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What Happens At Y Combinator (ycombinator.com)
549 points by pg on Sept 27, 2010 | hide | past | favorite | 143 comments



If you were to start YC again, from scratch - i.e. if your brain was teleported into your body 5 years ago - what would you do differently? Would you start it directly in SV instead of Boston? Would you focus more on building the alumni network from day one?

There must have been many mistakes along the way, while this article talks mostly about the successes. I'm curious what mistakes you made and avoided... maybe that's a topic for another article though.


Very interesting question. I would do it more emphatically, for one. The first couple batches we were pretty tentative, because we didn't know it was going to work.

It's painful to consider whether it would have been best to do YC in SV year round from the start. I loved alternating between the two places. I still miss living in Cambridge. And yet the founders in the Boston batches probably were getting short shrift. The startup community in Boston is so much smaller. We could never have organized something like Angel Day; there just aren't enough good angels. We wouldn't even have had enough alumni in Boston, because most of the successful ones used to move to the Valley.

You can figure out what we'd do differently by what we've changed. We give startups more money on average, but we don't give them any more for having more than 3 founders. Jessica now strongly encourages vesting, not to protect us, but to give startups a predefined way to deal with founders leaving. Interviews and Demo Day presentations are now much shorter, and I'd keep both short even if it weren't necessary for scale. We look more at the people and less at the idea when making funding decisions. We've added a bunch of protections against good groups falling through the cracks in applications. But we haven't changed that much structurally. We've made a lot of mistakes, but they've mostly been one-offs, like funding startups we shouldn't have, or not funding startups we should.


> like funding startups we shouldn't have, or not funding startups we should.

Examples?


This was an attempt to describe everything we do, so if there's anything I didn't cover, please let me know.

(Sorry it's so long. I was surprised myself how long it turned out, but we do a lot.)


Besides music labels, are there other industries you try to steer startups away from, either through not accepting them or through nudging them in other directions? I'm looking specifically at medical applications, but I imagine there are others too.


No others are quite as bad. We'd be dubious about startups building stuff for the government, for example, because there is such a horrible mismatch between startup culture and government culture. But we'd still fund a startup building stuff for the government if they weren't naive about what selling to the government would entail.


Thanks and agreed. I'm surprised I haven't seen many (any?) medical applications from YC companies given the margins available over consumer applications. Do you think it is the uncertainty of the FDA regulations or just a space that Silicon Valley doesn't tend to mine as frequently? Make something patients want is particularly alluring to me.


Many medical plays require large capital investment. Regulations, bizdev, and long sales cycles are all huge barriers to entry. Advertising to Doctors is incredibly expensive, and it is hard to monetize consumer applications that will scale (some people are trying their hand at medical compliance, but I haven't heard of a great business model yet.)

23andme is a great medical startup, but it is a capital-intensive business that has to spend time and money on Washington.

We (Epocrates) are working on an Electronic Health Record system as an additional product. Our core team is small, but we have the resources and brand of a midsize company. We have 40% of US physicians using our existing reference software and we are going to leverage our brand to provide a usable and moden system that increases the level of patient care and effectiveness of Doctors. We're a mixed RoR/Java/Mobile shop. We're currently hiring RoR developers, so please feel free to contact me if you are interested in this space and want to make a real impact on US healthcare.


I would guess the reason is that such applications are foreign to most potential applicants.


I'm a software dev. for a medical device company and when I read pg's comment about the mismatch between startup culture and government culture, the first thought I had was "add medical to the list."

The medical device/software field is certainly interesting, exciting even at times, but it progresses at an absolutely glacial pace for the most part. You're dealing with slow, conservative institutions (hospitals, etc) and government agencies. Unless you hire people specifically to deal with those soul-crushing interactions, you'll probably want to shoot yourself.


I think it's mostly just not something typical YC applicants are interested... which is really weird, because health issues are going to be a huge concern in the western world for the next 50 years at least.

Part of it may be that you need medical connections to do the much of the work. We work directly with a ton of different doctors/hospitals (for a team of only ~15 devs), and still have issues with building the right things, 510k submissions, etc...

But yeah, medical applications are getting neglected by the startup community at the moment.


