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Y Combinator Traded Prestige for Growth
- humansareok1 2y agoThey seemed to trade quality as well. Its now a net negative signal for a company's success if they are accepted into YC.
- stonethrowaway 2y agoYou’ll have to expand on this for us plebs. To whom is it a net negative signal?
- ToucanLoucan 2y agoI mean I can't speak for that commenter, but I hold any VC backed startup in suspicion for a good amount of time because if they can't reach the size demanded by their investors, which runs the gamut from ambitious-but-achievable all the way to not-in-my-or-your-lifetime, a perfectly profitable modestly sized business is almost bound to be shut down and it's services terminated with little drama, leaving behind potentially useless products, or yet another fucking ZIP file to add to the pile of the things I have yet to open up and sort into other mediums.
- dylan604 2y ago> if they can't reach the size demanded by their investors In this sense, how is YC any different from any other VC firm?
- ToucanLoucan 2y agoIt's not, which is probably why I said VC not YC.
- humansareok1 2y agoTo anyone with eyes? Job seekers looking for startups to join, investors looking for places to put money, etc. I'm sorry if your company got accepted into YC, better luck next time. At least you can hang out with the founders of... 100 AI-assisted Code Editors, 'The first Travel Credit Card for Gen Z', 'Starbucks memberships for restaurants', 'a video first food delivery app, tiktok meets doordash', and 'the operating system for vacation rentals'. Truly a staggering group of talent. Those are all real companies in W24 btw...
- blibble 2y agohave a look at this, it's hilarious https://www.ycombinator.com/companies?batch=F24&batch=S24&batch=W24 https://www.ycombinator.com/companies?batch=F24&batch=S24&ba... I expect "AI Nip Alert" to show up any day now
- coldcode 2y agoMany of these are "Use AI For Something" startups. A few seemed meaningful but most seem destined to fail.
- fisherjeff 2y agoNot going to name names, but so far my favorite has been “AI for [somewhat arcane process]”. I had no idea how “AI” could possibly be of use, so clicked through out of curiosity. Hilariously, it boiled down to “we occasionally use an LLM to email people for you.”
- devin 2y agohahahaha, wow! I really thought this was a joke list. That’s stunning.
- humansareok1 2y agoYeah not a joke. Straight from the W24 batch page... I'm sure these weren't even the most absurd.
- bearjaws 2y agoA) Security is always an afterthought at YC companies - I know from firsthand experience. B) YC companies are risky to use, obviously we meme about people using IBM for "saftey", but there is an opposite side of that which is going with a seed stage company - it's very risky. C) Even if you are a happy customer, if you are too niche they will typically abandon you. I've been on the decision making side for this, sometimes your early customers don't fit your new market, so you have to let them down slowly.
- bpodgursky 2y agoI'm bearish on the giant YC classes but (C) is an entirely necessary evil at any successful startup anywhere.
- impostervt 2y agoOof just watched a video from the Pear.ai guys and was happy to hear they made it into YC. I don't know much about the project, but they seem like good people.
- ToucanLoucan 2y ago"What we're doing isn't technically illegal so stop talking about it" isn't generally a phrase used by what I'd call good people, but we'll agree to disagree.
- jmull 2y agoI don't get the objection here. Forking is part of how open source is supposed to work.
- tightbookkeeper 2y agoThe objection is it’s extremely unlikely licenses are being followed and they seek to profit from good will of free software.
- minimaxir 2y agoThere's a difference between forking to make a OSS project better and forking to create a clone just for the sake of VC funding that doesn't trickle down back to the original code. Even if it's allowable by the permissive license of the original code, it's not a net positive for OSS.
- lupire 2y agoThat's your opinion. Maybe the original authors of this project don't care and are just happy that their invention is helping people. I'll take the authors' published intent over your speculation.
- askafriend 2y ago
- tfehring 2y agoJust from public information my impression is that prestige was never a goal while scaling was in the plans from fairly early on. Anecdotally, some of the best recent founders I know are opting not to apply, which I think is a bad sign. But their reasons have nothing to do with the scale, competitiveness, or prestige of the program.
- paulgb 2y agoIMHO this post misses the fact that YC becoming a prestige institution is itself a sort of failure mode. You don't want to attract founders who figure YC is a low-risk alternative to grad school that will look good on their resume. It's tough to avoid that outcome while still conferring positive signal to VCs/potential employees, though. I'm sure YC/Garry see something in the PearAI founders' ability to market themselves, but I find the whole debacle a bit embarrassing for YC and I know some of my YC batchmates quietly do as well.
- toomuchtodo 2y agoWhat would YC 2.0 look like? How would you build it?
- cheschire 2y agoYC was a child of its time though, right? Are you asking what could YC have done differently in the context of its history, or are you asking what a new accelerator started today would look like? I ask because I’m not sure that now is the time for a new startup accelerator to succeed, and we have no way to predict the circumstances that are required for success without couching it in some major changes to externalities.
