
Y Combinator has lost its soul: A YC founder's perspective - artembugara
https://twitter.com/AdamNeumannsCoS/status/1285651161723342848
======
awillen
The idea that check sizes should be small so people should be forced into dire
financial situations is a terrible one, and one that would absolutely hurt
diversity. You're going to end up with a bunch of rich white dudes as founders
(because very, very obviously the other way that people can afford to take
smaller checks is if they have a lot of money in the bank).

The smaller class size issue is probably fair, but reducing check sizes as a
filtering method will absolutely filter out socioeconomically disadvantaged
people. Just a terrible suggestion from somebody who I would wager heavily is
not unsure of where his next meal is coming from.

~~~
Alex3917
It also doesn't make any sense from an investment perspective. Reddit would
have been one of the most successful YC companies of all time, except for that
they basically had to shut down because they couldn't raise money. This
happened to lots of early YC companies that could have otherwise been
successful.

Had Reddit not sold for pennies on the dollar to Conde Nast, that alone would
have probably paid for the extra 100k for every YC startup since.

~~~
awillen
Great point. People think a willingness to take extreme financial risks is
somehow a useful personality trait when it comes to entrepreneurship because
of selection bias. People who take that risk and make it tell that story.
People who take that risk and don't make it aren't heard from. People who
don't take that risk also aren't heard from.

There are lots of people with great ideas and the ability to execute on them
who also have a deep sense of financial responsibility that precludes them
from going 50k into credit card debt.

~~~
sangnoir
And often, getting credit card debt is not a material risk, but a minor
embarrassment when they ask their family to bail them out and/or move in the
guest house for a few months, rent-free. When poorer folk take the "same"
risk, they can be ruined for decades.

~~~
hpcjoe
Here here. When you empty your 401k to build your business, and don't
contribute to it for 15 years while you are building, as you simply don't have
the cash, and cannot afford it ...

Yeah. The implicit assumptions of the "live in poverty" of the OP, are wrong.

I'm 54, and I was financially wiped out at 51. I will not ever recover from
this. No family wealth to fall back on. I do not believe I will ever be able
to retire. And noting that there is a bit of ageism in this space, makes the
threat of potential long term unemployment even worse for folks like me.

Sort of an inverse Ozymandias. Gaze upon my flaming cratered company, and
beware. Here be demons. That you cannot control.

I had skin in the game. And I lost it.

~~~
Lordarminius
> ...I'm 54, and I was financially wiped out at 51. I will not ever recover
> from this....

You need a fighting spirit to achieve great things. Many people have overcome
far greater problems. Never give up you are only one transaction away from
financial success. Good luck

~~~
hpcjoe
(really not sure why this was down voted ... it is a good comment)

Thanks. I'm aware of others struggles. I figure that my story could be a
cautionary tale for some, and others may take lessons from it.

When I say in other fora, never, ever take debt financing of anything if you
can avoid it, this is coming from personal agonizing experience.

If I go back into the startup world, I'm going with a very clear perception of
what is what. No rose colored glasses. No "if you build a better mousetrap"
mentality. I know how things can go horribly wrong. I know where the traps and
mines are.

------
panorama_love
(throwaway as YC founder for obvious reasons)

I've spoken to a half dozen YC founders this morning -- no one disagrees
except the check size debt thing. Mostly "that is dumb" for that one.

For those who worked at startups when they were small (5–20 people), the
difference between then and when they grew to be 100 or 200 people is night
and day. Very real difference.

For those who haven't, think of class sizes. Do you think a uni class with 18
people in it will be the same as a survey with 200? Course not.

Three founders in my batch (early 2010s) have started companies in the past
year and opted out of YC b/c of 1. batch size 2. YC doesn't mean to investors
what it once did. The brand is heavily diluted.

YC is a broad based investment fund. The partners cannot handle the size of
the batches or give the attention they once could. The partnership simply
hasn't scaled.

Somewhat informed guess: partners don't want to give up their own returns by
splitting it with more partners. Understandable -- human nature. But not good
for YC as a whole.

~~~
tqi
That perspective makes sense, but I think it's also worth considering that it
is likely that not all of those YC founders would have been accepted if
batches were smaller. You're totally right that per founder, YC was more
valuable when batches were small, but I think it's less clear whether the
aggregate value is higher.

~~~
benmathes
Well, sure, but then YC in the _present day_ is collecting value based on what
YC was in the _past_.

