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I see no sign of the trend he describes. And if it were happening I'd see it. But I don't find myself telling startups preparing for Demo Day "you guys are bu

by pg 14y ago

I see no sign of the trend he describes. And if it were happening I'd see it. But I don't find myself telling startups preparing for Demo Day "you guys are building important technology, so you'll have an uphill battle with investors, but you other guys have a social startup, so you'll have it easy."

sblank 14y ago
Hmm. Selection bias perhaps? How many medical devices, nano materials, chemical sensors and life science, etc. startups applied to the last Y-Combinator cohort? The hundreds of hard science teams I see every year don't send you applications.
- pg 14y ago
  We started out specializing in software, so we rarely get these types of applications. But you can build important infrastructure using software (indeed, most of the examples you give are largely or mostly software). And the companies we fund that are building such things do not have a harder time raising money than the companies building social apps.
- brlewis 14y ago
  The hundreds of hard science teams I see every year don't send you applications. Maybe some of them should. Sure, the direct experience of most of the YC partners is web-centric, but they're connected enough in SV that YC might be a big benefit, especially if any of those teams are amenable to a 3-month build cycle.
socratic 14y ago
Is that what Blank is arguing though? I remember listening to your office hours at TC Disrupt, when you were talking to the guy from Omniplaces. You said: "This is commercialized research? Ouch. It’s often a solution in search of a problem..." (Of course, that was part of a broader commentary about how the startup shouldn't be competing with Google in search, which I don't necessarily disagree with.) But I think that's what he's talking about. Sun, Google, Cisco, Akamai, VMWare, and a variety of other technology companies came fairly directly out of commercialized university research in systems, databases, networking, virtualization. Are there YC companies that are commercialized university research? Such companies at the very least seem very different from companies like Airbnb which seem like they evolved from a consumer problem rather than innovative technology. What's more, it seems like basing investing decisions on current consumer behavior and problems seems much more sensible than doing so based on technology, which is what Blank seems to be arguing and what you seemed to be arguing at Disrupt. http://techcrunch.com/2011/09/12/tc-disrupt-office-hours-with-yc-partners-paul-graham-and-harj-taggar/ http://techcrunch.com/2011/09/12/tc-disrupt-office-hours-wit...
- pg 14y ago
  The problem with commercialized research is more the attitudes of the founders than what they're building. They usually approach starting a startup as a solution in search of a problem. Sun (and Google) were exceptions in that even while working on the project within a university, they were building a product. We'd love to fund that kind of project, but they're rare.
  - ThomPete 14y ago
    But couldn't that be said about Facebook too?
    - nswanberg 14y ago
      Facebook was born in a university dorm room, not a university lab (or department lounge). Facebook is a great product, and has spawned some interesting technology created to solve a massive scaling problem, but what cause the scaling problem to begin with was a product created with a good intuition for what people love, built with some existing, not academic, technologies.
      - ThomPete 14y ago
        I was more thinking about the problem looking for a solution part.
  - DanBC 14y ago
    Do they know you're there? Do they realise that they can do interesting research, and build a product, and get a chance at funding from you? Has anyone tried to solve that publicity problem?
  - waterlesscloud 14y ago
    Isn't the fact that they're rare his point?
    - herdrick 14y ago
ericflo 14y ago
I can confirm this. When my co-founder and I told PG we were working on a mobile social network around movie trailers, he hated the idea, and told us we would have a hard time and that we should build more important technology. We wouldn't have arrived where we are today without building what we built, so I hesitate to call it a mistake, but PG was right in the end :)
hef19898 14y ago
I'm not going to contradict you, but at least to me it seems that all the hype and press goes to social start-ups. I'm excluding mobile since this is a rather new technology. Being as far away from SV and Vcs as you can probably get in the western world, I had the impression that there could be some kind of "social bubble". Or am I completely mislead here? That said, I don't believe you can make the point the other way round. whereas social start-ups can have an easier going there is also more competition. On the other hand the next apple might face different problems.
ucee054 14y ago
EDIT for clarity: I think Steve Blank has in mind the level of ambition of the stealth fighter program. Such a venture would involve putting in many orders of magnitude more money than YC invests in a single startup. Today's equivalent would be investing in a new Intel corporation. Last time I checked, YC sponsored much smaller ventures such as bed-and-breakfast exchanges and online backup systems. So why would you be involved at all in such ventures, let alone aware of the trend?
- pg 14y ago
  Sounds like you don't understand what we do. We do seed funding. The money we invest is not the last a startup will raise; it's just enough to get them to the point where they can raise more. So YC can fund arbitrarily expensive projects.
  - ucee054 14y ago
    Look, let's take an example. The microprocessor was invented in the 60s to be the wing controller for the F14. The F14 was rolled out in the 70s and deployed in the 80s, and in service till a few years ago. So the government was funding integrated circuits for multi-decade deployment, decades before it intended them to be used and between 5-10 years before silicon valley got in on the action. Last time I checked, VC funds are 10 years, and most VCs want an investment to return within 3 years. (As Steve Blank is complaining about). By my understanding, even if somebody got seed funding for a project with an F14 level of ambition, the money would be peanuts compared to what it would take to make meaningful progress, and then the VCs would think it too far from a liquidity event to invest in anyway. How could YC invest profitably in such a venture? What am I not understanding? I think you'd need to find a source of follow-on financing that would be much longer term than either Wall Street or Sand Hill Road (again what Steve Blank is complaining about).
- hef19898 14y ago
  When you look at Airbnb's potential I hardly consider this a small venture. Maybe they are not disrupting technology / hardware businesses. But at least from my point of view they have the potential to disrupt the hotel and travel industry (including corporate travel, I know an austrian company using it for their sales people). Wether or not that scale was part of the vision right from the start I can't tell.