- toomuchtodo 2y agoGreat question; the latter, because as you mention, YC was a product of a moment in time and that moment has passed, but during that time horizon, they were very successful (imho). Edit: YC says "Build something people want." and so I'm going to riff off of that in a bit of a meta way: "Support experiments worth conducting." The accelerator bit comes in once you've reached product market fit and need fuel for the rocket ship, but until then, you're just running an economic science experiment.
- neilv 2y agoAFAICT, as much as YC was a child of their time, they (and PG) were also one of the parents of our current time. I'm guessing it was inevitable that Wall Street would take over the field, and turn it into a machine. And therefore it was also inevitable that people who, in the past, would've gone to Wall Street, now would flow into the space, and take it over. But YC did put their own spin on that, in which the traditional affluent-family, prestigious-school kids could also be computer nerds.
- throw14082020 2y agoHow many times did the author apply and get rejected from YC? I have heard this sentiment before, from a less successful VC. After comparing them based on track record, it was clear YC is in a league of its own. I want to get advice from people who have built startups before. Looks at YC advisors on YouTube and you'll find they're all very successful. Look at the partners and advisors at most VCs or accelerator programs, and you won't find that level of experience. You'll get mismanaged and start thinking like an investor instead.
- deleted 2y ago[deleted]
- chronic9304 2y ago> How many times did the author apply and get rejected from YC? Author is not wrong. This “YC is actually a negative signal” sentiment started back in 2018-2019. The “actual” good entrepreneurs (e.g., the folks you expect from Harvard, MIT, Stanford, Berkeley) stopped applying to YC a while back. There are different signaling mechanisms in 2024, which I won’t reveal here, because the “plebs” will turn it into shit, just like they did to YC, leetcode interviews, and FANG ML jobs.
- zhaohan_dong 2y agoI think I've heard about the different signaling mechanisms. Those are easily exploitable so good to not reveal.
- marviel 2y agoYou have a good hart
- throw14082020 2y agoYou posting "better" signalling mechanisms (in your opinion) will not be the end of them... People don't do things because you think they're good. They'll find them by looking and copying existing companies' approaches. You have failed to mention anything except to say approximately "YC sucks and I have something better but I don't want to share"
- zurfer 2y agoI don't know what YC thinks, but the mission is not about prestige, but to help startups succeed, so these startups can make something people want. Also, YC is mostly back in person and so pretty hard to scale (also batch sizes have gone down in the last couple of years).
- HeyLaughingBoy 2y agoI don't track these things, but as far back as I can remember, the appeal of YC was the tutelage of experienced founders, availability of office hours, and the atmosphere of being surrounded by like-minded, ambitious people. When did that change?
- jsheard 2y agoThat tight-knit environment couldn't last when they keep taking on a bigger volume of startups every year. 2005 - 8 startups 2010 - 63 startups 2015 - 216 startups 2020 - 435 startups 2024 - 509 startups so far (likely 600+ when the Fall batch is done) https://www.ycombinator.com/companies https://www.ycombinator.com/companies
- buggeryorkshire 2y agoSurprised this doesn't mention meticulous.ai, who seem to spam HN with "we're hiring!" each month but i've never heard of anybody using them, nor do LI show any new employees. Hey Gabriel, what's going on?
- autonomousErwin 2y agoI thought I was the only one who noticed, I'd much prefer the YC companies do a monthly "here's who's hiring" much like the "who's hiring" instead of individual ones.
- mpeg 2y agoJoin us as Founding Engineer #207 !
- hobofan 2y agoI don't think that's really connected to the topic here? What you are describing here just sounds like one of their portfolio companies taking full advantage of one of the perks that comes with YC? I don't know what the limit on the "We're hiring" posts is for portfolio companies, and I also have a few on the top of my mind that showed up a lot, but having that as "ads" on this website isn't too bad.
- bluecheese452 2y agoHN is rife with these adds masquerading as legit hiring posts. One company was “hiring their 3rd engineer” for years.
- intelVISA 2y agoWith the recent drop of batch quality comes more lifestyle companies and less disruptors. I can't imagine the YC of even 10 years ago funding quite so many zombies 3+ years no product but still holding out for the fabled founding engineer... A half-decent Schemer in found3rm0de would've built 5 failed MVPs and exactly one unicorn in that timeframe.
- camjw 2y agoI've used meticulous.ai!
- underdown 2y agoThis is almost as embarrassing as data centers in space getting funded. lol.
