, it is much more important to be ramen profitable. Success will come if you work hard and persevere, but not blinded by ambition. I also thought that success did not require social capital, eg ivy league degree, FAANG connections, etc. I filled up YC applications last year, but not sure how to answer question whether my idea is worth a billion. I will be satisfied if my SAAS business can make $5k MRR. If I have more than that, it will be a blessing. Should YC remove questions that favors those social capital? I mean, YC can have a simple leetcode question to prove you are smart enough. Then, run a lucky draw to pick which ones selected.
  • danenania 6y ago
    I don't think pg or the YC partners more generally have anything at all against bootstrapping or smaller scale businesses. But they're a business too and have their own investors to answer to. Billion dollar exits are what make their business work. $5k MRR is a great goal, but you shouldn't expect investors to give you money if you there's no potential upside for them.
    • swyx 6y ago
      there's definitely some jockeying for "the YC of bootstrappers" among the indie hacker crowd now
  • vikramkr 6y ago
    Ramen profitable does not mean the company isn't worth a billion dollars. People aren't suggesting that your endgoal is to be ramen profitable - the mindset is to get ramen profitable as fast as possible so you have a foundation to build a billion dollar business. Venture capital does not have use for companies that make $5k a month. That doesn't mean it's a bad company, but I suggest taking another look at the PG essay about black swan farming to understand what they are looking for as venture capitalists. For $5k a month MRR, I think that's really only able to be funded via bootstrapping and friends/family if you're privileged enough to have access to the latter.
• soneca 6y ago
  So his suggestion to improve YC is to increase financial pressure on founders so you filter the ones that ”really believe in their product” , ignoring what would happen with the ones that failed all the same and ignoring that an obvious consequence is also filtering people for who can afford 3 months without pay. Also, his suggestion is to block the startups that are most likely to succeed (the ones who can validate and gain traction from within YC network). And the reason for that is... a sense of nostalgia when B2C was a majority in YC? He assumes B2C is the spirit of YC and that should be reason enough to make a decision that will make YC select companies less likely to succeed at YC? Reducing batch size is the only idea there that make any rational sense at least (which doesn’t mean it is correct).
• jlokier 6y ago
  > "make founders take on massive personal debt to survive" That assumes massive personal debt is even an option. A lot of poorer people are turned down for personal debt with respectable institutions. They go to the bank, credit company or whatever, and the answer is a straight no, we have nothing for you. Maybe if they're lucky they can have a small overdraft, worth less than a month's rent. Not enough to move the needle. Loan sharks exist but that's a terrible idea. I mention this because I have the impression some people, who are used to easy credit (especially credit cards), don't realise there are a lot of people who can't get any.
• panorama_love 6y ago
  (throwaway as YC founder for obvious reasons) I've spoken to a half dozen YC founders this morning -- no one disagrees except the check size debt thing. Mostly "that is dumb" for that one. For those who worked at startups when they were small (5–20 people), the difference between then and when they grew to be 100 or 200 people is night and day. Very real difference. For those who haven't, think of class sizes. Do you think a uni class with 18 people in it will be the same as a survey with 200? Course not. Three founders in my batch (early 2010s) have started companies in the past year and opted out of YC b/c of 1. batch size 2. YC doesn't mean to investors what it once did. The brand is heavily diluted. YC is a broad based investment fund. The partners cannot handle the size of the batches or give the attention they once could. The partnership simply hasn't scaled. Somewhat informed guess: partners don't want to give up their own returns by splitting it with more partners. Understandable -- human nature. But not good for YC as a whole.
  • tqi 6y ago
    That perspective makes sense, but I think it's also worth considering that it is likely that not all of those YC founders would have been accepted if batches were smaller. You're totally right that per founder, YC was more valuable when batches were small, but I think it's less clear whether the aggregate value is higher.
    • benmathes 6y ago
      Well, sure, but then YC in the _present day_ is collecting value based on what YC was in the _past_.
• ycfailure 6y ago
  I can really empathize with this. I was an early employee for one of the magical YC unicorns, and I thought I could be successful as a YC founder afterwards, but then I learned the truth about startups and realized it's hopeless. Nowadays being a founder is only for those who are already rich, well connected, and have a safety net to fall back on. It's super sad because I think it means the end of the great SV meritocracy as we used to know it. I think it's just a matter of time before another country comes along and takes the reins from the US as the leader in terms of innovation. The entire country feels like a failed state right now.
