With the market conditions right now, have any ideas about how it could be better?
It sounds like structural critiques; like a smaller, tighter community that onboards with better incentives, enables more efficient engagement with the alumni and batch would be a big gain. And importantly, like ycombinator could show more flexibility and interest in the batch. That sounds like a smaller network overall though, with less success stories to tout. If they have a better 'batting average' so to speak, though, that would help the investor environment. How does it affect their income and social lives, balancing it all I wonder. Thanks for the article!
I think they did a right move - making the batch smaller and moving it back in-person. The money amount that was not very attractive at 2021 makes a lot more sense in 2023 as well.
As for the community I believe it can only be build relatively strong for <100 people. Hence, smaller niche-specific batches?
I can say, we didn't see significant uplift at Demo Day, the highest bump of valuation happened when we got accepted, it's fair to assume we wouldn't get it otherwise.
I can't answer your question completely as in the end we decided not to raise and returned the money...
There are a lot of good, even in what I write. The strongest I believe is the early and fully independent support for ideas that received no other recognition yet.
Do you think YC would make sense for a company that doesn't intend to raise money beyond the YC investment?
I have an idea for a b2c product I want to build that has a few paths to revenue (and a possible b2b offshoot), as well as acquisition by FAANG (or FAANG-adjacent). Is there something about taking investment from YC that prevents me from turning around and selling it for $2M after building it out a bit more?
Alternately, as a solo founder, if I got to a point of $10K MRR I'd be happy to just keep doing what I'm doing, but I guess I'd have an obligation to continue trying to grow?
edit: to clarify, I'd be using the $125K 7% part of the investment without necessarily dipping into the additional $375K in this situation. But maybe I'm not understanding how the MFN provision works
Any investor would hate this idea, it's a terrible deal for them, and YC are smart enough to get it out of you. The whole business of VC is to sell later at the higher price. If they give you money at val of 5M+ and you sell for 2M - they are in loss.
It's not val of 5M though? It's ~1.7M IIUC. 7% for 125K, an additional 375K can be invested though, with additional equity attached. Is that not right?
edit: Investors are also expecting to take a loss on many of the investments. 2M is one exit option, which still gives them +17% return on investment
I know that's not the standard type of exit YC are looking for, and I'm open to growing a bit more, but not as interested in taking additional investments. Final exit could end up being 10M for all I know.
I just think this growth at all costs attitude needs to change a bit with the current economy. I'd be happy to take $80K for a 7% investment also, but they have a standard deal which I think perverts the incentives and, frankly, leads to outcomes where they're pushing you to take more investment even if you could just have a sustainable business pulling in 10-30K MRR or something
I have no intention of lying, I'd rather bootstrap or shop for other investors who don't have the same expectation of 'growth potential'.
The YC model is.. it's own thing.. seems like in the current economy, they need every company to be a potential unicorn, which works out for them because they're doing it at scale, and the ones that deliver, deliver outsized returns.
But possibly doesn't work out as well for the founders, because the 9/10 that don't deliver, are forced to run their company into the ground chasing a moonshot vs. a sustainable lifestyle business, and don't get to reap the rewards they might get from the latter business model
There are funds trying to succeed at the many-small-successes model of investing - personally I am skeptical (from my own experience) because the natural failure rate is so high (before stressors due to investors). Edit: and there is a strong negative selection bias - small software businesses asking for money is a loud signal that they are much less likely to be successful at all IMHO. Relevant article about Mittelstands ”We need a middle class for startups”: https://neilthanedar.com/we-need-a-middle-class-for-startups... and my comment https://news.ycombinator.com/item?id=31350478
> small software businesses asking for money is a loud signal that they are much less likely to be successful at all IMHO
Money doesn't seem like the main benefit to going through YC (otherwise there are lots of other investment firms one could approach). The main advantage seems to be the network, connections, and expertise on running a business.
Sure, if I had another 30K I'd have an extra year of runway, which can be pretty valuable right now. But I suspect solo-bootstrapping without a good VC will result in a lot of friction at points that a specialist VC would be well-suited to assist with (providing standard ToS, verifying compliance, business structure boilerplate, etc)
When we took the money we were planing to build up the original idea, not to start another one. For the consecutive growth of the original idea it wouldn't be an issue.
Even when it came to fundraising, all the YC’s advice came down not to how to raise smarter and more, but to the fact that everyone needs to follow their simple framework, not try to shine too much, not try to choose the right words, wash off all the makeup, put on a gray uniform, and present dry facts—how much money customers already paid you, what the size of the market, if you count all the units you can sell, what you have actually built and what is working today. And this will always sound bad for anyone, it just can't sound good in the early days. And what actually works is storytelling, confident vision, committed revenue, and all these subtle things. It looks as if they are trying to make the selection process among 400 companies easier for the investors, and cover their own reputational risks, instead of trying to wrap each company in a beautiful wrapper and help it to raise easier.
Just for ref, I did SUS and applied to YC three times unsuccessfully.
I guess both perspectives seem completely rational to me. Why shouldn’t Ycombinator care most about viability and why shouldn’t startups care most about vision?
Each side needs to cater to the other a bit but ultimately this is just the difference between funders and builders.
Cannot even remotely understand the logic in this getting flagged.
People are upset with the idea, that the mother and the fetus form a feedback loop, to ensure the baby is as large as possible, while still being able to exit the womb??
Yeah, horrible, flaggable idea. Even if one disagrees, what is the logic in flagging? "Ew, ick! Birth!"?!?
I think the complaint here is that the current "mass market" version that treats all founders the same isn't really able to deliver on the promise of helping most of them achieve their vision. If YC makes all its money from tentpoles, the fund doesn't care. But founders probably care.
It's the opposite! Only the good hype-makers and storytellers get early access to investors before demo day. If you're a good huckster, no one finds out about your stats. Even though... YC tells people to be dry and boring and focus on stats.
I think the rationale here is "be so good they can't ignore you". While advanced fundraising skills could potentially help someone to raise without first making a great product that people demonstrably want, nailing product and early growth sufficiently well makes fundraising achievable even for founders who are notably lacking in the charm and storytelling departments.
Here again, I think the complaint is the opposite. He's saying that if you have traction already, you don't need YC. You're further along than what they offer. They are there to help people who have no traction and no metrics and no money.
The sad thing is that the hype cycle is more important than the product delivery. Many huge investments are made on products that have nothing delivered. It's more BS than we'd like to admit. My own product failed in the market because I focused on the MVP and making it real and not on getting hype out and using that to get money.
'Traction' is a pretty wide spectrum. Having some early traction with a small number of users who love your product is a sweet spot for YC imho, especially if you don't have connections or a 'pedigree' in the startup world. At that stage, VCs typically aren't interested unless you have something else going for you. YC helps you take the few sparks you've got smoldering in some twigs and turn it into a little fire that is potentially interesting to angel and seed investors without too much embellishment.
You can call it reputation management. They can provide access to good investors, because investor know they are not selling lemons.
For example, if YC has a strict rule about inflating the startup users only up to 20%, and then everyone will inflate them 20%-25% and investors will pay only the the 50% because they never know how much the number are inflated.
I always thought the primary benefit of YC was the brand. It's like an Ivy League school for startups. The article suggested it didn't help much. Perhaps going too big has diluted the YC brand?
It’s not like an Ivy League, it’s more like joining a frat, but for startups. Except, it used to be more fun, when all companies worked at the same location and you could bump into people in halls and then go do keg stands after work or sleep on couches, etc.
Now it’s just remote webinar garbage, talk to some people on Zoom, etc.
I think it would have always been the same for overseas companies - I've had several YC-founder friends, and the experience is vastly different if you're YC-in-the-Bay versus YC-elsewhere.
The Ivy League is talked about and well known all over and public knowledge your neighbor your aunt, your wife, your mother, the guy who owns the local bakery etc. It's an international brand.
YC known in the startup community. Most likely the guy who runs the local 200 person wholesale operation wouldn't even know about it unless he read about it in the WSJ he reads print edition. Go to sell to that company and they will say HUH what's that mean 'YC'.
I actually like the YC as Ivy League school comparison - it has many parallels. Highly selective, has a set regimen ("world view"), has a somewhat high cost of entry ($500k for 7%, not bad tho), and has a fairly exclusive clique that provides value by association that's difficult for outsiders.
Given that, is it harder to get into Harvard or YC based on admission numbers?
> Given that, is it harder to get into Harvard or YC based on admission numbers?
I always find it laughable (sorry not directed at you in particular) when people make that type of comparison. Probability of something occurring for unrelated events ... why in the world does that matter at all? I could say it's harder to get accepted to a certain health club than Harvard or YC.
I am reminded of a restaurant in my city that opened and the local press talked about how hard it was to get a reservation. In fact this particular chef decided to open that restaurant both because he didn't have any experience and also the fact that it had a limited amount of tables would always make it seem more valuable in some way than it was. 'So hard to get a table harder than WONDERFUL RESTAURANT IN SAME CITY where it's hard to get a reservation HARDER THAN THAT EVEN!' Additional point in that restaurant was it took over the location (another PR win) of an old established and very famous restaurant in the same city. The press ate that up as a story angle. As if it mattered at all. It didn't only it made a good story angle. Otherwise why should it make any difference at all?
Heard similar opinions from other YC founders before.
I think any educational system will run into similar issues.
The problem is that the system takes over and becomes more important than the original goal of educating, coaching, helping. And instead it just becomes a conversions and return optimizer.
At the end the individuals don’t matter as long as the aggregate produces good enough results.
A recurrent theme I noticed is that a fully virtual setup (zoom calls, distributed companies in the batch) coupled with varied timezones lead to shallow interactions, weak bonds and no sense of community. Furthermore, if you are in a remote timezone (vs SF/NY) like the author, you will have even more trouble like ungodly meeting hours or very few fellows in the same timezone.
This is very similar to how I have experienced remote work as well. Just replace startups with individuals and the takeaways are still the same.
> In their picture of the world, you, the founders, should only build a product and talk to customers, everything else is superfluous and waste of time. Hiring is waste of time, paid advertising is waste of time, content is waste of time, talking to investors is waste of time, getting media coverage is waste of time.