- nashashmi 2y agoArticle's assumption is that a totally incompetent set of startup founders were admitted to YC because it "loses quality in exchange for quantity" (not a direct quote but the gist). And this startup was nothing more than a copy of a different startup. Maybe it is the prestige game that became a death knell for YC. Because it is "cool" to be accepted to YC, the "cool people" with a coolness factor started applying and tried to game through the evaluation process into acceptance. But these cool people aren't really cut out for doing sweaty, gross, sleeve-pulling work. So they likely fail. What does Sam do? Refocus the company to drift away from the "cool" tech sector where cool people are looking to make their name cool. And start doing stuff in multiple sectors (that will seem cool in the future!). What didn't he do? Make the grind of becoming a YC selectee even sweatier and harder. Or change the selection process entirely so that all previous books trying to get you through the system fall flat on their faces.
- djaouen 2y agoAt some point, you have to turn reputational capital into real capital. The hope, then, is that you only spend the interest on that capital.
- toomuchtodo 2y agoDo you have to? Doesn't YC have enough capital to spend it on meaningful endeavors instead of silly "moonshots"? How much would be enough before this happens? Genuine questions, no snark.
- lvl155 2y agoCounter point: there are so many more accelerators now. It was basically getting into MIT/Stanford in term of opening up big doors. Now you have schools with accelerators right out of undergrads. So, YC has to compete in the space (sort of). It’s still one of the highest prestige (as in validation) you can get EVEN IF YOU FAIL.
- mehulashah 2y agoI don't agree at all with this post. YC's mission is to help founders start companies and help them build sustainable businesses. Towards that they've made it super simple to get started and funded, and provide guiding principles and support in the form of advice and a strong network to help the startups survive. They were never about prestige -- that came as a byproduct. Scaling this model is hard, however, and I think they may be running into scaling limits. There just may not be that many fast growing businesses (startups) every year. We won't know until years from now.
- nsedlet 2y agoI was part of the W12 batch of YC (which was a lot smaller, ~60 companies, back when Paul Graham was still leading YC). YC funds a lot of companies and has always had super high variance in the companies it funds. Entrepreneurs are a wild bunch of people. There have always been companies where the founders turned out to be BS artists or sociopaths. Companies that folded immediately after the program started. Companies with messy cofounder breakups already brewing at the beginning of the batch. Companies that turned out to be slightly scammy. Some of the founders that were in those companies pivoted and became successful. Picking on Pear AI (which I don't know anything about) as evidence of YC failing is silly. It's also a super early stage company and you really have no idea what they will do. The test of YC to me is, can they keep attracting and picking some of the best founders (which you can't really tell for years). And providing the inspiring, warm, but pushy environment that best sets up founders for success, and in turn keeps them coming to YC. I'd apply to YC again in a heartbeat if I were ever starting another company.
- deleted 2y ago[deleted]
- supafastcoder 2y agoYC went downhill during Sam Altman and then Garry Tan pushed it off a cliff. There’s no point in joining YC anymore.
- joeybloey 2y agoWhat's the most successful yc company started in the last 5 years ?
- lupire 2y agoIs there a tracker or all YC companies and their outcomes?
- Mistletoe 2y agohttps://www.ycombinator.com/companies/ https://www.ycombinator.com/companies/
- deleted 2y ago[deleted]
- marviel 2y agoReplit and Vanta stand out
- deleted 2y ago[deleted]
- ahstilde 2y agoZepto, W21, raised last month at $5B valuation. So, in 4 years.
- dilyevsky 2y agoProbably Deel (W19)
- reagan83 2y agoPG should return and go 'founder mode' on YC and clean house.
- deleted 2y ago[deleted]
- pexabit 2y agoWhat happened is adverse selection due to a stubbornly low valuation that doesn't even try to keep up, in the midst of a growing number of alternatives, worsened by a formal and therefore somewhat gameable process of getting in. The kind of person who really has an idea they are going to pursue regardless that he's actually committed to isn't going to part with his equity at the low prices a YC would offer. Instead what you get is people creating companies explicitly with the intention of applying for VC, which removes an important filter reflecting founder buy-in, and therefore average quality; and there's no way you can really tell one from the other.
- stevenseb 2y ago[flagged]
- EarthBlues 2y agoI don’t see how any of the evidence martialed in this article proves the conclusion. There’s a tendency in contemporary online culture to want to condemn the whole person. It’s not enough, it seems, to condemn Altman’s self-serving decisions with OpenAI. We also have to pretend he’s a bungling businessman, whose self-inflicted downfall is imminent. The same pattern can be observed with other public figures. It just doesn’t seem to me to beget a workable understanding of reality. I don’t have a dog in this fight, except that I like reading HN, and I’d like it if this place didn’t descend into the kind of friend-enemy thinking so prevalent on much of the internet.
- tines 2y ago> martialed I think you mean “marshaled,” correct?
- lupire 2y agoIt's used as an attack, so both.
- jmward01 2y ago> I don’t see how any of the evidence martialed in this article proves the conclusion. Agreed. Making this level clam requires a lot more evidence. It would have been better if the author presented this idea as something like 'YC better watch out, quality does matter' or something like that. Even then they would need to bring in more evidence and outside examples of industries where this trend took hold.
