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What interest would we have in mischaracterizing it? Advantages to YC of multi-founder companies that have nothing to do with "growing really big": 1. Multi-f

What interest would we have in mischaracterizing it? Advantages to YC of multi-founder companies that have nothing to do with "growing really big": 1. Multi-founder companies shrink the available pool of founders. Assume the pool of available founders is fixed at any given point in time. By requiring start ups to have 2 or more founders, YC is able to capture a larger part of that pool, harming competitive incubators and increasing the likelihood that the founders they've been able to capture will produce for YC. 2. Split ownership is much easier for YC to manipulate favorably. By providing YC with two or more avenues to affect the actions of a company, the autonomy of a founder is reduced even below the numerical amount: a single founder in a company with two isn't just half as influential, it's probably more like 1/3. The extra influence is retained by YC, which can play the founders against each other. 3. To maintain this competitive advantage and influence, YC effectively forces successful single founder companies like Dropbox to dilute themselves and gain a founder. The entire process is now self-reinforcing, with YC actively manipulating the inputs while claiming the outputs are unbiased. (1) and (2) above demonstrate why YC has incentives to do this. Of course, pg is a good person and would never blah blah blah. I agree, he is a good person. That doesn't mean the above things are untrue though, even if YC is consciously telling themselves they don't matter, or even "don't want" these advantages. Humans are really good at deluding themselves, especially when they have something to gain.

rdl 14y ago
I don't think #1 is a goal of YC at all, nor does it particularly help YC. There are plenty of founders of businesses who will never consider YC (99% of small businesses, and many startups which don't want to move to the Bay Area, or which just don't know about YC). #2 is utterly incorrect; YC, like any other seed stage investor, basically doubles down (in time/effort, not money, I guess) on winners and puts minimal effort into failures. Pitting founders against each other is a pretty easy way to move businesses from "winners" to "losers", so it makes no sense whatsoever. The damage to a business from founder strife outweighs the returns from almost any decision (other than "should we sell", which YC or a seed investor has essentially no influence over, or maybe "continue vs. shut down". 3. YC has accepted enough single founder companies which remain single founder companies that they don't force anyone to do this. I fail to see how an investor taking a 2-10% common equity stake could force anything except disclosure, and I don't see how a relatively small investor like YC would be able to manage the administrative overhead or psychic cost of forcing startup founders to do anything.
macspoofing 14y ago
I think all your points are nonsensical, bordering on insane. "Shrink the available pool of founders"?? In country of 300 million, how in the world is that even possible for a relatively tiny incubator to do?? "Split ownership to manipulate the startup" - YC takes a 5-10% equity stake! "YC effectively forces successful single founder companies like Dropbox to dilute themselves and gain a founder" - HOW?!?!
- mgkimsal 14y ago
  ..."Shrink the available pool of founders"?? In country of 300 million, how in the world is that even possible for a relatively tiny incubator to do??... It's not a pool of 300 million that would be included. The number of people that are considering starting venture-backed companies that are "swinging for the fences" by trying to build a 9-figure company is much much smaller than 300 million.
  - macspoofing 14y ago
    OBVIOUSLY 300 million are not doing start-ups. But it is a country of 300 million and the biggest economy of the world. I cannot imagine that a little incubator that signs 100 start-ups a year can possibly "shrink the pool of founders" in any meaningful way. Give me a break. It's idiotic to claim that.
rpm4321 14y ago
Someone please correct me if I'm wrong, but I believe YC's shares are non-voting, and I know that they don't insist on a board seat, which makes the machiavellian scenarios above even more far fetched.
deleted 14y ago
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chernevik 14y ago
!1 Seems very unlikely YC could have a meaningful impact on the supply of able entrepreneurs. !2. YC tries to create splits in management opinion that it can then exploit -- I guess this is the Sonny Corleone theory? Given the importance of focus to success, don't these splits deteriorate performance more than they enhance the position of master manipulator Graham? Whose interests diverge from the founders' how exactly? !3 really NULL 3 bc this is just a repetition. This reads like you've made up your mind and gone looking for a reason. And no, I'm not a pg fan and haven't a prayer in hell of ever making YC. There is no questioning the man has something to say about what works for start-ups.
dennisgorelik 14y ago
#1 is irrelevant or even slightly negative from YC perspective, because mostly it reduces pool of companies and founders available to YC itself. #2 is a good observation though: Because multiple founders could be potentially split - it makes it less risky for VC to invest. Therefore it's easier to get VC funding for multi-founder startup. Which is a competitive advantage over single-founder startups. From YC perspective making access to VC capital easier (by going multi-founder) is even more important, because "deals with VCs" is one of the core services that YC provides to startups.

