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YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks. Other VCs want to

by staunch 12y ago

YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks. Other VCs want to believe in "proprietary deal flow" and their own ability to worm into hot companies. Probably because it seems more a sure thing than, gasp, actually judging startups on their merits, like YC at least tries to do.

solve 12y ago
From that page: > Should everyone apply to First Round through the OpenApp? > No. The best way to reach us is still through a referral.
- staunch 12y ago
  The incumbents often see the future, but rarely update their fundamental viewpoint to match the new reality. It's the innovator's dilemma applied to VCs.
hdhdhshw 12y ago
This is exactly the issue I find with a lot of venture capital firms. They're letting Ycombinator kill their deal flows because they're too stubborn to consider deals from outside their networks. It's a shame really. Some of these firms have the nerve to say Silicon Valley is merit based when they're simply just taking institutional capital and funding their rich boy network.
- applecore 12y ago
  The best entrepreneurs will always find a way into the networks of top-tier VCs.
  - staunch 12y ago
    The most common way the best entrepreneurs find their way into their networks is by succeeding without their help. The old VC strategy of just waiting around to pick off the winners won't work so well these days. The idea that the best entrepreneurs are good at things like personal networking, or ladder climbing, is clearly false. One example: Elon Musk didn't have the "hustle" to talk to anyone in the Netscape lobby, when he marched in there to get a job. He nervously stood around for a while and then went home in quiet shame. That's Elon Musk before you knew him.
    - proksoup 12y ago
      He's got more hustle than me --- I would have had the panic attack before I went out the door of my home to go the lobby.
    - applecore 12y ago
      Your anecdote mostly proves my point: Elon Musk marched into the lobby; everyone else stayed at home.
  - bbreier 12y ago
    As long as you define "best" as those who get funded by top-tier VCs, sure.
  - hkailahi 12y ago
    What if you have it backwards? The top VC firms stay the top VC firms if they attract and fund the best entrepreneurs. The best entrepreneurs are the best entrepreneurs regardless of which VC networks they tap. First Capital realizes this, and is making a move to capture the important opportunities they would miss out on otherwise.
kentonv 12y ago
Well... maybe. Keep in mind that the way YC judges candidates involves spending almost no time evaluating any particular group, because they have so many to go through. Even those who get an interview only get 10 minutes to talk after which the interviewers spend 5 minutes making a decision before moving on to the next group -- and ~90% of those decisions are rejections. Since the interviewers don't actually have time to review the next team's application between interviews, much of the 10 minutes is spent introducing the idea and people from scratch. It's an approach that has clearly worked very well for YC and you can't fault them for doing what works, but it's good that not everyone uses this approach since a lot of good ideas and good people would never get funded this way. It's also pretty costly for founders: each team spends hours or days putting together their application and potentially several days traveling to the interview (unless they're lucky enough to be in the bay area already), all for a few minutes of YC's time and a tiny chance of acceptance. On the other hand, most VCs, if they're going to talk to you at all, will schedule a one-hour meeting, which they're happy to do over Skype if you aren't local. Meanwhile, getting an intro typically requires far less time investment on the part of the candidate compared to a YC-like application process (you just need someone to send a short email). But, yes, you have to get that intro, so if you don't have connections, it's a problem. I don't think you can really say that either method is objectively more or less fair; they are simply different kinds of processes that have different kinds of bias and costs. I think it's important that YC exists as an opening for the large number of great teams who aren't well-connected, but I also think that if every VC worked like YC it would make fundraising much more costly for founders and a lot of great ideas and people that get funding today would not succeed under such a system. Really, the best thing is for lots of VCs to be doing lots of different approaches, even if each one has biases.
- deleted 12y ago
  [deleted]
mbesto 12y ago
> YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks. Unfortunately at scale YC operates today (~2,500+ submissions per batch) this is no longer true. It's simply too difficult to get through all of that noise without "knowing someone", and the exceptions to that rule are getting rarer every batch. Source - ask any YC Alumni candidly.
- RoboTeddy 12y ago
  I'm pretty sure this isn't the case. Applications definitely get judged on their merits. (Source: I'm a YC alum)
  - mbesto 12y ago
    I don't think your lying, but I have to ask you this...do you believe it's genuinely possible to decipher startups merits alone from just an application?
    - infinite8s 12y ago
      PG has often stated that thegdon't fund the idea, they fund the team (or person).
      - EGreg 12y ago
        Sam Altman has told me specifically why they didn't fund us the myriad times we applied. Our founder split made them worried / didn't fit with their thesis. That seemed to be the only thing, based on our back and forth. So, keep in mind that YC is looking for something very particular. It does strongly suggest however that YC is very open to taking teams they don't know as long as they fit their official and unofficial criteria. They make a serious effort to be transparent but they are also oberworked and are pretty much a black box to most startups they reject. They surely were for us, I just got lucky to get an answer. When we make an accelerator, it'll also be based on a certain way of doing things. But it'll be very different. We believe that standardized platforms make a huge difference - YC has one as do other accelerators. But we have an actual software platform on which others can build their apps. It would be as if FB ran an accelerator program to develop new businesses on top of the FB platform. Our program could have actual measurable metrics to determine who is funded further and who is not.
harryh 12y ago
Mostly only looking at startups with warm intros is a way of judging founders. If you can't figure out a way to get an introduction to a VC there are going to be a lot of things about running a company that you won't be able to figure out either.
jacquesm 12y ago
I agree partially, I think the biggest factor here is that YC evaluates a given startup/set of founders against the backdrop of the other founders and then simply picks the strongest according to the metrics they have developed. You don't have to pick the winners, you have to eliminate the duds.

