7 ms·

Was Y Combinator Worth It?

90 points by sama 13y ago

wiwillia 13y ago
Thanks for posting this Sam! If anyone thinking about YC has any follow up questions, happy to answer them here. It truly was an amazing experience for us.
- jtfrench 13y ago
  Hey Walker, great post. I remember you starting this while at Brown, and I also remember when FishCo was shut down. I did NOT know someone used a Pokémon card for an ID. Totally believe it though :) Inspiring story, and I'll be in touch.
johnbroccoli 13y ago
Just curious, are there any reports/posts of people or companies who think that Y Combinator was not worth it?
zt 13y ago
As to the usefulness and worthwhileness of YC there cannot be two opinions. The affection and praise of the alumni alone would prove the point even before you consider the companies that have built out of it. And at the heart of that is what Walker points to quite clearly: candor and the clear support that can only spring from it.
- mildtrepidation 13y ago
  There "cannot be two opinions?" Actually, there can be as many opinions as there are people (not just companies, but individual people) who have gone through the process. And they can reasonably vary, because not everyone and not every company needs YC or something like it, or can necessarily even benefit from it. It's ridiculous to suggest that YC is a universally positive experience, just like it's ridiculous to suggest it's completely without value (based on the significant praise you refer to).
  - zt 13y ago
    It was a turn of phrase -- sorry if I offended.
    - jacalata 13y ago
      It's not just a turn of phrase - your whole comment was saying 'YC is indisputably worth it' and the response was 'no it isn't, not for everyone.
  - wdewind 13y ago
    Honestly curious, is there any company you know of who has publicly stated they weren't happy they went through YC? Not saying it's conclusive either way, would just be interesting to read why.
    - dshanahan 13y ago
      I do know founders who've said as such. Wouldn't say it publicly, I'd imagine.
    - mehrdada 13y ago
      I am really curious about this as well. I would be surprised if there is no YC alum with the opposite opinion. Even if they are wrong in their conclusion, I would be very interested to see a reasoned negative perspective on the value of YC as well to shape my personal evaluation better. It'd be awesome if a founder in that position volunteered publishing something, even if it's published anonymously. (If anyone has a link to such a writeup, that I may have missed, please comment!)
nawitus 13y ago
No matter how you slice it, ~$14k for 6% is a terrible deal.
- paul 13y ago
  And if $14k is all you got, you would be correct. I feel like this is a test that screens out founders who don't understand value.
  - nawitus 13y ago
    Or maybe founders who understand value, and can get a better deal elsewhere. Not everybody takes the YC hype at face value.
    - deleted 13y ago
      [deleted]
    - balls187 13y ago
      EDIT: Sorry, I just took a look at your LinkedIn Profile (love drinking Karhu in a Sauna btw...) It doesn't appear that you've created any startups, so I'm curious how you came to the opinion that YC is Hype and not worth the value to founders, if you yourself have not been a founder (and presumably) not gone through an accelerator?
      - nawitus 13y ago
        Ah, the goold old ad hominem attack. Clearly you can't review any movies because you're probably not a director?
        balls187 13y ago
        It wasn't an attack at all. My question was very sincere--I was very curious how you've come to the opinion that YC isn't valuable to founders. > Clearly you can't review any movies because you're probably not a director? You shouldn't review a movie, until you've watched it. Also are we discussing movie reviews, or discussing whether YC is worth it?
lbr 13y ago
"Worth it" meaning worth the equity you give up? Are there downsides other than giving up 2-10% of your company?
- opendais 13y ago
  The relocation and the time it costs. xD
paul 13y ago
Thanks Walker! I love telling people the story of how some investors scoffed at Teespring on demoday -- I remember one person asking why they were even there. It shows why it's still possible to make a lot of money in this business, and that startups shouldn't be put off by a weak reception from investors.
ed 13y ago
This is the one consistent exception to Betteridge's law of headlines
- jnsaff2 13y ago
  I was just going to post NO for that reason only.
koji 13y ago
I agree with this. People ask me all the time what I thought about my experience at YC was like. And my answer usually comes down to being with the people. When everyone around you seems to be smarter, work harder, and be more driven, you really push yourself too. But, it was also a supportive community. Everyone wanted to see everyone else succeed. Basically, it was a good support group for those days (and there were many) where you just felt down in the startup dumps. The good news is that you don't necessarily need YC to have much of that experience. If you build a good network around you, with lots of hard-working and positive people, it helps a lot.
alaustsen 13y ago
For me coming from outside the US, YC is just as much about getting a crash course and network in SV.
bunkat 13y ago
Is there a breakdown on YC accepted companies by product stage? How many companies were accepted that were already deployed, making money, and growing vs brand new ideas not yet developed? How many companies with significant month-over-month growth are ever rejected? From the articles I see lately, it seems like there has been a pretty big shift at YC to help companies go from $1MM to $500MM rather than $0 to $1MM. Everything appears to be about pre-existing growth now.
- pg 13y ago
  Everything appears to be about pre-existing growth now. It would be a disaster if that were true, because in this type of investing as in any other, returns are proportionate to risk. Fortunately it isn't. As I said in another thread, a quick sample of the current batch suggests half had no growth when YC accepted them. YC does face a danger in this respect, because as it gets better known, there are an increasing number of applications from fairly established startups. To avoid that danger we make a conscious effort to fund risky outliers. E.g. the 17 year old kid from Bulgaria with zero revenues or users.
  - bunkat 13y ago