IMHO YC doesn’t want you to “build” a product they want you to “grow” a product. I think the YC framework (again IMHO) is to get an idea out and then do everything you can to make it grow 30% each week, and if after a few months you’re obviously failing at that — maybe that product isn’t working.
This seems, on the whole, like kind of reasonable high level operating parameters for startups, since traction is what defines revenue and fundraising chances.
I do think there is a flip side to this approach which is it can kind of lead to short-term-erism where if things aren’t working you flail about, and/or it can encourage founders to specifically tackle things they can ship quickly rather than things that are maybe more compelling.
I would argue that when things are slowly working that’s exactly when you need skilled advisors and founders to give you critical advice. Most dying startup don’t flat line… they slowly grow.
> In their picture of the world, you, the founders, should only build a product and talk to customers, everything else is superfluous and waste of time. Hiring is waste of time, paid advertising is waste of time, content is waste of time, talking to investors is waste of time, getting media coverage is waste of time.
Getting you to focus on those two things, particularly the second one which many technical founders are initially out of their comfort zone doing (I need to work on it myself), is probably a huge value add in itself if they're successful at doing just that.
> get an idea out and then do everything you can to make it grow 30% each week
Compounded? After 8 weeks you go from 10 customers to 81, seems doable. But after 6 months you'd have 5,428 customers. Maybe if it was an App Store app? But if you have to talk to any of them, yikes. Might not be the most sustainable rate of growth?
Yeah, the entire venture capital model is based on outlier outcomes. They don't want 2x or even 10x returns, they want 1000x returns on the outliers, so in aggregate they can hopefully 5-10x the fund overall.
I'm not sure I understand the question but HN discusses what it wants and this post happened to show up and get upvoted. Considering that the author went through YC a year ago I'm not sure that the timing matters much.
All I am saying is that YC terms should be a place for clarification outside of HN - and if Q's show up on HN, they should be answered and addressed in a YC FAQ/forum-specific/whatever...
YC doesn't scale for students. In fact, no accelerator does (500startups has ~3k investments as well). Accelerators are about relationships, signalling, prestige, advisory, networking, etc. The success is asymmetric, because YC is a numbers game - the more bets they make, the higher likelihood they are to succeed.
Many of the negative criticisms here have to do with the fact that there are 4k companies that have gone through YC, and this batch specifically had 400 companies, so it's no wonder there are aspects that are less than ideal.
>Accelerators are about relationships, signalling, prestige, advisory, networking
Interesting to see this after reading the ‘nice vs competent’ threads because everything you mentioned is a soft skill, and correlated with EQ/SQ, niceness and playing of the game.
I guess it’s a reminder that there is no objective superior strategy of being nice vs being competent because the game is too complex for that. It’s strategically applying both to increase your own survivability and if you’re so inclined, that of your company too.
I did YC in W21 in NYC. I was not allowed to meet people in large groups until April (after the batch).
I disagree with each and every one of these ratings and conclusions.
Firstly, the comparison should be "Is the alternative to YC worth it?" For many companies, the alternative is raising nothing and bootstrapping, or raising at significantly lower valuations.
Additionally, I believe founders approach YC the wrong way. YC is not there to coddle you. They are there to give you access to hundreds of exceptional founders, brilliant partners who have seen much more than you, and a fundraising platform.
It is on the founder to adapt their behavior to get the most out of Y Combinator. Unfortunately, many founders are unable to do so, and waste the opportunity.
That's totally true, we also heard that the attitude is dramatically different if you're in the top of the batch.
Unfortunately, long-term performance is proven to not correlate well with performance during the batch, and YC are transparent about it. So I wouldn't recommend over-stressing it.
It's true that the business is governed by power laws at every level and you can't ignore those and succeed. I hope that doesn't prevent people from still being decent to each other.
> For many companies, the alternative is raising nothing and bootstrapping, or raising at significantly lower valuations.
The review has four stars for fundraising. So it's not like they don't address that.
However I don't understand "1.2. Network of clients/partners". I wonder why YC is expected to provide that. And for the Money one, that's common knowledge and only makes sense if you don't get a lot of value out of it.
The most concerning one to me is that Networking isn't 5 stars and I would like to hear reviews from others because I suspect it might still deserve that.
> They are there to give you access to hundreds of exceptional founders
Is there anything you can't do on your own? Like finding email and writing? Mentioning that you're from YC in the beginning adds less to the conversion than the actual message you're conveying, imo.
If you have enough of those to send, seems like something easy enough to A/B test. You only have a few sentences before an email recipient marks your email as spam. If one of those mentions your YC batch and that's what keeps their attention for another couple sentences, hey.
As a YC alum, of all the emails i get spammed with, I'll give YC founders are read and a reply. More often than not it's a "sorry can't help" but I will at least give it a look.
I'm surprised they haven't moved back to being in person. That seemed like one of the core benefits to companies, grinding it out with a set of like minded people who can all benefit in one place. Hearing you made a weaker network from YC than you would have liked is concerning, especially when you can find most of YC's wisdom on free videos. Network is one of the primary reasons I had applied and interviewed with YC a few times, both for investor networking and for founder networking and had presumed that was one of their main benefits.
I agree with people here saying YC attempting to scale seems to be hurting the overall experience. Hopefully with their recommitment to early stage companies only, this changes for the better. Their earlier wins set them up as the pre-eminent accelerator and diluting that experience those earlier companies had seems like a bad idea to me.
They have access to metrics I don't have though (obviously) so who knows I may be totally off base.
Wonder why YC wouldn't split into themed programs with less startups in each like some other accelerators. More focused themed groups could probably be more helpful for startups. Only very broad generic recommendations kind of work for everyone.
YC is 100% what you make of it. It's not a lean back experience.
I did not meet most of the companies in my batch but I've gotten to know many founders through YC that I would not have otherwise. Founders that have been source of advice and support.
Network of clients - yep don't go into YC expecting to sell to other YC cos. It is easier to get warm intros through the network though.
YC advice, office hours specifically - it's what you make of it too. Expecting a group partner to know your space in great detail is unreasonable but if you recognize that they've seen hundreds of companies with similar problems and make use of that pattern matching, you can get very valuable advice. Some of the advice I did not take and did the opposite and it was the right decision. And some advice that I did not take was exactly right, but I only saw it in retrospect months later.
Fundraising - being a YC company definitely opens doors, and also helps protects you from bad actors who have to think twice before fucking with a YC co. Very valuable for any first-time founder. You have someone to sanity-check everything, terms you're not sure about etc. The bump in valuation is real too.
>Some of the advice I did not take and did the opposite and it was the right decision. And some advice that I did not take was exactly right, but I only saw it in retrospect months later.
Sometimes their advice is right, and sometimes it's wrong? That doesn't sound particularly valuable.
>Fundraising - being a YC company definitely opens doors, and also helps protects you from bad actors who have to think twice before fucking with a YC co. Very valuable for any first-time founder.
You can't expect them to be oracles though, right? Even the most experienced can give not-good-enough business advice, they don't do it on purpose I imagine.
>>Some of the advice I did not take and did the opposite and it was the right decision. //
FWIW that does not mean the advice was wrong. Trivial example: "head East, there's a great bakery there", "I went West and found a place for a lovely lunch".
Unless the parent elucidates (and maybe even then) you can't tell if the advice was right or wrong.
VCs are not gonna help you build your company (doesn't matter if it's YC or anyone else). As a founder, you're the only one responsible about what advice to follow or not (and very often you get conflicting advice from two very credible sources)
As much as I think VC is problematic: Those folks have a host of previous experience. When they share advice with you, it's a distillate of seeing lots of companies go through similar things.
And that's all any advice is - "based on what I've experienced before, here's what I see". You never should take advice unevaluated, but it's additional data that might help you to come to a better decision.
If that additional data is worth enough to you is a separate question, but there's certainly value there.
Because a lot of first-time founders have no idea what they're doing and other experts are at least experts whether they're 100% right or not. Anyone on Sand Hill is probably a better resource than some guy down the alley.
But, as a serial entrepreneur for more decades than I like to think about, I can confidently say that there is one thing that you really do need: you need access to people experienced in business, preferable a similar sort of business to yours. You need their advice.
YC can provide that, and has paved the path for it. You can also get it through many other avenues. But whether through YC or not, your business will be more likely to succeed if you can learn from what other people have already done.
Ah it could be if you learn from it-- which it sounds like they did. They would have learned mire imagine than if they had never had to make those choices and live with the consequences.
"Better" can mean a bunch of different things, too. For example, if your business is headed for the rocks, mediocre advice that you get in time to enact it is much better than perfect advice that you get too late.
What advice isn't, and can never be, is ironclad rules that you can just accept without consideration and expect to provide value. The real value of almost all advice isn't the part where it's telling you what to do -- it's the part where it's providing you with a new way of thinking about the problem.
We can't accoubt for stupidity true. Almost every situation I encounter is a learning opportunity. Even a repetitive one where you learn : "Gee, I shouldn't do that again." : is a lesson.
No idea about whether bad actors would think twice, but if you are asking about whether having YC attached to your business opens doors, absolutely. I did a startup with a much less well-known incubator VC and that alone got us in so many doors compared to when you are trying talk with VCs on your own. Honestly, I think that is the one and only major benefit to doing an incubator. Unless you are just really green and need the support for things that maybe aren't on your radar like taxes and payroll and compliance, etc., the unknown unknowns.
There are a lot of businesses with a great deal of traction that do incubators because it simply opens a lot more doors for VC investment. You would be surprised how little due diligence many investors actually do. Many will just invest in whatever $respected_vc is investing in. Assuming that $respected_vc has already done the due diligence.
> Sometimes their advice is right, and sometimes it's wrong? That doesn't sound particularly valuable.
This is true of literally every source of advice you'll ever encounter.
It's not that the advice is right or wrong in an absolute sense, it's that how good the advice is depends on the context of it. So you always have to evaluate the advice according to your own circumstances. Some of it will be appropriate to you and some will not.
Yah, seeing that is a signal from others personal experience that you’re now entering into non-formulaic territory and need to put on the appropriate hat.
> This is true of literally every source of advice you'll ever encounter.
Right, that's the point. If the main thing you have to say about some advice is a thing that's true about all advice, then that's not a good endorsement.
