5 ms·

IMHO 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 l

by paulgb 2y ago

IMHO 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 ago
What would YC 2.0 look like? How would you build it?
- cheschire 2y ago
  YC 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 ago
    Great 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 ago
      AFAICT, 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.
  - fallinditch 2y ago
    It's interesting to consider what the evolution YC 2.0 could be. I do think we're going to be seeing more innovative organizational models that can be facilitated by adept use of AI. For example, a network organization that hires individuals and small teams. The organization works on various projects and product streams, which which can be spun out as new businesses. This is a flexible model that allows for many different outcomes and journeys for the people. Less of a startup factory and more of an enterprise garden. I like the idea of gateways as a system for managing ideas and new business developments. Regular gateways every 6 or 12 months that assess projects for continuation, funding and further development. People can be involved in several projects. I see this type of organization structure as a kind of 'hyper network'. By using AI to monitor and report on network activity it should be possible to have effective management oversight, direction and communication ... beneficent controlled creative chaos.
- candiddevmike 2y ago
  For founders? I'd buy into the network and mentorship maybe, but not with equity. Maybe a subscription or cohort based fee schedule.
  - deleted 2y ago
    [deleted]
  - jasfi 2y ago
    So like accelerators before YC? No thanks.
- ganeshkrishnan 2y ago
  completely data driven and pseudonymous. Everyone enters what they are building, traction, progress so far, team etc and internal team votes based on the data progress without looking at founder profile. make it fair instead of funding the same golden-spoon cliquey gang over and over again.
PyWoody 2y ago
I think you mean PearAI[0], not to be confused with Pair AI[1], which YC also funded. [0] https://www.ycombinator.com/companies/pearai https://www.ycombinator.com/companies/pearai [1] https://www.ycombinator.com/companies/pair-ai https://www.ycombinator.com/companies/pair-ai
- paulgb 2y ago
  oops, thanks, fixed.
hobofan 2y ago
> You don't want to attract founders who figure YC is a low-risk alternative to grad school Of course YC would want that (in the short- to mid-term). The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that. The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.
- paulgb 2y ago
  YC doesn’t benefit from founders who are just looking to pad their resume because they don’t follow through to a liquidity event for YC.
  - candiddevmike 2y ago
    How do you tell the difference? Especially when so many YCs seem almost like comical vaporware or shovelware but with a charismatic CEO.
    - MOARDONGZPLZ 2y ago
      Very true. Saw one recently that literally forked VSCode and Cursor and called it a company with some really shady practices. Not even sure what YC was thinking with that one, but it indeed falls into the category of comical vaporware. How did something like this get funded? They must think there will be a follow through to liquidity event, but no clue how. Maybe YC is playing into the bigger fool theory that someone else will come along and pay more so YC can extricate their equity.
      - ndiddy 2y ago
        That’s the company that the blog post points to as an example.
amirhirsch 2y ago
YC benefits strongly from network effects; the value for each founder grows superlinearly with more founders. Grow faster!
- edouard-harris 2y ago
  That's true but there's also a countervailing dilution effect. Hard to know exactly where those two lines intersect.
- closeparen 2y ago
  A very straightforward way that this manifests: when a VC funds a developer tooling company, all their other portfolio companies are strongly encouraged to use it. Built in customers! The test is how much revenue you can actually bring in from outside the VC bubble.
a1371 2y ago
For the uninitiated like myself, PearAi just took the source code of continue.dev (not fork, they copy pasted) and did some clunky work on it. That was their entry to YC.
- neom 2y ago
  And to save anyone else looking it up, seems to be continue.dev is using Apache License in their repos. (also, I did some poking around, this is the founder 3 months ago talking about using continue https://www.youtube.com/watch?v=X0OylwLzBQw&t=257s https://www.youtube.com/watch?v=X0OylwLzBQw&t=257s - no horse in this race, just sharing)
- pj_mukh 2y ago
  "did some clunky work on it. That was their entry to YC" For more context, YC doesn't judge your code, never has. It was never a code quality competition. Orthogonally, they do judge the results (user metrics).
  - FactKnower69 2y ago
    >For more context, YC doesn't judge your code, never has. It was never a code quality competition. it shows
    - pj_mukh 2y ago
      Yea it does! [1]. [1]: https://jaredheyman.medium.com/on-the-176-annual-return-of-a-yc-startup-index-cf4ba8ebef19 https://jaredheyman.medium.com/on-the-176-annual-return-of-a...
  - moomin 2y ago
    Yeah, but they used to care about your moat and “Did some easily replicable work on a product anyone can duplicate.” ain’t it.
    - pj_mukh 2y ago
      Did they? YC regularly funded competitors. This was always true. Fundamentally, YC is betting on founders. They're optimizing for founders who can move fast enough to find a moat before they die, that's it. They fund competitors because most YC companies usually pivot out anyway.
cal85 2y ago
Just looked up the etymology of prestige and it’s interesting. It comes from Latin praestigium ("delusion, illusion"), then 1500s French prestige meaning “deceit, imposture, illusion”. In the 1800s it started to mean “an illusion as to one's personal merit or importance, a flattering illusion”. I would have wrongly guessed it originally meant “good reputation” (same as the article author meant it, I assume) and that the association with bullshit/fakery is just a modern twist from people using the word with cynical irony. But bullshit/fakery was in fact the core meaning.
- fuzzfactor 2y ago
  That is enlightening. Without being aware of the etymology I've still had a lifetime feeling since childhood that it is very fragile for some reason that is hard to pinpoint or bring into focus very easily. Really is about the same feeling as when you know something is hype or BS and for that reason more subject to collapse like a house of cards.
- satvikpendem 2y ago
  Hence the name of Nolan's movie.
  - reyqn 2y ago
    And the word prestidigitation
fallingknife 2y ago
The "something" that they see is that they have a 1% chance of success. YC is an investment strategy. They noticed that equity which is 99% sure to be worthless is heavily under priced and bought a ton of it. That bet paid off handsomely. If your batchmates are seeing embarrassment from who else is at the top of such a funnel I don't think much of their judgment. Investors provide capital, not prestige.
closeparen 2y ago
YC pretty openly and deliberately tries to convince prospective and actual Big Tech employees who are curious or on the fence to quit and do a startup already. There's a great Startup School video about this [0]. I think the critics are right about "doing a startup" and chasing an exit having become an equally normal, precedented, socially-supported path as joining a big company and chasing promotions. But I'd be surprised if YC itself would characterize that as failure. [0] https://www.youtube.com/watch?v=sM2reZib2RY https://www.youtube.com/watch?v=sM2reZib2RY
- Apocryphon 2y ago
  HN is a lot more jaded towards startups and founders’ games these days. Back in late 2019 there was this thread about a pre-YC Garry Tan video where the tone of the discussion was fiercely against working for startups, saying it was better to join FAANG or start your own company instead: https://news.ycombinator.com/item?id=21865065 https://news.ycombinator.com/item?id=21865065
shekispeaks 2y ago
We can keep going down here, the problem with society can also be that prestige in itself is valuable. Instead of say prestige being the side effect of being good at something useful for the society.