    It will be interesting to see how YC continues to evolve. In the early days it seemed like it was all about early, early investing (come to San Francisco and build your product, we're betting on you as a founder) to today where 50% of the open slots are no longer even available to these types of startups since they are taken by established companies. Seems similar to how things like the Olympics evolved. At first participants had to be amateurs but later they started letting in the professionals and the amateurs could no longer even qualify. Good to see that there is a concerted effort at YC to continue to fund the amateurs but I can only assume that will be harder and harder to justify in the future.
    - paul 13y ago
      You shouldn't think in terms of "open slots". We accept all of the companies that seem like good bets, and we don't know how many that will be until interviews are complete. Teespring coming in with a million in revenue didn't push out some other pre-revenue startup.
djb_hackernews 13y ago
If you don't care so much about access to investors, but do want a community of like minded entrepreneurs I'd check out the Startup Chile program. It's not for everyone but it is 40k equity free, and everyone is working on something they are passionate about and it has a really strong community where everyone helps and listens. Downside is no prestige and of the few investors it does attract, they tend to be low quality by SV standards.
- larrys 13y ago
  "Downside is no prestige and of the few investors it does attract, they tend to be low quality by SV standards." Taking you at face value (meaning I don't know the facts and I'm relying on what you are saying..) that's a huge downside. Prestige is important. While YC is not Harvard have you even noticed how many doors going to Harvard, Wharton etc. open? That said not everyone with an open door is able to capitalize on it but I'd say it's a pretty big advantage to have. Once again, this is based on my many years in business. I have nothing to gain from touting YC and I have been critical at times as well.
jason_wang 13y ago
I can say unequivocally entering YC is one of the best decisions I have ever made both personally and for my business. I'll let others debate the monetary economics of YC and just say that the YC network effect is the most under-rated aspect of YC. Both the W14 batch mates and the YC alums from past batches have been amazing in terms giving us strategic and tactical advices. This aspect of YC simply can not be ignored.
- icinnamon 13y ago
  Completely agree. This line sums it up best "If I could only pitch you one reason why Y Combinator is worth it, it would be the people.". I don't know any other place in the world where you can meet such a concentrated group of amazing, brilliant individuals (and companies!)
carterschonwald 13y ago
One thing that i never see addressed concretely for me is this: assuming I dont want to raise capital unless i really really really really have to, assuming im doing not b2c, assuming I actually am friends with a number of people who've done YC, etc etc then why YC? Unnuanced advocacy makes me nervous (and thats all I typically hear). Every single time in my life where I have taken unnuanced, uncaveated remarks on face value, it has blown up in my face. There are many fine businesses that have been certainly enabled by YC, and many that have not been. Is YC suitable for businesses whose risks have been shifted to be strictly of the "can technology of this caliber actually exist?" sort, rather than "explore the business premise, do an MVP for the tech" sort? (admittedly, one challenge with sophisticated tech is educating folks about it!). I guess I'm asking for nuance in why. If you can't give me nuance on that, why should I trust your advice on anything more complex? [edit: to be clear, if someone convinced me, i'd totally apply to YC, just not sure if it makes sense for me]
- paul 13y ago
  It would be easier to answer your question if you provided more concrete examples. The only businesses I can think of that are strictly "can technology of this caliber actually exist?" are ones that likely violate the laws of thermodynamics :) There are certainly business for which YC is not a good fit though, and we generally screen them out at the application stage. In fact, most businesses aren't a good match for YC, as we are only looking for high-growth potential startups of the sort described in http://paulgraham.com/growth.html http://paulgraham.com/growth.html
  - carterschonwald 13y ago
    How do we measure growth? Its a bit opaque (at least to me) how to evaluate the growth of an early early stage organizations where paying customers would likely be in finance, biotech, and governmental/university RnD. I agree its a bit more manageable to evaluate in b2c /b2smb / b2b cases. I guess its also for me, I've seen so many well publicized, brilliant technologically sophisticated analytical tools startups fail over the past two years, i'm just leery of how i've seen quantitative products "grow fast" too early. But seriously, how does one evaluate technology that (when positioned well) becomes a substrate for core product strategy for other organizations and entire technological ecosystems? This is a question I hope to know the answer to this spring :)
Xdes 13y ago
I doubt I'd find a YC-ruined-my-startup article. To me this seems like more confirmation bias for those that drink the kool-aid.
btrautsc 13y ago
Unequivocally, yes. You can haggle over the $'s and %'s all day - but what you can't argue over is where your company stands after YC, especially in the eyes of customers & investors. Some people have the ability to never worry about investors, but for those who don't, it is insanely helpful. And most of the shift in opinion is based on how your product is being used by customers, which is the primary focus of many YC partners. Once again for good measure: Yes.
- asdad 13y ago
  After YC - Customers? Please talk about Investors. Customers have no regard for YC. They look at your company and your product, your value addition. Which probably you've already proved, by the time you've gotten into YC.
  - amirmc 13y ago
    If your other customers are also companies then the YC brand may have an effect (e.g. Stripe). If it's for consumers, maybe not (e.g. Airbnb).
MCarusi 13y ago
Thanks for sharing this! I've never understood how startups snub Y combinator because it "only" offers $17,000. Think long term!