The main thing about the advice comes immediately before the bit you’re zooming in on. Want to talk to people who have seen hundreds of companies deal with what you’re dealing? YC is great for that.
> Want to talk to people who have seen hundreds of companies deal with what you’re dealing? YC is great for that.
The way I read your post, saying you "can get" very valuable advice immediately followed by saying some advice was wrong undermines that "can" pretty solidly. I'm not just looking at that sentence in isolation.
Could we get an estimate of how much of the advice was right, weighted by how non-obvious each thing was and how much of an impact it would have to follow or not follow?
> The way I read your post, saying you "can get" very valuable advice immediately followed by saying some advice was wrong undermines that "can" pretty solidly.
I disagree. Getting advice from subject matter experts is almost always of great value. The chances of that advice being on-target for you are never 100%, but that doesn't mean the advice is without value. It just means that it's not infallible.
In the end, as with literally everything about running a business -- VC backed or not -- you need to take in all of the quality information you can get and decide what's important/relevant and what's not.
Having access to more information is a Good Thing, even if some particular bit of information isn't helpful.
Also, while access to subject matter experts is one of the benefits of a group like YC, it's not necessarily the most important. Even if that's not useful to you, the other benefits may very well be.
Disclaimer -- I'm personally not interested in doing VC-backed ventures. For me, the juice isn't worth the squeeze, so I'm not asserting that YC is some sort of panacea that is valuable to everyone. But it is obviously of great value to some. Part of what an entrepreneur needs to learn how to do is how to determine what is of value to your startup and what is not. Every venture is different, and has different needs.
100% right is likely impossible, but the way it was written it made it sound as if it was right 50% of the time, which is essentially the worst you can do. Anything below or above that is valuable. Obviously, the closer to 0% or 100% the better.
I just had this discussion with my child. I tried to advise them through experiences based on my trip through those same experiences. So I gave them advice like 'don't rack up student debt' and "don't buy a house that costs more than 3x your salary".
Turns out, even though I had the same experiences (went to college, bought a house, etc.) my advice doesn't seem to fit today's world. At some point, they should just quit asking me for advice. #DitchTheSherpa
that you got advice for the particular areas you needed and it was not always bad is actually a pretty major step up from what you’d otherwise be dealing with, in my experience.
If you could find a source of advice for areas you need that is always bad, that would be amazingly useful. Each piece of advice is another pitfall you can confidently avoid.
Eh, I know you're being facetious but the opposite of bad advice is not good advice. Things are more complicated than that. Which is why even a 20% hit rate (say) could be very impressive.
If you can get multiple wrong takes on the same topic you can very likely narrow down the correct path by a lot. Even if each piece of anti-advice is kind of vague by itself.
The advice can't always be right. As a founder, I get a lot of (also unsolicited) advice every day, and it is the founder's responsibility to decide what advice makes sense in the current context. YC partners always emphasise that, and I really appreciate that.
In general, I can only say positive things when it comes to YC advice (especially on the fundraising side - YC partners know A LOT about fundraising)
Substantiating as an early employee of a YC company. There is much honor among thieves, so to speak.
EDIT - but to the OP's point, yeah, it's what you make of it. I would suspect that word could get out about founders who are rude or combative to important people as not being worthy of any veil of protection.
> Sometimes their advice is right, and sometimes it's wrong? That doesn't sound particularly valuable.
As others have commented, all advice is like that. The person offering it cannot know your precise situation, but just pattern match on what they hear. That's life.
I turn this around the other way: if I am asked for my advice but the asker uses none of it, I don't feel bad, but stop offering advice. I'm clearly not the right person to be helping them.
But the opposite is true too: if the asker takes 100% of my advice then they aren't thinking about their business (or whatever they're asking about). And so I won't offer them any more advice either.
Whenever I see interviews with YC advisors, they blame mistakes of founders of not taking their advice as the biggest as mistake.
I don't have a strong opinion on this, and I believe YC is worth it, as 7% of nothing is still nothing, so any way a startup can decrease its risks is great.
My experience is usually more like being told to do X, me saying X probably isn’t worth the time and energy, doing X anyway at their prompting assuming they’ll take some accountability for it going sideways, it ultimately going sideways because it was a bad idea, and then them taking zero accountability for their bad idea and not helping with the fact we’ve now been materially set back by the attempt.
I’ve since learned to align our incentives around advice. If they’ll put their money where their mouth is to stand behind their advice, then it’s good advice. If they won’t, then it’s bad advice and I’m just their lab rat.
As someone who has raised hundreds of millions of dollars for venture capital backed companies, I can tell you that this absolutely does not change even at the highest level of the company.
My advice from experience - if the advice you're receiving is wrong and you know it's wrong, explain why it's wrong and if you're pressured to go against your advice, then that person is not a fit for you and you should part ways.
Thanks for the tip. That’s more or less where I’ve ended up with things. Initially I was obstinate to predictable deleterious result. Then I went through being compliant only to be hung out to dry for abiding when it didn’t work out. Then I went through a phase of trying to educate in hopes of them coming around to no avail. Now I just look for stronger signs of alignment right out of the gate before even bothering to spend the time engaging at all.
> My advice from experience - if the advice you're receiving is wrong and you know it's wrong, explain why it's wrong and if you're pressured to go against your advice, then that person is not a fit for you and you should part ways.
I've raised about 5 million from VC... and agree at least 100% with this advice.
” ‘… The choice is yours: to go or wait.’ [Gildor said.]
‘And it is also said,’ answered Frodo, ‘Go not to the Elves for counsel, for they will say both no and yes.’
‘Is it indeed?’ laughed Gildor. ‘Elves seldom give unguarded advice, for advice is a dangerous gift, even from the wise to the wise, and all courses may run ill. But what would you? You have not told me all concerning yourself; how should I choose better than you? But if you demand advice, I will for friendship’s sake give it.’“
I can’t speak for if it is better or not in YC land, but I can vouch for a truly amazing amount of scammers that salivate when they hear startup. It’s mind boggling.
If someone makes a YC company legitimately happy, then using them with other YC companies would be both natural and a good way to filter out the scammers.
> I can vouch for a truly amazing amount of scammers that salivate when they hear startup.
It really is amazing, isn't it? Over the years, I've developed a few coping mechanisms. One of which is that I never tell people I'm an entrepreneur, and I never use the word "startup".
I work for a business, doing <whatever the business does>. Outside of potential investors, nobody needs to know that the company is a startup running on my sweat and blood.
Does it really need to be stated that you can learn a ton from advice you don’t directly take? It could be relevant later, get you to think up a different solution, help you understand a competitor’s business model or decisions, improve your understanding of the industry you’re in, etc.
Advice does not need to be correct to be valuable. Simply getting a perspective on a problem, and a proposed strategy, can improve your ability to reason about your problem domain. If advice is wrong, and you choose not to follow it, then you know that people will ask about it later and you will be prepared to explain why you thought it was wrong; which is a better situation then saying to potential investors "Gee, never thought about that option."
That is to say that advice, right or wrong, gives you information about the problem space and perspectives on it; which can be valuable if you evaluate said advice critically.
As an example "You should always unit test your code" may not be applicable, but being able to say something like "This code is almost 100% dealing with External systems so a pure unit test would not be the appropriate way to test this code" is a better answer than "What's unit testing?" (Yes, I'm sure someone is going to quibble with this example :) )
Hearing both good and bad advice and making smart decisions is what a CEO’s job is. Get as much advice as possible but understand no one knows your business like you do. Being able to hit go hard on the right advice and go slow/ignore the bad is what makes a good leader.
VC's have pitched their "value added" other than funding forever. I suspect it is no different with YC. From my own limited experience as a startup founder VC's can be detrimental as well as helpful. Ultimately if they provide a stable source of funding and lend credibility to your venture consider yourself lucky. The valuations are just a reflection of the mood of the day.
It's been an only option during Covid times. I believe now the program is still remote-friendly, tho everyone is encouraged to come in-person (particularly because it became crystal clear how harmful the remote experience is)
> Founders that have been source of advice and support.
What are the specific logistics/semantics of reaching out to a group of "founders" with targeted questions? Is it an e-mail chain? Is there a group chat? Discord? WhatsApp? iMessage?
I feel like if you were to ask 10 different "founders" general questions about "should I do XYZ in business?" (pivot, grow, measure how much you should listen to or ignore existing noisy customers, raise prices, don't raise prices, offer a free tier, don't offer a free tier), aren't you possibly going to get 10 different answers given that business isn't an exact science? Or... is it?
I could not help but notice the similarity with another popular question "Is MBA worth $100K+" and the equally similar answer "MBA is what you make of it".
this seems obvious, but its not for some. Should you get an MBA from Harvard? the material is probably very similar to other materials in other programs. But, the contacts you can make are probably priceless. Are you a shy individual who isn't going to put effort into meeting people, growing a network? probably not worth it because the actual advantage is the people, not the degree.
A classic example I use is I attended Arizona State for a bachelors and masters in electrical engineering. A friend of mine attended Arizona State for bachelors and Stanford for a masters. We both learned the same material. He had more opportunities to meet good contacts and use those resources to expand his future. Did he? no, he ended up at a defense contractor back in AZ. Instead he had larger student loans to pay back. The big fancy schools have big fancy networks of people, but if you're not going to leverage it, its not worth it. Sounds like YC is very similar.
No but you don't need a Stanford degree to do it. They hire out of local areas. My girlfriend is attending ASU virtually right now and I've been really impressed with their program. When she said she was learning Matlab in a fairly normal math course I had a bit of a revelation about the defense partners of the school.
5 years out he's doing defense work in AZ... but 20 years out he's flexing that Master's to get CTO roles, and making connections at the local Cornell / Stanford / MIT club, etc. etc.
Absolutely. Except, YC is designed to maximize your odds of "surviving"
It really is like college/university. You can skip class every day and no one cares. You can also attend every class, leverage every resource, and work really hard to be successful.
YC absolutely does not guarantee success (speaking from experience. my YC company failed). It absolutely increases your chances of success, particularly if (or perhaps only if) you don't have a strong professional network and/or network of advisors.
The fundraising aspect is understated. If you build a company on your own lots of investors don’t really care. But if you graduate from YC you get a huge reputation bump.
