4 ms·

(More Explicit) Advice to Summer Applicants

83 points by pg 18y ago

The exploding termsheets http://ycombinator.com/exploding.html have started to arrive. I just talked to a group who got one, and they hadn't realized we were willing to interview groups early when this happened. So I should be more explicit: If you get an exploding offer, send us an email, and if we were going to interview you, we'll do it early.

timr 18y ago
Investors must smell blood in the water to be trying this nonsense. Do you think they'd be doing this in a better economy?
- unalone 18y ago
  This isn't the first year they're doing it, so... yes?
- pg 18y ago
  I don't think it has much to do with the economy. The desperation comes from the fact that the seed funding business is national. I explained the dynamics here: http://news.ycombinator.com/item?id=528924 http://news.ycombinator.com/item?id=528924
- pxlpshr 18y ago
  I hope this is not TechStars because I really like their operation as a viable alternative to ycom from what I've seen and read. Exploding term sheets seems pretty short-sighted, and not something anyone should do if they are embodying the motto of "helping young entrepreneurs". If a "mentor" is going to use force tactics, they've lost my respect and I certainly have no interest in giving them 5pts for a lousy 20k. Rather just sell my car and bike all summer than deal with that type of investor. I think this applies to most people (at least for me), ycom is a #1 choice for two reasons: 1) Huge respect for PG for his knowledge generosity and true leadership qualities 2) ycom's presence and relationships in the media. So my personal note to yclones: figure out YOUR value add so people want to come to you. Force is not the answer, it's shows weakness in your operation.
  - deleted 18y ago
    [deleted]
medianama 18y ago
Why don't you move the dates up for everybody?
- pg 18y ago
  Mainly because we're not finished yet reading all the applications. When someone gets an exploding termsheet, we can all read their application immediately, but we can't do that for everyone. Also, Robert flies in for the real interviews. When we interview people early, we have to do it without him.
  - unalone 18y ago
    He's located in Boston?
    - pg 18y ago
      Yes; he's a professor at MIT.
      - unalone 18y ago
        Gotcha. Also, purely curious question: when you're looking through applications, is there a bar of "this is how many people we'll interview"? Or do you set a bar for quality-of-app, then take as many people as place above that bar?
        pg 18y ago
        There's a numeric bar for how many people we'll interview, based on how many groups we can physically talk to in 3 days. We usually interview 50 to 60 groups; it's hard to talk to more than 20 per day. At interviews, though, we care more about quality than numbers. We wouldn't reject a good group because we were over some number.
        prakash 18y ago
        Are there any stats on if more people get accepted on Day 1 or Day 2 or Day 3, in the mornings, afternoon's or in the evenings? For startups that were accepted, if the startups that interviewed prior and/or after were accepted?
prakash 18y ago
Wouldn't it help applicants in the future, if the current round of folks that applied to multiple programs to list: 1. The last day to accept for a particular program 2. The ones that offer exploding termsheets
- abossy 18y ago
  2. Is this generally known in advance? I'm under the impression that exploding termsheets appear on a company-to-company basis.
  - prakash 18y ago
    The idea is to figure out the list of firms that provide exploding termsheets.
mindslight 18y ago
> (YC asks people to decide that day whether or not to accept an offer from us, but we do this because at that point they already know all they need to, not to pre-empt other offers. There is no other seed firm that decides after us.) How is this behavior any different? Offering last is a unique position which allows a group to already know the other options. It's not surprising that other firms also want decisions ASAP - they certainly don't want to be floating long term offers that function as backup plans for the best groups. If YC wants seed funding to be synchronous like college admissions, then it should make its own process conducive - give time to accept an offer during which groups can interview elsewhere.
- joshu 18y ago
  Because the terms and dates are known before people apply.
  - mindslight 18y ago
    Do the other seed funding firms say that they'll float you an offer while you're awaiting YC's decision? PS- I realize that with YC being the "gold standard" of seed funding, other firms will always want to get earlier commitment. But moralizing about adding stress makes little sense when other firms currently have no way to actually cooperate.
    - pg 18y ago
      Of course they have a way to cooperate. All they have to do is make their offers expire later.
      - mindslight 18y ago
        And interview later unless they want to make long-standing offers. Perhaps making YC have an explicitly longer acceptance period would encourage the reputable funds to interview concurrently, causing the games played by the disreputable ones to become more transparent?
    - 18y ago
joshu 18y ago
Exploding termsheets are beyond rude. They're aimed at minimizing your ability to negotiate. They prevent you from forcing several funding groups to arrive at the table at the same time and cause more pricing competition. I recommend you consider that signing a term sheet is like entering into a relationship. Do you want a relationship with someone that's behaving badly beforehand? They're already on their best behavior.
- webwright 18y ago
  Agreed-- EXCEPT in certain cases where there are only N slots to fill (like TechStars and some others). Techstars, for example has 10 slots (I think). If they have 300 applicants and 10 slots, how do you think it'd work if they said, "take your time, let us know whenever". If they accept you, they aren't accepting the next startup on their list... And basically, they can't send accept/reject notices to folks until they fill all of their slots. Or am I missing something? If a YC competitor has a fixed number of slots, is there a way they could NOT have an exploding term sheet (other than not have a fixed number of slots)?
  - pg 18y ago
    If you have a fixed number of slots you have to have a deadline. The problem is when the deadline occurs. If the firm in question made their first round of offers expire in 20 days instead of 2, it would be a moot point.
    - webwright 18y ago
      Ah, that makes sense and seems startup friendly. i.e. they offer first round of 10 companies and give 'em 20 days. 8 accept. They then work there way down an alternate list. They could even have 2 types of acceptance. i.e. 10 offers and 20 alternates (so the rejected companies could get on with their lives). They could tell the alternates: "You didn't make the top 10, but you were really close. It's possible a slot could open up within 30 days. If it does, we might call you." If it's TechStars, they purportedly have their deadline set based on academic calendar. You oughta try hopping in front of them to test that assertion. :-)