90 points by sama 13y ago

Thanks for posting this Sam! If anyone thinking about YC has any follow up questions, happy to answer them here. It truly was an amazing experience for us.

jtfrench 13y ago
Hey Walker, great post. I remember you starting this while at Brown, and I also remember when FishCo was shut down. I did NOT know someone used a Pokémon card for an ID. Totally believe it though :) Inspiring story, and I'll be in touch.

johnbroccoli 13y ago

Just curious, are there any reports/posts of people or companies who think that Y Combinator was not worth it?

zt 13y ago

As to the usefulness and worthwhileness of YC there cannot be two opinions. The affection and praise of the alumni alone would prove the point even before you consider the companies that have built out of it. And at the heart of that is what Walker points to quite clearly: candor and the clear support that can only spring from it.

mildtrepidation 13y ago
There "cannot be two opinions?" Actually, there can be as many opinions as there are people (not just companies, but individual people) who have gone through the process. And they can reasonably vary, because not everyone and not every company needs YC or something like it, or can necessarily even benefit from it. It's ridiculous to suggest that YC is a universally positive experience, just like it's ridiculous to suggest it's completely without value (based on the significant praise you refer to).
- zt 13y ago
  It was a turn of phrase -- sorry if I offended.
  - jacalata 13y ago
    It's not just a turn of phrase - your whole comment was saying 'YC is indisputably worth it' and the response was 'no it isn't, not for everyone.
- wdewind 13y ago
  Honestly curious, is there any company you know of who has publicly stated they weren't happy they went through YC? Not saying it's conclusive either way, would just be interesting to read why.
  - dshanahan 13y ago
    I do know founders who've said as such. Wouldn't say it publicly, I'd imagine.
  - mehrdada 13y ago
    I am really curious about this as well. I would be surprised if there is no YC alum with the opposite opinion. Even if they are wrong in their conclusion, I would be very interested to see a reasoned negative perspective on the value of YC as well to shape my personal evaluation better. It'd be awesome if a founder in that position volunteered publishing something, even if it's published anonymously. (If anyone has a link to such a writeup, that I may have missed, please comment!)