That said, there's definitely diminishing returns doing an accelerator for a 2nd time. I did Techstars NYC 3 years after doing YC, and no complaints but once you're part of the YC (or Techstars) network, you're in and you know all the core teachings / philosophies - sort of like a college degree.
Plus, you already have the experience of starting and running a company.
100% do an accelerator at least once. But doing one twice, I would really consider the cost/benefit.
I find these two concepts [1, 2] at odds with each other. Not a critique on the author - on the contrary, empathy: I felt the same when applying to YC (did not make a batch).
On one hand, the general impression you get when preparing for your application (via FAQs, Startup School, YC videos, etc) is very much in line with [1] - YC is looking for _very_ early stage.
But once you go through the actual application you feel focus shift towards [2] - metrics and $. That is to say (with admittedly some not-having-been-selected bias), I feel [2] is a significant factor in deciding on applications. So as I weigh in on whether to apply for the next batch, I'm not sure whether a product I've just finished building makes sense for YC and whether I should gamble on attempt #3.
I think it would help both YC and founders if they take some steps to make this clear(er) for potential applicants.
[1] > In general, there is an evident focus on the very early stage without a product. The main theory and advice are about how to figure out what to do, how to build an MVP, how to launch, how to talk to customers, where to find the first 10 customers, how to raise the first money, and so on. Needless to say, for companies with tens or even hundreds of thousands in revenue it won’t be very valuable.
[2] > [...] present dry facts—how much money customers already paid you, what the size of the market, if you count all the units you can sell, what you have actually built and what is working today. And this will always sound bad for anyone, it just can't sound good in the early days.
> But once you go through the actual application you feel focus shift towards [2] - metrics and $. That is to say (with admittedly some not-having-been-selected bias), I feel [2] is a significant factor in deciding on applications.
While the application does ask about that (and I'm sure it's very helpful for getting in if you've already demonstrated traction) it's absolutely not required to have any revenue or users when getting accepted into YC. I'm in the current batch. We applied before we'd built anything and definitely before we had any users (we didn't even have a name yet -- we had to pick one in order to submit the application). Across the batch there are a few companies that came in with strong traction but they're definitely in the minority.
My impression from YC and investors in general is that without a product and traction, the investment decision becomes mostly about you as a person. Do you have an impressive résumé? Are you an MIT/Stanford grad? Do you come across as especially intelligent and ambitious in conversations?
When you have a product and traction, a lot of that goes out the window. All the things I listed above are basically proxies for “might have the ability to make something people want”. If you’ve already shown you can do that, other things become less important. On the extreme end, where you are growing like crazy, most investors will overlook just about any flaw or lack of credentials.
I think this dissonance comes from most of YC's guiding literature being written by PG in the 2000s and early 2010s. Back in those days it was definitely possible to grab the attention of users and investors with janky prototypes. But now the reality is that prototypes are nothing and traction is king. The new YC partners probably have to make this shift in practice and out of politeness, they don't call out the guiding literature
>I’ve seen enough cases when saying “oh, I’m also from YC” didn’t move the needle.
When you're one of a thousand companies every year, why would it? Are YC particularly discerning, or are they optimizing getting as many through the "system" as possible?
> In the end, YC is an investor, an investor with a strong reputation, who is now sitting in a very comfortable chair and can select the best startups and invest in them at a meager price
Wait what? a ~$7m valuation, _pre product_, is considered meager these days?
So much of this seems to just be a misunderstanding of how venture capital works. Like, yes, obviously they want your pitch to minimize flashy and showy and maximize real numbers like customer count, average spend, and market size.
I may have a low opinion of venture capitalists but at the end of the day they're not complete idiots. They're operating with a known framework, they're trying to maximize their own returns, and the only way to know if that will happen is to know hard numbers (like how many customers you have, how much money you have in the bank, how quickly you spend money), all the hype and sales charisma is not going to help you, and if that's your entire presentation to investors they're going to tell _other_ investors not to waste their time talking to you.
The reason you're getting advice to minimize hype and showmanship and maximize hard numbers is because when you get into those investor meetings they're going to cut off hype and showmanship and ask you to just tell them the numbers. This isn't some "make life easier for YC and make every startup fit into a box" thing, it's just how investor pitches work.
I wonder how much of this is a function of the W22 batch being remote.
We all know the benefits: The fundraising pop is great, the brand patina helps you hire better talent than you would otherwise, the advice can be useful, especially for first-time founders, you can sell into the YC network, etc. All of this pales, IMO, to the value of the personal connections you make in the program. It sounds like OP, by virtue of being 8,400 miles away, missed out on that.
I went through YC in S14, and I found the in-person experience to be invaluable. There were 80 companies at the time, so we had somewhere around ~200 founders in our batch. Even at that scale, you're not going to get to know everyone, and I found myself gravitating toward a smaller group of people who I connected with personally.
I'm not going to lie, YC was stressful. You're dropped in amongst bunch of smart and accomplished people who are sprinting as fast as possible toward the all-consuming Demo Day. It's a bit of a pressure cooker, but that's not unintentional. Those shared experiences formed the substrate of some amazing, life-long friendships.
I have 15+ close friends who went through S14. We talk every day. We've been in each other's weddings. We've watched each other have kids, shut down companies, start new ones, get acquired for enormous amounts of money, and everything in between. It's been incredible watching their trajectories over the last 9 years. Some are C-level execs at public companies, some are tier 1 VCs, a couple are billionaires, some are homesteaders and amazing parents. All of them are solid, kind, high-quality people, the likes of which you are unlikely to meet in the regular world.
I think you lose much of that in the remote-only format. If I were to go through a remote-only accelerator located in Singapore, I imagine I would make few meaningful personal connections. Like it or not, Zoom is a pretty thin facsimile of real human interaction.
My life's trajectory is meaningfully better for the friendships I made in S14, and I expect that trend to keep compounding over the next 30 years. If you missed that benefit, you missed much of what makes YC special.
Even if you can't have personal connections with the founders of 80 companies in a batch, having hundreds of companies in each batch--twice a year!--is seriously diluting my own worked-for-a-YC-startup brand equity. "Oh, yeah, I met Jeremy at $EVENT" becomes a thing of the past when there are thousands of founders with tens of thousands of early-stage employees.
> All of them are solid, kind, high-quality people, the likes of which you are unlikely to meet in the regular world.
This attitude may have something to do with the skepticism we low-quality people out in the regular world may harbor for the Silicon Valley startup sphere
I understand how easily this feeling can arise. It may not be obvious but we spend a lot of energy on HN trying to mitigate it. I don't want a high-status-insider vs. low-status-outsider dynamic on HN.
One thing I'd like to tell you is that as someone who came from little class privilege and a geographically provincial place, and had zero connection to the "Silicon Valley startup sphere" or really any other sphere, YC welcomed me and gave me a shot and a lot of help.
These dynamics aren't simple but I'd like to think (and do think) that YC is still one of the best ladders in the snakes-and-ladders game if you're talented, ambitious, and sincere. And at the same time, there are still lots of obstacles.
maybe my brain is sleed-deprived but this doesn't feel great to me either. can we not be high quality people without those connections, regardless of how those connections might be made easier for the rare individuals who participate in YC?
Who is saying you/we are not high quality people? No one is saying that high quality people don't exist outside YC, just that YC accepts high quality people. You are committing the logical fallacy known as the fallacy of composition [0].
I believe this was the offending sentence fragment that implied the sentiment you say is not there: "the likes of which you are unlikely to meet in the regular world"
I read that as 'There's a higher probability of meeting high quality people in a location that actively concentrates them, then just randomly going through life.'
Definitely could have worded that better, but my point is that I found YC to cultivate a density of smart + ambitious + nice people that I haven't found in quite the same quantities in most other networks I've been a part of.
This reminds of my college experience. My friends and I were always stressed trying to finish the next CS project or study for the next exam but we came out of it extremely close to one another. Nothing builds friendships like shared pain I guess.
I went through YC in S12 and have been investing in YC companies + active on Bookface and YC’s founder matching program. I recommend YC to almost everyone I meet and plan to apply again when/if I am working on a new product company.
We’re all adults and we all have agency. Every community is a function of how much you put into it; how much you invest in getting to know others.
It feels like the author expected YC to do all the work of community engagement for him. That’s 100% not what YC is about. Folks like Michael Seibel, Garry Tan, and other partners all respond to emails + engage as much (or as little) as you ask them to.
It's unfortunate the author had an experience that wasn't ideal, but I'd be wary of saying this is representative.
Do the things that make you seem like a great startup/founder regardless of YC: show you can execute. This means coding or launching experiments, and show that whatever you're doing is getting some sort of a market response.
A lot of people think YC has some secret formula they will teach you (I think maybe OP made this mistake?), in reality they are very open: build product and talk to users.
If you can do that well, you'll get in.
It's amazing how few people actually "get" this, though. I recently met with a friend who is running a consulting firm and is convinced he has a product... But there's no demo, customers can't just sign up -- they need to speak with him and it takes a few weeks to onboard them, etc... Yet his deep (and well-meaning, I'm sure!) belief is that he has a product. Nothing I say will convince him otherwise.
10 years post YC, I find most of the issues people have with startups (getting in to YC included) is they overcomplicate their interpretation of what YC says you should do.
No one clearly knows, but it should be there for a reason. We used a referral when applying and I would recommend finding one. Won't hurt for sure, prob will increase the chances to be seen.
We did W21, and whilst the point that 'remote < in-person' has some validity, I fundamentally disagree on the points about YC's network, partners and community.
Most of the YC network effects occur after demo day. Likewise, most of the socialising occurs after demo day, as during the batch companies have little time to socialise. You get out of the network what you put in.
Similarly, with YC partner advice - it depends on how you utilise it. To be honest, we probably under-utilise the partners (we made most of our stupid startup mistakes pre-YC). But looking at batch-mates I've seen companies attribute pivotal decisions to YC advice, particularly during funding rounds.
I'd liken it a college experience - you won't be spoon-fed like you were in preschool. You must be self-directed to be successful, and there's always someone smarter and more successful than you to learn from.
I have minimal contact with YC these days, and have no particular motivation to artificially inflate the value of the program.
YC was transformational for my company (MedCrypt). I have almost zero negative things to say about it, and would do it again immediately with my next company (despite probably not needing help raising the first $500k for a company).