by paulgb 2y ago

toomuchtodo 2y ago

What would YC 2.0 look like? How would you build it?

cheschire 2y ago
YC 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 ago
  Great 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 ago
    AFAICT, 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.
- fallinditch 2y ago
  It's interesting to consider what the evolution YC 2.0 could be. I do think we're going to be seeing more innovative organizational models that can be facilitated by adept use of AI. For example, a network organization that hires individuals and small teams. The organization works on various projects and product streams, which which can be spun out as new businesses. This is a flexible model that allows for many different outcomes and journeys for the people. Less of a startup factory and more of an enterprise garden. I like the idea of gateways as a system for managing ideas and new business developments. Regular gateways every 6 or 12 months that assess projects for continuation, funding and further development. People can be involved in several projects. I see this type of organization structure as a kind of 'hyper network'. By using AI to monitor and report on network activity it should be possible to have effective management oversight, direction and communication ... beneficent controlled creative chaos.
candiddevmike 2y ago
For founders? I'd buy into the network and mentorship maybe, but not with equity. Maybe a subscription or cohort based fee schedule.
- deleted 2y ago
  [deleted]
- jasfi 2y ago
  So like accelerators before YC? No thanks.
ganeshkrishnan 2y ago
completely data driven and pseudonymous. Everyone enters what they are building, traction, progress so far, team etc and internal team votes based on the data progress without looking at founder profile. make it fair instead of funding the same golden-spoon cliquey gang over and over again.

PyWoody 2y ago

I think you mean PearAI[0], not to be confused with Pair AI[1], which YC also funded. [0] https://www.ycombinator.com/companies/pearai https://www.ycombinator.com/companies/pearai [1] https://www.ycombinator.com/companies/pair-ai https://www.ycombinator.com/companies/pair-ai

paulgb 2y ago
oops, thanks, fixed.

hobofan 2y ago

> You don't want to attract founders who figure YC is a low-risk alternative to grad school Of course YC would want that (in the short- to mid-term). The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that. The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.

