Well done guys! Your web site looks pretty great and I'll be trying it out in a sec. I wondered myself if submitting early is a wise decision. I submitted our application a month before the due date but then we changed our idea entirely. I would hope the guys didn't read the original one and moved on.
Edit: I also think that YC should not be what decides whether you create your startup or not. It is great to see you guys kept going. The people that decide to change ideas or abandon their startup because of not getting into YC tell me that they are pretty good at picking people that aren't serious about creating a successful business.
I like the edit. Anyone that would stop working on their startup because they didn't get funded by YC or TechStars probably shouldn't be doing a startup in the first place.
I just want to add one thing: The quality of the presentation, design, and execution is better than many Ycombinator start-ups (at launch day/ first couple of months). I haven't tried the actual product, but from outside it looks neat and well presented.
Now there are lots of pretty damn good sites that YC alumni are making from launch day; but the fact that a good number isn't, suggests that PG might want to improve his filter process a bit.
> suggests that PG might want to improve his filter process a bit.
I'm not sure how this is related. From what I've observed, PG selects promising founders, not great site-builders. Is it fair to expect all of them to create beautiful sites?
yes. If you in theory pick the "best of the best" you expect .... the "best". that include the visual packaging and presentation of the companies products / services.
Well, if you are in the SaaS business, I expect that you have a beautiful and functional interface. If you are providing me something not related to the interface, then I don't care. (e.g. I'm using prgmr.com but I don't really care about the interface, their site design or an admin back-end; all I need is the shell).
Now there are lots of pretty damn good sites that YC alumni are making from launch day; but the fact that a good number isn't, suggests that PG might want to improve his filter process a bit.
Do beautiful sites at launch day correlate well with IPOs? I'll supply the answer: no. Many beautiful sites will not IPO. Many tech companies which IPOed had abominable sites at launch day. The long-term salience of this is an amusing historical footnote and nothing more.
The blog has a graph showing around 1500 paying customers, which is still amazing (nearly $15k / month revenue!). I'm guessing the missing 6000 odd are staying on the free plan.
Sorry, that's misleading (though I do wish :)) There are about 1500 customers in a trial plan that hasn't expired and doesn't require a credit card, so we will only convert some percentage of them to paying customers.
However, we just pushed an update last night that has dramatically increased our conversion rate from free to paid trials. Only time will tell by how much!
I'm surprised the potential here wasn't recognized; seems like a no brainer given the target market (one that's growing ridiculously fast with no signs of slowing down) and the obvious level of quality! Of course what doesn't look like a no brainer with the benefit of hindsight ;) Out of curiosity what change did you make that led to your conversion rate increasing so dramatically? You mentioned something in your post too, but didn't elucidate.
For the free builder we added a feature to immediately upgrade and save your work in progress in your dashboard, instead of just telling you to upgrade, forcing you to decide between losing your work or doing it all over again.
I'd never heard of Codiqa until I read this post, but I'm glad I did. Really impressive app, I'll definitely be using this to build mobile apps in the near future.
Congrats guys - very interested to see what happens when the free trial period ends for the users who joined after Codiqa showed up on the jQuery Mobile site.
It's great to see bootstrappers getting some well deserved love. Lots of attention goes to the startup lottery winners and it's good to have a reminder that you really can do it without funding just as well.
Not only that, but the longer you can delay taking funding, the less of your business you'll have to give away.
I hate the thought that getting funded is like winning the lottery. Yes, it is absolutely necessary for some startups, but far too many seem to treat it as an end in itself (presumably there are bragging points associated with being able to say you've been funded to the tune of X million)
Bootstrapping encourages you to keep your costs tight, focus on profit and revenue, ship early, quickly and often, and build something people want.
Bootstrapping profitable companies also have more leverage when ready for funding.
My use of the term startup lottery was meant to describe the communual celebration and veneration of quite often earning some runway.
The businesses that need it are ones that have to find a product-market fit and a repeatable business model. I just think you're better equipped to find validated scalable business models once you've done it without money.