I can't think of a situation where I would recommend a company not accept a spot in YC.
YC used to be for people who investors wouldn’t normally take a chance on…and imo, it still is. If you have a FAANG attached to your name with multiple years of experience, you can probably find better deals elsewhere. YC has done a relatively good job of scaling themselves, but it has never been a “one size fits all” funding solution, and if you are a founder you’d be wise to consider your options carefully.
That being said, removing the relocation requirement was a big mistake — it was partially a forced move, but it’s not at all surprising that you get a significantly degraded founder experience if you are not in SF.
I have FAANG attached to my name with multiple years of experience, where else would you recommend as a replacement or competitor to YC? I am aware of angel investors’ existence but looking for anything besides that
It depends on what your goals are and what your business needs. I would recommend reaching out to your local angel investors —- even if you don’t plan to fundraise with them, they usually have an avenue for you to get in touch directly with investors —- and they can interview you about your startup and dispense free advice that is much more informed than what I can give you here.
Assuming you are at a very nascent stage with your startup, there are still all sorts of options out there, including but not limited to —- Kickstarter, loans, raising from friends and family, running on a shoestring budget offshore, raising convertible notes from local investors (you probably have some of these people in your extended network already), selling preorders, self-funding (e.g. via collateral loans), grants, incubators (other than YC), etc.
There are a lot of variables, and several options to choose from depending on your particulars.
Thanks! Yeah I guess to be more specific, what meant to ask is: besides YC and angel investors, what will help me as much or better than YC? Particularly in the context of the person I was replying to saying that people with my background can potentially find better deals than with YC (which I guess I assumed meant in terms of VC - you’re right that it probably helps with alternative funding routes too).
Like, what better incubators or accelerators will be looking at 5+ years at FAANG as a shoe-in (honestly, I’m a bit skeptical that’s even a shoe in at at YC, but what do I know) and give me better terms and/or more support? I know Sequioa has a small incubator now and I’ve actually talked to them, but I assume there are some good ones out there that would be hard to learn about except through word of mouth.
You might be able to find some of those, but you probably don't want to work with incubators or accelerators that consider anybody -- let alone such a large absolute number of people as "ex-FAANG" -- a "shoo-in". Just think about the second order consequences of that.
And yes, when it comes to startups (i.e. business) and funding, word of mouth is very powerful and not to be underestimated.
> YC used to be for people who investors wouldn’t normally take a chance on…and imo, it still is.
It absolutely is not. The recently released Founders Directory[1] shows that YC is practically a big tech company now. Most alumni are from FAANG or Ivy League. This was an inevitable result when YC became the most prestigious accelerator in the West
That's why I said in my opinion. Which is to say, in my opinion the opportunity YC presents is more compelling for non-FAANG founders. That doesn't necessarily mean anything for what the demographics actually end up being. I'm sure at least some of those FAANG founders are favoring prestige over a better financial deal.
> Now, with a 500k deal, the amount is more substantial, but in turn, its terms are not super funder-friendly. Imho, the previous 125k deal was better for the founders since once the company gets accepted to YC it can raise easily a lot more money and on better terms.
Wait, the additional $375k is an uncapped SAFE. How could a company “easily raise at better terms”?
Add one angel or one early commit of 10k to it and the uncapped SAFE turns into a very bad SAFE. Basically it blocks you from flexibility of building up fundraising moment gradually.
According to the contract, in exchange of 375K USD (+/- salary for 1.5 developer) you agree to this when you sign the MFN:
==
If the Company issues any Subsequent Convertible Securities with terms more favorable than those of this Safe (including, without limitation, a valuation cap and/or discount) prior to termination of this Safe, the Company will promptly provide YCombinator with written notice thereof, together with a copy of such Subsequent Convertible Securities and, upon written request of YCombinator, any additional information related to such Subsequent Convertible Securities as may be reasonably requested by the Investor.
In the event YCombinator determines that the terms of the Subsequent Convertible Securities are preferable to the terms of this instrument, YCombinator will notify the Company in writing within 10 days.
Promptly after receipt of such written notice from the Investor, the Company agrees to amend and restate this instrument to be identical to the instrument(s) evidencing the Subsequent Convertible Securities.
==
So, any type of issue triggers the MFN and the jackpot to YC.
What I'm saying is that you can issue the exact same $375k YC MFN SAFE to other investors (with a different $$ value). This will not trigger the MFN because the terms are absolutely the same
Most small angels, like myself, will not do an uncapped SAFE. It's too risky when I'm only putting in $25K. I'd like to know at least very roughly how much I will own when it converts.
I don't want to be in a situation where they never raise again and then exit for $100M five years later and I only get my small little piece with no benefit for being in early.
It means that MFN will likely convert very fast, and these 375k will cost you more dilution than you might want otherwise. Or you have to play very fancy sheningans convincing other investors who wanted to be early to wait, just to postpone it and decrease its dilution.
Imagine you have a toy store, and you want to make it bigger and better.
To do that, you need more money, so you ask your friend YCombinator to help you.
In return, you promise to give them a special kind of toy money that you created (like monopoly money) that they can trade for real toys later when your store becomes bigger and better.
But for now, there are no real toys to exchange yet because the shop is still small and not opened yet.
Now, if you ask other friends for help and give them even better toy money (with better chances to get more toys), you need to tell YCombinator about it.
If YCombinator thinks the new toy money is better, they can ask you to change the toy money you gave them earlier to match the better one.
You have to do this quickly after YCombinator tells you they want the better toy money.
Your problem is that the YC terms are generous, and what you are complaining about is a hypothetical where you trigger a problem by causing an early valuation. If you choose to, you get given $375k by YC, that will usually convert at the price of your future round A valuation, also the SAFE doesn’t have a discount or onerous conditions from YC (YC has zero incentive to stiff you over a measly few hundred k, from their perspective). That is far more generous than most investors who want to capture the gains between angel and round-A (e.g. the angel below who wouldn’t ever consider an uncapped SAFE, for good reasons).
If you want your angels or $10k, get them into your Cap table before YC (just like you had prior investors?). Or ask YC for an exemption, which I would expect them to give you for a reasonable request (although I admit I am just guessing).
I suspect there are many ways that you can stiff YC out of their money, because the terms are founder friendly in comparison with most VC terms? Could someone sell 5% of the company to VC_BOB for “round A” at a ridiculous overvaluation (diluting YC’s SAFE’s), then shortly afterwards sell 15% to VC_BOB for “round B” at a normal valuation?
My intuition is that YC is playing an iterated game where reputation is everything, so YC has little interest in screwing over founders (YC seems wayyy more founder friendly than most VCs). YC probably wants unethical founders to show themselves sooner, rather than waste time on them. YC is interested in the few big IPO winners - and filtering for them and investing their time in them. YC might punish highly egregiously public cases to avoid having YC look like soft touches. YC can do the uncapped SAFE because they structure everything to get the round A valuation within months at demo day (they don’t seem to care so much about their gains as an “angel”).
Generally I found the points in your article to be fairly weak, and unfairly critical, and missing important details (e.g. your founder’s over-dilution). Disappointment is expected for over 50% of YC inductees, but I don’t see that YC has been bad for you. Some cash, access to resources, a lot of learning, and the ability to try again! Disclaimer: no love for YC, I just prefer people to be fair in their judgements.
But really what matters is what outcomes have occurred? Although the only way I can think of to know that would be to ask the experiences from a few founders a few years ago that used the YC SAFE.
Most surprising quote to me was this: If you have some kind of b2c or Enterprise business, all you will get is a knowledge exchange with homies. YC does not have any industrial partners, and YC partners themselves will not do external intros since this is a big part of other accelerators' pitch. Obviously YC can't compete with vertical-focused accelerators for depth of industry knowledge and day-to-day access to corporate sponsors, but knowing when and who and how to approach is one of the biggest challenges for an early stage startup and one where I'd assume YC's network was big enough to add value (beyond a list of companies to send cold emails to indiscriminately)
I don't know what "industrial partners" are but "YC partners will not do external intros" is not true, and a weird thing to say since it wouldn't be in their interest.
We did YC in S20 (fully remote during COVID) and, as a Silicon Valley outsider, it was absolutely, 100%, no-questions-asked worth it for the fundraising credibility alone.
After demo day, we were able to get in the room with dozens of top-tier investors, got multiple term sheets, and were able to pick the seed investors that were right for our business. This is a luxury none of my non-YC founder friends have had (being outside of Silicon Valley it was just such a stark, stark contrast in our fundraising experience to my friends'). Fundraising has always been a struggle and giant distraction for them.
The doors YC opened for us let us focus on building and have had an outsized impact on our trajectory. Re the 7%: I'd much rather have 93% of a giant pie over 100% of a small one.
Edit: I should caveat that YC and VC in general are built around finding & amplifying outliers. If you don't think you are an outlier founder and aren't trying to build an outlier company, our experience probably isn't relevant.
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[ 3.2 ms ] story [ 321 ms ] threadIt sounds like structural critiques; like a smaller, tighter community that onboards with better incentives, enables more efficient engagement with the alumni and batch would be a big gain. And importantly, like ycombinator could show more flexibility and interest in the batch. That sounds like a smaller network overall though, with less success stories to tout. If they have a better 'batting average' so to speak, though, that would help the investor environment. How does it affect their income and social lives, balancing it all I wonder. Thanks for the article!
As for the community I believe it can only be build relatively strong for <100 people. Hence, smaller niche-specific batches?
I can't answer your question completely as in the end we decided not to raise and returned the money...
What’s the strongest counter argument you can make in favor of YC?
I have an idea for a b2c product I want to build that has a few paths to revenue (and a possible b2b offshoot), as well as acquisition by FAANG (or FAANG-adjacent). Is there something about taking investment from YC that prevents me from turning around and selling it for $2M after building it out a bit more?
Alternately, as a solo founder, if I got to a point of $10K MRR I'd be happy to just keep doing what I'm doing, but I guess I'd have an obligation to continue trying to grow?
edit: to clarify, I'd be using the $125K 7% part of the investment without necessarily dipping into the additional $375K in this situation. But maybe I'm not understanding how the MFN provision works
edit: Investors are also expecting to take a loss on many of the investments. 2M is one exit option, which still gives them +17% return on investment
I know that's not the standard type of exit YC are looking for, and I'm open to growing a bit more, but not as interested in taking additional investments. Final exit could end up being 10M for all I know.