That's true, the health care industry is a massive opportunity waiting to be tapped. Not just in the western world, even in the developing world, where the incidence of insurance is increasing.

Many developing countries have had none or next to nothing health insurance till recently. But the market penetration of the healthy insurance is increasing (but still very low now). Because of that more people who could not afford advanced diagnosis or treatments earlier are able to afford them now.

Imagine the potential size of the industry when 1 billion people in India and 1.4 people in China (not to mention a billion or more in other developing countries) can afford as good health care as the 300 million in US, the 450 million in Europe, etc


Telemedicine, decision support and more favorable regulatory environment could be a VERY interesting mix for 2nd / 3rd world (and rural medicine domestically.)


I don't know of any successful medical startups that didn't have strong involvement (usually as founder) of an MD, usually with some experience and connections. Perhaps it's possible for a group of twentysomething techies who are complete medical-industry outsiders to produce a new disruptive product, but it's at least uncommon and makes things harder (especially to get regulatory approval and buy-in among physicians). And I'd guess the overlap between YC applicants and MDs with significant experience is quite small.


Make something patients want is particularly alluring to me.

I am curious as to what you have in mind. (I tried to find an email address for you and couldn't. Sorry to junk up this thread. You can email me -- from one of the websites in my profile -- if you don't want to post it here.)


I added the email to my profile. Specifically I'm interested in analytics platforms to help patients manage their health stats. I'm working on something specific with a great team, but I think there are a lot of opportunities in this space. Let data determine health status, where possible.


I get the concern about inciting the wrath of music labels. However, can you elaborate on your comment in footnote 5? Is there an unofficial policy of avoiding music startups, or just an extra special sanity check? What if the startup pre-clears (or is in the process of clearing) licensed use of label catalogs before the program?


The copyright problems related to music labels are nothing compared to the legal shenanigans of the contracts between labels and groups. They are horrific. The closest analogies would be share cropping or indentured servitude, though at least there is an out if the band fails.

The way a lot of record labels work is that they will give a band a cash advance. The band uses that advance to pay for living expenses. They are also forced to use it for various costs such as studio time, recording, producing a music video, etc. The band earns a percentage of the gross revenue for album sales (say 7%), the label earns a larger percentage. The band pays back their advance using their share of the earnings. Stop me if it seems like there's something a bit off about this arrangement.

Sending a fledgling startup company to work amidst that hell is not a smart move. Even billionaire multi-platinum bands have trouble.


I agree it is tough to be a band in the era of digital music. I’ll have to respectfully disagree about whether or not our venture is foolhardy. We are early days, but the multiple discussions we’ve had with one major label have been respectful and encouraging.


It was long, but not too long, because it was thorough. I didn't realize you were doing so much. In a way the article is kind of like a long sales pitch for YC without all of the typical sales language hype. Which is nice.


Wow, this list really made me glad we applied for the next cycle.

One question though, what about startups from outside the US? Can you offer advice there visa-wise and such? I know it doesn't really matter for the three month period, but what about after that. It would really suck for a startup to do well on Demo Day, only to be unable to go to any meetings because they can't get back to the US for a few months (I think the wait period is another three months)


Visas are something I don't know much about. The rules seem to vary a lot from country to country. There is a mailing list of YC founders from other countries who exchange advice about the topic. And we've certainly funded startups from a lot of different countries. So if I were you I'd just apply, and if we fund you, you can ask the alumni for advice about immigration stuff.


We're a YC startup going through the visa process right now.

Once you raise enough to pay yourself market salary, the situation transitions from "impossible" to "annoying and long".

So focus on the product, then on funding and/or revenue: the rest will follow.


Doesn't it defeat the purpose of YC if you have to raise enough money to pay yourself market salary before you can enter the US to participate in YC?


I think you misunderstand. It's easy to get in to the US for 3 months, so getting to YC isn't hard. Then you raise, and raising helps you stay long-term.


Ah, that makes far more sense. Thanks!


Is it also easy to get into the US for 3 months, and work legally? What kind of visa (or visa-less thingy) would you use?


What do you mean by "work legally?"

