5 ms·

This says too little of substance. What errors were made in YCs assessment, which will be corrected? What is the path forward?

by zwaps 2y ago

tptacek 2y ago
People have weird ideas about what YC is and does. People apply to YC: you can go look at the application. They get gajillions of them. They downselect applications to interviews. The interviews are brief. They downselect interviews to offers to join a cohort. Every company in the cohort gets a group partner that they do regular "office hours" meetups with. There are internal events and talks and stuff. There's a standard investment, and demo day. That's it. YC doesn't operate YC companies. They're investors. They aren't your boss. They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence. These are things that happen, to an extent, in priced rounds that happpen after your seed round (A-round technical due diligence is also a joke, but whatever, stipulate). The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year. Tan is apparently apologizing because he spoke up on behalf of a batch company, or repeated some misinformation TechCrunch published. But it is very weird to ask them how their selection process would change to account for this happening.
- FridgeSeal 2y ago
  “Don’t blame them, they just haphazardly throw money at projects without vetting them properly” Well uuhhh, maybe they shouldn’t? Would a bare minimum of due diligence not be ok lol?
  - tempusalaria 2y ago
    YC cannot do a ton of due diligence. Their strategy is to back many companies with small amounts of money, basically in the hope that a few companies in the batch end up as unicorns. This means they want to select founders capable of getting those outcomes, which will also select many liars/psychopaths due to the need for variance/risk taking behaviors in these founders. Now is there a problem where YC and many other VCs basically advise founders to commit fraud and lie to customers/stakeholders? Yes but that has nothing to do with YC admissions strategy. I’ve seen many VCs (including YC) advocate for lying and unethical behavior by their founders. It’s a big problem in the startup industry, and often the biggest brunt of this is taken by unsuspecting employees. One reason I would never advise someone to join a startup is the massive prevalence of unethical and dishonest founders.
    - tptacek 2y ago
      I have not (W20) seen any instances of YC advising companies to commit fraud.
- deleted 2y ago
  [deleted]
- minimaxir 2y ago
  The "that's it" is the problem here. The lack of due diligence on YC's part caused a PR disaster and ideally that's something they would want to avoid.
  - portaouflop 2y ago
    PR disaster is a bit of an exaggeration, outside of a fraction of HN no one cares or has noticed.
    - Foobar8568 2y ago
      True, dream world has been already forgotten.
    - ahoka 2y ago
      HN’s reason to exist is to give good PR for YC.
  - FreakLegion 2y ago
    YC's way of operating is globally optimal. The cost (in money and time) of adequately vetting every company they've ever invested in would dwarf the cost of this little brouhaha. Even in later rounds due diligence skews non-technical. E.g. for Series A it mostly takes the form of "What licenses do your OSS dependencies use?", and (for B2B SaaS) "We want to talk to a half-dozen of your customers, preferably of different sizes and from different industries, and ideally one that's renewed".
- imiric 2y ago
  > YC doesn't operate YC companies. They're investors. YC also offers mentoring and coaching services, which goes beyond what a traditional investment firm does. That's part of their appeal, anyway. > They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence. Maybe they should? If their job is to find talented, and hopefully also ethical and honest, people, then doing a basic check like ensuring that the project they're being pitched was actually authored by the candidates should be part of the vetting process. If, OTOH, their job is to bet on anyone who's likely to give them the highest ROI, regardless of their personal values, then they don't need to do any of this, and cases like PearAI should be acceptable. But that's not what YC claims to be about. > The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year. Maybe that's part of the problem then. When you're trying to fund and mentor hundreds of companies in a few months, it's impractical to think you'll be able to successfully screen all of them. But the startups must grow...
  - tptacek 2y ago
    Having seen/participated in it firsthand several times, I don't believe priced, institutional A-round technical due diligence would have turned any of this up. It is not realistic to think YC would have.
    - bambax 2y ago
      The problem is not with tech due diligence. YC can never say enough that they invest in people, that only the people matter, etc. "Founders, Founders, Founders" is YC's answer to Balmer's "Developers, Developers, Developers". That they decided to fund bros that simply copy-and-paste others' code (!) and are happy to declare publicly that they "chatgpt'd the licence" (!!) and "can't be bothered with legal" (!!!) is... alarming?
      - tptacek 2y ago
        The things you're talking about appear to have happened (or surfaced) after YC accepted them into the Fall cohort.

