This is the nub of the matter. I could have saved myself a decade. The only thing from YC that survived our relationship was the incorporation of the company.
I still think there's a massive gap in the market for an ergodic startup community where the young ambitious people tell the Gen-X's to go fuck themselves with a police baton and instead enjoy the benefits of pooling the risks & sharing the rewards.
I imagine the problem is how do you pool the risk without being able to assess with confidence who will succeed and who will fail? And how do you prevent freeloaders who don't expect to succeed wanting a share?
And if you could make that determination accurately, why wouldn't you use it to avoid pooling risk among all but an extremely small pool?
I don't know what one thing you're referring to, but a core principle of HN is to avoid repetition, and especially the repetition+indignation combo, which is the commonest and most tedious thing on the internet. So to me it sounds like you're referring to HN working as intended, regardless of what the thing is.
Oh certainly, and the way you have designed it is doing what you want - it seems to work for you - along with causing unmeasurable externalized consequences, but to each their own.
Repetition doesn't bother me personally, especially when understanding that what's repetition for one may be novel for another. I can understand you being in your position of having to scour HN reports - and that you'll likely see a far higher percentage of content and comments than most, etc, and that it could certainly take a toll and easily become annoying.
I have lots of thoughts written in draft notes, hopefully someday in the next few years it'll be worthwhile to compile it all and polish into a blog post; part of it has been studying behaviour associated with how various platforms similar mechanisms vary - HN vs. Reddit vs. Facebook vs. etc.
That's because the community in the end rejected it overwhelmingly, as anyone who reads the comments in this thread will understand. Admins did nothing, other than refrain from intervening.
Normally a post of this sort would never stay on HN's front page. In the end it spent 4 hours on the front page. That's because we suspended our usual quality control, as I explained at https://news.ycombinator.com/item?id=40100680.
dredmorbius's sibling comment already made the point, but I wanted to add more in the hope that no one ends up with the wrong idea.
TBH, if you're already holding a product in your hands, that you created, it's really hard to tell if you're holding an anchor or lightning in a bottle.
Using VC money to make that determination is kinda a no-brainer.
OTOH, if you're still in the exploratory phase (I am), is it wise to tie yourself to the mast of a ship that is already sinking?
In the latter scenario the smallbets.com proposition looks better.
It feels to me like YC's name-drop doesn't have a purpose beyond just attention/view grabbing, despite there being a few nuggets of solid reasoning sprinkled throughout the post.
> That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot!
This isn't the least bit unique to YC, it's just the cold reality of any high-growth startup.
If OP had framed this as "Moonshot Startup vs Lifestyle Business" it would have felt more like a good faith argument. Even "Do you have the risk tolerance to be a founder" would have worked. But basing a thread titled "Why you shouldn't apply to YC" off an illformed assumption of the readers risk tolerance is naive at best (and likely malicious given OP is selling competing services).
Also that sentence on "you need to go through YC three times in your lifetime, so you need 26 lifetimes" is absurd. I got a migraine trying to understand his line of reasoning.
The reasoning is a bit reductive, it makes sense if you think of success as binary (you become a billionaire or you don’t, which in fairness is what yc and many VC firms push).
Obviously you can fail to become a billionaire and make some non life changing amount of money and even make what to a lot of people is life changing, but for this outcome (which is still uncommon) you would be better off not trying to become a billionaire.
To me, this tweet seemed much more anti startup trying to grow big than anything anti-YC. Only using the tweet for marketing as mentioned at the bottom.
At first, it's against dedicating your life to your startup (which presumably you are already doing or at least want to do) and then states that YC actually has a good success rate for unicorns.
Then he talks about doing some brainstorming to find ideas and product market fit, but at least from my perspective YC doesn't advocate for this at all, but rather talking to customers, getting their buy in and then making something that solves customer problems. Aka, not brainstorming at all.
And then goes on to say that YC has lots of young people rather than older (more likely to be successful founders). But doesn't do any of the data diligence on percent of founders by age by industry and by YC vs. not.
And finally he focuses on saying that only the unicorns were success stories and no one else, while advocating that you should aim for a smaller goal. But doesn't acknowledge any data of companies from YC that aren't unicorns but are still operating, sold for less than a billion, etc.
I personally think that looking from the outside that YC is not for everyone and is geared towards the VC route. But if you want those things, then these arguments aren't valid for why you wouldn't apply.
This sort of became an anti-VC rant, definitely, and also a little unfair to the product YC offers. It's a legitimate product in the market, not a scam, and the 22-year-olds who do it are not getting duped.
My biggest issue with YC is that the deal isn't very good. Giving up 7-10% for $500k is pretty crappy for any company that has a decent shot at becoming anything good. That is why I have only ever applied to YC when my company ideas were very speculative. If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
If you already have the ability to go talk to a VC and an idea/product/company that is good enough to make it into YC, you don't need YC for your company. If you can sell YC on investing in you, you can sell your product.
However, it does make sense to do YC right out of college to get the networking benefits and the credibility signal. That's why so many 22 year olds do it. It sacrifices your stake in your first company in exchange for helping you as an individual later in your career.
> If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
But that's literally the point. You suddenly get a huge network that would help you get through the early stages.
It's certainly true that many founders would find better terms elsewhere. However, it's also true that most companies fail. So negotiating better terms usually doesn't matter nearly as much as making the company more successful. (The same rationale applies to employee equity grants)
Like you said, for people with no connections, whether just out of school or not, it's valuable.
