5 ms·

Going by my memory, when YC started they invested 5K per founder. It was, either by accident or design, focused on 20-somethings eating ramen and dreaming big.

Going by my memory, when YC started they invested 5K per founder. It was, either by accident or design, focused on 20-somethings eating ramen and dreaming big. You could not do much else on 5K. There may have been many (myself included) who thought "give up a cushty job, and even if I get in, don't get back much more than the cost of flights to Boston" Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating? I would be fascinated to see a demographic breakdown of YC / SV founders ... Edit: the thing is it breaks my clever idea of A Million Startups. So i had a clever idea a while back, (I think when Softbank wrote off 10BN?). 10BN is about the right amount to fund a million startups. 100K in India, 100K in SE Asia etc etc. You could assume a 50% fail rate at each "stage" and put in 5K to each of a million startups, and then 2.5BN, then 1.5BN etc etc. I am not sure what kicking off a million bright young things would do to the world, but I think it is a worthwhile way to waste 10BN

newsclues 5y ago
Most low hanging fruit has been picked.
- jessaustin 5y ago
  This has been claimed more often than it has been true.
cjameskeller 5y ago
I wonder if this kind of program could/has attracted any interest from the Effective Altruism folks?
ricardobayes 5y ago
From what I see around me, people with little to no 'real-life' experience rarely make it in startup world. On the contrary, people with proven track record in an industry have a jolly great time fundraising and building companies. That's just my experience, also I am a good few years older when I was doing the 'ramen and think big' thing.
PragmaticPulp 5y ago
> Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating? It’s much, much easier to get a high paying tech job now than it was back then. Assuming you’re ambitious and willing to relocate, you can now go to Silicon Valley, make all of the right moves, and amass millions of dollars in a decade of working for the right companies. Making that kind of money with that kind of point-and-shoot career process (not easy, but doable for kinds of ambitious engineers considering startup life) wasn’t nearly as easy a couple decades ago. If you wanted to really accomplish something and make it big, it felt like a startup was the right kind of gamble. Products were also easier to ship back then. 37Signals (now Basecamp) built a highly profitable empire on top of software that was basically a bunch of web forms. A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized without polished UX, flawless features, and a significant customer acquisition budget. It’s easy to forget just how much technology and the industry have changed in recent years.
- legostormtroopr 5y ago
  > A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized The competition was signficantly lower back then as well. Not only is all of the low hanging fruit gone, but those start ups who made it are now the current behemoth incumbents and are trying to clean up the whole orchard (so to speak).
- fdgsdfogijq 5y ago
  The overall value of a software engineer is higher now than in the past. I think companies recognize this and are paying for it. An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage, and is worth paying an extra few hundred grand.
  - PragmaticPulp 5y ago
    > An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage The idea of individual engineers shipping services on their own is long gone, though. Big companies have an almost unthinkably large army of engineers working on everything these days. It’s never just one person doing the magic that makes a service go. OTOH, decades ago it wasn’t too uncommon to find just a couple key engineers at the helm of key services. I think the real driver is the amount of money pouring into the tech space. Companies have to pay more to compete with each other for talent because there are so many tech companies trying to do tech things now. It’s as simple as that.
Alex3917 5y ago
> Going by my memory, when YC started they invested 5K per founder. It was originally 5k plus 5k per founder. The first time it changed was summer 2011, with the guaranteed additional 150k funding from Yuri Milner and Ron Conway. source: https://www.newsweek.com/boot-camp-next-tech-billionaires-100977 https://www.newsweek.com/boot-camp-next-tech-billionaires-10... https://venturebeat.com/2011/01/29/yuri-milner-and-ron-conway-aim-to-disrupt-angel-investing-with-latest-proposal/ https://venturebeat.com/2011/01/29/yuri-milner-and-ron-conwa...
- livinglist 5y ago
  thank u for this
lupire 5y ago
The short article clearly states that YC is now wealthy enough to pay founders more of what they need to survive, and to edge out other investors offering this critical funding.
wayoutthere 5y ago
In my mind, it’s a signal that we’ve solved all the problems capable of being solved by a hungry person with little experience in the problem space. The problem space that’s left is in places that require a significant amount of expertise to be able to even spot an opportunity, and the cost of developing products to address those spaces is much higher since there are ample opportunities to become a millionaire through just working for a big tech company. The tech product world is just more mature, and more mature leaders and developers are required as a result.
echelon 5y ago
I'm also really curious about their bets and the data. I thought the market was starting to cater to older, more experienced founders? That's been adjusted up so that YC invests $125,000 for 7%. It still feels really low these days. I've heard of VC firms investing 3-5 million for 10-20% in seed/series A with no seed [1, 2], which seems like a much better deal. Lots of room for growth before giving up more equity. Which VC firms are investing like this, and how do you connect with them if you're outside the bay area but already have a product with significant growth? Or, contrary to this, does YC offer value beyond monetary that makes the investment worth more than the alternatives? [1] https://web.archive.org/web/20200817011057/http://www.apolloprojects.com/ https://web.archive.org/web/20200817011057/http://www.apollo... [2] https://news.crunchbase.com/news/seed-funding-startups-top-vc-firms-a16z-nea-khosla/ https://news.crunchbase.com/news/seed-funding-startups-top-v...
pclark 5y ago
I think its a common misconception that YC primarily invests in 20-somethings eating ramen and dreaming big. Lots of YC founders have kids and stuff. This was true when I went through in YC in 2011 (interestingly first batch that got $250k from Yuri Milner) and doubly true when I just went through in 2021. I'm skeptical the goal of this is to encourage high salaried people to start companies though, it's probably just to give people extended runway.
netcan 5y ago
Lots and lots of things are different now. Salary prospects, for the people they want to fund. Competition from other investors. The follow on ecosystem of investors. Also the startup opportunities of 2022 Vs 2007.... both "real" differences and differences in belief about said opportunities. Airbnb, Reddit and such were websites that a clever, motivated 19 year old could build and launch in short time. There are fewer of these opportunities now, and mor opportunities at heavier scale.
- maerF0x0 5y ago
  in addition to what you said, there is also more global competition for startups. YC has to compete with other cities top incubators on a CoL adjusted opportunity cost. and the bay area is one of (or the) most expensive spot.
nostrademons 5y ago
The industry has changed. In 2005 the hot growth industry was the web, particular the social and sharing economy parts of it. These favor changes in consumer behavior, which young 20-somethings are particularly tapped into because their peers are often the ones driving the change. You could found a $100B company as a pair of early 20-somethings learning brand new tech and riding the beginning of some social wave. Now - outside of crypto - most of the exciting untapped markets in tech are in: a.) hardware, where you have bill-of-materials and contract manufacturing cost and everything takes longer to get off the ground b.) hard sciences like fusion or satellites or aerospace, where you need a Ph.D and often some research experience to make progress (plus you have super high manufacturing costs) c.) SaaS, where it helps to have deep knowledge of an industry so you've got those connections, understand all the internal processes of your customers, and can penetrate those sales processes. All of these select for older founders and more capital requirements. I think the spray-and-pray approach for funding low-capital web startups isn't really viable in 2022, because consumers aren't just visiting any website or downloading any app that becomes hot.
- mNovak 5y ago
  Of these SaaS is still vastly the cheapest; even hardware costs aside, because the timescales involved are fundamentally shorter. Trying to raise capital for hard science (besides rockets and quantum apparently) is a real drag. We went to DoD contracts instead.