I just think this growth at all costs attitude needs to change a bit with the current economy. I'd be happy to take $80K for a 7% investment also, but they have a standard deal which I think perverts the incentives and, frankly, leads to outcomes where they're pushing you to take more investment even if you could just have a sustainable business pulling in 10-30K MRR or something
I don’t usually see one-liner comments from you.
Giving 7%, but getting say 20% extra when you sell, could be financially sensible (depending on your other costs and benefits).
Do you think it is worth lying?
The YC model is.. it's own thing.. seems like in the current economy, they need every company to be a potential unicorn, which works out for them because they're doing it at scale, and the ones that deliver, deliver outsized returns.
But possibly doesn't work out as well for the founders, because the 9/10 that don't deliver, are forced to run their company into the ground chasing a moonshot vs. a sustainable lifestyle business, and don't get to reap the rewards they might get from the latter business model
Amazing video on bootstrapping: https://youtube.com/watch?v=otbnC2zE2rw
There are funds trying to succeed at the many-small-successes model of investing - personally I am skeptical (from my own experience) because the natural failure rate is so high (before stressors due to investors). Edit: and there is a strong negative selection bias - small software businesses asking for money is a loud signal that they are much less likely to be successful at all IMHO. Relevant article about Mittelstands ”We need a middle class for startups”: https://neilthanedar.com/we-need-a-middle-class-for-startups... and my comment https://news.ycombinator.com/item?id=31350478
Money doesn't seem like the main benefit to going through YC (otherwise there are lots of other investment firms one could approach). The main advantage seems to be the network, connections, and expertise on running a business.
Sure, if I had another 30K I'd have an extra year of runway, which can be pretty valuable right now. But I suspect solo-bootstrapping without a good VC will result in a lot of friction at points that a specialist VC would be well-suited to assist with (providing standard ToS, verifying compliance, business structure boilerplate, etc)
The real benefits and costs are hard to measure, the maths is obvious.
TinySeed and Calm Fund come to mind.
Each side needs to cater to the other a bit but ultimately this is just the difference between funders and builders.
Too much of either is not good, so perhaps the same is true here.
People are upset with the idea, that the mother and the fetus form a feedback loop, to ensure the baby is as large as possible, while still being able to exit the womb??
Yeah, horrible, flaggable idea. Even if one disagrees, what is the logic in flagging? "Ew, ick! Birth!"?!?
Bizarre.
That's quite different from what you said in the GP comment. This is a more neutral way to put it.
I've taken the flags off the GP comment now, but I'm leaving the subthread collapsed because it's off topic.
Not everyone is a good story-teller either so to avoid the confounding charm factor, just be as boring and straight to the point as possible?
Which should also keep every startup of their batches on equal footing and hopefully mitigate the hype factor?
Not defending them, just me brainstorming about what could be plausible explanations for this.
That's his complaint.
The sad thing is that the hype cycle is more important than the product delivery. Many huge investments are made on products that have nothing delivered. It's more BS than we'd like to admit. My own product failed in the market because I focused on the MVP and making it real and not on getting hype out and using that to get money.
For example, if YC has a strict rule about inflating the startup users only up to 20%, and then everyone will inflate them 20%-25% and investors will pay only the the 50% because they never know how much the number are inflated.
Now it’s just remote webinar garbage, talk to some people on Zoom, etc.
The Ivy League is talked about and well known all over and public knowledge your neighbor your aunt, your wife, your mother, the guy who owns the local bakery etc. It's an international brand.
YC known in the startup community. Most likely the guy who runs the local 200 person wholesale operation wouldn't even know about it unless he read about it in the WSJ he reads print edition. Go to sell to that company and they will say HUH what's that mean 'YC'.
Given that, is it harder to get into Harvard or YC based on admission numbers?
I always find it laughable (sorry not directed at you in particular) when people make that type of comparison. Probability of something occurring for unrelated events ... why in the world does that matter at all? I could say it's harder to get accepted to a certain health club than Harvard or YC.
I am reminded of a restaurant in my city that opened and the local press talked about how hard it was to get a reservation. In fact this particular chef decided to open that restaurant both because he didn't have any experience and also the fact that it had a limited amount of tables would always make it seem more valuable in some way than it was. 'So hard to get a table harder than WONDERFUL RESTAURANT IN SAME CITY where it's hard to get a reservation HARDER THAN THAT EVEN!' Additional point in that restaurant was it took over the location (another PR win) of an old established and very famous restaurant in the same city. The press ate that up as a story angle. As if it mattered at all. It didn't only it made a good story angle. Otherwise why should it make any difference at all?
1.5 - 2%
Harvard: 4%
$125k is for 7%. The other $375k SAFE causes extra dilution when next round or sale occurs.
> Ivy League school comparison
One difference: Harvard graduates 98%, but YC founder’s success rate is say 33% - http://paulgraham.com/die.html - and actual financial success is power law (average $ returns good, median return for founder rounds to $0). Edit: https://jaredheyman.medium.com/on-the-life-and-death-of-y-co...
I think any educational system will run into similar issues.
The problem is that the system takes over and becomes more important than the original goal of educating, coaching, helping. And instead it just becomes a conversions and return optimizer.
At the end the individuals don’t matter as long as the aggregate produces good enough results.
It's true that the energy has changed from "let's hack the economy / see if this works" to "yup it works".
This is very similar to how I have experienced remote work as well. Just replace startups with individuals and the takeaways are still the same.
> In their picture of the world, you, the founders, should only build a product and talk to customers, everything else is superfluous and waste of time. Hiring is waste of time, paid advertising is waste of time, content is waste of time, talking to investors is waste of time, getting media coverage is waste of time.
IMHO YC doesn’t want you to “build” a product they want you to “grow” a product. I think the YC framework (again IMHO) is to get an idea out and then do everything you can to make it grow 30% each week, and if after a few months you’re obviously failing at that — maybe that product isn’t working.
This seems, on the whole, like kind of reasonable high level operating parameters for startups, since traction is what defines revenue and fundraising chances.
I do think there is a flip side to this approach which is it can kind of lead to short-term-erism where if things aren’t working you flail about, and/or it can encourage founders to specifically tackle things they can ship quickly rather than things that are maybe more compelling.
I would argue that when things are slowly working that’s exactly when you need skilled advisors and founders to give you critical advice. Most dying startup don’t flat line… they slowly grow.
Getting you to focus on those two things, particularly the second one which many technical founders are initially out of their comfort zone doing (I need to work on it myself), is probably a huge value add in itself if they're successful at doing just that.
Compounded? After 8 weeks you go from 10 customers to 81, seems doable. But after 6 months you'd have 5,428 customers. Maybe if it was an App Store app? But if you have to talk to any of them, yikes. Might not be the most sustainable rate of growth?
Why the F are we having this conversation on HN and it not a seminal discussion happening with, at and of YC?
Why do we need "trench knowledge" as opposed to YC actually holding an open forum on such?
All I am saying is that YC terms should be a place for clarification outside of HN - and if Q's show up on HN, they should be answered and addressed in a YC FAQ/forum-specific/whatever...
Grats.
Many of the negative criticisms here have to do with the fact that there are 4k companies that have gone through YC, and this batch specifically had 400 companies, so it's no wonder there are aspects that are less than ideal.
Interesting to see this after reading the ‘nice vs competent’ threads because everything you mentioned is a soft skill, and correlated with EQ/SQ, niceness and playing of the game.
I guess it’s a reminder that there is no objective superior strategy of being nice vs being competent because the game is too complex for that. It’s strategically applying both to increase your own survivability and if you’re so inclined, that of your company too.
I disagree with each and every one of these ratings and conclusions.
Firstly, the comparison should be "Is the alternative to YC worth it?" For many companies, the alternative is raising nothing and bootstrapping, or raising at significantly lower valuations.
Additionally, I believe founders approach YC the wrong way. YC is not there to coddle you. They are there to give you access to hundreds of exceptional founders, brilliant partners who have seen much more than you, and a fundraising platform.
It is on the founder to adapt their behavior to get the most out of Y Combinator. Unfortunately, many founders are unable to do so, and waste the opportunity.
Define "exceptional"? Is that major exits above a certain valuation? YC has hundreds of these?
That’s the type of thing that you have to earn, and if you earn it you don’t need it.
Unfortunately, long-term performance is proven to not correlate well with performance during the batch, and YC are transparent about it. So I wouldn't recommend over-stressing it.
I don't understand this. Why would they stop people talking to each other?
The review has four stars for fundraising. So it's not like they don't address that.
However I don't understand "1.2. Network of clients/partners". I wonder why YC is expected to provide that. And for the Money one, that's common knowledge and only makes sense if you don't get a lot of value out of it.
The most concerning one to me is that Networking isn't 5 stars and I would like to hear reviews from others because I suspect it might still deserve that.
Is there anything you can't do on your own? Like finding email and writing? Mentioning that you're from YC in the beginning adds less to the conversion than the actual message you're conveying, imo.
I agree with people here saying YC attempting to scale seems to be hurting the overall experience. Hopefully with their recommitment to early stage companies only, this changes for the better. Their earlier wins set them up as the pre-eminent accelerator and diluting that experience those earlier companies had seems like a bad idea to me.
They have access to metrics I don't have though (obviously) so who knows I may be totally off base.
YC is 100% what you make of it. It's not a lean back experience.
I did not meet most of the companies in my batch but I've gotten to know many founders through YC that I would not have otherwise. Founders that have been source of advice and support.
Network of clients - yep don't go into YC expecting to sell to other YC cos. It is easier to get warm intros through the network though.
YC advice, office hours specifically - it's what you make of it too. Expecting a group partner to know your space in great detail is unreasonable but if you recognize that they've seen hundreds of companies with similar problems and make use of that pattern matching, you can get very valuable advice. Some of the advice I did not take and did the opposite and it was the right decision. And some advice that I did not take was exactly right, but I only saw it in retrospect months later.
Fundraising - being a YC company definitely opens doors, and also helps protects you from bad actors who have to think twice before fucking with a YC co. Very valuable for any first-time founder. You have someone to sanity-check everything, terms you're not sure about etc. The bump in valuation is real too.