• graeme 6y ago
  I’m surprised no one has mentioned this PG essay, black swan farming. YC appears to have switched to exactly this strategy. Invest in a far larger set of startups, with more possibility of failure but also larger possibility of finding the rare large ones. http://paulgraham.com/swan.html http://paulgraham.com/swan.html
  • divbzero 6y ago
    This is an excellent essay that speaks to the financial calculus of startup investing. In addition, I think YC partners also have a non-financial desire (e.g. first footnote in that same essay) to encourage entrepreneurship more broadly. Hence the larger YC batches and experiments like YC Fellowship [1] and online Startup School [2]. [1]: https://blog.ycombinator.com/yc-fellowship/ https://blog.ycombinator.com/yc-fellowship/ [2]: https://blog.ycombinator.com/onlineclass/ https://blog.ycombinator.com/onlineclass/
• throwawaysea 6y ago
  I agree having large check sizes does change the culture of this game. The filter function being talked about here is really just about the general concept of a moral hazard (https://en.wikipedia.org/wiki/Moral_hazard https://en.wikipedia.org/wiki/Moral_hazard). Just like with insurance deductibles, there has to be a way for founders to be committed and share in the risks significantly. Does that mean they need to be starving? No. But it does mean they need to at least incur a large opportunity cost (relative to working at FAANG for example).
• TACIXAT 6y ago
  Is anyone else unimpressed with the ideas being funded? I look at Work at a Startup and it is just new web frontends on existing industries. I'm sure that makes money but holy hell is it boring. Some are working on cool things, but the founder who has a PhD in that topic will be doing the interesting work and they are hiring for infra or interface. One company was a great match for my skill set but the equity was so low for early hires. I get that 1% can be huge for a FB scale exit, but 180k and 1% is generally just a paycut. In this case the founders were undergrad dropouts and not SMEs. It just seems like a really inflexible ecosystem when you can't give 5%-10% to an early hire when they would be the SME and core engineer.
  • mumbisChungo 6y ago
    >Is anyone else unimpressed with the ideas being funded? look at Work at a Startup and it is just new web frontends on existing industries. If there's money basically just lying all over the ground, why wouldn't you pick it up?
    • devalgo 6y ago
      Sure but that's not addressing his point which is most of the ideas being funded are uninteresting and aren't really moving the ball forward. Instead they're doing some kind of rent seeking.
      • mumbisChungo 6y ago
        I don't think it's rent seeking by definition to modernize a product and/or make it more accessible to people. The fact of the matter is that there is a tremendous backlog of legacy industry/infrastructure that needs to be modernized. There is plenty of opportunity in doing so to democratize access to services that are currently inaccessible to most, which is more or less the opposite of rent seeking. You can also just not do a shitty job of modernizing an old thing, and end up creating a product like Netflix that front-end devs fawn over, learn from, and emulate. It doesn't have to be uninteresting.
• nbardy 6y ago
  The Bay Area has lost its' soul. I moved here to meet creative people tackling big problems and I've found it's no longer about innovation and risk. Just a big pile of uninspired B2B SaaS companies. SV has become a well oiled money making machine for these kind of companies. If you want to work hard and get rich you come here and follow the grind to get your checks, status, clout, etc... I've found some creative people tackling big ideas, but they are exceedingly rare and largely unsupported by the community. I've met a lot more people who moved out here with big ambitions and have been railroaded down the route of conformity, which makes the most money for VC's. It leaves them without fulfillment or purpose as they grind on products they care little about. SV will continue to produce billion dollar software companies, but I doubt they will produce real innovation over the next few decades. The bay area has conspired to railroad its' potential for greatness towards profitable mediocracy.
  • fredsters_s 6y ago
    I don't disagree, but not sure how you can make that claim given that you didn't ever experience your idealized version (which never existed after the 70s)
  • thephyber 6y ago
    "We wanted flying cars, instead we got 140 characters." ― Peter Thiel I think people love to use "The Bay Area" and "Silicon Valley" and conflate that with "software startups that raise VC funding". Silicon Valley still produced most of the internet (for better or worse) and the only new American mass production car company in my lifetime. Let's not overlook the successes while we are busy complaining about the average (especially because the VC model assumes 900+ failures for every 1-3 unicorn IPOs). Not sure what the next few decades will bring (I'd be pleasantly surprised if the USA doesn't go through an actual revolution), but I'd wager that "real innovation" is still more likely to happen in Northern California than almost anywhere else in this country, even if the establishment VC club doesn't get disrupted.