83 points by pg 18y ago

timr 18y ago

Investors must smell blood in the water to be trying this nonsense. Do you think they'd be doing this in a better economy?

unalone 18y ago
This isn't the first year they're doing it, so... yes?
pg 18y ago
I don't think it has much to do with the economy. The desperation comes from the fact that the seed funding business is national. I explained the dynamics here: http://news.ycombinator.com/item?id=528924 http://news.ycombinator.com/item?id=528924
pxlpshr 18y ago
I hope this is not TechStars because I really like their operation as a viable alternative to ycom from what I've seen and read. Exploding term sheets seems pretty short-sighted, and not something anyone should do if they are embodying the motto of "helping young entrepreneurs". If a "mentor" is going to use force tactics, they've lost my respect and I certainly have no interest in giving them 5pts for a lousy 20k. Rather just sell my car and bike all summer than deal with that type of investor. I think this applies to most people (at least for me), ycom is a #1 choice for two reasons: 1) Huge respect for PG for his knowledge generosity and true leadership qualities 2) ycom's presence and relationships in the media. So my personal note to yclones: figure out YOUR value add so people want to come to you. Force is not the answer, it's shows weakness in your operation.
- deleted 18y ago
  [deleted]

medianama 18y ago

Why don't you move the dates up for everybody?

