9 ms·

Is YC a Monopoly?

144 points by enigmatic02 5y ago

kurikuri 5y ago
Why is it that we can freely swap what a consumer and producer are in this context? To say YC is a monopoly would be suggesting the capital to be a ‘product’ and the startup to be a ‘currency.’ While one could make an argument that they are similar to something more hotly debated as an actual monopoly (e.g. Facebook, Apple) in that they are a consumer of startup ownership (and even then, only partial as opposed to full acquisitions), they do not then use that purchase to potentially restrict _actual_ consumer choice down the line with their primary product. Also, why does the author examine YC’s interactions with its own competitors in a vacuum? Isn’t the litmus test for an abusive monopoly to examine if its decisions and negatively effect its target consumer’s behavior? Of course a company may make decisions which harms its competitors, but does that decision then increase overall cost or reduce the potential choices a consumer can make, or does the decision benefit the consumer (as most business competition should)?
braingenious 5y ago
- nbashaw 5y ago
  Developer here, thanks for the heads up and will look into it! Probably a font bug
kristianov 5y ago
YC has monopoly of being YC.
- daniel-cussen 5y ago
  Seriously. I commented years ago that the root cause of Apple's market dominance was that Steve Jobs had a monopoly on Steve Jobs. The monopoly issue, in that light, comes down to--well, not even brand, but history and identity.
dantheman 5y ago
MattGaiser 5y ago
Monopoly just increasingly seems to mean any successful company that changes its pricing structure.
- Isamu 5y ago
  I think here it is used (incorrectly) to mean “leading”. I think we are always reaching for superlatives in our click-bait headlines.
- paulryanrogers 5y ago
  Monopsony may be more technically correct. Or perhaps a different phrasing like "market controller". Ultimately though words can evolve. And overly narrow terms can expand.
- echelon 5y ago
  > Is YC a Monopoly? I can get money anywhere. YC just happens to be a good option with lots of resources. > Monopoly just increasingly seems to mean any successful company that changes its pricing structure. I can only reach Americans with my software over web, App Store, or Play Store, and since most Americans only own one device (iPhone or Android) and web on iPhone is crippled, that means I'm stuck with App Store for reaching 50% of consumers. This opts me into the 30% tax, the review straight jacket, and forced buy in to the life-draining Apple ecosystem (no customer relationship, can't deploy when I need to, etc). I have no power here. Of Apple and YC, one of these is clearly a monopoly, the other is not.
  - mastazi 5y ago
    Device != smartphone but I agree with many of the points you made (and I understand that for some products, smartphones are going to be your primary target).
- lmm 5y ago
  If you can dictate your own prices without worrying about losing customers/suppliers then yes, that's pretty much what being in a monopoly/monopsony position means?
deleted 5y ago
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Traster 5y ago
This seems... odd to me. I don't understand the industry well, but if you're sugesting that YC benefits from having stakes in lots of competing companies that therefore co-operate, that's a cartel, not a monopoly. I do think the new terms are YC trying to capture more of their advantage though.
- koolba 5y ago
  Cartel was the word that came to my mind as well. Any kind of exa-corporate relationship between companies leads to a cartel type situation. It doesn’t have to be about coordinating prices for services either. It could be as little as companies prefer to do business with a cartel member so as to open up opportunities with other members.
- heavyset_go 5y ago
  Cartels can be monopolies.
- ratkutti 5y ago
  Cartel - this is an amazing perspective on hindsight, that for the most part accurately describe them. Wow.
- Dracophoenix 5y ago
  I wouldn't call it a cartel either. YC funds companies that compete against each other in multiple spaces. If you think YC is a cartel, I wonder what you'd think about Harvard or Stanford.
chrisseaton 5y ago
> Their portfolio boasts over $400B in value I don't understand - YC doesn't own these companies does it? They just have a minor 7% investment? So YC isn't worth $400B. What is it worth?
- aspenmayer 5y ago
  This doesn’t answer your question, but it helps narrow it down. I can easily believe a Y Combinator market valuation of $400B based on known exits alone. https://www.crunchbase.com/organization/y-combinator https://www.crunchbase.com/organization/y-combinator https://www.ycombinator.com/future/jessica https://www.ycombinator.com/future/jessica
- deleted 5y ago
  [deleted]
RcouF1uZ4gsC 5y ago
Notice that the people complaining seem to be other funds, not founders or startups. The reason YC is so popular is that they cater for founders and startups. YC terms are well-laid out, fairly easy to understand, and reasonable. They also are huge for networking.
bloodyplonker22 5y ago
> They are so confident in their power that they have recently instituted new funding terms that crowd out seed investors (their partners of yesteryear). This quote is hilarious and actually proves that YC is moving farther from a monopoly than to one. YC had to make their funding terms much more competitive (better for founders) because of the insanely increasing competition and the flood of capital into VC.
- marconey 5y ago
  The MFN clause can’t be considered more competitive against other seed and angel investors. It is clearly making their next fundraise MORE complex for founders.
  - fredophile 5y ago
    I'm not sure that it necessarily does. They're giving founders money today at tomorrow's valuation. Having that extra runway can extend the time before founders need to raise again which should result in a higher value, which actually turns into a lower return for YC. It also means less money they need to raise so they can get back to building their business sooner instead of fundraising.