I'd do YC again in a heartbeat.
Sometimes their advice is right, and sometimes it's wrong? That doesn't sound particularly valuable.
>Fundraising - being a YC company definitely opens doors, and also helps protects you from bad actors who have to think twice before fucking with a YC co. Very valuable for any first-time founder.
I'd love to see this substantiated.
FWIW that does not mean the advice was wrong. Trivial example: "head East, there's a great bakery there", "I went West and found a place for a lovely lunch".
Unless the parent elucidates (and maybe even then) you can't tell if the advice was right or wrong.
And that's all any advice is - "based on what I've experienced before, here's what I see". You never should take advice unevaluated, but it's additional data that might help you to come to a better decision.
If that additional data is worth enough to you is a separate question, but there's certainly value there.
But, as a serial entrepreneur for more decades than I like to think about, I can confidently say that there is one thing that you really do need: you need access to people experienced in business, preferable a similar sort of business to yours. You need their advice.
YC can provide that, and has paved the path for it. You can also get it through many other avenues. But whether through YC or not, your business will be more likely to succeed if you can learn from what other people have already done.
What advice isn't, and can never be, is ironclad rules that you can just accept without consideration and expect to provide value. The real value of almost all advice isn't the part where it's telling you what to do -- it's the part where it's providing you with a new way of thinking about the problem.
There are a lot of businesses with a great deal of traction that do incubators because it simply opens a lot more doors for VC investment. You would be surprised how little due diligence many investors actually do. Many will just invest in whatever $respected_vc is investing in. Assuming that $respected_vc has already done the due diligence.
This is true of literally every source of advice you'll ever encounter.
It's not that the advice is right or wrong in an absolute sense, it's that how good the advice is depends on the context of it. So you always have to evaluate the advice according to your own circumstances. Some of it will be appropriate to you and some will not.
Right, that's the point. If the main thing you have to say about some advice is a thing that's true about all advice, then that's not a good endorsement.
The way I read your post, saying you "can get" very valuable advice immediately followed by saying some advice was wrong undermines that "can" pretty solidly. I'm not just looking at that sentence in isolation.
Could we get an estimate of how much of the advice was right, weighted by how non-obvious each thing was and how much of an impact it would have to follow or not follow?
I disagree. Getting advice from subject matter experts is almost always of great value. The chances of that advice being on-target for you are never 100%, but that doesn't mean the advice is without value. It just means that it's not infallible.
In the end, as with literally everything about running a business -- VC backed or not -- you need to take in all of the quality information you can get and decide what's important/relevant and what's not.
Having access to more information is a Good Thing, even if some particular bit of information isn't helpful.
Also, while access to subject matter experts is one of the benefits of a group like YC, it's not necessarily the most important. Even if that's not useful to you, the other benefits may very well be.
Disclaimer -- I'm personally not interested in doing VC-backed ventures. For me, the juice isn't worth the squeeze, so I'm not asserting that YC is some sort of panacea that is valuable to everyone. But it is obviously of great value to some. Part of what an entrepreneur needs to learn how to do is how to determine what is of value to your startup and what is not. Every venture is different, and has different needs.
Ah, I see. I didn't interpret it that way at all!
Turns out, even though I had the same experiences (went to college, bought a house, etc.) my advice doesn't seem to fit today's world. At some point, they should just quit asking me for advice. #DitchTheSherpa
Unfortunately, real life advice is rarely something you can short. :(
In general, I can only say positive things when it comes to YC advice (especially on the fundraising side - YC partners know A LOT about fundraising)
EDIT - but to the OP's point, yeah, it's what you make of it. I would suspect that word could get out about founders who are rude or combative to important people as not being worthy of any veil of protection.
As others have commented, all advice is like that. The person offering it cannot know your precise situation, but just pattern match on what they hear. That's life.
I turn this around the other way: if I am asked for my advice but the asker uses none of it, I don't feel bad, but stop offering advice. I'm clearly not the right person to be helping them.
But the opposite is true too: if the asker takes 100% of my advice then they aren't thinking about their business (or whatever they're asking about). And so I won't offer them any more advice either.
I don't have a strong opinion on this, and I believe YC is worth it, as 7% of nothing is still nothing, so any way a startup can decrease its risks is great.
This is normal human behavior. You did X and failed. If only you had done Y as I had suggested... Monday morning quarterbacking at it's finest.
I’ve since learned to align our incentives around advice. If they’ll put their money where their mouth is to stand behind their advice, then it’s good advice. If they won’t, then it’s bad advice and I’m just their lab rat.
My advice from experience - if the advice you're receiving is wrong and you know it's wrong, explain why it's wrong and if you're pressured to go against your advice, then that person is not a fit for you and you should part ways.
I've raised about 5 million from VC... and agree at least 100% with this advice.
If someone makes a YC company legitimately happy, then using them with other YC companies would be both natural and a good way to filter out the scammers.
It really is amazing, isn't it? Over the years, I've developed a few coping mechanisms. One of which is that I never tell people I'm an entrepreneur, and I never use the word "startup".
I work for a business, doing <whatever the business does>. Outside of potential investors, nobody needs to know that the company is a startup running on my sweat and blood.
That’s how all advice works.
That is to say that advice, right or wrong, gives you information about the problem space and perspectives on it; which can be valuable if you evaluate said advice critically.
As an example "You should always unit test your code" may not be applicable, but being able to say something like "This code is almost 100% dealing with External systems so a pure unit test would not be the appropriate way to test this code" is a better answer than "What's unit testing?" (Yes, I'm sure someone is going to quibble with this example :) )
THIS. Running (or even being the lowliest employee of) a maybe-not-yet-viable new & hopefully-fast-growing company is so, SO what you make of it.
What are the specific logistics/semantics of reaching out to a group of "founders" with targeted questions? Is it an e-mail chain? Is there a group chat? Discord? WhatsApp? iMessage?
I feel like if you were to ask 10 different "founders" general questions about "should I do XYZ in business?" (pivot, grow, measure how much you should listen to or ignore existing noisy customers, raise prices, don't raise prices, offer a free tier, don't offer a free tier), aren't you possibly going to get 10 different answers given that business isn't an exact science? Or... is it?
A classic example I use is I attended Arizona State for a bachelors and masters in electrical engineering. A friend of mine attended Arizona State for bachelors and Stanford for a masters. We both learned the same material. He had more opportunities to meet good contacts and use those resources to expand his future. Did he? no, he ended up at a defense contractor back in AZ. Instead he had larger student loans to pay back. The big fancy schools have big fancy networks of people, but if you're not going to leverage it, its not worth it. Sounds like YC is very similar.
5 years out he's doing defense work in AZ... but 20 years out he's flexing that Master's to get CTO roles, and making connections at the local Cornell / Stanford / MIT club, etc. etc.
P.S this is not a recent market phenomenon
This is 100% what survivor bias sounds like.
Every party is what you make of it. Every job. Every business. Every interaction.
Except, you know, when this other thing is overhyped and one hopes getting there helps and it turns out... it's not any different than anything else?
Absolutely. Except, YC is designed to maximize your odds of "surviving"
It really is like college/university. You can skip class every day and no one cares. You can also attend every class, leverage every resource, and work really hard to be successful.
YC absolutely does not guarantee success (speaking from experience. my YC company failed). It absolutely increases your chances of success, particularly if (or perhaps only if) you don't have a strong professional network and/or network of advisors.
Probably the best thing they get out of this.
I think this captures my opinion too, in spirit.
That said, there's definitely diminishing returns doing an accelerator for a 2nd time. I did Techstars NYC 3 years after doing YC, and no complaints but once you're part of the YC (or Techstars) network, you're in and you know all the core teachings / philosophies - sort of like a college degree.
Plus, you already have the experience of starting and running a company.
100% do an accelerator at least once. But doing one twice, I would really consider the cost/benefit.
On one hand, the general impression you get when preparing for your application (via FAQs, Startup School, YC videos, etc) is very much in line with [1] - YC is looking for _very_ early stage.
But once you go through the actual application you feel focus shift towards [2] - metrics and $. That is to say (with admittedly some not-having-been-selected bias), I feel [2] is a significant factor in deciding on applications. So as I weigh in on whether to apply for the next batch, I'm not sure whether a product I've just finished building makes sense for YC and whether I should gamble on attempt #3.
I think it would help both YC and founders if they take some steps to make this clear(er) for potential applicants.
[1] > In general, there is an evident focus on the very early stage without a product. The main theory and advice are about how to figure out what to do, how to build an MVP, how to launch, how to talk to customers, where to find the first 10 customers, how to raise the first money, and so on. Needless to say, for companies with tens or even hundreds of thousands in revenue it won’t be very valuable.
[2] > [...] present dry facts—how much money customers already paid you, what the size of the market, if you count all the units you can sell, what you have actually built and what is working today. And this will always sound bad for anyone, it just can't sound good in the early days.
On the defense of YC, I would say, they aim to make you think in terms of metrics and $ from day 1, perhaps?
While the application does ask about that (and I'm sure it's very helpful for getting in if you've already demonstrated traction) it's absolutely not required to have any revenue or users when getting accepted into YC. I'm in the current batch. We applied before we'd built anything and definitely before we had any users (we didn't even have a name yet -- we had to pick one in order to submit the application). Across the batch there are a few companies that came in with strong traction but they're definitely in the minority.
When you have a product and traction, a lot of that goes out the window. All the things I listed above are basically proxies for “might have the ability to make something people want”. If you’ve already shown you can do that, other things become less important. On the extreme end, where you are growing like crazy, most investors will overlook just about any flaw or lack of credentials.
When you're one of a thousand companies every year, why would it? Are YC particularly discerning, or are they optimizing getting as many through the "system" as possible?
Exactly, therefore making very questionable the whole "YC network" concept
Wait what? a ~$7m valuation, _pre product_, is considered meager these days?
I may have a low opinion of venture capitalists but at the end of the day they're not complete idiots. They're operating with a known framework, they're trying to maximize their own returns, and the only way to know if that will happen is to know hard numbers (like how many customers you have, how much money you have in the bank, how quickly you spend money), all the hype and sales charisma is not going to help you, and if that's your entire presentation to investors they're going to tell _other_ investors not to waste their time talking to you.