pg 18y ago
Mainly because we're not finished yet reading all the applications. When someone gets an exploding termsheet, we can all read their application immediately, but we can't do that for everyone. Also, Robert flies in for the real interviews. When we interview people early, we have to do it without him.
- unalone 18y ago
  He's located in Boston?
  - pg 18y ago
    Yes; he's a professor at MIT.
    - unalone 18y ago
      Gotcha. Also, purely curious question: when you're looking through applications, is there a bar of "this is how many people we'll interview"? Or do you set a bar for quality-of-app, then take as many people as place above that bar?
      - pg 18y ago
        There's a numeric bar for how many people we'll interview, based on how many groups we can physically talk to in 3 days. We usually interview 50 to 60 groups; it's hard to talk to more than 20 per day. At interviews, though, we care more about quality than numbers. We wouldn't reject a good group because we were over some number.
        prakash 18y ago
        Are there any stats on if more people get accepted on Day 1 or Day 2 or Day 3, in the mornings, afternoon's or in the evenings? For startups that were accepted, if the startups that interviewed prior and/or after were accepted?

prakash 18y ago

Wouldn't it help applicants in the future, if the current round of folks that applied to multiple programs to list: 1. The last day to accept for a particular program 2. The ones that offer exploding termsheets

abossy 18y ago
2. Is this generally known in advance? I'm under the impression that exploding termsheets appear on a company-to-company basis.
- prakash 18y ago
  The idea is to figure out the list of firms that provide exploding termsheets.

mindslight 18y ago

> (YC asks people to decide that day whether or not to accept an offer from us, but we do this because at that point they already know all they need to, not to pre-empt other offers. There is no other seed firm that decides after us.) How is this behavior any different? Offering last is a unique position which allows a group to already know the other options. It's not surprising that other firms also want decisions ASAP - they certainly don't want to be floating long term offers that function as backup plans for the best groups. If YC wants seed funding to be synchronous like college admissions, then it should make its own process conducive - give time to accept an offer during which groups can interview elsewhere.

joshu 18y ago
Because the terms and dates are known before people apply.
- mindslight 18y ago
  Do the other seed funding firms say that they'll float you an offer while you're awaiting YC's decision? PS- I realize that with YC being the "gold standard" of seed funding, other firms will always want to get earlier commitment. But moralizing about adding stress makes little sense when other firms currently have no way to actually cooperate.
  - pg 18y ago
    Of course they have a way to cooperate. All they have to do is make their offers expire later.
    - mindslight 18y ago
      And interview later unless they want to make long-standing offers. Perhaps making YC have an explicitly longer acceptance period would encourage the reputable funds to interview concurrently, causing the games played by the disreputable ones to become more transparent?
  - 18y ago

joshu 18y ago

Exploding termsheets are beyond rude. They're aimed at minimizing your ability to negotiate. They prevent you from forcing several funding groups to arrive at the table at the same time and cause more pricing competition. I recommend you consider that signing a term sheet is like entering into a relationship. Do you want a relationship with someone that's behaving badly beforehand? They're already on their best behavior.

webwright 18y ago
Agreed-- EXCEPT in certain cases where there are only N slots to fill (like TechStars and some others). Techstars, for example has 10 slots (I think). If they have 300 applicants and 10 slots, how do you think it'd work if they said, "take your time, let us know whenever". If they accept you, they aren't accepting the next startup on their list... And basically, they can't send accept/reject notices to folks until they fill all of their slots. Or am I missing something? If a YC competitor has a fixed number of slots, is there a way they could NOT have an exploding term sheet (other than not have a fixed number of slots)?
- pg 18y ago
  If you have a fixed number of slots you have to have a deadline. The problem is when the deadline occurs. If the firm in question made their first round of offers expire in 20 days instead of 2, it would be a moot point.
  - webwright 18y ago
    Ah, that makes sense and seems startup friendly. i.e. they offer first round of 10 companies and give 'em 20 days. 8 accept. They then work there way down an alternate list. They could even have 2 types of acceptance. i.e. 10 offers and 20 alternates (so the rejected companies could get on with their lives). They could tell the alternates: "You didn't make the top 10, but you were really close. It's possible a slot could open up within 30 days. If it does, we might call you." If it's TechStars, they purportedly have their deadline set based on academic calendar. You oughta try hopping in front of them to test that assertion. :-)