josh_carterPDX 5y ago
I want to see their returns 5-8 years from now based on this new model. I've always thought of YC as the ultimate "throw spaghetti on the wall and see what sticks" type of program. Should be interesting to see how other programs respond. If nothing else, it's a GREAT time to be a founder.
Msw242 5y ago
If seed VCs are upset about YC's terms, they could always start sourcing deals themselves instead of depending on YC and the like to derisk their investment decisions.
deleted 5y ago
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jcburnham 5y ago
> Betteridge's law of headlines is an adage that states: "Any headline that ends in a question mark can be answered by the word no." https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headli...
deleted 5y ago
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deleted 5y ago
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rvz 5y ago
According to 'Betteridge's Law of Headlines' any headline that ends with a question mark can be answered definitively with: No.
pl0x 5y ago
- foobarbaz33 5y ago
  You are assuming they actively seek out people by race. If the pool of people in your domain are predominately of a particular race, it may be simple demographics at play, not bias.
  - genewitch 5y ago
    This is just lazy, though. YC could hire a couple of well paid people to seek out innovators, via social media (Reddit, YouTube) and attempt to balance the scales. Throwing up one's hands and saying "welp, demographics/statistics/climate change/demon fairies are at play, here, so I guess we'll do nothing" is certainly capitalist, but it's not very good.
    - primax 5y ago
      Are you arguing that venture capitalists shouldn't be capitalist...? You want them to go out and prod minorities into creating startups instead of considering the businesses that come to them?
      - drblast 5y ago
        Now that you mention it...yes exactly that.
    - foobarbaz33 5y ago
      > attempt to balance the scales That is actually imbalance you are seeking. For example if 90% of people in a domain are of race X, then unbiased selection *should* select 90% of race X. Assuming the perceived investment opportunity is evenly distributed between all people.
      - genewitch 5y ago
djbusby 5y ago
The real title: "Is YC the Monopoly It Thinks It Is?"
polote 5y ago
We keep hearing about YC network effect, but are we sure it is significant? In France, there is a fund which is also doing seed index investing [1] they invest in 100 companies a year. But they are not an accelerator, just a fund, and they consistently get good IRR [2]. And they are as much known in the French ecosystem than YC is known in the American ecosystem. Does anyone have an example of a seed index investing fund that failed ? [1] https://www.kimaventures.com/ https://www.kimaventures.com/ [2] https://twitter.com/2lr/status/1479042875019173889 https://twitter.com/2lr/status/1479042875019173889
voz_ 5y ago
This person has no understanding of what a Monopoly is. A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. A monopoly would be if: 1) You can only effectively start a startup through YC (Not true) 2) YC actively did things to subvert competition (Not true, at all, from what I can see) 3) YC owned a significant majority portion of some market, and used its position to arbitrarily set prices (A la Apple for taking cuts of apps written by people other than them, to be installed on devices you own), or otherwise damage the market's competitive viability in some way. (Clearly not true)
- b112 5y ago
  They realise what a monopoly is, but also, what a click bait title, and article looks like. Hence the nisdirect re:monopoly
- gxs 5y ago
  I think at this point we should relent and find a different word for the actual, technical meaning of the word monopoly. It seems like any time there is an article at the top with the word monopoly in it, one of the first few comments is always someone trying to educate the author/other commenters on what a monopoly actually is. If we do this, then we can all be on the same page when someone is intending to say that a service has become so mainstream/successful that it might feel like there are no alternatives.
- jorvi 5y ago
  > A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. It is not a monopoly, but it is a sign of an unhealthy market. A simple example: say we have company QualityEars. QualityEars sells budgetBoom ($25), performanceBoom ($60), and premiumBoom ($100) speakers. However, their performanceBoom is so well-engineered, that it performs more like an $90 speaker and thus nearly invalidates the premiumBoom line. In a healthy market, this now forces QualityEars’ competitors to create an equally valuable product, and QualtiyEars itself to increase the price-performance ratio of its premiumBoom and perhaps even budgetBoom line. Instead, what I’ve mostly seen happen in the real world (whether it is products or services) is either the price of the performanceBoom and premiumBoom line get raises, or performanceBoom gets discontinued and worsevalueBoom takes its place. This is a sign of not enough competition. Also known as an unhealthy market :)
skmurphy 5y ago
One insight into YC leverage is that they are working in larger and larger batches instead of moving to a continuous process or many smaller batches. I believe that a significant source of leverage is their ability to create two "Demo Day" auctions a year. This leverage might be considerably diluted by spreading the 400 startups in the most recent cohort into, for example, 13 fortnightly events with 30 startups spread over the same six months. From cohort sizes in the teens in the first few years to several dozen in the next decade to now hundreds, the only constant has been two events a year. I believe the logistics and support models for a 400 firm cohort are very different from one of 40 (in the same way 40 is distinct from a dozen). They cannot be analyzed in isolation as there have been many other changes in the venture funding and incubator models over the last 15 years. I never did get an answer to this question from ten years ago (https://news.ycombinator.com/item?id=3711131 https://news.ycombinator.com/item?id=3711131) "Initially we didn't have what turned out to be the most important idea: funding startups synchronously, instead of asynchronously as it had always been done before. Or rather we had the idea, but we didn't realize its significance. We decided very early that the first thing we'd do would be to fund a bunch of startups over the coming summer." I wonder what the best batch size is: each cohort seems to be larger than the last. When does it makes sense to do three, four, or six a year as smaller batches.