Agreed. YC from my POV is attractive not for the money but the motivation. The peer influence (encouragement, competition, accountability) is what I feel would improve my chances of building something amazing.
But I can’t disagree with the Tweet’s argument that what’s good for YC (swinging for home runs) isn’t good for the vast majority of founders (but it is what those founders want, and why the lottery is a thing).
There are a lot of ideas (virtually all of them) for which I’d give up 2-3% for $0 to go through the YC process and network even if I intended to bootstrap or think of the $500K as getting them the “other” 5% (or an ~$10M valuation).
The biggest thing that sours me on YC is the exclusivity. They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different? As peter theil would say, competition is for losers.
You shouldn’t participate in games that are zero sum and they shouldn’t pretend they have some kind of carefully thought out scientific method to determine who should get in. Half the companies I see in the batch are dog shit. A third of the companies are “ideas only” which is basically now an Opaque beauty contest. Just opt out and boycott these stupid status games
> They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different?
How is Harvard artificial scarcity? How could YC do this any other way, when they have a limited number of staff and a quality bar to meet?
> Just opt out and boycott these stupid status games
Sorry - I'm struggling to follow. Do you think YC membership is a status game? I thought it was a real program.
Harvard could easily expand their student body. They haven't kept up with population growth. They could easily double or triple their size But it would reduce the prestige. Plus they're sitting on 50bn endowment. In general people look at admittance rate as a proxy for worth. Doubling the size means doubling the acceptance rate. The one thing many people know about harvard is that it's hard to get into, and by design. InI'm imagine yc is similar.
I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.
> I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.
That just depends on how you define "meaningfully evaluate". That definition makes it feasible or not, I think. Companies perform some level of evaluation at scale on hiring, and it's not perfect, but it's not bad, I think.
My view to YC is more similar with yours than the OP’s actually.
The red flag I saw is: they basically encourage every one to apply, no matter the stages, areas, backgrounds, etc. Their PR seems saying everyone could have a chance as long as you dream big. But TBH I doubt it would the reality.
The lack of a thesis and target audience feels like more an exclusive club game. The selectiveness is part the product, leading to better chances to get following funding and talents. Ofc nothing wrong with it, but I think people should have a realistic view to it.
I have seen successful YC founders not get in with their next companies. There's a lot of competing applications. Getting in is not easy. But I don't believe it's a club. I have evidence that suggests the opposite.
People need to stop conjuring up evil YC processes just to reassure themselves about not applying. It's fine not to apply! But if you're rationalizing it, consider that maybe you really do want to, and are just scared of rejection? That's normal too.
It doesn't matter. YC isn't some not for profit BS. They're not handing out free money. If its a beauty contest, it's because they think the start ups are beautiful.
Expect them to take a half a million dollar bet on you based on their own metrics; as scientific or gut as they allow. Just because you think they're dog shit doesn't mean they are. And some partner at YC saw something in them and _that's_ what matters, no?
I did YC when I was 27 after trying to do a tiny bit of fundraising, and kinda agree with you, but I think you can replace "22 year old" in your comment with "anyone not super-well-networked in the startup scene".
The truth is, even if you have pedigree (top-tier college, worked at FAANG and startups), the very first time fundraising is going to be pretty hard and annoying unless you've already been going to a lot of founder meetups, want to start something in a hot field, or have VC's in your personal network. This is especially true after the money wave from pre-2022 receded.
I do feel like I probably could've raised on better terms, but I'm not sure it would've improved the trajectory of my life or expected value. YC taught me a lot about fundraising that I didn't know I didn't know. Compared to other VC's we've worked with (who have all been pretty great), YC has provided more specific advice to our stage, better technology, and a slightly better network.
For me, definitely! It helped us raise our first round of funding, without which we may have failed during the pandemic. I also learned a lot and found the online platform useful.
Let me give the other side of this because I used to believe this too
I'll start with the most important first
1. When you take YC money you get to pay yourself. You wont be paying yourself FAANG money (if that's still achievable nowadays who knows) but you are paying yourself to build a company you own the majority of. So yes, they want you to dig to the center of the earth to find gold but you are being paid to do so.
2. I don't think starting a niche startup is meaningfully easier than starting a startup seeking uber growth. While a tech startup might require more up front knowledge I don't think startup ceos are working harder than the baker that's waking up at 4 am every day.
3. YC has a very good success rate and I think it's related to services they provide founders and the network.
I think if your business falls into the category of hyperscale startup and you are a first time founder I really think YC is worth it. They seem to have a system that works.
Personally, I agree with you. If you're just coming out of college this is a great way to get a couple years of salary and a chance to work on whatever you like. Give it a few years, if it doesn't work out it hasn't really cost anymore than a post-grad course in terms of time.
Basically you can view the whole program as a simple "job" with pay, with a 1% chance of going big. That's probably worth taking a punt on.
99% will fail, so frankly I wouldn't spend more than 5 years on this path, but if you're young you can afford that time.
Honestly this approach seems a lot more attractive than putting up my own life savings to start a business. Or working without income for a year or whatever.
And a startup doesn't need to make 1 billion per year to be a success. How about one that makes 100 million? or even 10 million? If the company is sold, the founders will be rich (not ultra rich, but have a million or more).
And, for ycombinator, the number of "startup exits" is: 351 (according to this page: https://explodingtopics.com/blog/startup-stats). Am no expert at startups, but this may mean that out of the 4000 that when through ycombinator, ~9% where valuable enough for investors to take profit. That sound pretty good to me.