newsclues 5y ago

Most low hanging fruit has been picked.

jessaustin 5y ago
This has been claimed more often than it has been true.

cjameskeller 5y ago

I wonder if this kind of program could/has attracted any interest from the Effective Altruism folks?

ricardobayes 5y ago

From what I see around me, people with little to no 'real-life' experience rarely make it in startup world. On the contrary, people with proven track record in an industry have a jolly great time fundraising and building companies. That's just my experience, also I am a good few years older when I was doing the 'ramen and think big' thing.

PragmaticPulp 5y ago

> Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating? It’s much, much easier to get a high paying tech job now than it was back then. Assuming you’re ambitious and willing to relocate, you can now go to Silicon Valley, make all of the right moves, and amass millions of dollars in a decade of working for the right companies. Making that kind of money with that kind of point-and-shoot career process (not easy, but doable for kinds of ambitious engineers considering startup life) wasn’t nearly as easy a couple decades ago. If you wanted to really accomplish something and make it big, it felt like a startup was the right kind of gamble. Products were also easier to ship back then. 37Signals (now Basecamp) built a highly profitable empire on top of software that was basically a bunch of web forms. A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized without polished UX, flawless features, and a significant customer acquisition budget. It’s easy to forget just how much technology and the industry have changed in recent years.

legostormtroopr 5y ago
> A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized The competition was signficantly lower back then as well. Not only is all of the low hanging fruit gone, but those start ups who made it are now the current behemoth incumbents and are trying to clean up the whole orchard (so to speak).
fdgsdfogijq 5y ago
The overall value of a software engineer is higher now than in the past. I think companies recognize this and are paying for it. An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage, and is worth paying an extra few hundred grand.
- PragmaticPulp 5y ago
  > An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage The idea of individual engineers shipping services on their own is long gone, though. Big companies have an almost unthinkably large army of engineers working on everything these days. It’s never just one person doing the magic that makes a service go. OTOH, decades ago it wasn’t too uncommon to find just a couple key engineers at the helm of key services. I think the real driver is the amount of money pouring into the tech space. Companies have to pay more to compete with each other for talent because there are so many tech companies trying to do tech things now. It’s as simple as that.