- jacquesm 5y ago
  Yes, this is key. This is the one genius bit that YC brought to the table and it changed everything. Suddenly you no longer have to decide which start-ups to fund, you just pick the top 'N' where N is however large your classes are. That's a much simpler problem than to solve for N individual investments given a steady drip of possibilities. Now you only have to make a relative call instead of a series of absolute ones: do I like this startup better than that startup?
civilized 5y ago
Like Twitter redefined "disingenuous" to mean "disagrees with me", now "monopoly" is redefined to "successful thing I don't like".
- deleted 5y ago
  [deleted]
TameAntelope 5y ago
> Any headline that ends in a question mark can be answered by the word no. [0] I wonder if the author chose this headline on purpose. I doubt it. [0] https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
- nbashaw 5y ago
  Editor here, we are very aware of Betteridge’s law
a-dub 5y ago
nah. it's more like a new type of technology conglomerate where knowledge share and mutual support between projects still exists, but innovation murdering enterprise scale corporate bureaucracy problems have been minimized by reducing the depth and influence of the top-level holding company to an absolute minimum. the only potential trust concerns would involve exclusive dealings between portfolio companies, but even that is a stretch.
MichaelMoser123 5y ago
PG realized something really early on: that the most valued commodity in the tech economy is the attention of the customer; The most valued skill is therefore to grab attention. That may be the reason, why he made this site: if one can grab every hackers attention, then that attention can be directed towards the goal of making money. And he managed to do just that. This ability to turn insight into a tangible result does deserve a lot of respect, imho.
stale2002 5y ago
As much as I think Monopoly law needs to be expanded, there is no definition of anti trust law, that would apply to YC. Anti trust law, requires pretty significant market power. And even in places like the EU, "significant" means at least above something like 20-30% of a market. And there is no way that YC has anywhere close to that, in basically any market.
rkk3 5y ago
Punch up, generate outrage, capitalize on the attention. TLDR: Another trash piece of provocation driven content-marketing.
adamlangsner 5y ago
YC is a monopoly in the same way that Coca Cola is a Monopoly. And if you’ve ever been to a Taco Bell, Pizza Hut or KFC you’ll know exactly how much they are not.
Proven 5y ago
farmerstan 5y ago
deleted 5y ago
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gumby 5y ago
I don’t think it’s a monopoly as there are scads of other accelerators. YC is neither the first nor the last, but as far as I can see it’s the only one have had any significant success (and I think it can quite reasonably claim to be successful). They were always quite expensive, and, as the article says, now even more so. But I think for a lot of people it’s worth it. Not everyone, but many.
blunderkid 5y ago
First off, being a "monopoly" (dominant market share) does not make one a "despot blinded by hubris" as the OP suggests. Anti-trust laws target "abuse" of monopoly. Secondly, YC may very well be a "new age monopoly" much like Google or Amazon or Facebook i.e. the customers of those companies (in YC's case - founders) gravitate to them not because there is no choice but the value that they offer is so far above and beyond any competition that exists today. The point to note is - traditional definitions of monopoly abuse don't apply, unlike for example: Apple extorting 30% from app devs, which is a blindingly obvious case of abuse. YC just put out a superior product for their customers who'd otherwise have to pitch to 20 other angels. If you consider YC like the Amazon marketplace, this new deal can be considered a new private label (like AmazonBasics). It is quite likely that this hurts the economics of some angels. But YC is still makings it primary customers happy. And talking about superior products, by virtue of its early stage and program design, YC does in fact add substantial value when your company is most vulnerable and needs the most help. A16Z/Sequoia/etc founders, are happy with the money and the short lived legitimacy the branded money confers. But most YC founders seem to owe their existence to YC i.e. they love YC like an alma mater, which is exactly how YC positions itself. No angel/fund can compete with that emotional connect with checkbooks. Soon YCG will be giving later stage VCs a run for their money. Disclaimer: I am a yc alum. YC is far from a guarantee of success as my dying company can testify. And they are quick to remind that the Harvard analogy doesn't go very far because the median YC company is still a dead one.
- jka 5y ago
  > YC just put out a superior product for their customers who'd otherwise have to pitch to 20 other angels. This phrasing could imply that YC offer something that any entrepreneur can access - in other words, an unbiased funding source that is equally accessible to people regardless of background and experience. Is that what you intended or could you find a better analogy?
jasfi 5y ago
The problem is that founders without funding have very little support. I'm trying to change that at https://cxo.industries https://cxo.industries.
blitzar 5y ago
I think someone has been drinking too much of the YC coolaid / propaganda.