If you mean do a program like YC, it's fine. The reason it works in this situation is because you aren't making any money. The INS does not care if you are "working" if you aren't actually making any taxable income.

If you mean draw a regular salary, it's harder to do that legally but I have a friend in France who runs a 1-man consulting firm that does short term contracts in the USA and he's figured it out. I don't think it was easy in terms of "no work" but it was just filling out a bunch of paperwork.


You are allowed into the US for business on the visa-waiver or the B1 visa (which is easy to get and is the default for non visa-waiver countries I think). But you can't _work_ there. It's a subtle distinction, and I suspect it relies on how the immigration official is feeling that day. Meetings, conferences, meeting investors, networking, etc, are all OK.

Doing the job you normally do isn't allowed, but it seems like it's pretty obvious that people do that.


Thanks for enlightening me!


Perhaps, but not necessarily; the YC project is about going big, ultimately -- after all, that's the only way YC is going to make some money.

It is possible to bootstrap a company in such a way as to plateau out at, say, 3 people, each of whom gets a decent market salary. However, that company may not have further room to climb for various structural and/or marketing reasons, lack of appropriate connections, funding opportunities, etc. In principle, the purpose of YC is to address that specific gap irrespectively of how much short-term revenue the startup may be generating.

On the other hand, I agree that the amount of funding they provide per se is not particularly useful if you are already generating enough revenue to pay yourself(ves) a market salary.


I wasn't so much thinking about the funding provided by YC; but rather that if you've reached a stage where you can raise enough funding to hire yourself into the US, the fact that YC provides connections to angels and VCs is probably not tremendously useful.


I think you have the order of events wrong. The connections (and other value) YC provides help you get that funding which lets you hire yourself into the US.

As pbiggar points out above, there's no problem (at least for EU citizens) getting into the US for three months of YC - it's staying there long term that's hard.


I assume for visa waiver countries those 12 weeks can be done in a 3-month visa-free visit, with the purpose of "seeking investment" or so. Otherwise you'd have missed the cycle after going through the "annoying and long" process of getting a visa.


I've heard about a startup that had to relocate to London after the YC 3 month phase and then wait a substantial time for the INS to work out their papers. That sounds like it could break a company?


Yes, I was wondering about the YC process as being involved in a London start-up, the dream is obviously to take it to YC and the Valley.

Has anyone here on HN got into YC from London?


Snaptalent, Heyzap, Raportive, Songkick + a couple of others were from london. I think guys from most of those companies are on HN.


http://www.songkick.com/ are a london based yc company


I suspect that's the norm rather than the exception. And as such, it can be planned for. It'll certainly slow your expansion (hiring people is hard when you don't know where you'll be located N months from now) but it shouldn't break the company.


Thanks, that doesn't sound too bad then.


>8000 words, but very much worth the read. Thanks for putting in the effort!


Some of my favorite (unintentionally?) humorous bits:

We have to recruit the largest founders in each batch to act like Tokyo subway pushers and herd all the investors back to their seats.

The founders of Cloudkick are sysadmin gods who within the alumni network play the same role for servers that The Wolf in Pulp Fiction played for the back seats of cars.


Upvote for bringing the Tarantino reference to my attention; I missed that one somehow. I'd be hard pressed to find a more perfect analogy for the way I think about server issues.

If you're not familiar: http://www.youtube.com/watch?v=wWmRTjLRMfU


I've also found myself leaning on this analogy to describe the ideal non-technical co-founder. When it comes to dealing with any non-technical problem, you'd damn well better be Mr Wolf and just get shit done.


I've always thought of YC as more of an incubator for young 20-somethings trying to get an idea off the ground. The impression has been fortified by the reported small amounts of 'seed' that is given out. I know a lot of people in older age brackets (30s-40s-50s) with a family and Silicon Valley mortgage who have great ideas and experience but wouldn't even consider approaching YC.

My one suggestion is if you want to expand your age/experience bracket and get these people to apply, you may want to address issues directly relevant to them. One suggestion is to relabel the investment to something more like a 'stipend' and explain clearly that it's not expected to cover salary and life expenses, but only to help defer company expenses. That way, people know that they need to set aside enough savings to cover their family.

