
The Aha Moments That Made Paul Graham's Y Combinator Possible - ahallerberg
http://www.fastcompany.com/3002810/aha-moments-made-paul-grahams-y-combinator-possible
======
pg
Skimming this, I noticed a few mistakes.

I was 30, not 31.

My degree is in CS, not computer engineering, which is a hybrid of CS and EE.

We were already working on another company when we decided to work on
ecommerce. We were making software to generate web sites for commercial art
galleries (who didn't want web sites). So we didn't suddenly decide to write
software to make stores. It was more a question of switching to a market that
wanted what we could make.

Robert's apartment was not in NYC. I was the one who lived in NYC, and I was
visiting him in Cambridge.

I didn't wake up with a specific sentence in my head. I just woke up with the
idea that we might be able to control the software on the server by clicking
on links.

It's an overstatement to say that the idea of Viaweb was too strong to fail.
We came close to failing several times. It is true though that the best thing
we had going for us was the quality of the software (rather than, say,
marketing, or connections).

We weren't the only ones "insane enough" to make web-based software. At least
one of our competitors did. It was a big help though that our most dangerous
competitor took a long time to grasp the idea.

The story about the origins of YC omits Jessica. We decided to start it one
night while we were walking back from dinner in Harvard Square
(<http://ycombinator.com/start.html>).

Robert never devoted his time exclusively to YC. Jessica and I did, but he and
Trevor have always done it part time.

As far as I know, no one has ever tried to put a valuation on YC. You could
value our current assets fairly precisely, but that would come to less than
500m.

~~~
hiddenstage
$500 million valuation?

YC could probably sell their stake in Dropbox alone for more than that.

~~~
rdl
YC's stake is common stock. It was presumably somewhere between 2-7%, like is
advertised for current YC companies, back then. I assume it got diluted a lot
since then, as Dropbox has had multiple rounds of financing.

Dropbox is worth maybe $5b. I think YC's stake comes out to 1-2% after the
rounds. So, off by an order of magnitude or so. Just based on published info
about the distribution of YC companies and their value, it's probably more
like $200mm total fund value. Given that money-in was say 300 x $20k, and
maybe triple that to account for salaries and other overhead, say $20mm, it's
a 10x return so far.

Which is pretty baller for a VC fund.

On the other hand, I suspect PG etc. could have created a single startup of
their own worth >$300m x 2 (to account for dilution) and probably exited it,
in the same amount of time.

~~~
YuriNiyazov
They might have actually done that anyway. Like PG said, YC itself is worth ~
$500m when marked to market, and I imagine they get acquisition offers.

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hiddenstage
I think the moral of the story is clear: If you want to build a successful
startup, you must first hate Windows.

~~~
beagle3
That did make me laugh; however, I think there is some truth to it, in that it
helps to dislike the standard way to do _something_ in order to innovate.

After all, if you like the standard way, and practice it, what you are going
to get is standard results - which are mostly average. Yes, there exist crazy
creative innovations, but the vast majority of successful business are not new
inventions - but rather, a better way to do something everyone is already
doing. It's evolution -- sometimes a big step, but still, way more often
evolution than revolution.

~~~
evoxed
My mother used to wonder why I seemed so negative all the time. "I'm not being
negative, I'm just figuring out all the stuff I have to fix." I expect I'll be
on the other side of that conversation in a few years.

------
cpr
"Robert Greene is the author of the international bestsellers The 48 Laws of
Power, ...[list of books]. His highly anticipated fifth book, Mastery,
examines the lives of great historical figures such as Charles Darwin, Mozart,
Paul Graham, and Henry Ford and distills the traits and universal ingredients
that made them masters. ...more filler..."

Wow, Darwin, Mozart, Graham and Ford. PG's head must be spinning. ;-)

~~~
pazimzadeh
Author of "The Art of Seduction", "The 50th Law (with rapper 50 Cent).

------
oxwrist
_The lesson is simple--what constitutes true creativity is the openness and
adaptability of our spirit. When we see or experience something we must be
able to look at it from several angles, to see other possibilities beyond the
obvious ones. We imagine that the objects around us can be used and co-opted
for different purposes. We do not hold on to our original idea out of sheer
stubbornness, or because our ego is tied up with its rightness. Instead, we
move with what presents itself to us in the moment, exploring and exploiting
different branches and contingencies. We thus manage to turn feathers into
flying material. The difference then is not in some initial creative power of
the brain, but in how we look at the world and the fluidity with which we can
reframe what we see. Creativity and adaptability are inseparable._

What a huge load of bull (in the last paragraph) on an otherwise good story
(albeit some inaccuracies) of how pg started YC.