nawitus 13y ago

No matter how you slice it, ~$14k for 6% is a terrible deal.

paul 13y ago
And if $14k is all you got, you would be correct. I feel like this is a test that screens out founders who don't understand value.
- nawitus 13y ago
  Or maybe founders who understand value, and can get a better deal elsewhere. Not everybody takes the YC hype at face value.
  - deleted 13y ago
    [deleted]
  - balls187 13y ago
    EDIT: Sorry, I just took a look at your LinkedIn Profile (love drinking Karhu in a Sauna btw...) It doesn't appear that you've created any startups, so I'm curious how you came to the opinion that YC is Hype and not worth the value to founders, if you yourself have not been a founder (and presumably) not gone through an accelerator?
    - nawitus 13y ago
      Ah, the goold old ad hominem attack. Clearly you can't review any movies because you're probably not a director?
      - balls187 13y ago
        It wasn't an attack at all. My question was very sincere--I was very curious how you've come to the opinion that YC isn't valuable to founders. > Clearly you can't review any movies because you're probably not a director? You shouldn't review a movie, until you've watched it. Also are we discussing movie reviews, or discussing whether YC is worth it?

lbr 13y ago

"Worth it" meaning worth the equity you give up? Are there downsides other than giving up 2-10% of your company?

opendais 13y ago
The relocation and the time it costs. xD

paul 13y ago

Thanks Walker! I love telling people the story of how some investors scoffed at Teespring on demoday -- I remember one person asking why they were even there. It shows why it's still possible to make a lot of money in this business, and that startups shouldn't be put off by a weak reception from investors.

ed 13y ago

This is the one consistent exception to Betteridge's law of headlines

jnsaff2 13y ago
I was just going to post NO for that reason only.

koji 13y ago

I agree with this. People ask me all the time what I thought about my experience at YC was like. And my answer usually comes down to being with the people. When everyone around you seems to be smarter, work harder, and be more driven, you really push yourself too. But, it was also a supportive community. Everyone wanted to see everyone else succeed. Basically, it was a good support group for those days (and there were many) where you just felt down in the startup dumps. The good news is that you don't necessarily need YC to have much of that experience. If you build a good network around you, with lots of hard-working and positive people, it helps a lot.

alaustsen 13y ago

For me coming from outside the US, YC is just as much about getting a crash course and network in SV.

bunkat 13y ago

Is there a breakdown on YC accepted companies by product stage? How many companies were accepted that were already deployed, making money, and growing vs brand new ideas not yet developed? How many companies with significant month-over-month growth are ever rejected? From the articles I see lately, it seems like there has been a pretty big shift at YC to help companies go from $1MM to $500MM rather than $0 to $1MM. Everything appears to be about pre-existing growth now.

pg 13y ago
Everything appears to be about pre-existing growth now. It would be a disaster if that were true, because in this type of investing as in any other, returns are proportionate to risk. Fortunately it isn't. As I said in another thread, a quick sample of the current batch suggests half had no growth when YC accepted them. YC does face a danger in this respect, because as it gets better known, there are an increasing number of applications from fairly established startups. To avoid that danger we make a conscious effort to fund risky outliers. E.g. the 17 year old kid from Bulgaria with zero revenues or users.
- bunkat 13y ago
  It will be interesting to see how YC continues to evolve. In the early days it seemed like it was all about early, early investing (come to San Francisco and build your product, we're betting on you as a founder) to today where 50% of the open slots are no longer even available to these types of startups since they are taken by established companies. Seems similar to how things like the Olympics evolved. At first participants had to be amateurs but later they started letting in the professionals and the amateurs could no longer even qualify. Good to see that there is a concerted effort at YC to continue to fund the amateurs but I can only assume that will be harder and harder to justify in the future.
  - paul 13y ago
    You shouldn't think in terms of "open slots". We accept all of the companies that seem like good bets, and we don't know how many that will be until interviews are complete. Teespring coming in with a million in revenue didn't push out some other pre-revenue startup.

djb_hackernews 13y ago

If you don't care so much about access to investors, but do want a community of like minded entrepreneurs I'd check out the Startup Chile program. It's not for everyone but it is 40k equity free, and everyone is working on something they are passionate about and it has a really strong community where everyone helps and listens. Downside is no prestige and of the few investors it does attract, they tend to be low quality by SV standards.