• IAmEveryone 6y ago
  I'm not usually one to think in these terms, but this somehow still strikes me as a caricature of white middle-class privilege: "Having to take considerable financial risk definitely sucked, but it was also was a great filtering function. If you didnt have conviction in yourself or your product theres no way you would have been there. For those who made the leap, it made success the only option."
  • vikramkr 6y ago
    Based on the responses in this thread, you're not alone. It's not often that a series of arguments is so thoroughly undermined by just one spectacularly bad one, but that's really the comment that's been driving all the discussion. His point about batch sizes is maybe something worth actually discussing, but there's nearly no discussion on that (and maybe a couple comments on how YC should stop funding everything but consumer companies which is also IMO ridiculous).
• seizethecheese 6y ago
  Recent YC founder here. I disagree with the premise that boring ideas are inherently bad. Stripe is a B2B company that adds an API on top of existing infrastructure. Airbnb is a basic CRUD app. I also disagree that YC is not funding interesting ideas. Our batch had quite a few. Someone was making a rapid cargo ship. Someone else was making a fully distributed cell network. The only real copycat ideas were the ones duplicating successful startups for international markets. In my opinion these were obviously good investments. The social climber phenomenon was real. I think anything that becomes elite will attract them. I’d say, I was impressed that half the batch did not fit this profile. My sense was that YC actually went out of its way to fund more interesting ideas. I’m sure my startup would not have gotten in, based on our traction and backgrounds, if our idea wasn’t out-of-the-box. (We are bottomless.com, a smart coffee subscription that uses a WiFi scale to ship at the perfect time). I’d even venture to say that there appeared to be a negative correlation between interestingness and outcome in our batch. It’s possible YC should fund more boring companies, not fewer.
  • paulgb 6y ago
    > We are bottomless.com My Bottomless scale has been an essential part of my transition to WFH, cheers!
    • seizethecheese 6y ago
      Happy to hear it, Paul!
  • jmwilson 6y ago
    The author didn't say anything about "interesting" vs. "boring" companies or ideas. He said YC should curtail funding of dev tools/SaaS startups, because the traction they appear to have is misleading. They're selling to each other, revenue moving in a circle, without demonstrating value creation outside of the sphere of similarly-situated startups. Not explicitly stated, but he's also implying it's a portfolio risk for YC.
    • shadowmore 6y ago
• breck 6y ago
  My suspicious is that this is satire, but I'll pretend it's not and if so I like your gusto for publicly criticizing YC, even if I disagree with nearly all your points. I personally think YC has gotten way better over the years, but fun to contrarian read opinions. Point #3 doesn't seem to be talked about in this thread yet, so let me bring it up: > Free SaaS and Dev tools...IMO YC should ban them YC's #1 investment of all time (https://www.ycombinator.com/topcompanies/ https://www.ycombinator.com/topcompanies/) is a SaaS/dev tools company (Stripe), and nearly 50% of their top 20 fit this category. Also, ViaWeb fits that category as well. Are you suggesting they should stop investing in their most successful category, the category they know best?
• AdenRyan2323 6y ago
  "this was the sam altman effect. pg kept the entire system small and personal on purpose. but sam wants trillion dollar funds. sam approaches everything from "how can sam altman own the entire galaxy?" now YC is an endless low effort 90s-era "groupware for groupware nerds" fund" --- https://twitter.com/mattsta/status/1285988679958138881 https://twitter.com/mattsta/status/1285988679958138881 this retweet is also true
  • dang 6y ago
    That's quite wrong. pg always said that YC should operate like a startup and his primary definition of startups is growth. The original spirit behind YC was let's-hack-the-economy with an experiment in the mass production of startups. That's encoded in the name itself. In other words, much larger batch sizes were guaranteed as YC grew. How pg and the original founding team might have gone about it, compared to others, is a different question—but certainly not by "keeping the entire system small". Whoever wrote that is speaking from ignorance, which fits with the personal smear against Sam.