A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.
Ah, I see. And actually, I do know a little about startups (even though I said I'm no expert), and thought that most founders who sell their businesses for something like 10 million can make a comfortable amount of cash. But didn't realize that if they use VC's, the VC's can take so much!
So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money?
(Talking about the minimum needed to make a million for a couple of founders).
I guess the break-even line is exiting for more than you raised. If you raise 20 mil, and sold for 20 that's different to raising 5 and selling for 10.
Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round.
Until you can't raise anymore, at which point the exit is likely underwater.
But you got paid a salary along the way, so thats not to be ignored.
Ah, can see that investors can force the company to shoot for the moon, instead of just trying to right-size the business and sell it. Very interesting!
Disappointingly YC hasn't provided any good analysis for founders or employees.
YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align).
I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options.
Finding good information is difficult and YC don't help.
I imagine it's not much fun with YC on you constantly telling you to make more, scale, or pivot to you make our investment worth it. I find the clients that pay the least demand the most
agreed:)
But on the flip side, as long as the startup is sold in the end and you as the founder make a good amount of money (meaning over a few hundred of thousands), think it's probably worth it
I hope, perhaps against mainstream opinion, that the myopic focus on the young will be proven flawed.
I see the launches and highlights YC posts on LinkedIn and elsewhere and see no one like me, yet am confident I would both benefit from it and be more likely to build something amazing than the majority (that being a particularly uninformed opinion, since I know only a few personally).
Taking a job is indeed an alternative. You pay yourself, but you get little control on what you work on (apart from choosing which company to work for). However, you can usually leave easily with a 2 week notice without many downsides.
Getting accepted into YC is quite similar to getting a job. You get paid (less), but you get more control on what you work on. Even though technically you have full control, you don't really do that for moral and ethical reasons. You will want to do things that have a chance of paying off big time, because that's why your investors trusted you with their money. And if you get fed up, it's not as easy to leave. What about your investors? What about your reputation? Will you want to let these people down? Etc.
Overly zealous opinions of any form are, to me, often eyebrow raising. Yes the acknowledgement of self-promotion gives the guise of candor, but does make clear the attempt to gain by standing on the shoulders of giants to reach the stars. To YC or not to YC is a personal decision that one should make on their own assessment of cost/benefit of doing business - and not be based on the emphasis of talking heads, no matter how they attempt to appeal to the emotions.
I said MKBHD was irresponsible for using a highly sensational headline (worst product ever reviewed) when he has such as large influence. I never said what you're implying.
Sometimes the truth is sensational. I hope you know you lost at least one long time follower after your recent stretch of engagement farming. You’ve fallen off. Good time to lay off the tweets and look inward.
Ehhh, there's pros & cons, just like anything else.
Maybe some VCs want you to dig to the bedrock, but not all, and everything in life is a negotiation.
I look at YC as grad school for entrepeneurs. You'll learn a ton, build a network, and have a good time for a while. Unlike grad school, there's direct upside, and you won't have to take out loans or live off the lab stipend.
Now would I go to grad school at 40? Maybe, but the calculus is certainly different than at 20.
YC is clearly good for something. You really have to figure out how to make it work for you.
Join a CEO group and set up a cross-holding of stock between the companies in the group. Now you’re all digging for gold at the same time. You don’t have to be a VC and you also don’t have to be that person with 26 lifetimes to spare.
The problem with this is VCs give you money, and some (like YCombinator) also give you advice. The CEO group gives you no money. Also, how do you prevent parasites from entering your CEO group?
I’m not saying a CEO group is a replacement for venture capital. You can join a group of CEOs whose companies are all venture backed. As for ensuring parasites don’t join your group… that can’t be guaranteed.
In each section I got maybe 1/3rd of the way through before reading something that was just so wrong and exposed his lack of knowledge and skipped to the next section.
Which is a bummer! I got excited by the title but disappointed by the content.
I’d love opinions from people who have actually gone through YC and their arguments against applying to YC.
In one thread he gets into histrionics about an overfunded VC hardware startup getting a bad review and in another thread he criticizes the existence of such companies.
This is the same guy who went viral criticizing MKBHD last week right? Here is a good information on what is happening: https://news.ycombinator.com/item?id=40060554 from that discussion.
There is incentive to take a public view that is anti current (or trend or popular or right) thing to do that makes you go viral.
Part of being an interesting contrarian is that you have to actually be right about stuff. Simply espousing the opposing view to the popular view is going to be wrong more often than not.
Hahah he's like "YC is a big scam" but when you keep scrolling...
> I charge you a one-time payment of $375, and you get access to my community
It basically invalidates the entire post. Maybe some good points were made about investing in general but they should be delivered by someone who doesn't run an Andrew Tate style self-help scheme, and shouldn't be advertised in the very post criticizing YC of being inauthentic.
YC is infinitely more prestigious and well-connected than this guy's $375 program - and how dare he talk about YC coming after my "personal economy" when he's charging $375 for "access to a community". Last I checked HN is free and I bet there's a lot more valuable info here than that self-help nightmare forum.
Furthermore, we know YC is exclusive. But the fact that YC is so Ivy League and startup focused is also why HN is not just a random subreddit, or some Twitter hatefluencer pyramid scheme.