There's nothing quite like having to find and build what people are willing to pay for out of the gate instead of putting it off. From where I see it, I don't see enough technologically complex startups that need a runway, and in hindsight could have been built without funding.
The startups that would, tremendously benefit from the coaching, introductions, and business model development are rare, and special, and maybe that reflects in the small number of startups accepted to Y!. The rest shouldn't consider themselves a failure either... this startup certainly fit the mantra build something people want (and will pay for)
I would like to argue that having success at getting founding is more predictable than being successful at bootstrapping a company. However, I think the majority of businesses are bootstrapped, you just don't hear as much from them. It really depends on business idea if taking venture capital makes sense or not. Some businesses are able to generate money quickly and don't require a large upfront investment, others do.
Checked out the homepage on FF 11.0 and the gray text under "Pure jQuery Mobile" shows up as an unreadable light gray (vs. Chrome where it shows up fine). Might want to check that out.
Great idea and it does look very slick and well executed, but from the little playing around I did it just didn't feel as fluid as a desktop app would. I'd definitely prefer a native desktop application to html and js, perhaps with an option to view and tweak my creations with the web interface when I'm off site.
You could just put "Plans", which because you're selling something implies it has a price.
"Pricing" sounds like you're raising the issue of cost too quickly (on the landing page). Give them the value proposition of the plans, then tell them how much it will cost.
For other options, there's always "Products" but that makes me think you have multiple products (Product Suite, Standalone 1, Standalone 2...)
I always happen to look for "Plans & Pricing" these days; it's one of the things I scan for.
I disagree with that. A lot. The Pricing page is one of the most viewed pages on a typical app sales site (in my experience, at least), and the one that does the lion's share of the selling. People head to it straight away for a reason, and they need to be able to find it without effort - hence the obvious title. It's too important to not be bold and explicit.
Congrats guys! I wholeheartedly believe in bootstrapping over funding. Keep that company to yourselves. I played around with Codiqa on the jquerymobile site and what you've put together is truly impressive. I've worked with startups in the past and I haven't seen any as well put together.
Gobuzz was basically google alerts for people and companies that matter to you. We would send you an email each day (or more) with news about these people and companies. Near the end we also supported NLP stuff to find new people mentioned alongside your important contacts.
I still think it's a missing piece of the news world, but we lacked experience and did not dig in and focus.
No, we did the indexing and searching ourselves utilizing Solr and using a document service (can't remember the name, starts with an S, which was pricy). This let us take out a lot of "fuzzy" tokenization requirements and rely on pretty exact matches in content. I'd love to talk more about it with you. My email is in my profile.
Is there a little something extracted from jQueryMobile, which lets me use only 'form-styling' of their otherwise huge piece of work? I want only the relevant css and javascript out of the entire thing.
Any help would get a huge hug from me. And thanks, in advance.
BTW nice work with Codiqa, I am in. [Edited for grammar]
Believe it or not I like this being the top story. We know there are lots of bugs in our process and we want to hear the bug reports.
I went back to look at the application. It fell immediately below the threshold for invitation to interviews. I.e. if even one of us had given them a grade one step better, they would have made it to interviews.
When we make mistakes, it's usually in this phase. Most of the time when we screw up it's by not inviting a group to interviews, rather than by interviewing them and turning them down. So this startup is exactly where a mistake would be most likely to occur: in the applications that fell just short of the cutoff for interviews.
The good news is, we'd already decided to fix this problem. We're going to do 3 interview tracks for s2012, which will let us interview 270 groups instead of the 180 we did last time.
If we'd done that last time, we would have interviewed these guys. But last batch was the first time we did parallel interview tracks at all, and we needed to test whether it worked for 2 before we went to 3.
Look at it this way: at least you interview everyone you accept. Most colleges interview only a few prospective students, and that's for a four year program rather than a three month one.
I meant this as a compliment for the hard work you guys do evaluating all the potentials and making deliberate, thoroughly evaluated decisions on who you work with. I'm sorry if I didn't convey that properly.