------
kemayo
He lost me with the whole "make founders take on massive personal debt to
survive" tweet. Removing that particular stressor, particularly from people
from poorer backgrounds who lack the access to that kind of credit is how we
get a better sampling of ideas.

~~~
czbond
I’d suggest the opposite. One who is used to living off $1k a month for 1-2
years have an upper hand on founders used to a more cushy lifestyle. Or even
having no income and almost broke for years like many successful founders I
know of.

~~~
JimDabell
There’s a significant trade-off here – it can result in overvaluing money in
comparison to time / effort. If you’ve been scraping by for a while, you train
yourself to always pick the cheapest option, which often isn’t the best
option. I’ve seen several founders waste time and effort trying to work around
shortcomings in cheap / free tools or implementing something themselves when
spending an insignificant amount of money would make the problem go away
immediately.

~~~
czbond
I don't disagree with that as a side effect; in the end, the only thing that
matters for a company is runway of the founders.

------
seizethecheese
Recent YC founder here. I disagree with the premise that boring ideas are
inherently bad. Stripe is a B2B company that adds an API on top of existing
infrastructure. Airbnb is a basic CRUD app.

I also disagree that YC is not funding interesting ideas. Our batch had quite
a few. Someone was making a rapid cargo ship. Someone else was making a fully
distributed cell network.

The only real copycat ideas were the ones duplicating successful startups for
international markets. In my opinion these were obviously good investments.

The social climber phenomenon was real. I think anything that becomes elite
will attract them. I’d say, I was impressed that half the batch did not fit
this profile.

My sense was that YC actually went out of its way to fund more interesting
ideas. I’m sure my startup would not have gotten in, based on our traction and
backgrounds, if our idea wasn’t out-of-the-box. (We are bottomless.com, a
smart coffee subscription that uses a WiFi scale to ship at the perfect time).

I’d even venture to say that there appeared to be a negative correlation
between interestingness and outcome in our batch. It’s possible YC should fund
more boring companies, not fewer.

~~~
jmwilson
The author didn't say anything about "interesting" vs. "boring" companies or
ideas. He said YC should curtail funding of dev tools/SaaS startups, because
the traction they appear to have is misleading. They're selling to each other,
revenue moving in a circle, without demonstrating value creation outside of
the sphere of similarly-situated startups. Not explicitly stated, but he's
also implying it's a portfolio risk for YC.

~~~
danenania
It's a myth imho that it's just so easy to sell your saas/devtool product to
other YC companies (in your batch or otherwise), and that it somehow
guarantees you early traction. It may have been true in the Stripe days when
there were much smaller batches, but now being in YC means being bombarded
with pitches from your batchmates (and then from each new batch as an alumni).
Highly effective growth channels tend to quickly get over-saturated, and this
one is no different.

Companies in YC are maniacally focused on their own goals and generally don't
have the time and energy to adopt products just as a favor. They also tend to
have NIH syndrome. They'll try it and give you feedback, but getting them to
_really_ use it is still very hard and requires that you're truly solving a
problem.

I think a lot of companies start YC with this idea that they'll just sell to
other YC companies, then quickly change their minds when they see how hard it
actually is. Other early stage startups are not great customers for most b2b
companies.

------
nbardy
The Bay Area has lost its' soul. I moved here to meet creative people tackling
big problems and I've found it's no longer about innovation and risk. Just a
big pile of uninspired B2B SaaS companies. SV has become a well oiled money
making machine for these kind of companies. If you want to work hard and get
rich you come here and follow the grind to get your checks, status, clout,
etc...

I've found some creative people tackling big ideas, but they are exceedingly
rare and largely unsupported by the community. I've met a lot more people who
moved out here with big ambitions and have been railroaded down the route of
conformity, which makes the most money for VC's. It leaves them without
fulfillment or purpose as they grind on products they care little about. SV
will continue to produce billion dollar software companies, but I doubt they
will produce real innovation over the next few decades. The bay area has
conspired to railroad its' potential for greatness towards profitable
mediocracy.

~~~
thephyber
"We wanted flying cars, instead we got 140 characters." ― Peter Thiel

I think people love to use "The Bay Area" and "Silicon Valley" and conflate
that with "software startups that raise VC funding".

Silicon Valley still produced most of the internet (for better or worse) and
the only new American mass production car company in my lifetime. Let's not
overlook the successes while we are busy complaining about the average
(especially because the VC model assumes 900+ failures for every 1-3 unicorn
IPOs).

Not sure what the next few decades will bring (I'd be pleasantly surprised if
the USA doesn't go through an actual revolution), but I'd wager that "real
innovation" is still more likely to happen in Northern California than almost
anywhere else in this country, even if the establishment VC club doesn't get
disrupted.