Overall I doubt his characterization. It's an okay model but I think the way that YC probably actually works is more like: a network of secret back-channelers with inside info and connections, read a bunch of crazy old treasure maps, pay off landowners, form search cliques, hire people with good shovel-arms, develop tunneling methodologies, and end up swiss cheesing the entire field until the subsurface is a honeycomb of search paths, and maybe they come away with some gold, after agreeing beforehand how it would be divided if it were found.
YC is more like ants, but he makes it sound like robots.
But even that doesn't really cover it, as the whole idea of a zero-sum game where you are searching for something that already exists is broken and wrong. It's false. What you're actually doing (YC be damned, in anything!) is creating something new! You're not finding the gold that's there, you're making it. Out of nothing. And then profiting from it!!! :)
There are few people I think are as consistently wrong as Daniel Vassallo. His writings on cloud are an exercise in fanaticism, and it looks like he’s turned that failed venture into yet another course.
People selling you courses and community are mostly grifters.
The content here has nothing to do with YC in particular, and makes a few interesting claims:
1. YC founders are all young, impressionable 20yos
2. YC encourages you to make up problems to solve
3. That an exit less than a billion dollars is a failure
All of which are easily dismissed by watching actual content from YC.
4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome
Yeah this one got me. I have nothing to do with YC but I was hired to consult to a couple of really nice young guys who were YC alumni. They worked their asses off doing All The Right Things - talking to customers, reaching out to people with deep experience :) - and when they realised it wasn’t going to work out, they pivoted right away.
This is the exact opposite of digging in one place for the rest of your life, and as someone who has done a few startups, I was super impressed by their attitude and their ability to let go (even though I was out of a gig!)
I think they’re going to do great whatever they do, and at least some of that will be because of what they learned at YC.
First money in at a 40M valuation? Assuming this is pre-seed, that seems like the investor is taking on a lot of risk based on the distribution of outcomes.
Hmm, I think this criticism maybe has a kernel of truth, but
- I think the "ergodicity" concept is kind of being abused. As I understand the term, ergodicity describes systems whose dynamics cause them to eventually visit all states in a way that lines up with some probability distribution. In MCMC one uses this to argue that a chain that runs long enough can be used to generate samples from a distribution.
- But the response to his actual concern I think should be something more like income pooling. E.g. my understanding was there was some movement towards this for minor league baseball players, who have a modest chance of really large incomes. I think poker players also make similar arrangements. But critically, pools make sense when all the participants in each pool have pretty equivalent odds of making getting a large payout. With very early founders of course smart, reasonable people could have wildly different ideas of who is in equivalent tiers.
- You could try to ask a bunch of informed investors to rate or rank, and hope that average estimates are good -- but if those investors don't also have the opportunity to invest in a way commensurate with their ratings, they have no incentive to be accurate.
Confusingly, this tweet is about why you should join YC. History is full of young men on boats, in the wilderness and in formation to have a small chance at glory. All of those guys were giving up a lot more than a 7% stake, and eating worse than ramen, and living worse than a cramped apartment.
The reason you shouldn't do YC is simpler. It commits you to the VC track. Whatever you build is eventually going to suck because of enshittification.
YC = VC
If the VC thing doesn't bother you then try for YC for sure. It is overwhelmingly the best way to do that unless you're a rich kid who can leverage his connections. And even if you are that rich kid it's still the best way.
I didn't mean it as a top-down thing but as an aligned goals thing. If you do this you're basically paying a 7-10% tax on everything you do, forever, without the hyper-growth to justify/offset it. It's like selling out to Hollywood and then only doing bit roles. If you do YC, you should take VC. You would be stupid not to. I mean, YC is VC, right? It's a consistency thing.
No-YC and no-VC makes sense. Yes-YC and yes-VC makes sense. Yes-YC and no-VC does not make sense.
Paying 7-10% tax is a fabulous expense for founders if that leads to company growth >10% (ignoring smallprint). Certainly that's a reasonably likely outcome. "Hyper growth" is irrelevant.
Do the benefits exceed the costs? That's a harder thing to judge.
Worthwhile reading https://paulgraham.com/articles.html which has many articles expounding the benefits (understandably biased and unfortunately mostly pro VC).
We applied to YC and were rejected, which was probably good for us (less dilution, etc.). That said, you get some pretty unfair advantages being a YC company.
My cofounder has 20 years in the industry and I have a solid tech background with a track record of success. We had leads at the time; a demo product, etc. We raised without YC and have been doing well.
One of competitors (little experience, no product, no customer leads) got into YC. Immediately they were considered credible. They are getting effectively the same interest with nothing and that’s what YC offers. They are good at branding and offer you their brand, advice and network. All of which is well worth the cost if you have nothing to start with.
Now ultimately the best product will win and I’m confident in ours. That said, for someone starting out with little network or connections it’s worth YC.
> Now ultimately the best product will win and I’m confident in ours.
That's unfortunately not true. The better funded company has an advantage because they can get ahead in GTM. The further ahead they get, the harder it will be to catch up. If you find yourself in this situation and they offer you a merger, strongly consider it.
The fact that this was reposted only 6 months later makes this a dupe by HN's standard (see https://news.ycombinator.com/newsfaq.html). Normally we would mark it as such, which removes a thread from HN's front page.
"We moderate less, not more, when YC or a YC startup is the story" is the first rule of HN moderation. That does not mean we don't moderate at all—that would be too big a loophole. But we always moderate less than we otherwise would.