- ninetyninenine 2y agohttps://news.ycombinator.com/item?id=41697929 https://news.ycombinator.com/item?id=41697929 Only punishment and court judgement requires that level of evidence. Corruption often never gets exposed at all and at best is only revealed through weaker anecdotal evidence or even rumors. A blurry picture is often better than no picture at all. Form your own opinion about my link above. If it’s actually true, then that post I made is likely the only thing you’ll ever read about it.
- pbiggar 2y agoOne of the biggest shocks to me was that YC now invests in war and killing people. Before their closest connecting to killing people was investing in companies that had severe negative effects for society, like Doordash or AirBnb. Now they're helping people make missiles. https://www.ycombinator.com/companies/ares-industries https://www.ycombinator.com/companies/ares-industries
- mschuster91 2y ago[flagged]
- jedimind 2y ago[flagged]
- davidguetta 2y ago[flagged]
- pbiggar 2y agoThere are 40,000 people killed in Gaza by US weapons, in what even Biden called "indiscriminate bombing". YC should not be making cheaper ways for our allies to commit genocide.
- signatoremo 2y agoIf you put it that way, lot of people have been killed by Russia’s weapons in Ukraine. US’s weapons are used to protect civilians there. Think of all the Russia’s missiles shot down, or artillery depots blown up. Contemporary weapons are also much more precise. That means lower collateral damages. A lot of development efforts are to further enhance on that front. Weapon development is essential. Of course we should condemn mis- or excessive use of force, especially against civilians.
- jedimind 2y ago
- yayitswei 2y agoYC did not have prestige in their early years (Jessica mentions they had to beg their friends to come to demo days). Yet people were dropping out of Harvard to join. So it seems prestige is not necessary for success and in fact may be a negative signal.
- lupire 2y agoSo it was prestigious, but it wasn't seen as a profitable investment before it made its first dollar.
- jeffreyrogers 2y agoIt wasn't. If you told someone you dropped out of Harvard back then they would think you were making an odd choice. That said, it was never very risky since Harvard will take you back if you drop out, but it was at least unusual.
- pyb 2y agoIt was very prestigious by ~2007, but only within a much smaller niche of programmers nerds.
- pj_mukh 2y ago"The issue isn't that PearAI did something illegal—it's that they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies." This shows a fundamental misunderstanding on how YC functions. YCombinator was never a test of how good (or unique) your code was. At its core it was a filter of people, people who can work well together and people who can build something useful. That's it. You can read more about this straight from one of the founders [1]. The fact that you used open-source code (within legal bounds) to get their quicker just shows your resourcefulness, something YC actually optimizes for. More often than not, "good people" tend to be domain experts sometimes really good and unique coders but that, to me, was always a byproduct of the search pattern. You can obviously disagree with this methodology, but it has worked pretty well. [1]: https://foundersatwork.posthaven.com/the-social-radar-what-i-did-at-y-combinator https://foundersatwork.posthaven.com/the-social-radar-what-i...
- vergessenmir 2y agoVC firms are betting on the people. Most early startups are still looking for their market fit. The VC firm is betting that the people are able to identify that market which they'll be able to scale.
- shombaboor 2y agoyc is a club looking for members. A lot of the members share similar traits/backgrounds which is why there's sorta this "populist" backlash. It's not meritocracy for ideas or viability.
- jasfi 2y agoI think the real pain point you're hitting on there is that people feel like they don't get selected when they deserve to be. While there are those who don't deserve it but get selected anyway.
- yunohn 2y agoWhile I often feel this sadness/jealousy myself, and most probably a lot of the rage bait X replies do too (despite not admitting it) - someday they have to wake up and realize that life is/has always been that way. Despite our collective desire, Tech is not a guaranteed meritocracy either.
- sottol 2y agoPart of the earlier appeal of YC was that it was a batch of approval that, at least imo, was a strong signal to VCs to take a good look at the company and more-likely-than-not invest in. With larger batches and more lax selection that signal is so weak that YC comapnies are mostly like other companies with some traction.
- mattcantstop 2y agoThere is a part in the Netflix culture doc where it talks about how sometimes people do bad things, and Netflix tries to not overcorrect by implementing burdensome policies on the company as a knee-jerk reaction to a single bad actor. The conclusion (YC's brand has been tarnished because of the lower quality companies in their larger batches who do bad things) doesn't follow from the evidence of this ONE company doing something that people could view as a low integrity move. This exact situation could have occurred even if they kept their acceptance rates, and cohorts, incredibly small. There can always be bad actors (not saying this company is a bad actor though). I think you wanted to share your conclusion, even if the available evidence didn't necessarily support your claim.
- sneak 2y ago“It takes two points to establish a line, and three for a curve.”