The other is to spell out clearly the policy of working on outside projects (to bring in some money) during the YC 3-month period. Leaving it ambiguous keeps out people who need a part-time gig to bring in some money but could spend the rest of their waking time working on a cool product.

I know people who work as consultants and make $10K-$25K in a month. To these people, the YC 'investment' is more of a deterrent. The main attraction would be to get wired into the network and tap into the experience YC and its alumni can offer. It would be good if you could clarify whether it makes sense for them to apply or not.

Overall though, a good write-up with a decent level of detail. Thanks for putting it up.


You may find "Doing Y Combinator in your 30s" useful & interesting: http://zencoder.com/encoder-blog/2010/09/21/doing-y-combinat...


If this hypothetical person doesn't realize that he or she might need some savings to cover family expenses while devoting all or most of their time to a project that isn't generating revenue yet, I am skeptical of that person's ability to successfully start or run a business. Just me?

Additionally if someone is wary of losing their great consulting/contracting fees to start the startup, maybe starting a startup is not for them. Or maybe they just need to plan to minimize the risk that they will be taking. Either way, this is not YC's problem to fix, imo.


The other is to spell out clearly the policy of working on outside projects (to bring in some money) during the YC 3-month period. Leaving it ambiguous keeps out people who need a part-time gig to bring in some money but could spend the rest of their waking time working on a cool product.

I know people who work as consultants and make $10K-$25K in a month. To these people, the YC 'investment' is more of a deterrent. The main attraction would be to get wired into the network and tap into the experience YC and its alumni can offer. It would be good if you could clarify whether it makes sense for them to apply or not.

Pretty sure the official answer is that they wouldn't be interested in taking someone who could only work part-time. I'm sure there are edge cases here and there, and YC is all for creative ways to stay alive financially (AirBnB sold cereal to stay alive - http://money.cnn.com/galleries/2010/smallbusiness/1003/galle...), but the YC school of thought is that a startup should occupy 100% of your work-related effort.

Of course, plenty of us worked as consultants for $10K-$25K/month before YC (er, closer to $10K) in order to build up some savings to live on.


Can someone with big recurring expenses really afford to devote all their time to something that is statistically likely to either outright fail or never provide them enough to cover these expenses?


Thanks for the insight Paul. As an outsider, it's quite interesting to understand how (successful) startups get formed.

It's funny that in my field (economics/finance) we treat startups as black boxes, and we have no clue about how they work. We argue that they are "crucial to the economy and to growth", but yet we haven't made any progress at understanding [1] them.

Do you guys think that we (academy) have any chance at finally understanding/modelling what you do?

[1] "Understanding" = Either writing a mathematical model, or test some hypothesis with a few regressions.


There are certainly a lot of important and so far mostly unstudied phenomena there. How much of it you could talk about in conventionally publishable economics papers is another question, though.


I'm actually thinking about doing some work on this. Would you mind if I drop you an email at some point?


Sure; pg@ycombinator.com


Paul was interviewed at CrunchUp this summer, and he briefly talked about what they have learned works and doesn't work. The video can be found on TechCrunch.

- 2 founders is best - founders should have known each other for a while before starting the company - team is much more important then idea


2 or 3 founders is best.


Thanks!


Great article, thanks a lot for posting this.

I do have one question: is the goal of all the companies to raise addition funding rounds? Or, do some startups still want to work without raising the extra capital, but rather grow organically (37 signals style). I guess another way to ask is: do you force (or even strongly expect) companies to get extra funding on demo day, do you let them choose (and they always choose to get more funding), or do some startups actually not get extra funding?

I ask because, from your article, it seems like most of the latter part of the cycle is geared towards raising capital, and I had always assumed that not raising capital was also a viable option for startups.


No, not all of them. Some are already profitable when they apply, and a few more make it to profitability just on what we give them. But the distinction is not a sharp one: most of the profitable companies would take money on sufficiently good terms.

Though I don't mention this explicitly in the article, Demo Day isn't just for raising money. It's a good way to get mindshare too, because the people in the audience are so influential. So even the startups for whom raising money is not a top priority usually try hard to be impressive on DDay.


Makes me wonder about how selection criteria shifts based on maturity of the company.