Are you guys keeping track of statistics of grades for applications? I am wondering if at some point there is a clear cut off that you can safely say we don't need to interview these groups. If it is a linear/gradual decrease I'd imagine it would be very difficult to find that threshold.
The probability that we will fund a startup decreases pretty smoothly as you go down the list. It's not asymptotic at the cutoff. We'd probably have to interview half the applicants to get that last one. Which would kill us.
I can't imagine what it's like to go through so many applicants, so I won't.
A few thoughts:
- It would be interesting to see what made them 181 instead of 179. Would applicants this close to the cutoff get feedback of any kind about how they fared?
- Whoever ranks 271 might be missed out too in the future.
- Has any thought been given to sharing "you're this close" details with the 50 or 100 applicants that were within the proverbial whisker, or giving them a second review to see if any would move up or down relative to their peers in the same range?
If offered a spot now in YC, would you take it? Not going back in time, but actually, now? If so, and if PG has already admitted it was a mistake, what's to stop YC from offering you a spot in their next session and you taking it? Are there no "re-dos" in YC? Just asking.
That's my question -- would YC make the offer now, and would the company accept it? Basically, could there possibly be a re-do? The answer might be "no" for both, but it might be "yes". Is applying to YC and accepting a one-shot deal for all parties, or can there ever be a chance to get back together? From the responses and posts, it looks like it's a one-shot deal - either they accept you and you accept the offer, or there's no chance to get together again in the future.
I don't think much explanation is necessary. YC is never going to catch every potentially successful startup. The process can be refined, but you will never recognize all of them. Averages being what they are, I think YC has done very well. The Codiqa team showed tenacity, and when YC didn't work out for them, they found another route. They are a great example for other startups. None of this should put YC in a negative light.
I don't know if I'm going to be able to express what I feel but I'll try.
YC "bugs" are
- startups that are accepted and fail
- startups that are rejected and fail, but would have thrived had they been accepted
(Of course this last kind of bug is extremely difficult to track down.)
But if a startup makes a killing after being rejected by YC it means they didn't need you.
If you consider this a bug, there's some kind of moral problem because it means YC is trying to siphon every promising team in order to maximize YC's success, independently of who YC is likely to help more.
You're not just betting on horses, you're also training them: it seems what you should want to maximize is YC's impact...?
You're considering success or failure as a binary outcome. It's possible that a startup is accepted and wouldn't have failed anyways, but that being in YC makes it a bigger success than it otherwise would have been (through mentoring or other intervention by YC). My understanding is that is the sweetspot for YC anyways - everyone is a winner there.
I think a more important aspect is that YC is able to connect with exceptional individuals (and groups). Even if one particular group fails they may add talented individuals to their network and connect them with other more successful startups.
> You're considering success or failure as a binary outcome
I think that's how it is, yes, and PG seems to have stated as much; in essence, you either die or don't die; if you don't die, the scale of your success depends on a lot of things that are beyond your control.
(Actual quote from PG: "The formula for the success of a startup includes a random multiplier of roughly zero to a thousand." — http://news.ycombinator.com/item?id=3050280 )
If one subscribes to this point of view then the purpose of YC is to help startups not die, and the purpose of the YC admission process is to
1. select all startups that have a chance of not dying if admitted (eg, refuse startups that don't stand a chance in hell of not dying)
2. if the sample from #1 is too large, reduce it at the low end first (startups that are not very likely to not die) but maybe also at the high end (startups that seem certain to not die no matter what)
Maybe reducing the selection from the high end is just plain stupid / counter productive, but if you don't do that, it's not very clear why one would be in this business in the first place (as opposed to other lucrative businesses).
I think you're both right. Success can be understood as binary, depending on how you interpret it. You either fail or you don't. But YC can help you find that faster than without YC. So there's room for improvement even if success is binary.
These guys got 10k users in a month. But maybe they'd get 100k in 3 if they had YC. Even if you understand that either way it would be a success anyway. It's still reasonable to assume that it would be a worthwhile deal for them. If YC missed the opportunity to help them get even better, even faster. It's reasonable for both sides to treat that as a bug.