- deleted 2y ago[deleted]
- bko 2y agoI think the bigger issue is that the main signal to YC (and other elite institutions) is the acceptance rate (<1%). That's probably the #1 thing people know about YC. A lot of people try to get in, and few do. The main criticism I have of YC is their constants chants of "everyone should apply!". Here is what you commonly hear: YC: You should apply to YC! Person: But I don’t have a product YC: You should still apply, we let in a lot of people with just an idea! Person: But I don’t have a co-founder YC: You should still apply, successful solo founders have made it into the program! Person: But I [perfectly valid reason not to waste your time] YC: You should still apply! Person: Wow, you’re being very encouraging, does this means I have a chance to get in? YC: Almost certainly not! At a certain point, I can't really take the org's mission in good faith with this kind of messaging. They want a high application rate, a low acceptance rate (even with bigger batch sizes). Just infinite optionality and founders being strung along. I wrote more about it in a blog post https://mleverything.substack.com/p/dont-play-status-games https://mleverything.substack.com/p/dont-play-status-games
- noobermin 2y ago> This decline will continue until cool, innovative companies no longer see any reason to apply. I am the furthest thing from a business man / start-up news addict, but even I know that the point of starting a company is to make money (perhaps fulfilling a need or niche, sure) and "being cool" should have nothing to do with it. Hell, "cool" often doesn't really square with being "innovative" anyway.
- sneak 2y agoStartups determine their ability to execute, and thus generate revenue (or promises of same) from appearing “cool” to prospective talent and future investors. Without it, they wither and die.
- authorfly 2y agoEh yes, but half a million in income sure helps you avoid death too, and most of them are moments from death when they apply.
- hollerith 2y agoPlease don't refer to an investment as "income". It hurts the ears of those of us who know a little accounting. I have no objection to, "half a million in cash sure helps you . . "
- authorfly 2y agoI understand that. However review my last month or so of post history for my views on earned/employment income, unearned income and asset income. In essence I differentiate between revenue within income, but not income/investment. I don't think taxes should either. Specifically, I think capital gains/intermingling of asset taxes while requiring up to date taxed-upfront employment taxes is one of the worst decisions society ever made.
- ninetyninenine 2y agoIt’s true. With 40k applications and roughly only 100s accepted… they likely only chose pearai because of nepotism. It would be self sabotage if they regularly do this so likely only a few companies are selected this way with pearai being one. The above is a very educated guess on pearai, but whether or not YC engages in nepotism or not is unmistakable to me. They do and there is real corruption in the selection process. It’s not just gross incompetence. Not only is there actual evidence that can be sourced but I can offer anecdotal evidence from inside sources from within the family involved with a company that passed via nepotism. the company is called dreamworld. See here: https://www.pcgamer.com/dreamworld-infinite-world-mmo-kickstarter-fiasco/ https://www.pcgamer.com/dreamworld-infinite-world-mmo-kickst... There’s whole YouTube videos about them including a post from one of the founders ex girlfriend. It’s all very shady the articles around them. I encountered this company by being close friends with someone that is within the family related to the founders of dreamworld. I was literally told that the company succeeded because of family connections from dreamworlds ceo: https://www.linkedin.com/in/garrisonbellack https://www.linkedin.com/in/garrisonbellack Garrison is the ceo of dreamworld. And he’s from a rich family headed by his dad: https://www.linkedin.com/in/john-r-bellack https://www.linkedin.com/in/john-r-bellack who is part of some super rich real estate fund. The bellacks regularly have big family gatherings in Tahoe and one of the attendees is Geoff ralston the previous president of YC. Source not only confirmed dreamworld got selected via favors from Geoff but that Geoff was telling stories at this family retreat about how he had to fire Sam Altman from YC after getting a call from Paul graham. Yes pg fired Sam Altman from YC. Dreamworld as it is right now got additional seed funding from VCs via connections as well and they are sitting on a pot of assets which is generating net positive income while that company can just stay afloat indefinitely. They don’t go through the hardships and risks other startup do thanks to nepotism. There are other people in the bellack family creating startups and looking to Geoff to funnel them through YC via nepotism so Geoff is primed to make it happen again for sure. So yeah. I’m sure Geoff isn’t the only person from within YC who does that. Hacker news is pretty pristine, but the fund itself does shady stuff. At least I think hacker news is pristine. Let’s see what happens to my post and my account. Maybe the moderators will be more strict with me? And use that to ban me? I am a bit rough with my opinions. But who knows?
- 2y ago
- s17n 2y agoWeird that his example of YC's decline is a company putting together a hacky MVP based on open source code, which is an absolutely classic YC thing to do.
- aabhay 2y agoWe were in YC S22 and it definitely has become a status seeker magnet. However, entrepreneurship is itself a status seeker magnet. The point the author misses is that you need to think of YC not as an organization but as a segment of time for personal and team reflection. It can help you develop a coherent narrative for your path and goals. Others may deride this characterization and say it’s too expensive. But the only way to enforce that kind of reflection is to raise the stakes and give it a real opportunity cost.