144 points by enigmatic02 5y ago

Why is it that we can freely swap what a consumer and producer are in this context? To say YC is a monopoly would be suggesting the capital to be a ‘product’ and the startup to be a ‘currency.’ While one could make an argument that they are similar to something more hotly debated as an actual monopoly (e.g. Facebook, Apple) in that they are a consumer of startup ownership (and even then, only partial as opposed to full acquisitions), they do not then use that purchase to potentially restrict _actual_ consumer choice down the line with their primary product. Also, why does the author examine YC’s interactions with its own competitors in a vacuum? Isn’t the litmus test for an abusive monopoly to examine if its decisions and negatively effect its target consumer’s behavior? Of course a company may make decisions which harms its competitors, but does that decision then increase overall cost or reduce the potential choices a consumer can make, or does the decision benefit the consumer (as most business competition should)?

braingenious 5y ago

nbashaw 5y ago
Developer here, thanks for the heads up and will look into it! Probably a font bug

kristianov 5y ago

YC has monopoly of being YC.

daniel-cussen 5y ago
Seriously. I commented years ago that the root cause of Apple's market dominance was that Steve Jobs had a monopoly on Steve Jobs. The monopoly issue, in that light, comes down to--well, not even brand, but history and identity.

dantheman 5y ago

MattGaiser 5y ago

Monopoly just increasingly seems to mean any successful company that changes its pricing structure.

Isamu 5y ago
I think here it is used (incorrectly) to mean “leading”. I think we are always reaching for superlatives in our click-bait headlines.
paulryanrogers 5y ago
Monopsony may be more technically correct. Or perhaps a different phrasing like "market controller". Ultimately though words can evolve. And overly narrow terms can expand.
echelon 5y ago
> Is YC a Monopoly? I can get money anywhere. YC just happens to be a good option with lots of resources. > Monopoly just increasingly seems to mean any successful company that changes its pricing structure. I can only reach Americans with my software over web, App Store, or Play Store, and since most Americans only own one device (iPhone or Android) and web on iPhone is crippled, that means I'm stuck with App Store for reaching 50% of consumers. This opts me into the 30% tax, the review straight jacket, and forced buy in to the life-draining Apple ecosystem (no customer relationship, can't deploy when I need to, etc). I have no power here. Of Apple and YC, one of these is clearly a monopoly, the other is not.
- mastazi 5y ago
  Device != smartphone but I agree with many of the points you made (and I understand that for some products, smartphones are going to be your primary target).
lmm 5y ago
If you can dictate your own prices without worrying about losing customers/suppliers then yes, that's pretty much what being in a monopoly/monopsony position means?