I don't really see the moral problem. YC is a group of investors, not a charity. Of course they're going to look for the kind of hardy founders who would succeed even if they got rejected.
Yes, they're not a charity. They're also not a pension fund. To me they look a little like a prep school (but maybe I'm wrong).
The mission of a prep school is to help good students become brilliant; if it becomes stuffed by already brilliant candidates (for example because the admission process is more selective than the admission process of the college it preps for), so much so that there's no place left for second-tier students who would make the most of its teaching, then there's a problem.
I'm just wondering if this is something YC worries about or should worry about.
I see what you mean, since Y Combinator is an institution now, and its selection process has an impact on the overall ecosystem. But let's say Startup A, which is top-tier, would become a $75M company with Y Combinator's help, but would become a $50M company without them. Meanwhile, Startup B, which is second-tier, would become a $3M company with Y Combinator, but would become a $30K company without them. Even if we throw profit out the window (which an investment group doesn't do, obviously), Y Combinator would add a greater total dollar value to Startup A than to Startup B, even though they would multiply the value of Startup B by 100x.
Also, elite prep schools do try to fill their classes with nothing but brilliant students, for a variety of reasons, including money and prestige. There are some negative consequences, to be sure, but it happens. At least Y Combinator increases the size of its classes every year, unlike prep schools.
YC is not like a prep school. It is a win condition for the YC model (really, for any investment system) if so many top-tier companies apply that there's no room for second-tier companies. YC is a business, not a public good.
Many comments to my initial post point out that YC is not a charity. We can all agree on that.
Prep schools are businesses too, BTW. And yes, businesses have a responsibility to their shareholders to maximize profits. But if that was the only purpose of any business, everyone would be selling luxury watches.
YC is not a pension fund putting money in a VC; YC "makes it happen". They invest in very early stage companies because they believe that they can help them succeed (and they do).
In 2004-2005, PG famously predicted the second coming of Apple; if he had put all of his money in Apple stock then, he would be 17 times richer today. And yet that's not what he did. At the same time he was making this prediction, he founded YC.
- - -
I can't seem to explain myself clearly, but I'll give it another try.
The total return of an investment fund is really the return on a very few top investments, which tend to dwarf all others.
Now, if you had a magic prediction device that let you identify for certain the next Google, it wouldn't make sense from a profit-maximizing point of view to invest money in any other company: just put all your money in the next Google and you're done.
It's safe to assume that YC, who have been in business for 7 years (really 14 since they have 2 rounds per year) are getting better at what they do. They should be able to predict who's likely to succeed and who's not, better and better each year.
Therefore in all logic they should be reducing the number of startups they fund: put more money in sure winners and don't fund anybody else.
And yet they're doing the exact opposite: each batch is larger than the previous one.
There can be only two explanations to this: either they're getting worse and worse, and are spreading their bets; or, they're getting better and better and can afford to offer their services to more and more companies.
It seems likely that the second option is the correct one.
>> put more money in sure winners and don't fund anybody else
That is not their business model. Their model is to take a small fraction of the company for a small amount of money, and then help them succeed.
>> There can be only two explanations to this: either they're getting worse and worse, and are spreading their bets; or, they're getting better and better and can afford to offer their services to more and more companies.
So far YC has a fantastic return on investment. I imagine that their returns are the envy of many conventional VC firms.
They invest so little per company that they can afford to invest in every company where the expected return on investment exceeds the amount invested.
As they become better known, they get more and more qualified applicants, and thus the number of bets that they make should be expected to increase over time.
From YC's perspective there are two ways in which they win when they invest in a company. On the one hand they make a return on their investment, classic straight-up utility maximizing economics. On the other hand they help a startup succeed, which is part of their overall purpose aside from raking in fat stacks of filthy lucre.
Even if a company succeeds without YC that doesn't mean that YC's potential involvement is a no-op. On the one hand that represents a missed opportunity for revenue. It also means a missed opportunity to perhaps accelerate the growth of that company beyond what it has managed to achieve on its own.
I think this is too narrow a range to determine where bugs are in the process.