What signaling does YC look for in a company whose idea was birthed a week before applying, versus one who applies while their beta is in progress? Is it as simple as "these guys are smart" in both cases?

I've met lots of guys way smarter than me with less motivation, so there's got to be more to it.


Mostly we care about the people, regardless of how far along the company is. Which can be a problem, actually, because startups that have been running for a while generally overestimate the percentage of the work that's behind them.

For us the most important thing about the company having been running for a while is that it gives us more information about the founders. E.g. we can ask them "what have you learned from your users?"


Though it occurs to me now this may be just the thing PG and friends can't share with us. It's to their benefit to make expectations for a great application very clear.

On the other hand, I'm sure there are a handful of red flags and heuristics that they emphatically won't share, simply because they're effective filters. Their disclosure could let people better obscure true problems or falsely inflate perceived value. Reviewing applications after that would be a lot less fun.


I enjoyed reading it. It is nice to read about what the startups in Y Combinator go through.

Minor typos I noticed (since you seem like you want the feedback):

missing 'the': "to get the company into best shape possible"

spelling of predict: "know the investors but can preditct their reaction to each specific startup"

see instead of seem: "no one except the current batch of startups gets to seem them"


Thanks; fixed.


This is very interesting, but the topics covered make it seem like YC is only focused on advising companies how to raise more money.


Hrm, that's not good. Most of the convos are actually about the product. We only switch to talking about investors towards the end of the 3 months, and even then we talk more about the product.

Maybe it seems that way because this talks about all the stuff that's common to all the startups, and the things to do with the product are usually more startup-specific than those to do with investors.


Right - my point isn't: YC only advises on investment topics, but: This overview makes it look like YC only advises on investment topics.

I'm the last person to give you writing advice, but maybe some examples would help.


Most of the dinners and office hours are focused on building a great startup, not raising money. There is structure around raising money (angel day, demo day, sequoia, etc.), but it's definitely a minority of the focus.

I'd also say that even the fundraising stuff isn't just about raising money. Having a smart angel investor give you feedback on your startup isn't just about raising money; it's also about building a product, a team, and a company.


Agreed. And, pg has already written plenty about advising startups to build things people want - I just want more :)


That wasn't my takeaway. The emphasis to me was on how the creative process is nurtured and accelerated. I'm actually surprised by how many times the word "event" occurs, but stepping back that makes sense. Events are opportunities for action.


The main insight I took from this was the quip about "investing in YC-funded startups is safe in the same way buying name-brand products is".

Like many people I sometimes feel ripped off when I pay 50% more for that box of Kellogs cereal or whatever. I imagine the same feeling might be the motivation behind AngelGate.


There's a difference: YC's brand is not based purely on marketing. It's based on the success rate of past YC companies, which is objectively higher than average.

From an angel's point of view, YC is a deal refinery. Raw deals come in. High-quality, refined deals come out. Many investors will gladly pay a premium for those, because much of the early risk has been taken out: do the founders get along? Do they crack under pressure? Can they ship something? Can they adapt to changing circonstances?

YC figured out a repeatable, streamlined formula for a process which was previously a black art. They industrialized the gut feeling. And they deserve every bit of recognition they got for it.


re: "YC figured out a repeatable, streamlined formula for a process which was previously a black art. They industrialized the gut feeling."

That's not my understanding. I don't think they have any formula other than "We recognize great entrepreneurs when we see them" - It's not something they can write down in a book and sell to other people - so, in that sense, not industrialized. Still a gut feeling.

I could be wrong though - happy to hear otherwise.


You're leaving out an important part of the equation: the sheer number of deals that went through YC, and the data associated with them. When you know the complete story on 500+ founders, and look at which ones were successful, patterns emerge. These patterns can be used to make better decisions and give better advice.

Anybody who's talked to PG will tell you he is a walking database of startup patterns. "I've seen X and Y do this and they failed. Don't do it". I'm sure as YC scales, that database will be externalized to a medium other than PG's brain :)

So, yes, there is a formula: it's called data.


How much larger can Y Combinator get? 36 start ups is already a huge number.