deleted 5y ago

[deleted]

Traster 5y ago

This seems... odd to me. I don't understand the industry well, but if you're sugesting that YC benefits from having stakes in lots of competing companies that therefore co-operate, that's a cartel, not a monopoly. I do think the new terms are YC trying to capture more of their advantage though.

koolba 5y ago
Cartel was the word that came to my mind as well. Any kind of exa-corporate relationship between companies leads to a cartel type situation. It doesn’t have to be about coordinating prices for services either. It could be as little as companies prefer to do business with a cartel member so as to open up opportunities with other members.
heavyset_go 5y ago
Cartels can be monopolies.
ratkutti 5y ago
Cartel - this is an amazing perspective on hindsight, that for the most part accurately describe them. Wow.
Dracophoenix 5y ago
I wouldn't call it a cartel either. YC funds companies that compete against each other in multiple spaces. If you think YC is a cartel, I wonder what you'd think about Harvard or Stanford.

chrisseaton 5y ago

> Their portfolio boasts over $400B in value I don't understand - YC doesn't own these companies does it? They just have a minor 7% investment? So YC isn't worth $400B. What is it worth?

aspenmayer 5y ago
This doesn’t answer your question, but it helps narrow it down. I can easily believe a Y Combinator market valuation of $400B based on known exits alone. https://www.crunchbase.com/organization/y-combinator https://www.crunchbase.com/organization/y-combinator https://www.ycombinator.com/future/jessica https://www.ycombinator.com/future/jessica
deleted 5y ago
[deleted]

RcouF1uZ4gsC 5y ago

Notice that the people complaining seem to be other funds, not founders or startups. The reason YC is so popular is that they cater for founders and startups. YC terms are well-laid out, fairly easy to understand, and reasonable. They also are huge for networking.

bloodyplonker22 5y ago

> They are so confident in their power that they have recently instituted new funding terms that crowd out seed investors (their partners of yesteryear). This quote is hilarious and actually proves that YC is moving farther from a monopoly than to one. YC had to make their funding terms much more competitive (better for founders) because of the insanely increasing competition and the flood of capital into VC.

marconey 5y ago
The MFN clause can’t be considered more competitive against other seed and angel investors. It is clearly making their next fundraise MORE complex for founders.
- fredophile 5y ago
  I'm not sure that it necessarily does. They're giving founders money today at tomorrow's valuation. Having that extra runway can extend the time before founders need to raise again which should result in a higher value, which actually turns into a lower return for YC. It also means less money they need to raise so they can get back to building their business sooner instead of fundraising.

josh_carterPDX 5y ago

I want to see their returns 5-8 years from now based on this new model. I've always thought of YC as the ultimate "throw spaghetti on the wall and see what sticks" type of program. Should be interesting to see how other programs respond. If nothing else, it's a GREAT time to be a founder.

Msw242 5y ago

If seed VCs are upset about YC's terms, they could always start sourcing deals themselves instead of depending on YC and the like to derisk their investment decisions.

deleted 5y ago

[deleted]

jcburnham 5y ago

> Betteridge's law of headlines is an adage that states: "Any headline that ends in a question mark can be answered by the word no." https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.m.wikipedia.org/wiki/Betteridge%27s_law_of_headli...

deleted 5y ago

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deleted 5y ago

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rvz 5y ago

According to 'Betteridge's Law of Headlines' any headline that ends with a question mark can be answered definitively with: No.