A related principle is that we trust readers to be smart enough to make up their own minds. Between this thread and the one I posted yesterday (https://news.ycombinator.com/item?id=40091622) I think HN commenters are doing a good job of that.
Edit: although it follows from the above, I should probably say explicitly that the [flagged] marker on the post is because of flags that came from users, not moderators.
This comment in the thread is in disagreement with your point:
> As a former employer for a YC funded company that was shut down against the founder's wishes, forced to via the investor board; I can say that this article does not universally wrongly characterize the YC experience.
I have heard of YC doing pivots, so "dig a hole in the same spot until you reach the boiling magma" doesn't characterize it either. However, that doesn't make YC look good from the perspective of a founder wanting to be in control. What I remember hearing from YC is of cases where a partner tells you to pivot, not where they let the founders decide to pivot themselves.
Edit: I realized the main comment linked to jibes with what I was saying:
> The overwhelming feeling is: be humble in the face of reality, try something and try to try it in a way that you can assess whether it’s working — quickly/cheaply — then try something new.
...try something new that's recommended by the YC partner(s)
I am more positive than negative on YC though. There is no perfect balance between being too hands-on or too hands-off for a startup accelerator.
> What I remember hearing from YC is of cases where a partner tells you to pivot, not where they let the founders decide to pivot themselves.
Post-batch you can talk to your partners as often as you want or never again - they stay out of your way unless you explicitly reach out. They make this quite clear during the batch as well.
During the batch you do talk to your partners as part of the structure. They do give (really good!) advice, but you're always told it's your company. I can see them giving advice based on their experience on where you might want to dig instead, but I've never heard a founder being forced down a direction they didn't want to go. After all, why would that be the optimal path?
I've always been sort of leery of the idea of pivots, because a pivot for a company really doesn't make a lot of sense to me unless it's more of a course correction, and/or heavily utilizes the company's built-up IP (eg Slack, the famous pivot from a gaming company to a productivity tool that they made for themselves).
What would make more sense for everyone is for the company "pivoting" to simply shut down, return the unused money to the investors, and reincorporate to do the new thing. That new thing would then go get investment for itself from investors who are more aligned with the new mission.
I can see pivots being worthwhile for existing investors if the business needs more investment. If the pre-pivot is a worthless thing you own 7% of, it would be better to inject another bundle to own 14% for a new thing instead of starting afresh and owning 7% of nothing plus 7% of a new thing.
The thing is that usually pivots are pre-vesting for the founders, and usually the company has less in the bank when they initially raised. In those conditions, the entirety of the company's assets will be returned to the investors when the company dissolves.
It is a good point that it can get you a larger share of a success, though.
To me, pivot feels like YC saying: hey, we thought you were above the cut, that's why you're here. We know the low likelihood of an idea exploding, let's just get you focusing on other promising blocks as soon as we hit bedrock.
I'm assuming this isn't terribly uncommon, considering the hitrate and actual sunk cost.
I see the author's viewpoint from a milder formula: learn, earn, or quit. YC seems to be a perfectly fine place to learn a certain kind of methodology. It can be difficult to balance the value flow, especially when goodwill is involved, but there aren't many places that will give you half a mill and a chance at a dream.
Accelerators can be a great fit for some people at a certain stage of their life, development, or understanding of these systems; it really depends on what your end goal is too.
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[ 5.5 ms ] story [ 254 ms ] threadI still think there's a massive gap in the market for an ergodic startup community where the young ambitious people tell the Gen-X's to go fuck themselves with a police baton and instead enjoy the benefits of pooling the risks & sharing the rewards.
And if you could make that determination accurately, why wouldn't you use it to avoid pooling risk among all but an extremely small pool?
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
Repetition doesn't bother me personally, especially when understanding that what's repetition for one may be novel for another. I can understand you being in your position of having to scour HN reports - and that you'll likely see a far higher percentage of content and comments than most, etc, and that it could certainly take a toll and easily become annoying.
"that one thing" and "unmeasurable externalized consequences"
<https://news.ycombinator.com/item?id=40100680>
Normally a post of this sort would never stay on HN's front page. In the end it spent 4 hours on the front page. That's because we suspended our usual quality control, as I explained at https://news.ycombinator.com/item?id=40100680.
dredmorbius's sibling comment already made the point, but I wanted to add more in the hope that no one ends up with the wrong idea.
Using VC money to make that determination is kinda a no-brainer.
OTOH, if you're still in the exploratory phase (I am), is it wise to tie yourself to the mast of a ship that is already sinking?
In the latter scenario the smallbets.com proposition looks better.
> That’s 1.25%. To be fair, that’s actually quite impressive, but let’s say you have the stamina and willpower to go through YC three times in your lifetime. You’d need approximately 26 lifetimes to hit the jackpot!
This isn't the least bit unique to YC, it's just the cold reality of any high-growth startup.
If OP had framed this as "Moonshot Startup vs Lifestyle Business" it would have felt more like a good faith argument. Even "Do you have the risk tolerance to be a founder" would have worked. But basing a thread titled "Why you shouldn't apply to YC" off an illformed assumption of the readers risk tolerance is naive at best (and likely malicious given OP is selling competing services).
Obviously you can fail to become a billionaire and make some non life changing amount of money and even make what to a lot of people is life changing, but for this outcome (which is still uncommon) you would be better off not trying to become a billionaire.
At first, it's against dedicating your life to your startup (which presumably you are already doing or at least want to do) and then states that YC actually has a good success rate for unicorns.