rdl 14y ago

I don't think #1 is a goal of YC at all, nor does it particularly help YC. There are plenty of founders of businesses who will never consider YC (99% of small businesses, and many startups which don't want to move to the Bay Area, or which just don't know about YC). #2 is utterly incorrect; YC, like any other seed stage investor, basically doubles down (in time/effort, not money, I guess) on winners and puts minimal effort into failures. Pitting founders against each other is a pretty easy way to move businesses from "winners" to "losers", so it makes no sense whatsoever. The damage to a business from founder strife outweighs the returns from almost any decision (other than "should we sell", which YC or a seed investor has essentially no influence over, or maybe "continue vs. shut down". 3. YC has accepted enough single founder companies which remain single founder companies that they don't force anyone to do this. I fail to see how an investor taking a 2-10% common equity stake could force anything except disclosure, and I don't see how a relatively small investor like YC would be able to manage the administrative overhead or psychic cost of forcing startup founders to do anything.

macspoofing 14y ago

I think all your points are nonsensical, bordering on insane. "Shrink the available pool of founders"?? In country of 300 million, how in the world is that even possible for a relatively tiny incubator to do?? "Split ownership to manipulate the startup" - YC takes a 5-10% equity stake! "YC effectively forces successful single founder companies like Dropbox to dilute themselves and gain a founder" - HOW?!?!

mgkimsal 14y ago
..."Shrink the available pool of founders"?? In country of 300 million, how in the world is that even possible for a relatively tiny incubator to do??... It's not a pool of 300 million that would be included. The number of people that are considering starting venture-backed companies that are "swinging for the fences" by trying to build a 9-figure company is much much smaller than 300 million.
- macspoofing 14y ago
  OBVIOUSLY 300 million are not doing start-ups. But it is a country of 300 million and the biggest economy of the world. I cannot imagine that a little incubator that signs 100 start-ups a year can possibly "shrink the pool of founders" in any meaningful way. Give me a break. It's idiotic to claim that.

rpm4321 14y ago

Someone please correct me if I'm wrong, but I believe YC's shares are non-voting, and I know that they don't insist on a board seat, which makes the machiavellian scenarios above even more far fetched.

deleted 14y ago

[deleted]

chernevik 14y ago

!1 Seems very unlikely YC could have a meaningful impact on the supply of able entrepreneurs. !2. YC tries to create splits in management opinion that it can then exploit -- I guess this is the Sonny Corleone theory? Given the importance of focus to success, don't these splits deteriorate performance more than they enhance the position of master manipulator Graham? Whose interests diverge from the founders' how exactly? !3 really NULL 3 bc this is just a repetition. This reads like you've made up your mind and gone looking for a reason. And no, I'm not a pg fan and haven't a prayer in hell of ever making YC. There is no questioning the man has something to say about what works for start-ups.

dennisgorelik 14y ago

#1 is irrelevant or even slightly negative from YC perspective, because mostly it reduces pool of companies and founders available to YC itself. #2 is a good observation though: Because multiple founders could be potentially split - it makes it less risky for VC to invest. Therefore it's easier to get VC funding for multi-founder startup. Which is a competitive advantage over single-founder startups. From YC perspective making access to VC capital easier (by going multi-founder) is even more important, because "deals with VCs" is one of the core services that YC provides to startups.