pl0x 5y ago

foobarbaz33 5y ago
You are assuming they actively seek out people by race. If the pool of people in your domain are predominately of a particular race, it may be simple demographics at play, not bias.
- genewitch 5y ago
  This is just lazy, though. YC could hire a couple of well paid people to seek out innovators, via social media (Reddit, YouTube) and attempt to balance the scales. Throwing up one's hands and saying "welp, demographics/statistics/climate change/demon fairies are at play, here, so I guess we'll do nothing" is certainly capitalist, but it's not very good.
  - primax 5y ago
    Are you arguing that venture capitalists shouldn't be capitalist...? You want them to go out and prod minorities into creating startups instead of considering the businesses that come to them?
    - drblast 5y ago
      Now that you mention it...yes exactly that.
  - foobarbaz33 5y ago
    > attempt to balance the scales That is actually imbalance you are seeking. For example if 90% of people in a domain are of race X, then unbiased selection *should* select 90% of race X. Assuming the perceived investment opportunity is evenly distributed between all people.
    - genewitch 5y ago

djbusby 5y ago

The real title: "Is YC the Monopoly It Thinks It Is?"

polote 5y ago

We keep hearing about YC network effect, but are we sure it is significant? In France, there is a fund which is also doing seed index investing [1] they invest in 100 companies a year. But they are not an accelerator, just a fund, and they consistently get good IRR [2]. And they are as much known in the French ecosystem than YC is known in the American ecosystem. Does anyone have an example of a seed index investing fund that failed ? [1] https://www.kimaventures.com/ https://www.kimaventures.com/ [2] https://twitter.com/2lr/status/1479042875019173889 https://twitter.com/2lr/status/1479042875019173889

voz_ 5y ago

This person has no understanding of what a Monopoly is. A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. A monopoly would be if: 1) You can only effectively start a startup through YC (Not true) 2) YC actively did things to subvert competition (Not true, at all, from what I can see) 3) YC owned a significant majority portion of some market, and used its position to arbitrarily set prices (A la Apple for taking cuts of apps written by people other than them, to be installed on devices you own), or otherwise damage the market's competitive viability in some way. (Clearly not true)

b112 5y ago
They realise what a monopoly is, but also, what a click bait title, and article looks like. Hence the nisdirect re:monopoly
gxs 5y ago
I think at this point we should relent and find a different word for the actual, technical meaning of the word monopoly. It seems like any time there is an article at the top with the word monopoly in it, one of the first few comments is always someone trying to educate the author/other commenters on what a monopoly actually is. If we do this, then we can all be on the same page when someone is intending to say that a service has become so mainstream/successful that it might feel like there are no alternatives.
jorvi 5y ago
> A high value service realizing it delivers more value than it initially thought, and raising prices... is not a monopoly. That's just business, life, etc. It is not a monopoly, but it is a sign of an unhealthy market. A simple example: say we have company QualityEars. QualityEars sells budgetBoom ($25), performanceBoom ($60), and premiumBoom ($100) speakers. However, their performanceBoom is so well-engineered, that it performs more like an $90 speaker and thus nearly invalidates the premiumBoom line. In a healthy market, this now forces QualityEars’ competitors to create an equally valuable product, and QualtiyEars itself to increase the price-performance ratio of its premiumBoom and perhaps even budgetBoom line. Instead, what I’ve mostly seen happen in the real world (whether it is products or services) is either the price of the performanceBoom and premiumBoom line get raises, or performanceBoom gets discontinued and worsevalueBoom takes its place. This is a sign of not enough competition. Also known as an unhealthy market :)

skmurphy 5y ago

One insight into YC leverage is that they are working in larger and larger batches instead of moving to a continuous process or many smaller batches. I believe that a significant source of leverage is their ability to create two "Demo Day" auctions a year. This leverage might be considerably diluted by spreading the 400 startups in the most recent cohort into, for example, 13 fortnightly events with 30 startups spread over the same six months. From cohort sizes in the teens in the first few years to several dozen in the next decade to now hundreds, the only constant has been two events a year. I believe the logistics and support models for a 400 firm cohort are very different from one of 40 (in the same way 40 is distinct from a dozen). They cannot be analyzed in isolation as there have been many other changes in the venture funding and incubator models over the last 15 years. I never did get an answer to this question from ten years ago (https://news.ycombinator.com/item?id=3711131 https://news.ycombinator.com/item?id=3711131) "Initially we didn't have what turned out to be the most important idea: funding startups synchronously, instead of asynchronously as it had always been done before. Or rather we had the idea, but we didn't realize its significance. We decided very early that the first thing we'd do would be to fund a bunch of startups over the coming summer." I wonder what the best batch size is: each cohort seems to be larger than the last. When does it makes sense to do three, four, or six a year as smaller batches.