Bugs in the application process can only really be rooted out by startups that apply and are successful.
Startups that apply and fail could point to a bug in a number of different areas - not just the application process.
If the purpose of YC is to make money and improve startups, than they are failing at both of those things if they pass on startups that eventually succeed.
>- startups that are rejected and fail, but would have thrived had they been accepted
PG has specifically stated that this is not a bug (it's a feature). The goal of YC is not to take mediocre or bad startup teams and turn them into wins, but to take the winners and turn them into Super-Winners(Dropbox).
As far as maximizing YC's impact, I think Dropbox maximizes it more than small wins from teams that would have lost had they not been in YC.
If a company can only succeed by getting funding though YC, they should not fund it, in my opinion. I don't think those founders are ready yet to start a startup.
I think PG is talking about YC's selection process. A startup applied, was not accepted, but became a success. Selection is the core of YC team's job, and this post is a self reflection on how can they get better. In that sense, this is certainly a bug.
You're confusing YC with a charity. It is not. Trying to invest in teams that will succeed is the modus operandi of virtually all venture investors, YC included.
YC is trying to rewrite a lot of the rules of venture investing, and has had quite some success there, but at its very core it's important to remember that they are investors. At the end of the day, the measuring stick of an investor is their returns, not how many (proto-) companies they pulled from the brink of implosion. As such, your second measuring stick rings false.
I suspect that AirBnb, Dropbox and Heroku are simultaneously among the investments that YC is the most proud of and the companies that would have been most likely to succeed had they not been a part of YC.
I don't think that makes any sense at all. Like any organization or group, it is seeking the best. In fact, I would imagine they'd be delighted bringing in folks even YC could learn from. I'm sure PG would be the first to say he doesn't have all the answers and cannot magically make every team be successful. Suggesting it's a deficiency in morality is absurd.
This post seems like a success story, so far. So how is not interviewing them a bug? If you are seeking startups who need help identifying how to get customers and how to create products people want, then it seems that Codiqa doesn't fit. Codiqa has customers and is making products people want.
Said another way, the delta between where Codiqa stands today vs. where they would be had they been interviewed does not seem as large an opportunity as probably the opportunities you made for the companies you did select. Therefore, I'd say there's no bug.
Here's a possible solution for the future, have YC former accepties conduct proxy interviews for applicants where ever they are in the country(world) on their convenience. It could help you out, unless you feel that the people you accept are unable to help you make your decision. Ivy league schools do it with alumni, YC could do it with alumni.
I don't know what to reply except that the very words 'process', 'interview', 'batch', 'moderation' these all exist to bring sanity and order into any system at the expense of mediocrity.
Like someone said "Micheal Jordan would NOT want to be selected by YC".
This means people like Mark Zuckerberg, Larry Page, Sergey brin, Bill Gates, Steve Jobs are not likely to come out of YC. Because the very fact that they have to go through layers of interview sessions, and then spend time performing to you, to get your attention like some performance artist performing to the king to get his attention means that is not going to happen.
Because people screw up in interviews. And a interview is generally no measure what the true story actually is. The guide to cracking interviews and performance is learning how to game the system. If your process is known to people outside,and they plan enough to cover all the corners and deal their cards well, they can game your interview process. That's how job hoppers who can do nothing hop around in circles of big successful companies. The situation from evaluating a 'good product' changes to evaluating 'how good the interview went'.
Nerds, Geeks of the best quality hate all this interviewing, playing-to-the-galleries-business. That is why they wish to build their own firm. Now if you subject them though the same bureaucratic process which they had otherwise go through in a traditional large corporate(Applying, interviewing etc) they are just going to go away, take money from somebody else and build some stuff in the same time.
If I would be building a business and need funding from somebody. I would go to them and explain them 'whats in it for them' and take their money.
But if have to go through the same large corporate styles process for this, I will be spending my time for something else. Because the very purpose my starting a business is to avoid that corporate styles processes.