I don't know. One of our general principles with YC is to apply software techniques to startup funding. So we approach scaling YC the way you'd approach scaling software: we scale up till we hit a bottleneck, then we remove that bottleneck and keep going.

Funding 36 startups at a time would have seemed impossible back when we were doing 8. And in fact it would have been impossible to do 36 the way we operated then. So how many will we be able to fund at once, after we've taken advantage of whatever new techniques we discover for scaling? We can't say, because we haven't discovered them yet.


I'm curious whether, and how, you're going to start pulling in alumni to scale it up, and how that will turn out.


Yes, in several ways. We hired Harj and Alexis, who are alums. We have some of the alumni read the applications, in case we overlook any good ones. And the alumni who come in to give advice about funding are fabulous.


In order to be self-replicating, you'd have to have alumni with relatively large exits who then participate on more or less equal terms... is that something you foresee, or is it going to just be too messy to add people that way?


I haven't thought too much about it. I usually focus on the bottleneck immediately in front of us. But what we do is pretty parallelizable.


Maybe an eventual next step is creating a YCombinator for YCombinators - a program to help your successful alumni do what you did and become successful incubators/angels/VCs, while keeping them under the overall YC umbrella.


I don't think you need multiple YCs though. All our experience so far suggests it's better to have one big YC. Maybe there's some limit to scale, but the optimistic hacker in me would rather prove that by hitting it than assume it's there.


"At the end of Demo Day what the startups usually have is a bunch of potential leads. Our default advice is to do a breadth first search, weighted by expected value. ... There are a few investors for whom it should be zero, and we can tell startups about those too."

Interesting. If you know beforehand that those investors' expected value is 0, why invite them?


It would be too much of a deliberate affront to refuse to let them even attend. And not all the leads startups have are from the audience at DDay. Since there are so many investors here, they often get introed to investors before DDay through some other connection.

Also, zero is probably an overstatement. It would have been better to say epsilon. Because most of these investors I would take money from if the alternative would be to shut down the company.


A gentle request; I think it'd be better to call it DemoDay or something other than abbreviating it to DDay. (I know you mean no disrespect, it's an easy shorthand...)


How often do those situations happen (ie- take money from a low quality individual or close the doors)? Startup sucess rattes are very low as a whole, so it seems as if there may be a culture of "vulture" investors in SV to prey on entrepreneurs who just need cash. It'd be good to know the warning signs.


Maybe once per cycle. There doesn't seem to be a culture of bad investors; they're all bad in their own ways.


Reminds me of the opening to Anna Karenina: "Happy families are all alike; every unhappy family is unhappy in its own way."


> Interesting. If you know beforehand that those investors' expected value is 0, why invite them?

Just a speculation: Different investors may also have different values to different companies.


How frequently do companies grow (hire, add a cofounder) during the YC term? Does that ever happen? Is advising on that ever part of the YC role/conversation?


Maybe 15-20% do. And yes, we care a lot about that, and often help not only in advising but in recruiting.


Do you generally advise single-founder companies to add cofounders (it does have its benefits), or do you think single founders are fine if they pass the filter?

I guess my question is, do you see single-founder companies as missing something (a cofounder), or does it depend on the founder?


Yes, usually, though we don't insist on it. I think most single founders would be better off with cofounders, but it's not worth taking someone mediocre just to have a cofounder.


Have you ever had any successful single founder company came out of the other end of the YC process?


Thank you Paul. It is great to have this detailed information that fills in all the gaps I have wondered about.


Great article! (it surprised me that I read the whole article in one shot without evening noticing it was that long!)

One question (maybe a bit sensitive): all the glory of successful YC startups aside, what are the "failure rate" for YC funded startups? What situation would you consider a "total fail", if that ever happened?

And another related question is based on which criterion would you consider a YC graduate successful? user base? the amount of money raise? financially break even? profitability?

thanks.


I found the following sentence to be hard to parse:

"The general answer is to pick something where the product of how fast it can be built and how excited users would be about it is high."


    x = speed-of-implementation(idea)
    y = usefulness(idea)
    rank(x,y) = x*y
Something like that I think.