    • AdenRyan2323 6y ago
      But do you disagree with the statement that "now YC is an endless low effort 90s-era "groupware for groupware nerds" fund"" though?
      • dang 6y ago
        Statements of feeling don't admit of agreement or disagreement.
    • TigeriusKirk 6y ago
      >The original spirit behind YC was let's-hack-the-economy with an experiment in the mass production of startups. If the experiment is no longer working as well as it was, it's time to change the parameters. That's how experiments work.
      • 6y ago
• anotherfounder 6y ago
  The SAAS thing is real. In my own broader network, I've seen so many interesting new consumer companies not even get an interview but SAAS companies of all stripes not have a problem getting an interview. It also heavily correlates with FAANG/Stanford phenomena which then leads to a mostly white male batch. There are so many reasons why all this is, including the fact, these applications heavily bias towards 'solving a big problem that the interviewer CAN grep', and so many of those readers and interviewers are themselves from SAAS backgrounds. Anecdotally, within female founders, it is quite understood that if you are a female founder with a consumer startup, good luck getting an interview whereas if you are FANG employee with event hint of an idea, you get an interview!
  • a13n 6y ago
    I would guess that if you are a founder with a consumer startup, good luck getting an interview! I think this makes sense too – YC is in the business of picking will-be billion dollar companies. The number of consumer startups that make it this far is probably significantly lower, percentage-wise, than B2B SaaS companies.
• dang 6y ago
  "Things have always been getting worse."
• 11thEarlOfMar 6y ago
  Ultimately, YC exists for the benefit of the investors. It's symbiotic with startups, of course, but the measure of success is ultimately the return YC achieves for itself. It seems unlikely that anyone but the inner circle has that data, but given the type of people that run YC, I'd expect they experiment and then observe results, refactor, experiment again, ultimately heading in the direction of what improves their return. I'd be surprised if they haven't debated class and check sizes at great length since the beginning, and then settled those debates by observing the results of the changes over time.
• vernie 6y ago
  Implying YC had a soul
• classified 6y ago
  Twitter is really a terrible platform for posting more than 10 words.
• deleted 6y ago
  [deleted]
• blickentwapft 6y ago
  Isn’t YC just a numbers game? Back enough companies and hopefully some will be winners.
• kevstev 6y ago
  Are there really many cases of founders who went all-in and lost, ending up homeless or otherwise destitute? Asking honestly- I know a small population of founders, and they have all failed, but generally have bounced back quite well. They at least got to a point where they launched and at least tried to find their market fit, and even getting to that point is an incredibly valuable experience. None have massive houses in the Hamptons, but generally they have all found good jobs and are in the management ranks (aside from one who just decided that he did not want to go that route) at decent companies. It seems to me that if you took a decent stab and didn't completely flame out with some obviously poor idea or execution, you really tend to fail "up" in the end.
  • tdrp 6y ago
    I think most tech founders are more than capable of getting a decent paying engineering corporate job if they choose to do so. The problem (at least for me, who started off in FAANG initially) is that the longer you're in the start-up world, the more you hate the idea of going back to a corporate job. So in my previous start-up I went all-in, racked up tens of thousands in CC debt and would have sold every single one of my possessions before letting it happen. When I missed my first rent payment, I ended up reluctantly selling the company and only accepted the offer on the condition that my transition period would be one month or less (i.e. I don't actually have to work for the acquirer). Throughout that time, my previous coworkers/managers from the companies I originally worked for kept trying to convince me to come back.
• ykevinator 6y ago
  Yc was always about older people exploiting younger people, but maybe that's all of vc. It went downhill when pgs mistress got promoted
• oluomike1 6y ago
  I totally understand if he feels this way..his own opinion. My own opinion is this, as a founder running our startup (catering marketplace for businesses and individuals) for over 2 and half years. Still working with No Angel or VC money, just friends and family funds. With our sweat and blood we tested the market from "Uber" style, events to iterating to various verticals.. The painful truth, it hurts when you can't pull out your best solutions to problems because of low funds, it leads to poor execution most times.. competition is fierce and business means war. Most founders would have given up before year one with no VC money. I see no harm in YC's cheque size and scaling. Heck.. Covid 19 just dug out some new interesting problems in need of urgent solutions. My Opinion. Cheers HN.