You have to seriously ask what value you bring, or how different you are from anybody else. If you are just evaluating profit prospects(which I agree, is important), funding, taking profits back. Then really you are just another VC. There is nothing wrong with that. But that is what it boils down to.
I LOVE that you are calling them bugs and taking the selection process very seriously. We (Sandglaz) had a similar experience where we went from 4000 to 35000 users after YC rejection.
That said, interviews and applications are inherently subjective and based on a snapshot in time; they will always have "bugs". It is a tough thing to do, and I fully appreciate the effort going into it.
This is what i like to hear! In the future, more and more start ups will be the ones choosing who to get funding from. Power always lies with those who create. Congrats, and keep up the good work!
Compliments on the execution of your site, platform and branding. This is well deserved success. Keep pushing and reapply to YC, I you want to, you'll make it!
Well done and looks quite useful - bookmarked for the future. However, I have a really hard time reading some of the copy (contrast) on my laptop: http://i.imgur.com/fRzAe.png
I played with your app on the jquerymobile site... what immediately frustrated me is that it doesn't seem to be possible to align elements to the bottom of the frame. At least have an option for Footer elements!
123 comments
[ 2.6 ms ] story [ 178 ms ] threadEdit: I also think that YC should not be what decides whether you create your startup or not. It is great to see you guys kept going. The people that decide to change ideas or abandon their startup because of not getting into YC tell me that they are pretty good at picking people that aren't serious about creating a successful business.
Now there are lots of pretty damn good sites that YC alumni are making from launch day; but the fact that a good number isn't, suggests that PG might want to improve his filter process a bit.
I'm not sure how this is related. From what I've observed, PG selects promising founders, not great site-builders. Is it fair to expect all of them to create beautiful sites?
What I'm trying to understand is, if a team of amazing hackers don't understand site design, html and css - should they be rejected at YC?
Do beautiful sites at launch day correlate well with IPOs? I'll supply the answer: no. Many beautiful sites will not IPO. Many tech companies which IPOed had abominable sites at launch day. The long-term salience of this is an amusing historical footnote and nothing more.
If so, congratulations! =)
However, we just pushed an update last night that has dramatically increased our conversion rate from free to paid trials. Only time will tell by how much!
I hate the thought that getting funded is like winning the lottery. Yes, it is absolutely necessary for some startups, but far too many seem to treat it as an end in itself (presumably there are bragging points associated with being able to say you've been funded to the tune of X million)
Bootstrapping encourages you to keep your costs tight, focus on profit and revenue, ship early, quickly and often, and build something people want.
My use of the term startup lottery was meant to describe the communual celebration and veneration of quite often earning some runway.
The businesses that need it are ones that have to find a product-market fit and a repeatable business model. I just think you're better equipped to find validated scalable business models once you've done it without money.
There's nothing quite like having to find and build what people are willing to pay for out of the gate instead of putting it off. From where I see it, I don't see enough technologically complex startups that need a runway, and in hindsight could have been built without funding.
The startups that would, tremendously benefit from the coaching, introductions, and business model development are rare, and special, and maybe that reflects in the small number of startups accepted to Y!. The rest shouldn't consider themselves a failure either... this startup certainly fit the mantra build something people want (and will pay for)
You could just put "Plans", which because you're selling something implies it has a price.
"Pricing" sounds like you're raising the issue of cost too quickly (on the landing page). Give them the value proposition of the plans, then tell them how much it will cost.
For other options, there's always "Products" but that makes me think you have multiple products (Product Suite, Standalone 1, Standalone 2...)
I always happen to look for "Plans & Pricing" these days; it's one of the things I scan for.
No point wasting my team reading anything on that site if the price is out of my league.
Edit: Apparently just like you.
Need a marketing person? Give me a call.
I still think it's a missing piece of the news world, but we lacked experience and did not dig in and focus.
Is there a little something extracted from jQueryMobile, which lets me use only 'form-styling' of their otherwise huge piece of work? I want only the relevant css and javascript out of the entire thing.
Any help would get a huge hug from me. And thanks, in advance.