Alex3917 5y ago

> Going by my memory, when YC started they invested 5K per founder. It was originally 5k plus 5k per founder. The first time it changed was summer 2011, with the guaranteed additional 150k funding from Yuri Milner and Ron Conway. source: https://www.newsweek.com/boot-camp-next-tech-billionaires-100977 https://www.newsweek.com/boot-camp-next-tech-billionaires-10... https://venturebeat.com/2011/01/29/yuri-milner-and-ron-conway-aim-to-disrupt-angel-investing-with-latest-proposal/ https://venturebeat.com/2011/01/29/yuri-milner-and-ron-conwa...

livinglist 5y ago
thank u for this

lupire 5y ago

The short article clearly states that YC is now wealthy enough to pay founders more of what they need to survive, and to edge out other investors offering this critical funding.

wayoutthere 5y ago

In my mind, it’s a signal that we’ve solved all the problems capable of being solved by a hungry person with little experience in the problem space. The problem space that’s left is in places that require a significant amount of expertise to be able to even spot an opportunity, and the cost of developing products to address those spaces is much higher since there are ample opportunities to become a millionaire through just working for a big tech company. The tech product world is just more mature, and more mature leaders and developers are required as a result.

echelon 5y ago

I'm also really curious about their bets and the data. I thought the market was starting to cater to older, more experienced founders? That's been adjusted up so that YC invests $125,000 for 7%. It still feels really low these days. I've heard of VC firms investing 3-5 million for 10-20% in seed/series A with no seed [1, 2], which seems like a much better deal. Lots of room for growth before giving up more equity. Which VC firms are investing like this, and how do you connect with them if you're outside the bay area but already have a product with significant growth? Or, contrary to this, does YC offer value beyond monetary that makes the investment worth more than the alternatives? [1] https://web.archive.org/web/20200817011057/http://www.apolloprojects.com/ https://web.archive.org/web/20200817011057/http://www.apollo... [2] https://news.crunchbase.com/news/seed-funding-startups-top-vc-firms-a16z-nea-khosla/ https://news.crunchbase.com/news/seed-funding-startups-top-v...

pclark 5y ago

I think its a common misconception that YC primarily invests in 20-somethings eating ramen and dreaming big. Lots of YC founders have kids and stuff. This was true when I went through in YC in 2011 (interestingly first batch that got $250k from Yuri Milner) and doubly true when I just went through in 2021. I'm skeptical the goal of this is to encourage high salaried people to start companies though, it's probably just to give people extended runway.

netcan 5y ago

Lots and lots of things are different now. Salary prospects, for the people they want to fund. Competition from other investors. The follow on ecosystem of investors. Also the startup opportunities of 2022 Vs 2007.... both "real" differences and differences in belief about said opportunities. Airbnb, Reddit and such were websites that a clever, motivated 19 year old could build and launch in short time. There are fewer of these opportunities now, and mor opportunities at heavier scale.

maerF0x0 5y ago
in addition to what you said, there is also more global competition for startups. YC has to compete with other cities top incubators on a CoL adjusted opportunity cost. and the bay area is one of (or the) most expensive spot.

nostrademons 5y ago

The industry has changed. In 2005 the hot growth industry was the web, particular the social and sharing economy parts of it. These favor changes in consumer behavior, which young 20-somethings are particularly tapped into because their peers are often the ones driving the change. You could found a $100B company as a pair of early 20-somethings learning brand new tech and riding the beginning of some social wave. Now - outside of crypto - most of the exciting untapped markets in tech are in: a.) hardware, where you have bill-of-materials and contract manufacturing cost and everything takes longer to get off the ground b.) hard sciences like fusion or satellites or aerospace, where you need a Ph.D and often some research experience to make progress (plus you have super high manufacturing costs) c.) SaaS, where it helps to have deep knowledge of an industry so you've got those connections, understand all the internal processes of your customers, and can penetrate those sales processes. All of these select for older founders and more capital requirements. I think the spray-and-pray approach for funding low-capital web startups isn't really viable in 2022, because consumers aren't just visiting any website or downloading any app that becomes hot.

mNovak 5y ago
Of these SaaS is still vastly the cheapest; even hardware costs aside, because the timescales involved are fundamentally shorter. Trying to raise capital for hard science (besides rockets and quantum apparently) is a real drag. We went to DoD contracts instead.