3 ms·

From what I've seen, YC will always advise going for a high-growth, high-risk strategy, and their advice and knowledge base will always push in that direction b

by sfink 5y ago

From what I've seen, YC will always advise going for a high-growth, high-risk strategy, and their advice and knowledge base will always push in that direction because that's what is best for YC. That might be what's best for a given founder or company, but it may very well might not be. You will have to be proactive and assertive in what works for you to avoid being bullied into the standard YC/Silicon Valley gamblers' playground point of view.

dang 5y ago
That's not quite accurate. YC's approach has always been to encourage founders to do what's best for them. This was actually something that sharply distinguished YC from the rest of the investment world in the beginning. Industry insiders couldn't believe that YC would leave money on the table when the founders wanted to do something else. I remember one person talking about puzzling over the paperwork going "why would they do this?" Even today, when things have shifted in a founder-friendly direction (thanks in part to YC), it still stands out that way. You're right that YC's business depends on high-growth wins. But YC knows perfectly well that only a few of the startups it funds will reach that state. Where the two outcomes—high-growth win vs. what the founders want—end up conflicting, YC has always advised the latter. If you think about it, there isn't a conflict anyhow, because no startup is going to become a high-growth win if the founders feel it doesn't work for them. What works for founders is what's best for YC, generally speaking, and the company has been organized around that principle from the beginning. Founders that want to be a high-growth win, and show progress, get a lot of help with that, but people aren't pushed to do that if they don't want to. The optimization is global, not local. (Btw, although I work for YC, I refer to it in the third person when describing the investment business because I'm not really part of the investment business and have mostly just observed it as an outsider - albeit inside the wall, if that makes sense.)
- fairity 5y ago
  One thing that's bothered me is that YC doesn't actively help its founders pursue early exits. YC will support your decision to take an early exit if you find one, but they rarely help you find your way to one. There's a whole world of PE that will acquire business for 5-15x EBITDA, but you won't hear anyone at YC talking about that even though those sort of outcomes are life changing for first-time founders. Curious about your thoughts there.
  - lifeisstillgood 5y ago
    Tell us more about this world of PE - honestly it's the first I have heard of it. My understanding of the world was bootstrap - bought by mom and pop outfit or slightly larger competitor vs VC - series A-Z or burn out
    - deleted 5y ago
      [deleted]
edouard-harris 5y ago
> YC will always advise going for a high-growth, high-risk strategy I agree that this is indeed YC's bias, but it's incorrect that they will always advise founders in this direction. That claim is inconsistent both with my direct personal experience as a YC founder, and also with the experiences of other YC founders who I know intimately and have spoken to about these sorts of questions. The fundamental reason claims of "being bullied" and similar are incorrect is that there's another major component to YC's incentives. Namely, YC loses out on an enormous number of great startups if there's even the slightest justified perception that they do anything close to bullying their founders. YC's time horizon is naturally long: their biggest investments pay off over a 7-12 year time scale and almost all of their portfolio is extremely illiquid at any given time. That means they're especially culturally sensitive to actions that carry the risk of long-term negative effects, even if those actions also have positive short-term effects. Bullying founders into risking it all is just such an action, so they'd default to avoiding it even if it worked (which, by and large, it does not).
aerosmile 5y ago
I would love to see where you've seen that. Ramen profitability is one of the most often quoted principles at YC. It's easy to make assumptions and pad them with "from what I've seen," but it's not helpful to other founders. Are there instances where it makes sense to step on the gas? Of course. Are YC valuations high, leading to large rounds and plenty of liquidity? Yes. And yet, nobody at YC will tell you to scale before you find your PMF.
- sfink 5y ago
  That's fair, since I am not a founder and have no direct personal experience with YC (nor interest in gaining such). My "from what I've seen" is based on reading HN, talking to a friend who was accepted into YC but turned it down, and pg's essays. As such, I will confess that this is a bit of an uninformed cheap shot -- but given the confirmation bias of current and "successful" founders and the political/social pressure on all founders, I'm not sure this viewpoint would be exposed if it existed. I furthermore admit that my opinion is heavily influenced particularly by that last component; I find pg's seemingly rational exhortations of "how to be successful" to be slanted and self-serving. They are excellent logical argumentative essays that assume a limited definition of success and guide the reader inexorably to the best way to achieve that particular flavor of success while ignoring (and subtly implying the nonexistence of) others. I may be inferring too much about YC's actual behavior from what I glean from those (otherwise excellent) essays.