BTW nice work with Codiqa, I am in. [Edited for grammar]
I went back to look at the application. It fell immediately below the threshold for invitation to interviews. I.e. if even one of us had given them a grade one step better, they would have made it to interviews.
When we make mistakes, it's usually in this phase. Most of the time when we screw up it's by not inviting a group to interviews, rather than by interviewing them and turning them down. So this startup is exactly where a mistake would be most likely to occur: in the applications that fell just short of the cutoff for interviews.
The good news is, we'd already decided to fix this problem. We're going to do 3 interview tracks for s2012, which will let us interview 270 groups instead of the 180 we did last time.
If we'd done that last time, we would have interviewed these guys. But last batch was the first time we did parallel interview tracks at all, and we needed to test whether it worked for 2 before we went to 3.
A few thoughts:
- It would be interesting to see what made them 181 instead of 179. Would applicants this close to the cutoff get feedback of any kind about how they fared?
- Whoever ranks 271 might be missed out too in the future.
- Has any thought been given to sharing "you're this close" details with the 50 or 100 applicants that were within the proverbial whisker, or giving them a second review to see if any would move up or down relative to their peers in the same range?
0.02
http://ycombinator.com/whynot.html
YC "bugs" are
- startups that are accepted and fail
- startups that are rejected and fail, but would have thrived had they been accepted
(Of course this last kind of bug is extremely difficult to track down.)
But if a startup makes a killing after being rejected by YC it means they didn't need you.
If you consider this a bug, there's some kind of moral problem because it means YC is trying to siphon every promising team in order to maximize YC's success, independently of who YC is likely to help more.
You're not just betting on horses, you're also training them: it seems what you should want to maximize is YC's impact...?
I think that's how it is, yes, and PG seems to have stated as much; in essence, you either die or don't die; if you don't die, the scale of your success depends on a lot of things that are beyond your control.
(Actual quote from PG: "The formula for the success of a startup includes a random multiplier of roughly zero to a thousand." — http://news.ycombinator.com/item?id=3050280 )
If one subscribes to this point of view then the purpose of YC is to help startups not die, and the purpose of the YC admission process is to
1. select all startups that have a chance of not dying if admitted (eg, refuse startups that don't stand a chance in hell of not dying)
2. if the sample from #1 is too large, reduce it at the low end first (startups that are not very likely to not die) but maybe also at the high end (startups that seem certain to not die no matter what)
Maybe reducing the selection from the high end is just plain stupid / counter productive, but if you don't do that, it's not very clear why one would be in this business in the first place (as opposed to other lucrative businesses).
These guys got 10k users in a month. But maybe they'd get 100k in 3 if they had YC. Even if you understand that either way it would be a success anyway. It's still reasonable to assume that it would be a worthwhile deal for them. If YC missed the opportunity to help them get even better, even faster. It's reasonable for both sides to treat that as a bug.
The mission of a prep school is to help good students become brilliant; if it becomes stuffed by already brilliant candidates (for example because the admission process is more selective than the admission process of the college it preps for), so much so that there's no place left for second-tier students who would make the most of its teaching, then there's a problem.
I'm just wondering if this is something YC worries about or should worry about.
Also, elite prep schools do try to fill their classes with nothing but brilliant students, for a variety of reasons, including money and prestige. There are some negative consequences, to be sure, but it happens. At least Y Combinator increases the size of its classes every year, unlike prep schools.
Prep schools are businesses too, BTW. And yes, businesses have a responsibility to their shareholders to maximize profits. But if that was the only purpose of any business, everyone would be selling luxury watches.
YC is not a pension fund putting money in a VC; YC "makes it happen". They invest in very early stage companies because they believe that they can help them succeed (and they do).
In 2004-2005, PG famously predicted the second coming of Apple; if he had put all of his money in Apple stock then, he would be 17 times richer today. And yet that's not what he did. At the same time he was making this prediction, he founded YC.
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I can't seem to explain myself clearly, but I'll give it another try.
The total return of an investment fund is really the return on a very few top investments, which tend to dwarf all others.