- vessenes 2y agoThe blog post is dumb, in the extreme. Sven doesn’t know the PearAI founders, the key metric YC says they assess when they make a funding decision. Where they forked a codebase from is a deminimus consideration — as Gary says, if it’s in the license, it’s in the license. Maybe Sven thinks that’s unethical, although in this case it’s funny to complain on behalf of YC, “Hey, YC, your money went to an open source codebase, and then some more of your money got to use it! You guys suck!” Comments here miss a lot as well, (although I agree that YC’s prestige days are over) — PG’s plan was ALWAYS to be able to do more. He lays out the reasoning in an essay maybe eight years ago — if your portfolio looks like 1-2 companies (now 3) out of 500 made 80% of the returns, what should you do? There are basically three answers to this: Rejoice, Write 497 less checks next time, or write 1,000 more checks in the hope of getting a fourth. PG’s head was at: write 1,000 more checks. I like this attitude a lot, and believe there are good social, macroeconomic and financial reasons to act this way. Of course you will put up with more failures in that mode — you already went and got the “good” ones — you are now picking ones you didn’t love that much in the sure knowledge that you’ll happily be wrong about one (or maybe even two) of them. Especially when you’re considering what to do mid-ZIRP, this is I think the only rational strategy if you want to make more money and help the world see more cool things. That said, one thing YC companies benefitted from immensely in the height of the prestige era was just that, prestige; it was a virtuous cycle in that getting in to YC guaranteed a quality seed and probably A round just on the name. In that way, it was like getting in to Stanford or MIT. Today, along with mentoring, one of the main benefits is the larger network internally, and this is a different thing. Possibly better, possibly not. I do think that if the prestige is needed for their model, they’re probably over scaled for today’s markets and venture money. Of bigger concern, I would say should be the question: “what does pre-seed/seed even look like in five years?” — Much of what seed capital is for can be done with quality LLMs today — and I expect that trend to continue. We saw the rise of pre-seed firms in exactly this economic environment — through the middle of the dotcom one boom, a tech startup was EXPENSIVE — ten engineers, $30k sparcstations, long data center contracts — the cash was needed. YC started at an inflection point when open source tooling and availability was driving that cost down. The next YC / early stage fund is going to look very, very different than the last one. And that’s okay! It will be fun to see what’s next.
- elAhmo 2y agoThere was a discussion a few weeks ago about YC betting on essentially the same product of adding support for chatting with LLMs inside your IDE (Continue.dev, Void, double.bot), which is a great example of this. No differentiation between investments, just spray-and-pray technique hoping that at least one of the contenders will succeed. I understand that in broader terms, VCs operate in this way - investing in many things hoping that one will stick. And if this is spread across different products, industries, ideas, then it is a good signal that your company was handpicked and got attention of one of the best VCs, among many many contenders. With examples like this, this signal is basically gone and getting a YC investment means nothing.
- jeffreyrogers 2y agoYC gets such great terms (because they invest so early and have great deal flow) that it's hard to see them declining unless the current venture model stops working. It does seem that recent YC batches are less impressive, but IMO that's less due to the quality of person that YC attracts and more that there's less low-hanging fruit. The "software is eating the world" thesis still seems true but now it's a lot harder to compete just on software you often need domain expertise in a complicated field.
- codingwagie 2y agoStarting a startup is now a prestige game. Its a career path. Spend enough time with ivy league grads and youll realize this is true
- dgreensp 2y agoFull disclosure, I'm a YC alum whose last start-up was acquired by Google, who applied to this batch and didn't get an interview. YC is not the stamp of quality it once was, to be sure, though it still works as social proof, because investors (especially VCs) want to invest in companies other investors like (or failing that, companies they imagine other investors would like). YC would say that they aren't trying to be a stamp of quality or social proof, they are just trying to help start-ups. If I had to take a stab at articulating how YC has changed, it's that it's become a VC, picking ideas to generate returns. This rejection email from 2022 that someone posted online cements the idea for me (excerpted): "Unfortunately, we've decided not to fund {Company} this batch. We enjoyed our conversation today and were impressed by you as founders building something they are passionate about bringing into being. However we weren't convinced that this product strategy is going to yield a big company in its current form. ... Of course, things are very early and you are still figuring out the right way to build and structure your business. If you're able to make significant progress with it, we'd be very interested in hearing about it for a future batch." Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback. It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky. Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools. Cryptocurrency is a whole exploration of this effect, turning hype into money by building a streamlined mechanism for bringing in greater fools, but we can also look at examples like Theranos. (There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself.) The point is, the greater fool "strat" works. In a moral vacuum, if you are trying to maximize returns, you lean into it. If I were running a fund like YC with basically unlimited money at my disposal, balancing the goals (strategies?) of 1) make money for money's sake, 2) advance technology for technology's sake (let's go to Mars, etc), and 3) make the world a better place, I would focus on (3). Like can we at least try to build a unicorn that feeds people, and maybe fail, rather than trying to build FooBarBazCoin that eats the word, and failing? We mostly see a mix of (1) and (2).