jacquesm 5y ago
Yes, this is key. This is the one genius bit that YC brought to the table and it changed everything. Suddenly you no longer have to decide which start-ups to fund, you just pick the top 'N' where N is however large your classes are. That's a much simpler problem than to solve for N individual investments given a steady drip of possibilities. Now you only have to make a relative call instead of a series of absolute ones: do I like this startup better than that startup?

civilized 5y ago

Like Twitter redefined "disingenuous" to mean "disagrees with me", now "monopoly" is redefined to "successful thing I don't like".

deleted 5y ago
[deleted]

TameAntelope 5y ago

> Any headline that ends in a question mark can be answered by the word no. [0] I wonder if the author chose this headline on purpose. I doubt it. [0] https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...

nbashaw 5y ago
Editor here, we are very aware of Betteridge’s law

a-dub 5y ago

nah. it's more like a new type of technology conglomerate where knowledge share and mutual support between projects still exists, but innovation murdering enterprise scale corporate bureaucracy problems have been minimized by reducing the depth and influence of the top-level holding company to an absolute minimum. the only potential trust concerns would involve exclusive dealings between portfolio companies, but even that is a stretch.

MichaelMoser123 5y ago

PG realized something really early on: that the most valued commodity in the tech economy is the attention of the customer; The most valued skill is therefore to grab attention. That may be the reason, why he made this site: if one can grab every hackers attention, then that attention can be directed towards the goal of making money. And he managed to do just that. This ability to turn insight into a tangible result does deserve a lot of respect, imho.

stale2002 5y ago

As much as I think Monopoly law needs to be expanded, there is no definition of anti trust law, that would apply to YC. Anti trust law, requires pretty significant market power. And even in places like the EU, "significant" means at least above something like 20-30% of a market. And there is no way that YC has anywhere close to that, in basically any market.

rkk3 5y ago

Punch up, generate outrage, capitalize on the attention. TLDR: Another trash piece of provocation driven content-marketing.

adamlangsner 5y ago

YC is a monopoly in the same way that Coca Cola is a Monopoly. And if you’ve ever been to a Taco Bell, Pizza Hut or KFC you’ll know exactly how much they are not.

Proven 5y ago

farmerstan 5y ago

deleted 5y ago

[deleted]

gumby 5y ago

I don’t think it’s a monopoly as there are scads of other accelerators. YC is neither the first nor the last, but as far as I can see it’s the only one have had any significant success (and I think it can quite reasonably claim to be successful). They were always quite expensive, and, as the article says, now even more so. But I think for a lot of people it’s worth it. Not everyone, but many.

blunderkid 5y ago

First off, being a "monopoly" (dominant market share) does not make one a "despot blinded by hubris" as the OP suggests. Anti-trust laws target "abuse" of monopoly. Secondly, YC may very well be a "new age monopoly" much like Google or Amazon or Facebook i.e. the customers of those companies (in YC's case - founders) gravitate to them not because there is no choice but the value that they offer is so far above and beyond any competition that exists today. The point to note is - traditional definitions of monopoly abuse don't apply, unlike for example: Apple extorting 30% from app devs, which is a blindingly obvious case of abuse. YC just put out a superior product for their customers who'd otherwise have to pitch to 20 other angels. If you consider YC like the Amazon marketplace, this new deal can be considered a new private label (like AmazonBasics). It is quite likely that this hurts the economics of some angels. But YC is still makings it primary customers happy. And talking about superior products, by virtue of its early stage and program design, YC does in fact add substantial value when your company is most vulnerable and needs the most help. A16Z/Sequoia/etc founders, are happy with the money and the short lived legitimacy the branded money confers. But most YC founders seem to owe their existence to YC i.e. they love YC like an alma mater, which is exactly how YC positions itself. No angel/fund can compete with that emotional connect with checkbooks. Soon YCG will be giving later stage VCs a run for their money. Disclaimer: I am a yc alum. YC is far from a guarantee of success as my dying company can testify. And they are quick to remind that the Harvard analogy doesn't go very far because the median YC company is still a dead one.

jka 5y ago
> YC just put out a superior product for their customers who'd otherwise have to pitch to 20 other angels. This phrasing could imply that YC offer something that any entrepreneur can access - in other words, an unbiased funding source that is equally accessible to people regardless of background and experience. Is that what you intended or could you find a better analogy?

jasfi 5y ago

The problem is that founders without funding have very little support. I'm trying to change that at https://cxo.industries https://cxo.industries.

blitzar 5y ago

I think someone has been drinking too much of the YC coolaid / propaganda.