Then he talks about doing some brainstorming to find ideas and product market fit, but at least from my perspective YC doesn't advocate for this at all, but rather talking to customers, getting their buy in and then making something that solves customer problems. Aka, not brainstorming at all.
And then goes on to say that YC has lots of young people rather than older (more likely to be successful founders). But doesn't do any of the data diligence on percent of founders by age by industry and by YC vs. not.
And finally he focuses on saying that only the unicorns were success stories and no one else, while advocating that you should aim for a smaller goal. But doesn't acknowledge any data of companies from YC that aren't unicorns but are still operating, sold for less than a billion, etc.
I personally think that looking from the outside that YC is not for everyone and is geared towards the VC route. But if you want those things, then these arguments aren't valid for why you wouldn't apply.
My biggest issue with YC is that the deal isn't very good. Giving up 7-10% for $500k is pretty crappy for any company that has a decent shot at becoming anything good. That is why I have only ever applied to YC when my company ideas were very speculative. If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
If you already have the ability to go talk to a VC and an idea/product/company that is good enough to make it into YC, you don't need YC for your company. If you can sell YC on investing in you, you can sell your product.
However, it does make sense to do YC right out of college to get the networking benefits and the credibility signal. That's why so many 22 year olds do it. It sacrifices your stake in your first company in exchange for helping you as an individual later in your career.
But that's literally the point. You suddenly get a huge network that would help you get through the early stages.
It's certainly true that many founders would find better terms elsewhere. However, it's also true that most companies fail. So negotiating better terms usually doesn't matter nearly as much as making the company more successful. (The same rationale applies to employee equity grants)
Like you said, for people with no connections, whether just out of school or not, it's valuable.
But I can’t disagree with the Tweet’s argument that what’s good for YC (swinging for home runs) isn’t good for the vast majority of founders (but it is what those founders want, and why the lottery is a thing).
You shouldn’t participate in games that are zero sum and they shouldn’t pretend they have some kind of carefully thought out scientific method to determine who should get in. Half the companies I see in the batch are dog shit. A third of the companies are “ideas only” which is basically now an Opaque beauty contest. Just opt out and boycott these stupid status games
How is Harvard artificial scarcity? How could YC do this any other way, when they have a limited number of staff and a quality bar to meet?
> Just opt out and boycott these stupid status games
Sorry - I'm struggling to follow. Do you think YC membership is a status game? I thought it was a real program.
I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.
That just depends on how you define "meaningfully evaluate". That definition makes it feasible or not, I think. Companies perform some level of evaluation at scale on hiring, and it's not perfect, but it's not bad, I think.
The red flag I saw is: they basically encourage every one to apply, no matter the stages, areas, backgrounds, etc. Their PR seems saying everyone could have a chance as long as you dream big. But TBH I doubt it would the reality.
The lack of a thesis and target audience feels like more an exclusive club game. The selectiveness is part the product, leading to better chances to get following funding and talents. Ofc nothing wrong with it, but I think people should have a realistic view to it.
People need to stop conjuring up evil YC processes just to reassure themselves about not applying. It's fine not to apply! But if you're rationalizing it, consider that maybe you really do want to, and are just scared of rejection? That's normal too.
Expect them to take a half a million dollar bet on you based on their own metrics; as scientific or gut as they allow. Just because you think they're dog shit doesn't mean they are. And some partner at YC saw something in them and _that's_ what matters, no?
The truth is, even if you have pedigree (top-tier college, worked at FAANG and startups), the very first time fundraising is going to be pretty hard and annoying unless you've already been going to a lot of founder meetups, want to start something in a hot field, or have VC's in your personal network. This is especially true after the money wave from pre-2022 receded.
I do feel like I probably could've raised on better terms, but I'm not sure it would've improved the trajectory of my life or expected value. YC taught me a lot about fundraising that I didn't know I didn't know. Compared to other VC's we've worked with (who have all been pretty great), YC has provided more specific advice to our stage, better technology, and a slightly better network.
This isn’t how YC works at all…
If this guy had gone through YC, maybe he wouldn’t be trying to sell an online course.
I'll start with the most important first
1. When you take YC money you get to pay yourself. You wont be paying yourself FAANG money (if that's still achievable nowadays who knows) but you are paying yourself to build a company you own the majority of. So yes, they want you to dig to the center of the earth to find gold but you are being paid to do so.
2. I don't think starting a niche startup is meaningfully easier than starting a startup seeking uber growth. While a tech startup might require more up front knowledge I don't think startup ceos are working harder than the baker that's waking up at 4 am every day.
3. YC has a very good success rate and I think it's related to services they provide founders and the network.
I think if your business falls into the category of hyperscale startup and you are a first time founder I really think YC is worth it. They seem to have a system that works.
The point of the article is who does it work for?
Personally, I agree with you. If you're just coming out of college this is a great way to get a couple years of salary and a chance to work on whatever you like. Give it a few years, if it doesn't work out it hasn't really cost anymore than a post-grad course in terms of time.
Basically you can view the whole program as a simple "job" with pay, with a 1% chance of going big. That's probably worth taking a punt on.
99% will fail, so frankly I wouldn't spend more than 5 years on this path, but if you're young you can afford that time.
Honestly this approach seems a lot more attractive than putting up my own life savings to start a business. Or working without income for a year or whatever.