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- martythemaniak 2y agoEveryone is missing the reason they got accepted: they are some kind of tech influencers have 300k subs on YouTube. You have 10 mins to pitch your idea, so they went in and said ”look, we work for coinbase, we're competent. Look, we have 300k subs on YouTube, we know how to sell shit and get attention. Look we have <some random AI thing>, we got it all" and that's all it takes. The problem is, they want to sell dev tools and those tend to be more grounded in reality than <some random social media thing> where their attitude and skills might be a better fit. Lots of devs like calling out bullshit as a hobby and making fun of shoddily built stuff, so it's a tough audience. YC doesn't do "due diligence" and never has, not worth it for the $125k they put in. The real danger is they become known as the place for bullshit peddlers, influencers, etc. Edit: 344k subs: https://youtube.com/@fryingpan?si=QIPTDvJATXFNYBPM https://youtube.com/@fryingpan?si=QIPTDvJATXFNYBPM
- idkwhattocallme 2y agoI always thought YC growth was to fuel it's portco's initial traction. My understanding is that they solved each other's problems and then raised on traction largely within their own ecosystem. Having a wide breadth of companies would better enable this
- ahstilde 2y ago> (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies. YC never said they were anything else, though? YC's strategy is simple. Vet for y intercept, do little due diligence, and make it up through investing in enough people. They never claim to be perfect. In fact, there's a number of YC founders who have had scandals: - Bitfinex $4.5 B hack was a YC founder - uBiome (wire fraud) was a YC co: https://news.ycombinator.com/item?id=30899352 https://news.ycombinator.com/item?id=30899352 - Stablegain ($44M crypto fraud) was a YC co https://news.ycombinator.com/item?id=31461634 https://news.ycombinator.com/item?id=31461634 - DreamWorld is a YC co: https://news.ycombinator.com/item?id=26898266 https://news.ycombinator.com/item?id=26898266 I guess hucksters are inevitable?
- jedberg 2y agoThis entire article is premised on the idea that YC accepts more startups now than before, but if I'm not mistaken, their acceptance rate has gone down every batch. And since the OP specifically called out Harvard as a paragon of prestige institution, it should be noted that YC acceptance rate is lower than Harvard's too.
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- siliconc0w 2y agoIt's pretty clear that many VCs are starting to play the carry-game, it's much easier to scale up and make money on carry than it is picking winners or even pricing the 'winners' correctly as we saw during ZIRP. Tax advantaged too.
- solumos 2y agoSomething that I think is a bit misguided about this is that YC, at founding, was pretty unfashionable itself. The "accelerator" model wasn't particularly proven, and the thesis was that there was an untapped talent pool of "hackers" who just needed to figure out how to run a business and get connected to the right people/resources in order to be successful founders. Compared to other accelerator-type opportunities at the time (and some that still exist), YC was extremely founder friendly. YC 1.0 made good on that vision — the success rate in the early batches is indicative of that. Once PG stepped back and handed the reigns over to Sam Altman, YC focused more on scaling up, while the startup ecosystem grew significantly as well, specifically around "Web 2.0". At the time, it wasn't particularly difficult to create a venture-backable web business if you had the technical skills and the right resources to achieve distribution. Along the same lines, being a startup founder became a viable alternative to becoming a banker or management consultant for high-achieving individuals. So naturally YC, as a backer of hyper-successful startups that generally have an easier time fundraising, became a magnet for the status-seeking subset of high-achieving individuals, leading to it becoming more of a stamp of prestige. Since Sam Altman's tenure, it seems like a lot of the initial edge that YC had at founding is significantly diluted. There are a lot of aspiring founders seeking funding, but the Web 2.0 opportunity doesn't really exist anymore (at least not at the same scale). So today, YC looks much more like a large seed fund that funds more specialized businesses rather than the types of founders of the initial cohorts (i.e. hackers that want to build Web 2.0 businesses), and I think people are overly critical of that scale up. 2005 was a very specific point in time for the startup industry, and the YC thesis was not only well-timed, but extremely effective through ~2014 — but it's been difficult for them to figure out how to continue the momentum given changes in the ecosystem.