Now, if you had a magic prediction device that let you identify for certain the next Google, it wouldn't make sense from a profit-maximizing point of view to invest money in any other company: just put all your money in the next Google and you're done.
It's safe to assume that YC, who have been in business for 7 years (really 14 since they have 2 rounds per year) are getting better at what they do. They should be able to predict who's likely to succeed and who's not, better and better each year.
Therefore in all logic they should be reducing the number of startups they fund: put more money in sure winners and don't fund anybody else.
And yet they're doing the exact opposite: each batch is larger than the previous one.
There can be only two explanations to this: either they're getting worse and worse, and are spreading their bets; or, they're getting better and better and can afford to offer their services to more and more companies.
It seems likely that the second option is the correct one.
They invest so little per company that they can afford to invest in every company where the expected return on investment exceeds the amount invested.
As they become better known, they get more and more qualified applicants, and thus the number of bets that they make should be expected to increase over time.
Even if a company succeeds without YC that doesn't mean that YC's potential involvement is a no-op. On the one hand that represents a missed opportunity for revenue. It also means a missed opportunity to perhaps accelerate the growth of that company beyond what it has managed to achieve on its own.
Bugs in the application process can only really be rooted out by startups that apply and are successful.
Startups that apply and fail could point to a bug in a number of different areas - not just the application process.
If the purpose of YC is to make money and improve startups, than they are failing at both of those things if they pass on startups that eventually succeed.
PG has specifically stated that this is not a bug (it's a feature). The goal of YC is not to take mediocre or bad startup teams and turn them into wins, but to take the winners and turn them into Super-Winners(Dropbox).
As far as maximizing YC's impact, I think Dropbox maximizes it more than small wins from teams that would have lost had they not been in YC.
YC is trying to rewrite a lot of the rules of venture investing, and has had quite some success there, but at its very core it's important to remember that they are investors. At the end of the day, the measuring stick of an investor is their returns, not how many (proto-) companies they pulled from the brink of implosion. As such, your second measuring stick rings false.
I suspect that AirBnb, Dropbox and Heroku are simultaneously among the investments that YC is the most proud of and the companies that would have been most likely to succeed had they not been a part of YC.
Said another way, the delta between where Codiqa stands today vs. where they would be had they been interviewed does not seem as large an opportunity as probably the opportunities you made for the companies you did select. Therefore, I'd say there's no bug.
Like someone said "Micheal Jordan would NOT want to be selected by YC".
This means people like Mark Zuckerberg, Larry Page, Sergey brin, Bill Gates, Steve Jobs are not likely to come out of YC. Because the very fact that they have to go through layers of interview sessions, and then spend time performing to you, to get your attention like some performance artist performing to the king to get his attention means that is not going to happen.
Because people screw up in interviews. And a interview is generally no measure what the true story actually is. The guide to cracking interviews and performance is learning how to game the system. If your process is known to people outside,and they plan enough to cover all the corners and deal their cards well, they can game your interview process. That's how job hoppers who can do nothing hop around in circles of big successful companies. The situation from evaluating a 'good product' changes to evaluating 'how good the interview went'.
Nerds, Geeks of the best quality hate all this interviewing, playing-to-the-galleries-business. That is why they wish to build their own firm. Now if you subject them though the same bureaucratic process which they had otherwise go through in a traditional large corporate(Applying, interviewing etc) they are just going to go away, take money from somebody else and build some stuff in the same time.
If I would be building a business and need funding from somebody. I would go to them and explain them 'whats in it for them' and take their money.
But if have to go through the same large corporate styles process for this, I will be spending my time for something else. Because the very purpose my starting a business is to avoid that corporate styles processes.
You have to seriously ask what value you bring, or how different you are from anybody else. If you are just evaluating profit prospects(which I agree, is important), funding, taking profits back. Then really you are just another VC. There is nothing wrong with that. But that is what it boils down to.
That said, interviews and applications are inherently subjective and based on a snapshot in time; they will always have "bugs". It is a tough thing to do, and I fully appreciate the effort going into it.
Best of Luck!
I was blown away by the builder interface design.
Well done, guys.