by sfink 5y ago

dang 5y ago

That's not quite accurate. YC's approach has always been to encourage founders to do what's best for them. This was actually something that sharply distinguished YC from the rest of the investment world in the beginning. Industry insiders couldn't believe that YC would leave money on the table when the founders wanted to do something else. I remember one person talking about puzzling over the paperwork going "why would they do this?" Even today, when things have shifted in a founder-friendly direction (thanks in part to YC), it still stands out that way. You're right that YC's business depends on high-growth wins. But YC knows perfectly well that only a few of the startups it funds will reach that state. Where the two outcomes—high-growth win vs. what the founders want—end up conflicting, YC has always advised the latter. If you think about it, there isn't a conflict anyhow, because no startup is going to become a high-growth win if the founders feel it doesn't work for them. What works for founders is what's best for YC, generally speaking, and the company has been organized around that principle from the beginning. Founders that want to be a high-growth win, and show progress, get a lot of help with that, but people aren't pushed to do that if they don't want to. The optimization is global, not local. (Btw, although I work for YC, I refer to it in the third person when describing the investment business because I'm not really part of the investment business and have mostly just observed it as an outsider - albeit inside the wall, if that makes sense.)

fairity 5y ago
One thing that's bothered me is that YC doesn't actively help its founders pursue early exits. YC will support your decision to take an early exit if you find one, but they rarely help you find your way to one. There's a whole world of PE that will acquire business for 5-15x EBITDA, but you won't hear anyone at YC talking about that even though those sort of outcomes are life changing for first-time founders. Curious about your thoughts there.
- lifeisstillgood 5y ago
  Tell us more about this world of PE - honestly it's the first I have heard of it. My understanding of the world was bootstrap - bought by mom and pop outfit or slightly larger competitor vs VC - series A-Z or burn out
  - deleted 5y ago
    [deleted]

edouard-harris 5y ago

> YC will always advise going for a high-growth, high-risk strategy I agree that this is indeed YC's bias, but it's incorrect that they will always advise founders in this direction. That claim is inconsistent both with my direct personal experience as a YC founder, and also with the experiences of other YC founders who I know intimately and have spoken to about these sorts of questions. The fundamental reason claims of "being bullied" and similar are incorrect is that there's another major component to YC's incentives. Namely, YC loses out on an enormous number of great startups if there's even the slightest justified perception that they do anything close to bullying their founders. YC's time horizon is naturally long: their biggest investments pay off over a 7-12 year time scale and almost all of their portfolio is extremely illiquid at any given time. That means they're especially culturally sensitive to actions that carry the risk of long-term negative effects, even if those actions also have positive short-term effects. Bullying founders into risking it all is just such an action, so they'd default to avoiding it even if it worked (which, by and large, it does not).

aerosmile 5y ago

I would love to see where you've seen that. Ramen profitability is one of the most often quoted principles at YC. It's easy to make assumptions and pad them with "from what I've seen," but it's not helpful to other founders. Are there instances where it makes sense to step on the gas? Of course. Are YC valuations high, leading to large rounds and plenty of liquidity? Yes. And yet, nobody at YC will tell you to scale before you find your PMF.

sfink 5y ago
That's fair, since I am not a founder and have no direct personal experience with YC (nor interest in gaining such). My "from what I've seen" is based on reading HN, talking to a friend who was accepted into YC but turned it down, and pg's essays. As such, I will confess that this is a bit of an uninformed cheap shot -- but given the confirmation bias of current and "successful" founders and the political/social pressure on all founders, I'm not sure this viewpoint would be exposed if it existed. I furthermore admit that my opinion is heavily influenced particularly by that last component; I find pg's seemingly rational exhortations of "how to be successful" to be slanted and self-serving. They are excellent logical argumentative essays that assume a limited definition of success and guide the reader inexorably to the best way to achieve that particular flavor of success while ignoring (and subtly implying the nonexistence of) others. I may be inferring too much about YC's actual behavior from what I glean from those (otherwise excellent) essays.