- jppope 2y agoWell said. Things change
- nostrademons 2y agoNote that when YCombinator first started in 2005 (the batch that Sam Altman was part of, as a college dropout), they were not prestigious. They largely funded college students that nobody else would invest in. But part of Paul Graham's philosophy for it is that "If you do anything well enough, you'll make it prestigious" [1]. Rather, I think that what's happened with YCombinator is that it's followed the growth arc common to all institutions. You start with somebody who has a good idea and a passion for making things better for some subset of humanity. That attracts other people in a virtuous cycle. But eventually you hit a growth limit and saturate your market. At that point, the focus of the people in charge turns to wealth extraction, leveraging your brand, reputation, and market position to make ever increasing profits. Eventually you squeeze everything there is out of your market, your product is shit, your employees don't care about you anymore, and you get replaced by a younger more beautiful que^H^H^Hstartup. I wouldn't bother applying to YC now - I don't feel like they give enough for the equity they take, their advice has become formulaic and well-known, and I'd rather go do what I love. But in 2005, when nobody was funding college students and the popular wisdom was that the Internet was a dead fad, they were revolutionary. [1] https://paulgraham.com/love.html https://paulgraham.com/love.html
- SandersAK 2y agoI love the posts about how YC was better back in the day. It was the same, it's the same. It's just bigger and there's more timeline now to reflect. If you think the partners (the core of which have been there since day 1) have really changed their outlook that much then you've not been paying attention. YC has always been a smorgasbord of status seekers, dreamers, ruthless pragmatists, creators and artists. It's a big community that keeps growing, the good parts and the bad parts. There were scandals then, there are scandals now. They pick some teams perfectly and others totally wrong. The most important thing is that they keep doing it every year and more people get access and a shot at doing their thing. FWIW I was YC W14 and yes it was totally better back then and we were all geniuses and pure lovers of startups only with no ego...
- tptacek 2y ago[flagged]
- mlsu 2y agoThis reminds me of something that appeared on hacker news a couple days ago: https://sohl-dickstein.github.io/2022/11/06/strong-Goodhart.html https://sohl-dickstein.github.io/2022/11/06/strong-Goodhart.... Basically, the proxy objective is "getting into YC" -- the real objective is producing value of course. We've started optimizing for the proxy. Which produces outcomes like this, where YC is a Thing You Do, after Graduating From Stanford, and before Becoming a YC Alum.
- dangitman 2y ago[dead]
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- phendrenad2 2y agoNitpick: > People don’t attend Harvard for the lectures, which are all on YouTube anyway This is very much NOT true. Only a few introductory lectures are on YouTube.
- phendrenad2 2y ago> they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything, I don't see it that way. This is NOT the first time YC has funded startups that are in direct competition. It seems to me that having multiple companies with the same product makes your net larger for customer acquisition, and the startups can always merge later.
- slashdave 2y agoNot to mention that the code base is probably the easiest part of a business like this.
- andrewstuart 2y agoMeh. Maybe a bit. Being a YC company is still prestigious. The vast majority of people familiar with the YC name don’t follow it close enough to know it’s volume of investments is higher.
- kshri24 2y agoAgree completely. That entire PeerAI BS put a really bad taste in my mouth w.r.t YC. It is fine to fund Companies that might create products with their own sweat/labor which might compete with their existing portfolio companies. That is healthy competition. But what happened here is not that! If I fork a popular repository on GitHub, say Plausible, change the name of the product and then apply to YC, you are telling me I have a non-zero chance of getting selected if I just come up with a better business plan than the Plausible team? WTAF? That is horrible! Where are the standards here? And no YC cannot hide behind the "You choose a wrong License" argument. That is legal BS and does not apply to TRUST built between Investors and Founders. This is serious credibility damage to YC. Disgusted.
- tim333 2y agoMeh. >The issue, however, is that they never truly grasped the factors behind their success, which is why YC's peak is already behind them—it’s likely all downhill from here. I haven't been to YC but I read Paul Graham and get the impression he has a pretty good idea of the factors behind their succcess and this guy who I think hasn't been and does not live in the US does not. YC wasn't pesitigious at the start but went out of the way to help startups and encourage them to 'build something people want' and I think that goes on.
- sub7 2y agoYC appears to be spending all it's time marketing itself on Twitter and pretty much all the partners, including the lead have companies that were acquihired i.e. failures Class size of 7 = quality, class size of 300 or whatever = noise filter But they again only need that 1 company to be the 1000x and return LP capital at a decent multiple. Any pool of their batch size is likely to produce that and allow them to self platitude after the fact.
- lauramarvin 2y ago[flagged]
- light_triad 2y agoFolks always bring up the increasing number of startups in YC which I don't think is a problem. YC is a people business. There were several key changes: - PG and Jessica 'retired' - they were the killer combo in terms of identifying talent in tech and culture. - YC became massively successful - when it started YC was prestigious because of the startups it funded, now the startups are prestigious because of YC. - Selection is much harder - tech & startups became mainstream unlike when the self-selection consisted of PG essay readers and niche programmers.
- 7e 2y agoI don't think this is the story. The story is that YC created a cult around a startup which convinced founders to give them equity in return for nothing. Now the good founders wised up to the sweatshop/meat market/factory that YC is, they get better terms from real VCs, or they self fund.
- rangav 2y agoYC used to select only top-tier startups, but now it seems more like a numbers game. As Brian Chesky mentioned, Silicon Valley has implicitly assumed that scaling a startup means shifting into 'manager mode.' It appears that YC is now operating in this 'manager mode.'