And, for ycombinator, the number of "startup exits" is: 351 (according to this page: https://explodingtopics.com/blog/startup-stats). Am no expert at startups, but this may mean that out of the 4000 that when through ycombinator, ~9% where valuable enough for investors to take profit. That sound pretty good to me.
A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.
So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money? (Talking about the minimum needed to make a million for a couple of founders).
Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round.
Until you can't raise anymore, at which point the exit is likely underwater.
But you got paid a salary along the way, so thats not to be ignored.
> ~9% where valuable enough for investors to take profit
Or aquihired.
Best analysis I have seen of YC: https://jaredheyman.medium.com/on-the-life-and-death-of-y-co...
Disappointingly YC hasn't provided any good analysis for founders or employees.
YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align).
I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options.
Finding good information is difficult and YC don't help.
I see the launches and highlights YC posts on LinkedIn and elsewhere and see no one like me, yet am confident I would both benefit from it and be more likely to build something amazing than the majority (that being a particularly uninformed opinion, since I know only a few personally).
while the author is Tru about the reasoning they fail to elaborate on the alternative.
take a job with youghly the same pay as working in your own startup? that would seem terrible.
obviously, if you have opportunity with a much higher expected pay, then that should be the go to opportunity.
Getting accepted into YC is quite similar to getting a job. You get paid (less), but you get more control on what you work on. Even though technically you have full control, you don't really do that for moral and ethical reasons. You will want to do things that have a chance of paying off big time, because that's why your investors trusted you with their money. And if you get fed up, it's not as easy to leave. What about your investors? What about your reputation? Will you want to let these people down? Etc.
Who was harmed? What was the source of that harm? What was the moral or ethical failing that caused the harm?
I think you have cause and effect mixed up.
Maybe some VCs want you to dig to the bedrock, but not all, and everything in life is a negotiation.
I look at YC as grad school for entrepeneurs. You'll learn a ton, build a network, and have a good time for a while. Unlike grad school, there's direct upside, and you won't have to take out loans or live off the lab stipend.
Now would I go to grad school at 40? Maybe, but the calculus is certainly different than at 20.
YC is clearly good for something. You really have to figure out how to make it work for you.
Which is a bummer! I got excited by the title but disappointed by the content.
I’d love opinions from people who have actually gone through YC and their arguments against applying to YC.
In one thread he gets into histrionics about an overfunded VC hardware startup getting a bad review and in another thread he criticizes the existence of such companies.
There is incentive to take a public view that is anti current (or trend or popular or right) thing to do that makes you go viral.
I'm automatically skeptical when this came from the author of one of the dumbest tweets I've ever read.
> I charge you a one-time payment of $375, and you get access to my community
It basically invalidates the entire post. Maybe some good points were made about investing in general but they should be delivered by someone who doesn't run an Andrew Tate style self-help scheme, and shouldn't be advertised in the very post criticizing YC of being inauthentic.
YC is infinitely more prestigious and well-connected than this guy's $375 program - and how dare he talk about YC coming after my "personal economy" when he's charging $375 for "access to a community". Last I checked HN is free and I bet there's a lot more valuable info here than that self-help nightmare forum.
Furthermore, we know YC is exclusive. But the fact that YC is so Ivy League and startup focused is also why HN is not just a random subreddit, or some Twitter hatefluencer pyramid scheme.
Overall I doubt his characterization. It's an okay model but I think the way that YC probably actually works is more like: a network of secret back-channelers with inside info and connections, read a bunch of crazy old treasure maps, pay off landowners, form search cliques, hire people with good shovel-arms, develop tunneling methodologies, and end up swiss cheesing the entire field until the subsurface is a honeycomb of search paths, and maybe they come away with some gold, after agreeing beforehand how it would be divided if it were found.
YC is more like ants, but he makes it sound like robots.
But even that doesn't really cover it, as the whole idea of a zero-sum game where you are searching for something that already exists is broken and wrong. It's false. What you're actually doing (YC be damned, in anything!) is creating something new! You're not finding the gold that's there, you're making it. Out of nothing. And then profiting from it!!! :)
I owe you a $375 beer or coffee.
In case you’re serious I’ll add a Stripe link later! :)
https://buy.stripe.com/dR6cNY31v8eL9Y4bKe
People selling you courses and community are mostly grifters.
The content here has nothing to do with YC in particular, and makes a few interesting claims:
1. YC founders are all young, impressionable 20yos
2. YC encourages you to make up problems to solve
3. That an exit less than a billion dollars is a failure
All of which are easily dismissed by watching actual content from YC.
4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome
Honestly what an opportunity!
This is the exact opposite of digging in one place for the rest of your life, and as someone who has done a few startups, I was super impressed by their attitude and their ability to let go (even though I was out of a gig!)
I think they’re going to do great whatever they do, and at least some of that will be because of what they learned at YC.
Slight logical problem, or unclear or poor wording here:
A chance is quite different from an outcome.
The first is in the future (chance), while the second is in the past (outcome).
A (1.25% or other) chance means something may happen.
An outcome means something did happen.
Also, a 1.25% chance in the past does not in the least imply the same chance in the future. See stock trading, for example.
>4. That a 1.25% chance of creating a company worth more than a billion is a bad outcome
Exactly the demographic he's targeting with his "courses". Easier prey for his engagement farming.
> People selling you courses and community are mostly grifters
"Mostly". It could be argued that that is the purpose of HN
I do not know, but I am glad of it
And I'm not buying
(Absolutely not complaining)
that's unbelievably good!