That is accurate parse as written. I think the even more dramatic conclusion suggested by Lean Startup is it is probably max(y1..yN)*C^(90/x), where y1 is the utility of your first idea and x is average number of days it takes you to learn one important thing (a full cycle through the idea, implement, measure, conclude loop).

Scary stuff starts happening in any business when you take the limit as x approaches zero. (This came up in client work today.)


What is C?


A constant, for simplicity. Call it your lower threshold of the impact one good idea makes on your business. (I have a mental target at C = 1.05 but at YC stages there is almost certainly a company with C = staggering.)


Can you put that in the English? I am too tired to make sense of that math.

I hope you do not think I am stupid for not immediately seeing the point of many seembols.


"The value of your business is the value of your best of several products times a multiplier. You apply the multiplier once for every time you have a good idea. The number of good ideas you can have in ninety days is 90 divided by the number of days it takes you to prove an idea is a good idea."


... or prove it is a bad idea.


If a YC startup was to never be acquired, what sort of dividend structure would you think is ideal? What sort of returns would you consider a "successful" investment?


This may be too direct question to ask, but I will anyway to have some points of reference...

1. What do you - at YCombinator consider to be your best example of a successful start-up? If you can name that company, that would be awesome and appreciated.

2. On the other hand, what do you consider to be a flat out failure? An example of an idea that totally did not work? If you could name this venture, it would be appreciated too.


I can't pick favorites, but it's pretty easy to see what the most prominent YC-funded startups are.

One good example of a bad idea that I can quote without hurting anyone's feelings is Artix: http://paulgraham.com/bronze.html


In your essay about the application process you discuss figuring out what the combination of founders are (e.g. two hackers, one business one hacker, two hackers one business...different stages of their careers) and you have seen about 20 or 30 different founder combinations.

Have you noticed any particular combination that seems to work better than the others across the board, or does it depend on the startup?


Great article! Just reading this finally motivated me enough to create an account here and seriously think about applying for winter 2011. After some reconsideration though, I'm not quite sure I'd be willing to quit my day job just yet. I have a few ideas for startups and one project I've been working on in my spare time that is interesting but nowhere near complete. Would it be worth to apply anyway? Perhaps I could list all the ideas I have or maybe just the best one? I was also thinking about applying to the YCommonApp. But I'd prefer to target my resume to specific companies just because that has worked for me the best in the past. Anyone have advice on what might be a good route to take? YCombinator funding? YCommonApp? Both or neither?


To reply to my own comment: I probably should have signed up to attend this - www.startupschool.org The deadline was 3 days ago. D'oh! If anyone who had signed up is reading this and has to cancel, let me know if I can take your spot. :)


It's a bit misleading to call these events "dinners" though, because they last half a day.

People start to show up for dinners around 6 pm.

This seems wrong, unless the YC dinners conclude at 6 AM.


I meant half a waking day, cperciva. When someone says "I spent half a day trying to find that bug," they don't mean 12 hours.


I meant half a waking day, cperciva.

Huh. That never occurred to me as an interpretation.

I wonder if this is a British vs. American vs. Canadian English issue, or if I'm just slower than usual today.


I'm from British Columbia originally, Half a Day (in the dinner context) is 12 Hours to me. I'll do a sample of the Indians, Canadians, and Americans in the office and get back to you.

This may be another of those "organ-eye-zation" versus "organ-eh-zation" things that pop up form time to time.


American here. To claim that something takes me half a day, I would usually interpret that as half a working day, so 4-5 hours. I brew beer, and I tell people that "beer brewing takes a full day" -- if I start brewing at 8:30 then I get done before 5. Yeah I could do some other stuff afterwards.

Oh, and it's "organ-eh-zation" through and through. :)


Sometimes we do :(


I have to say I agree with cperciva, the first thing that jumped to my mind was that the meals must start at 12/1pm and finish at a "normal" time for a semi-formal dinner of about 12/1am.


Many languages have separate words for "day" and "24-hour-cycle" ("den'" and "sutki" in Russian, "yom" and "yamima" in Hebrew). In English the word "day" may refer to both, depending on context. There is a word “nychthemeron”, but it's not used in day-to-day speech.