This says too little of substance. What errors were made in YCs assessment, which will be corrected? What is the path forward?

by zwaps 2y ago

This says too little of substance. What errors were made in YCs assessment, which will be corrected? What is the path forward?

tptacek 2y ago

People have weird ideas about what YC is and does. People apply to YC: you can go look at the application. They get gajillions of them. They downselect applications to interviews. The interviews are brief. They downselect interviews to offers to join a cohort. Every company in the cohort gets a group partner that they do regular "office hours" meetups with. There are internal events and talks and stuff. There's a standard investment, and demo day. That's it. YC doesn't operate YC companies. They're investors. They aren't your boss. They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence. These are things that happen, to an extent, in priced rounds that happpen after your seed round (A-round technical due diligence is also a joke, but whatever, stipulate). The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year. Tan is apparently apologizing because he spoke up on behalf of a batch company, or repeated some misinformation TechCrunch published. But it is very weird to ask them how their selection process would change to account for this happening.

FridgeSeal 2y ago
“Don’t blame them, they just haphazardly throw money at projects without vetting them properly” Well uuhhh, maybe they shouldn’t? Would a bare minimum of due diligence not be ok lol?
- tempusalaria 2y ago
  YC cannot do a ton of due diligence. Their strategy is to back many companies with small amounts of money, basically in the hope that a few companies in the batch end up as unicorns. This means they want to select founders capable of getting those outcomes, which will also select many liars/psychopaths due to the need for variance/risk taking behaviors in these founders. Now is there a problem where YC and many other VCs basically advise founders to commit fraud and lie to customers/stakeholders? Yes but that has nothing to do with YC admissions strategy. I’ve seen many VCs (including YC) advocate for lying and unethical behavior by their founders. It’s a big problem in the startup industry, and often the biggest brunt of this is taken by unsuspecting employees. One reason I would never advise someone to join a startup is the massive prevalence of unethical and dishonest founders.
  - tptacek 2y ago
    I have not (W20) seen any instances of YC advising companies to commit fraud.
deleted 2y ago
[deleted]
minimaxir 2y ago
The "that's it" is the problem here. The lack of due diligence on YC's part caused a PR disaster and ideally that's something they would want to avoid.
- portaouflop 2y ago
  PR disaster is a bit of an exaggeration, outside of a fraction of HN no one cares or has noticed.
  - Foobar8568 2y ago
    True, dream world has been already forgotten.
  - ahoka 2y ago
    HN’s reason to exist is to give good PR for YC.
- FreakLegion 2y ago
  YC's way of operating is globally optimal. The cost (in money and time) of adequately vetting every company they've ever invested in would dwarf the cost of this little brouhaha. Even in later rounds due diligence skews non-technical. E.g. for Series A it mostly takes the form of "What licenses do your OSS dependencies use?", and (for B2B SaaS) "We want to talk to a half-dozen of your customers, preferably of different sizes and from different industries, and ideally one that's renewed".
imiric 2y ago
> YC doesn't operate YC companies. They're investors. YC also offers mentoring and coaching services, which goes beyond what a traditional investment firm does. That's part of their appeal, anyway. > They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence. Maybe they should? If their job is to find talented, and hopefully also ethical and honest, people, then doing a basic check like ensuring that the project they're being pitched was actually authored by the candidates should be part of the vetting process. If, OTOH, their job is to bet on anyone who's likely to give them the highest ROI, regardless of their personal values, then they don't need to do any of this, and cases like PearAI should be acceptable. But that's not what YC claims to be about. > The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year. Maybe that's part of the problem then. When you're trying to fund and mentor hundreds of companies in a few months, it's impractical to think you'll be able to successfully screen all of them. But the startups must grow...
- tptacek 2y ago
  Having seen/participated in it firsthand several times, I don't believe priced, institutional A-round technical due diligence would have turned any of this up. It is not realistic to think YC would have.
  - bambax 2y ago
    The problem is not with tech due diligence. YC can never say enough that they invest in people, that only the people matter, etc. "Founders, Founders, Founders" is YC's answer to Balmer's "Developers, Developers, Developers". That they decided to fund bros that simply copy-and-paste others' code (!) and are happy to declare publicly that they "chatgpt'd the licence" (!!) and "can't be bothered with legal" (!!!) is... alarming?
    - tptacek 2y ago
      The things you're talking about appear to have happened (or surfaced) after YC accepted them into the Fall cohort.