If he finds this bad... then he finds venture capital and bank lending bad in general.
what were your startups?
- I think the "ergodicity" concept is kind of being abused. As I understand the term, ergodicity describes systems whose dynamics cause them to eventually visit all states in a way that lines up with some probability distribution. In MCMC one uses this to argue that a chain that runs long enough can be used to generate samples from a distribution.
- But the response to his actual concern I think should be something more like income pooling. E.g. my understanding was there was some movement towards this for minor league baseball players, who have a modest chance of really large incomes. I think poker players also make similar arrangements. But critically, pools make sense when all the participants in each pool have pretty equivalent odds of making getting a large payout. With very early founders of course smart, reasonable people could have wildly different ideas of who is in equivalent tiers.
https://www.npr.org/2019/10/25/773532516/some-baseball-playe...The reason you shouldn't do YC is simpler. It commits you to the VC track. Whatever you build is eventually going to suck because of enshittification.
YC = VC
If the VC thing doesn't bother you then try for YC for sure. It is overwhelmingly the best way to do that unless you're a rich kid who can leverage his connections. And even if you are that rich kid it's still the best way.
That's not true. YC always supports what founders want to do. If founders don't want to raise VC, YC supports them in that choice.
No-YC and no-VC makes sense. Yes-YC and yes-VC makes sense. Yes-YC and no-VC does not make sense.
Do the benefits exceed the costs? That's a harder thing to judge.
Worthwhile reading https://paulgraham.com/articles.html which has many articles expounding the benefits (understandably biased and unfortunately mostly pro VC).
There are unfortunately very few decent articles or good data on the costs. Here's one good article against the YC SAFE: https://siliconhillslawyer.com/2019/05/01/startups-shouldnt-...
Sometimes compromises are needed!
Not many businesses can find $500k another easier way.
My cofounder has 20 years in the industry and I have a solid tech background with a track record of success. We had leads at the time; a demo product, etc. We raised without YC and have been doing well.
One of competitors (little experience, no product, no customer leads) got into YC. Immediately they were considered credible. They are getting effectively the same interest with nothing and that’s what YC offers. They are good at branding and offer you their brand, advice and network. All of which is well worth the cost if you have nothing to start with.
Now ultimately the best product will win and I’m confident in ours. That said, for someone starting out with little network or connections it’s worth YC.
That's unfortunately not true. The better funded company has an advantage because they can get ahead in GTM. The further ahead they get, the harder it will be to catch up. If you find yourself in this situation and they offer you a merger, strongly consider it.
https://news.ycombinator.com/item?id=37869760
The fact that this was reposted only 6 months later makes this a dupe by HN's standard (see https://news.ycombinator.com/newsfaq.html). Normally we would mark it as such, which removes a thread from HN's front page.
I'm not going to do that, though, because the principle described here is more important: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....
"We moderate less, not more, when YC or a YC startup is the story" is the first rule of HN moderation. That does not mean we don't moderate at all—that would be too big a loophole. But we always moderate less than we otherwise would.
A related principle is that we trust readers to be smart enough to make up their own minds. Between this thread and the one I posted yesterday (https://news.ycombinator.com/item?id=40091622) I think HN commenters are doing a good job of that.
Edit: although it follows from the above, I should probably say explicitly that the [flagged] marker on the post is because of flags that came from users, not moderators.
Respect to Dang for not taking it down.
> As a former employer for a YC funded company that was shut down against the founder's wishes, forced to via the investor board; I can say that this article does not universally wrongly characterize the YC experience.
I have heard of YC doing pivots, so "dig a hole in the same spot until you reach the boiling magma" doesn't characterize it either. However, that doesn't make YC look good from the perspective of a founder wanting to be in control. What I remember hearing from YC is of cases where a partner tells you to pivot, not where they let the founders decide to pivot themselves.
Edit: I realized the main comment linked to jibes with what I was saying:
> The overwhelming feeling is: be humble in the face of reality, try something and try to try it in a way that you can assess whether it’s working — quickly/cheaply — then try something new.
...try something new that's recommended by the YC partner(s)
I am more positive than negative on YC though. There is no perfect balance between being too hands-on or too hands-off for a startup accelerator.
Post-batch you can talk to your partners as often as you want or never again - they stay out of your way unless you explicitly reach out. They make this quite clear during the batch as well.
During the batch you do talk to your partners as part of the structure. They do give (really good!) advice, but you're always told it's your company. I can see them giving advice based on their experience on where you might want to dig instead, but I've never heard a founder being forced down a direction they didn't want to go. After all, why would that be the optimal path?
What would make more sense for everyone is for the company "pivoting" to simply shut down, return the unused money to the investors, and reincorporate to do the new thing. That new thing would then go get investment for itself from investors who are more aligned with the new mission.
It is a good point that it can get you a larger share of a success, though.
I'm assuming this isn't terribly uncommon, considering the hitrate and actual sunk cost.
I see the author's viewpoint from a milder formula: learn, earn, or quit. YC seems to be a perfectly fine place to learn a certain kind of methodology. It can be difficult to balance the value flow, especially when goodwill is involved, but there aren't many places that will give you half a mill and a chance at a dream.
You should apply. Worst case scenario you’ll have spent a few hours tightening your thinking about what you’re trying to achieve.
Accelerators can be a great fit for some people at a certain stage of their life, development, or understanding of these systems; it really depends on what your end goal is too.