by pg 14y ago

sblank 14y ago

Hmm. Selection bias perhaps? How many medical devices, nano materials, chemical sensors and life science, etc. startups applied to the last Y-Combinator cohort? The hundreds of hard science teams I see every year don't send you applications.

pg 14y ago
We started out specializing in software, so we rarely get these types of applications. But you can build important infrastructure using software (indeed, most of the examples you give are largely or mostly software). And the companies we fund that are building such things do not have a harder time raising money than the companies building social apps.
brlewis 14y ago
The hundreds of hard science teams I see every year don't send you applications. Maybe some of them should. Sure, the direct experience of most of the YC partners is web-centric, but they're connected enough in SV that YC might be a big benefit, especially if any of those teams are amenable to a 3-month build cycle.

socratic 14y ago

Is that what Blank is arguing though? I remember listening to your office hours at TC Disrupt, when you were talking to the guy from Omniplaces. You said: "This is commercialized research? Ouch. It’s often a solution in search of a problem..." (Of course, that was part of a broader commentary about how the startup shouldn't be competing with Google in search, which I don't necessarily disagree with.) But I think that's what he's talking about. Sun, Google, Cisco, Akamai, VMWare, and a variety of other technology companies came fairly directly out of commercialized university research in systems, databases, networking, virtualization. Are there YC companies that are commercialized university research? Such companies at the very least seem very different from companies like Airbnb which seem like they evolved from a consumer problem rather than innovative technology. What's more, it seems like basing investing decisions on current consumer behavior and problems seems much more sensible than doing so based on technology, which is what Blank seems to be arguing and what you seemed to be arguing at Disrupt. http://techcrunch.com/2011/09/12/tc-disrupt-office-hours-with-yc-partners-paul-graham-and-harj-taggar/ http://techcrunch.com/2011/09/12/tc-disrupt-office-hours-wit...

pg 14y ago
The problem with commercialized research is more the attitudes of the founders than what they're building. They usually approach starting a startup as a solution in search of a problem. Sun (and Google) were exceptions in that even while working on the project within a university, they were building a product. We'd love to fund that kind of project, but they're rare.
- ThomPete 14y ago
  But couldn't that be said about Facebook too?
  - nswanberg 14y ago
    Facebook was born in a university dorm room, not a university lab (or department lounge). Facebook is a great product, and has spawned some interesting technology created to solve a massive scaling problem, but what cause the scaling problem to begin with was a product created with a good intuition for what people love, built with some existing, not academic, technologies.
    - ThomPete 14y ago
      I was more thinking about the problem looking for a solution part.
- DanBC 14y ago
  Do they know you're there? Do they realise that they can do interesting research, and build a product, and get a chance at funding from you? Has anyone tried to solve that publicity problem?
- waterlesscloud 14y ago
  Isn't the fact that they're rare his point?
  - herdrick 14y ago

ericflo 14y ago

I can confirm this. When my co-founder and I told PG we were working on a mobile social network around movie trailers, he hated the idea, and told us we would have a hard time and that we should build more important technology. We wouldn't have arrived where we are today without building what we built, so I hesitate to call it a mistake, but PG was right in the end :)

hef19898 14y ago

I'm not going to contradict you, but at least to me it seems that all the hype and press goes to social start-ups. I'm excluding mobile since this is a rather new technology. Being as far away from SV and Vcs as you can probably get in the western world, I had the impression that there could be some kind of "social bubble". Or am I completely mislead here? That said, I don't believe you can make the point the other way round. whereas social start-ups can have an easier going there is also more competition. On the other hand the next apple might face different problems.

ucee054 14y ago

EDIT for clarity: I think Steve Blank has in mind the level of ambition of the stealth fighter program. Such a venture would involve putting in many orders of magnitude more money than YC invests in a single startup. Today's equivalent would be investing in a new Intel corporation. Last time I checked, YC sponsored much smaller ventures such as bed-and-breakfast exchanges and online backup systems. So why would you be involved at all in such ventures, let alone aware of the trend?

pg 14y ago
Sounds like you don't understand what we do. We do seed funding. The money we invest is not the last a startup will raise; it's just enough to get them to the point where they can raise more. So YC can fund arbitrarily expensive projects.
- ucee054 14y ago
  Look, let's take an example. The microprocessor was invented in the 60s to be the wing controller for the F14. The F14 was rolled out in the 70s and deployed in the 80s, and in service till a few years ago. So the government was funding integrated circuits for multi-decade deployment, decades before it intended them to be used and between 5-10 years before silicon valley got in on the action. Last time I checked, VC funds are 10 years, and most VCs want an investment to return within 3 years. (As Steve Blank is complaining about). By my understanding, even if somebody got seed funding for a project with an F14 level of ambition, the money would be peanuts compared to what it would take to make meaningful progress, and then the VCs would think it too far from a liquidity event to invest in anyway. How could YC invest profitably in such a venture? What am I not understanding? I think you'd need to find a source of follow-on financing that would be much longer term than either Wall Street or Sand Hill Road (again what Steve Blank is complaining about).
hef19898 14y ago
When you look at Airbnb's potential I hardly consider this a small venture. Maybe they are not disrupting technology / hardware businesses. But at least from my point of view they have the potential to disrupt the hotel and travel industry (including corporate travel, I know an austrian company using it for their sales people). Wether or not that scale was part of the vision right from the start I can't tell.