That's a bit too literal, I think. 12 hour work days are likely typical - ergo, folks stay past midnight.


How exportable is YCombinator? Much of YCombinator depends on people being in the same geography. I understand that to be the reason why founders are required to move to Mountain View.

Do you think it would be possible to start YCombinator prime elsewhere in the country? If we put together many of the same factors, angels, infrastructure, good mentors, could this be replicated, albeit on a smaller scale?


He's written about this in the past. "Can You Buy a Silicon Valley? Maybe." http://paulgraham.com/maybe.html and "How to Be Silicon Valley" http://paulgraham.com/siliconvalley.html. He trends towards, "go to them", though: http://paulgraham.com/startuphubs.html

It comes down to people, money, and time. Exporting Silicon Valley might be the wrong approach. Another place must have its own culture and value system in order to survive and those qualities can't be borrowed.

Boulder, Boston, Austin, and to some extent NYC and a few other east coast (of the US) cities (my heart belongs to Baltimore) have burgeoning scenes, but each is different than SV. Where they don't try to simply mimic, I think they're more likely to find success.


The hardest part to replicate elsewhere would be the angels. You really need them, more than you need VCs, and you can't just call them into being.


> If we put together many of the same factors, angels, infrastructure, good mentors, could this be replicated, albeit on a smaller scale?

You need "enough" of all of the critical factors and then you have to overcome whatever penalty you incur from missing some of the "nice to haves". Considering the odds against success even with all of the stars aligned ....

Seriously - unless your customers care where you are, why are you so resistant to going to where the odds of success are highest?

It's okay to value things other than success, but you're competing with people who are focussed on success. How are you going to overcome that advantage?


Very impressive. I hope to someday apply, but being a very novice technical founder, that day may be much farther down the road.


What do you recommend to the founders that can't move to the bay area? Like people who own homes, have a family, etc? I know the YC requires it. I once emailed and asked about commuting because my co-founder and I both live in Sacramento, but the person who answered my email basically said that commuting is not feasible.


We funded some guys from the Central Valley once, with houses and families. They rented a place in SV for 3 months, and they'd go home on weekends to visit their families.


Typo: "We make a point of introducing speakers to those who particularly want to them."


Thanks; fixed.


> Dinner itself happens around 7:15. Everyone eats together at long white tables designed by our architect Kate Courteau. The general atmos is like a modernist version of an Oxford college dining hall, but without a high table

seriously?


[1] There was some debate whether to keep this analogy, lest it seem a pretentious comparison, but I kept it after Harj, who went to college there, insisted the atmos was in fact very similar.


If we broadcast or even recorded the talks, the speakers would clam up.

How about anonymizing it by removing the names of the startups/founders before publishing ?


It took less than an hour for someone to figure out the Partner and Venture Firm Steve Blank was referring to in his post that was approximately called "You're Just the Founder". Now admittedly he tagged the post with the name of the company so it was easier, but still.

Anonymising information while leaving it usable is hard to the point of (near?)impossibility


How about recording (with permission), and asking in a few years time whether you can publish it? Some issues just need to cool down.


If the startup either hasn't decided what to work on

Approximately what percentage of startups do you accept that apply with no particular idea?


Nearly all have some idea or ideas. Some make it clear that they're not wedded to their idea, which is fine with us, actually.


I've been eyeing YC for a while and this post has convinced me to apply.

I quit my job three months ago and have been doing consulting work in order to generate enough runway to finally dedicate ourselves fully to our own product.

I think we will be done with all of our current gigs by november, so the Winter YC cycle looks VERY attractive right now. We have a couple of ideas, and it seems like we might have enough time to get started on them before YC, but still be flexible enough when the cycle starts.


I hope you are able to finish your consulting when you expect, but it's my experience that it almost always takes longer.


Are there any downsides to being in Y Combinator?


There are two I can think of: you have to move, and you have to give us some stock. But I'm pretty confident that in both cases what you get in return more than compensates.


This is an amazing piece of writing by Graham. If he is as good a coder as he is a writer, he must be really good. http://goo.gl/fb/sfxTi


stays at Y Combinator!!


Stays at YCombinator?


Awesome, I envy you


Stays at Y Combinator




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