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dschiptsov
What he did - he made a pipeline, same like Ford did with a car assembly line.
But it not just that.

Usually there are very mediocre people who works at assembly line. The trick
is that YC filters out the best people possible, like Google does.

This is why the odds of successful exit (one way or another) are much greater
than on average. They don't need each project to turn out into Airbnb. More
than one is enough.)

Everything else is second. It is a pipeline of people who motivate, control
themselves and push themselves to the limits. This is the cheapest (but
hardest) way to get work done.

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chintan
> We do not hold on to our original idea out of sheer stubbornness, or because
> our ego is tied up with its rightness.

Sometimes sticking it out is what is needed. These days it is fashionable to
"pivot" -- I believe that in most cases you've gotta to stick it out enough
with the original idea to see where it takes you. The data only tells you what
you want to measure. The best insights/pivot you'll get by following your @gut
(or as PG did with his "aha" dream of converting into a web-based store)

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tedmiston
Hustle, as a personality characteristic, sets top entrepreneurs apart from the
pack. It's the one that really matters because those with hustle know how to
pivot when a chance encounter arises. Although this particular word is
avoided, Greene's description of PG reads much like his description of 50 Cent
in The 50th Law.

------
jkuria
Nice article but I think it over-emphasizes hating windows a little too much
and fails to explicitly make the more important point, which Greene did in
this Mixergy interview:

"Robert: Well, the other person that I’ve interviewed . . . I’ve interviewed
five so far. I’ve got about three or four more to go. It was a gentlemen named
Paul Graham. I don’t know if you’re familiar with him.

Andrew: Y Combinator.

Robert: Yes, and Hacker News, yes. He’s really brilliant. So, one of the
things I’m talking about in the book is the power of being a non-conformist,
and it comes to what we were talking about earlier about your life’s task that
you’re unique. There’s something different about you. When you find it,
there’s power in that uniqueness. It’s almost like Harry Potter or something.
When you find what makes that what it is about you, you’ve got this little
diamond that’s going to give you power.

So, Paul Graham, what I liked about him was he’s always been a complete non-
conformist and has gotten away with it, not because his parents had money or
he was privileged, but because he didn’t care and he took risks and he just
followed what he wanted to do. And that’s sort of the end of this book. That’s
like the ultimate thing.

So, when he first started out, he didn’t really want to get into business, but
he needed to make money because he was living in a really crappy apartment in
New York. He came up with this other friend who was a great hacker. His name
eludes me right now. You might know his name, and they came up with Viaweb,
basically, because he was so good at this one code which name also eludes me
that he writes in.

So, he kind of backs into being a successful businessman, and he doesn’t
really care. Then, when Yahoo buys out Viaweb, he doesn’t suddenly try and
morph into a conventional businessman working for Yahoo. He quits after a
year. He becomes a writer. He writes articles that create a great following,
and then he kind of backs into Y Combinator, which is a brilliant business
model, I think, for the future for entrepreneurs, for tech startups.

But he doesn’t give a damn about what other people think. He doesn’t follow
what other people do. He does what he thinks is right for himself, and I just
think it’s a brilliant formula. I’ll be more explicit in the book and make it
more, something you can understand. But that’s sort of the gist of it."

(Both audio/video and full text transcript can be found here:
<http://mixergy.com/robert-greene-power-interview/>)

~~~
ryanholiday
He definitely goes more into that in the book. Robert tells the stories of the
masters from a couple different angles, I think this is just one of the more
interesting ones.

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filipemonte
Why the Y Combinator model don't work/exist in other countries? If this model
spread to other countries it will be awesome, imagine the number of good ideas
dying, when they just need a push.

~~~
ig1
It does, TechStars in particular has a huge number of affiliates around the
world.

~~~
sbisker
In fairness, the TechStars model isn't _quite_ the same model.

For instance, YC rather explicitly doesn't provide shared office spaces. The
shared office space of a TechStars location is a large startup community
galvanizer in the cities where TechStars has set up shop - and partially
offsets the need to be in the Valley for those companies.

There's no question that TechStars is tweaking the YC model subtilely in its
attempts to get global outreach. (This is a good thing, the world could use
more experimentation.)

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imjk
It seems the author has already updated the article with edits based on PG's
comments in this thread.