The reason you're getting advice to minimize hype and showmanship and maximize hard numbers is because when you get into those investor meetings they're going to cut off hype and showmanship and ask you to just tell them the numbers. This isn't some "make life easier for YC and make every startup fit into a box" thing, it's just how investor pitches work.
We all know the benefits: The fundraising pop is great, the brand patina helps you hire better talent than you would otherwise, the advice can be useful, especially for first-time founders, you can sell into the YC network, etc. All of this pales, IMO, to the value of the personal connections you make in the program. It sounds like OP, by virtue of being 8,400 miles away, missed out on that.
I went through YC in S14, and I found the in-person experience to be invaluable. There were 80 companies at the time, so we had somewhere around ~200 founders in our batch. Even at that scale, you're not going to get to know everyone, and I found myself gravitating toward a smaller group of people who I connected with personally.
I'm not going to lie, YC was stressful. You're dropped in amongst bunch of smart and accomplished people who are sprinting as fast as possible toward the all-consuming Demo Day. It's a bit of a pressure cooker, but that's not unintentional. Those shared experiences formed the substrate of some amazing, life-long friendships.
I have 15+ close friends who went through S14. We talk every day. We've been in each other's weddings. We've watched each other have kids, shut down companies, start new ones, get acquired for enormous amounts of money, and everything in between. It's been incredible watching their trajectories over the last 9 years. Some are C-level execs at public companies, some are tier 1 VCs, a couple are billionaires, some are homesteaders and amazing parents. All of them are solid, kind, high-quality people, the likes of which you are unlikely to meet in the regular world.
I think you lose much of that in the remote-only format. If I were to go through a remote-only accelerator located in Singapore, I imagine I would make few meaningful personal connections. Like it or not, Zoom is a pretty thin facsimile of real human interaction.
My life's trajectory is meaningfully better for the friendships I made in S14, and I expect that trend to keep compounding over the next 30 years. If you missed that benefit, you missed much of what makes YC special.
The individual network is larger, but comprises a smaller % of the total network as the program scales.
This attitude may have something to do with the skepticism we low-quality people out in the regular world may harbor for the Silicon Valley startup sphere
I understand how easily this feeling can arise. It may not be obvious but we spend a lot of energy on HN trying to mitigate it. I don't want a high-status-insider vs. low-status-outsider dynamic on HN.
One thing I'd like to tell you is that as someone who came from little class privilege and a geographically provincial place, and had zero connection to the "Silicon Valley startup sphere" or really any other sphere, YC welcomed me and gave me a shot and a lot of help.
These dynamics aren't simple but I'd like to think (and do think) that YC is still one of the best ladders in the snakes-and-ladders game if you're talented, ambitious, and sincere. And at the same time, there are still lots of obstacles.
[0] https://en.wikipedia.org/wiki/Fallacy_of_composition
Tons of incredible non-YC folks out there too.
We’re all adults and we all have agency. Every community is a function of how much you put into it; how much you invest in getting to know others.
It feels like the author expected YC to do all the work of community engagement for him. That’s 100% not what YC is about. Folks like Michael Seibel, Garry Tan, and other partners all respond to emails + engage as much (or as little) as you ask them to.
It's unfortunate the author had an experience that wasn't ideal, but I'd be wary of saying this is representative.
A lot of people think YC has some secret formula they will teach you (I think maybe OP made this mistake?), in reality they are very open: build product and talk to users.
If you can do that well, you'll get in.
It's amazing how few people actually "get" this, though. I recently met with a friend who is running a consulting firm and is convinced he has a product... But there's no demo, customers can't just sign up -- they need to speak with him and it takes a few weeks to onboard them, etc... Yet his deep (and well-meaning, I'm sure!) belief is that he has a product. Nothing I say will convince him otherwise.
10 years post YC, I find most of the issues people have with startups (getting in to YC included) is they overcomplicate their interpretation of what YC says you should do.
I only expected and discusses the community engagement within the batch, and the power of YC connection between the batches. Both are quite low.
The connection to Brian Chesky or Paul Graham is expected to be ~0 from the start.
Most of the YC network effects occur after demo day. Likewise, most of the socialising occurs after demo day, as during the batch companies have little time to socialise. You get out of the network what you put in.
Similarly, with YC partner advice - it depends on how you utilise it. To be honest, we probably under-utilise the partners (we made most of our stupid startup mistakes pre-YC). But looking at batch-mates I've seen companies attribute pivotal decisions to YC advice, particularly during funding rounds.
I'd liken it a college experience - you won't be spoon-fed like you were in preschool. You must be self-directed to be successful, and there's always someone smarter and more successful than you to learn from.
YC was transformational for my company (MedCrypt). I have almost zero negative things to say about it, and would do it again immediately with my next company (despite probably not needing help raising the first $500k for a company).
I can't think of a situation where I would recommend a company not accept a spot in YC.
That being said, removing the relocation requirement was a big mistake — it was partially a forced move, but it’s not at all surprising that you get a significantly degraded founder experience if you are not in SF.
Assuming you are at a very nascent stage with your startup, there are still all sorts of options out there, including but not limited to —- Kickstarter, loans, raising from friends and family, running on a shoestring budget offshore, raising convertible notes from local investors (you probably have some of these people in your extended network already), selling preorders, self-funding (e.g. via collateral loans), grants, incubators (other than YC), etc.
There are a lot of variables, and several options to choose from depending on your particulars.
Like, what better incubators or accelerators will be looking at 5+ years at FAANG as a shoe-in (honestly, I’m a bit skeptical that’s even a shoe in at at YC, but what do I know) and give me better terms and/or more support? I know Sequioa has a small incubator now and I’ve actually talked to them, but I assume there are some good ones out there that would be hard to learn about except through word of mouth.
And yes, when it comes to startups (i.e. business) and funding, word of mouth is very powerful and not to be underestimated.
It absolutely is not. The recently released Founders Directory[1] shows that YC is practically a big tech company now. Most alumni are from FAANG or Ivy League. This was an inevitable result when YC became the most prestigious accelerator in the West
[1] https://www.ycombinator.com/companies/founders
Wait, the additional $375k is an uncapped SAFE. How could a company “easily raise at better terms”?
==
If the Company issues any Subsequent Convertible Securities with terms more favorable than those of this Safe (including, without limitation, a valuation cap and/or discount) prior to termination of this Safe, the Company will promptly provide YCombinator with written notice thereof, together with a copy of such Subsequent Convertible Securities and, upon written request of YCombinator, any additional information related to such Subsequent Convertible Securities as may be reasonably requested by the Investor.
In the event YCombinator determines that the terms of the Subsequent Convertible Securities are preferable to the terms of this instrument, YCombinator will notify the Company in writing within 10 days.
Promptly after receipt of such written notice from the Investor, the Company agrees to amend and restate this instrument to be identical to the instrument(s) evidencing the Subsequent Convertible Securities.
==
So, any type of issue triggers the MFN and the jackpot to YC.
I don't want to be in a situation where they never raise again and then exit for $100M five years later and I only get my small little piece with no benefit for being in early.
What does this mean in practice?
To do that, you need more money, so you ask your friend YCombinator to help you.
In return, you promise to give them a special kind of toy money that you created (like monopoly money) that they can trade for real toys later when your store becomes bigger and better.
But for now, there are no real toys to exchange yet because the shop is still small and not opened yet.
Now, if you ask other friends for help and give them even better toy money (with better chances to get more toys), you need to tell YCombinator about it.
If YCombinator thinks the new toy money is better, they can ask you to change the toy money you gave them earlier to match the better one.
You have to do this quickly after YCombinator tells you they want the better toy money.
Your problem is that the YC terms are generous, and what you are complaining about is a hypothetical where you trigger a problem by causing an early valuation. If you choose to, you get given $375k by YC, that will usually convert at the price of your future round A valuation, also the SAFE doesn’t have a discount or onerous conditions from YC (YC has zero incentive to stiff you over a measly few hundred k, from their perspective). That is far more generous than most investors who want to capture the gains between angel and round-A (e.g. the angel below who wouldn’t ever consider an uncapped SAFE, for good reasons).
If you want your angels or $10k, get them into your Cap table before YC (just like you had prior investors?). Or ask YC for an exemption, which I would expect them to give you for a reasonable request (although I admit I am just guessing).
I suspect there are many ways that you can stiff YC out of their money, because the terms are founder friendly in comparison with most VC terms? Could someone sell 5% of the company to VC_BOB for “round A” at a ridiculous overvaluation (diluting YC’s SAFE’s), then shortly afterwards sell 15% to VC_BOB for “round B” at a normal valuation?
My intuition is that YC is playing an iterated game where reputation is everything, so YC has little interest in screwing over founders (YC seems wayyy more founder friendly than most VCs). YC probably wants unethical founders to show themselves sooner, rather than waste time on them. YC is interested in the few big IPO winners - and filtering for them and investing their time in them. YC might punish highly egregiously public cases to avoid having YC look like soft touches. YC can do the uncapped SAFE because they structure everything to get the round A valuation within months at demo day (they don’t seem to care so much about their gains as an “angel”).
Generally I found the points in your article to be fairly weak, and unfairly critical, and missing important details (e.g. your founder’s over-dilution). Disappointment is expected for over 50% of YC inductees, but I don’t see that YC has been bad for you. Some cash, access to resources, a lot of learning, and the ability to try again! Disclaimer: no love for YC, I just prefer people to be fair in their judgements.
But really what matters is what outcomes have occurred? Although the only way I can think of to know that would be to ask the experiences from a few founders a few years ago that used the YC SAFE.
After demo day, we were able to get in the room with dozens of top-tier investors, got multiple term sheets, and were able to pick the seed investors that were right for our business. This is a luxury none of my non-YC founder friends have had (being outside of Silicon Valley it was just such a stark, stark contrast in our fundraising experience to my friends'). Fundraising has always been a struggle and giant distraction for them.
The doors YC opened for us let us focus on building and have had an outsized impact on our trajectory. Re the 7%: I'd much rather have 93% of a giant pie over 100% of a small one.
Edit: I should caveat that YC and VC in general are built around finding & amplifying outliers. If you don't think you are an outlier founder and aren't trying to build an outlier company, our experience probably isn't relevant.