larrys 13y ago
"Downside is no prestige and of the few investors it does attract, they tend to be low quality by SV standards." Taking you at face value (meaning I don't know the facts and I'm relying on what you are saying..) that's a huge downside. Prestige is important. While YC is not Harvard have you even noticed how many doors going to Harvard, Wharton etc. open? That said not everyone with an open door is able to capitalize on it but I'd say it's a pretty big advantage to have. Once again, this is based on my many years in business. I have nothing to gain from touting YC and I have been critical at times as well.

jason_wang 13y ago

I can say unequivocally entering YC is one of the best decisions I have ever made both personally and for my business. I'll let others debate the monetary economics of YC and just say that the YC network effect is the most under-rated aspect of YC. Both the W14 batch mates and the YC alums from past batches have been amazing in terms giving us strategic and tactical advices. This aspect of YC simply can not be ignored.

icinnamon 13y ago
Completely agree. This line sums it up best "If I could only pitch you one reason why Y Combinator is worth it, it would be the people.". I don't know any other place in the world where you can meet such a concentrated group of amazing, brilliant individuals (and companies!)

carterschonwald 13y ago

One thing that i never see addressed concretely for me is this: assuming I dont want to raise capital unless i really really really really have to, assuming im doing not b2c, assuming I actually am friends with a number of people who've done YC, etc etc then why YC? Unnuanced advocacy makes me nervous (and thats all I typically hear). Every single time in my life where I have taken unnuanced, uncaveated remarks on face value, it has blown up in my face. There are many fine businesses that have been certainly enabled by YC, and many that have not been. Is YC suitable for businesses whose risks have been shifted to be strictly of the "can technology of this caliber actually exist?" sort, rather than "explore the business premise, do an MVP for the tech" sort? (admittedly, one challenge with sophisticated tech is educating folks about it!). I guess I'm asking for nuance in why. If you can't give me nuance on that, why should I trust your advice on anything more complex? [edit: to be clear, if someone convinced me, i'd totally apply to YC, just not sure if it makes sense for me]

paul 13y ago
It would be easier to answer your question if you provided more concrete examples. The only businesses I can think of that are strictly "can technology of this caliber actually exist?" are ones that likely violate the laws of thermodynamics :) There are certainly business for which YC is not a good fit though, and we generally screen them out at the application stage. In fact, most businesses aren't a good match for YC, as we are only looking for high-growth potential startups of the sort described in http://paulgraham.com/growth.html http://paulgraham.com/growth.html
- carterschonwald 13y ago
  How do we measure growth? Its a bit opaque (at least to me) how to evaluate the growth of an early early stage organizations where paying customers would likely be in finance, biotech, and governmental/university RnD. I agree its a bit more manageable to evaluate in b2c /b2smb / b2b cases. I guess its also for me, I've seen so many well publicized, brilliant technologically sophisticated analytical tools startups fail over the past two years, i'm just leery of how i've seen quantitative products "grow fast" too early. But seriously, how does one evaluate technology that (when positioned well) becomes a substrate for core product strategy for other organizations and entire technological ecosystems? This is a question I hope to know the answer to this spring :)

Xdes 13y ago

I doubt I'd find a YC-ruined-my-startup article. To me this seems like more confirmation bias for those that drink the kool-aid.

btrautsc 13y ago

Unequivocally, yes. You can haggle over the $'s and %'s all day - but what you can't argue over is where your company stands after YC, especially in the eyes of customers & investors. Some people have the ability to never worry about investors, but for those who don't, it is insanely helpful. And most of the shift in opinion is based on how your product is being used by customers, which is the primary focus of many YC partners. Once again for good measure: Yes.

asdad 13y ago
After YC - Customers? Please talk about Investors. Customers have no regard for YC. They look at your company and your product, your value addition. Which probably you've already proved, by the time you've gotten into YC.
- amirmc 13y ago
  If your other customers are also companies then the YC brand may have an effect (e.g. Stripe). If it's for consumers, maybe not (e.g. Airbnb).

MCarusi 13y ago

Thanks for sharing this! I've never understood how startups snub Y combinator because it "only" offers $17,000. Think long term!