by staunch 12y ago

solve 12y ago

From that page: > Should everyone apply to First Round through the OpenApp? > No. The best way to reach us is still through a referral.

staunch 12y ago
The incumbents often see the future, but rarely update their fundamental viewpoint to match the new reality. It's the innovator's dilemma applied to VCs.

hdhdhshw 12y ago

This is exactly the issue I find with a lot of venture capital firms. They're letting Ycombinator kill their deal flows because they're too stubborn to consider deals from outside their networks. It's a shame really. Some of these firms have the nerve to say Silicon Valley is merit based when they're simply just taking institutional capital and funding their rich boy network.

applecore 12y ago
The best entrepreneurs will always find a way into the networks of top-tier VCs.
- staunch 12y ago
  The most common way the best entrepreneurs find their way into their networks is by succeeding without their help. The old VC strategy of just waiting around to pick off the winners won't work so well these days. The idea that the best entrepreneurs are good at things like personal networking, or ladder climbing, is clearly false. One example: Elon Musk didn't have the "hustle" to talk to anyone in the Netscape lobby, when he marched in there to get a job. He nervously stood around for a while and then went home in quiet shame. That's Elon Musk before you knew him.
  - proksoup 12y ago
    He's got more hustle than me --- I would have had the panic attack before I went out the door of my home to go the lobby.
  - applecore 12y ago
    Your anecdote mostly proves my point: Elon Musk marched into the lobby; everyone else stayed at home.
- bbreier 12y ago
  As long as you define "best" as those who get funded by top-tier VCs, sure.
- hkailahi 12y ago
  What if you have it backwards? The top VC firms stay the top VC firms if they attract and fund the best entrepreneurs. The best entrepreneurs are the best entrepreneurs regardless of which VC networks they tap. First Capital realizes this, and is making a move to capture the important opportunities they would miss out on otherwise.

kentonv 12y ago

Well... maybe. Keep in mind that the way YC judges candidates involves spending almost no time evaluating any particular group, because they have so many to go through. Even those who get an interview only get 10 minutes to talk after which the interviewers spend 5 minutes making a decision before moving on to the next group -- and ~90% of those decisions are rejections. Since the interviewers don't actually have time to review the next team's application between interviews, much of the 10 minutes is spent introducing the idea and people from scratch. It's an approach that has clearly worked very well for YC and you can't fault them for doing what works, but it's good that not everyone uses this approach since a lot of good ideas and good people would never get funded this way. It's also pretty costly for founders: each team spends hours or days putting together their application and potentially several days traveling to the interview (unless they're lucky enough to be in the bay area already), all for a few minutes of YC's time and a tiny chance of acceptance. On the other hand, most VCs, if they're going to talk to you at all, will schedule a one-hour meeting, which they're happy to do over Skype if you aren't local. Meanwhile, getting an intro typically requires far less time investment on the part of the candidate compared to a YC-like application process (you just need someone to send a short email). But, yes, you have to get that intro, so if you don't have connections, it's a problem. I don't think you can really say that either method is objectively more or less fair; they are simply different kinds of processes that have different kinds of bias and costs. I think it's important that YC exists as an opening for the large number of great teams who aren't well-connected, but I also think that if every VC worked like YC it would make fundraising much more costly for founders and a lot of great ideas and people that get funding today would not succeed under such a system. Really, the best thing is for lots of VCs to be doing lots of different approaches, even if each one has biases.

deleted 12y ago
[deleted]

mbesto 12y ago

> YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks. Unfortunately at scale YC operates today (~2,500+ submissions per batch) this is no longer true. It's simply too difficult to get through all of that noise without "knowing someone", and the exceptions to that rule are getting rarer every batch. Source - ask any YC Alumni candidly.

RoboTeddy 12y ago
I'm pretty sure this isn't the case. Applications definitely get judged on their merits. (Source: I'm a YC alum)
- mbesto 12y ago
  I don't think your lying, but I have to ask you this...do you believe it's genuinely possible to decipher startups merits alone from just an application?
  - infinite8s 12y ago
    PG has often stated that thegdon't fund the idea, they fund the team (or person).
    - EGreg 12y ago
      Sam Altman has told me specifically why they didn't fund us the myriad times we applied. Our founder split made them worried / didn't fit with their thesis. That seemed to be the only thing, based on our back and forth. So, keep in mind that YC is looking for something very particular. It does strongly suggest however that YC is very open to taking teams they don't know as long as they fit their official and unofficial criteria. They make a serious effort to be transparent but they are also oberworked and are pretty much a black box to most startups they reject. They surely were for us, I just got lucky to get an answer. When we make an accelerator, it'll also be based on a certain way of doing things. But it'll be very different. We believe that standardized platforms make a huge difference - YC has one as do other accelerators. But we have an actual software platform on which others can build their apps. It would be as if FB ran an accelerator program to develop new businesses on top of the FB platform. Our program could have actual measurable metrics to determine who is funded further and who is not.

harryh 12y ago

Mostly only looking at startups with warm intros is a way of judging founders. If you can't figure out a way to get an introduction to a VC there are going to be a lot of things about running a company that you won't be able to figure out either.

jacquesm 12y ago

I agree partially, I think the biggest factor here is that YC evaluates a given startup/set of founders against the backdrop of the other founders and then simply picks the strongest according to the metrics they have developed. You don't have to pick the winners, you have to eliminate the duds.