paulgb 2y ago
YC doesn’t benefit from founders who are just looking to pad their resume because they don’t follow through to a liquidity event for YC.
- candiddevmike 2y ago
  How do you tell the difference? Especially when so many YCs seem almost like comical vaporware or shovelware but with a charismatic CEO.
  - MOARDONGZPLZ 2y ago
    Very true. Saw one recently that literally forked VSCode and Cursor and called it a company with some really shady practices. Not even sure what YC was thinking with that one, but it indeed falls into the category of comical vaporware. How did something like this get funded? They must think there will be a follow through to liquidity event, but no clue how. Maybe YC is playing into the bigger fool theory that someone else will come along and pay more so YC can extricate their equity.
    - ndiddy 2y ago
      That’s the company that the blog post points to as an example.

amirhirsch 2y ago

YC benefits strongly from network effects; the value for each founder grows superlinearly with more founders. Grow faster!

edouard-harris 2y ago
That's true but there's also a countervailing dilution effect. Hard to know exactly where those two lines intersect.
closeparen 2y ago
A very straightforward way that this manifests: when a VC funds a developer tooling company, all their other portfolio companies are strongly encouraged to use it. Built in customers! The test is how much revenue you can actually bring in from outside the VC bubble.

a1371 2y ago

For the uninitiated like myself, PearAi just took the source code of continue.dev (not fork, they copy pasted) and did some clunky work on it. That was their entry to YC.

neom 2y ago
And to save anyone else looking it up, seems to be continue.dev is using Apache License in their repos. (also, I did some poking around, this is the founder 3 months ago talking about using continue https://www.youtube.com/watch?v=X0OylwLzBQw&t=257s https://www.youtube.com/watch?v=X0OylwLzBQw&t=257s - no horse in this race, just sharing)
pj_mukh 2y ago
"did some clunky work on it. That was their entry to YC" For more context, YC doesn't judge your code, never has. It was never a code quality competition. Orthogonally, they do judge the results (user metrics).
- FactKnower69 2y ago
  >For more context, YC doesn't judge your code, never has. It was never a code quality competition. it shows
  - pj_mukh 2y ago
    Yea it does! [1]. [1]: https://jaredheyman.medium.com/on-the-176-annual-return-of-a-yc-startup-index-cf4ba8ebef19 https://jaredheyman.medium.com/on-the-176-annual-return-of-a...
- moomin 2y ago
  Yeah, but they used to care about your moat and “Did some easily replicable work on a product anyone can duplicate.” ain’t it.
  - pj_mukh 2y ago
    Did they? YC regularly funded competitors. This was always true. Fundamentally, YC is betting on founders. They're optimizing for founders who can move fast enough to find a moat before they die, that's it. They fund competitors because most YC companies usually pivot out anyway.

cal85 2y ago

Just looked up the etymology of prestige and it’s interesting. It comes from Latin praestigium ("delusion, illusion"), then 1500s French prestige meaning “deceit, imposture, illusion”. In the 1800s it started to mean “an illusion as to one's personal merit or importance, a flattering illusion”. I would have wrongly guessed it originally meant “good reputation” (same as the article author meant it, I assume) and that the association with bullshit/fakery is just a modern twist from people using the word with cynical irony. But bullshit/fakery was in fact the core meaning.

fuzzfactor 2y ago
That is enlightening. Without being aware of the etymology I've still had a lifetime feeling since childhood that it is very fragile for some reason that is hard to pinpoint or bring into focus very easily. Really is about the same feeling as when you know something is hype or BS and for that reason more subject to collapse like a house of cards.
satvikpendem 2y ago
Hence the name of Nolan's movie.
- reyqn 2y ago
  And the word prestidigitation

fallingknife 2y ago

The "something" that they see is that they have a 1% chance of success. YC is an investment strategy. They noticed that equity which is 99% sure to be worthless is heavily under priced and bought a ton of it. That bet paid off handsomely. If your batchmates are seeing embarrassment from who else is at the top of such a funnel I don't think much of their judgment. Investors provide capital, not prestige.

closeparen 2y ago

YC pretty openly and deliberately tries to convince prospective and actual Big Tech employees who are curious or on the fence to quit and do a startup already. There's a great Startup School video about this [0]. I think the critics are right about "doing a startup" and chasing an exit having become an equally normal, precedented, socially-supported path as joining a big company and chasing promotions. But I'd be surprised if YC itself would characterize that as failure. [0] https://www.youtube.com/watch?v=sM2reZib2RY https://www.youtube.com/watch?v=sM2reZib2RY

Apocryphon 2y ago
HN is a lot more jaded towards startups and founders’ games these days. Back in late 2019 there was this thread about a pre-YC Garry Tan video where the tone of the discussion was fiercely against working for startups, saying it was better to join FAANG or start your own company instead: https://news.ycombinator.com/item?id=21865065 https://news.ycombinator.com/item?id=21865065

shekispeaks 2y ago

We can keep going down here, the problem with society can also be that prestige in itself is valuable. Instead of say prestige being the side effect of being good at something useful for the society.