------
erik_landerholm
As someone who did yc in s09 and w19, it was very different. But, you get out
what you put in, like most things. These generalized critiques are useless.
B2b is thriving at yc because it’s easier and more in the wheelhouse of
developers. If there were tech climbers there I didn’t meet them. There are so
many people the useless are easy to avoid. We got 6 months of work done in 3
months and the bigger check vs 09 was very helpful.

~~~
redisman
Also if you look at how the US economy works, all the money is in businesses,
not consumers - compare the current stock market to the unemployment numbers
for example. B2B was always going to out-compete B2C in the long run.

------
karl11
I don't think the author is advocating that founders take on a ton of of
personal debt, just that historically it was a filtering function that is now
absent. I would imagine that this filter function can be replaced by something
else that does not also weed out people without any safety net.

The point is valid - startups are a risk, and so if all the risk is removed,
it will increase the number of people who are coming to YC for status vs.
coming because they believe in their idea.

As good at interviewing as the YC partners may be, interviewing is no
substitute for the harsh reality and incentives imposed by taking a great
risk.

------
MattGaiser
I am somewhat sympathetic to the check size argument simply because I have
seen a lot of people drift from accelerator to accelerator to accelerator and
mostly focus on getting to their next one. They become really good at the
pitch and grant collecting, but have websites that barely work or rarely go
and meet customers. There is a perverse incentive in the accelerator spot in
itself being a reward.

I suppose it depends on what YC wants to optimize for. You can risk giving
money to not so serious founders or risk excluding ones who want to cap their
risk.

I don't get why they would want to ban dev tools and SaaS. The latter
especially is a huge segment. Many enormous companies like IBM and SAP are
built around those types of offerings.

~~~
soneca
So don’t change the check size, just filter out companies that passed through
other accelerators and still failed to gain significant traction.

------
GCA10
There's a Burning Man analogy in the Twitter comments that struck me as quite
apt. In fact, it holds for everything from vacation destinations to multi-
decade music acts.

People who were there at the beginning feel that something magical has slowly
been corrupted by success and all the bigness issues that come with it. They
aren't totally wrong. But people who get there later still find something of
value, and everything is now sturdy enough to support wider participation.

I'm okay with seeing it both ways.

~~~
danenania
Yeah, it seems to be the natural evolution of anything that starts out small
and obscure, then becomes famous and cool.

I have no doubt that there's some obscure, ramshackle accelerator out there
that will someday be as prestigious as YC, just like there is some small,
tight knit festival that will eventually become as huge as Burning Man.

But taking part early also means foregoing the prestige factor, and accepting
that this obscure accelerator/festival will most likely _never_ get big or
cool. You can't have it both ways.

------
richajak
Several years ago I used to read pg old articles (also Joel S, pgreenspun)
without realizing who he was or know what YC was. It clicked with my nerds
mindset. I had an impression that he was a champion for the underdog, nerds
like me who is smart enough (but not genius), willing to work hard and live
frugal. I also had the understanding that ambition to be a unicorn not
necessary, it is much more important to be ramen profitable. Success will come
if you work hard and persevere, but not blinded by ambition. I also thought
that success did not require social capital, eg ivy league degree, FAANG
connections, etc.

I filled up YC applications last year, but not sure how to answer question
whether my idea is worth a billion. I will be satisfied if my SAAS business
can make $5k MRR. If I have more than that, it will be a blessing.

Should YC remove questions that favors those social capital? I mean, YC can
have a simple leetcode question to prove you are smart enough. Then, run a
lucky draw to pick which ones selected.

~~~
danenania
I don't think pg or the YC partners more generally have anything at all
against bootstrapping or smaller scale businesses. But they're a business too
and have their own investors to answer to. Billion dollar exits are what make
their business work.

$5k MRR is a great goal, but you shouldn't expect investors to give you money
if you there's no potential upside for them.

~~~
swyx
there's definitely some jockeying for "the YC of bootstrappers" among the
indie hacker crowd now

------
diego
As an investor, all I can say is that having gone through YC is not the signal
of quality it was 7 or 8 years ago. This doesn't mean YC is doing anything
wrong regarding _their_ investment strategy. It simply means they are
expecting a very skewed power law of returns.

------
graeme
I’m surprised no one has mentioned this PG essay, black swan farming. YC
appears to have switched to exactly this strategy. Invest in a far larger set
of startups, with more possibility of failure but also larger possibility of
finding the rare large ones.

[http://paulgraham.com/swan.html](http://paulgraham.com/swan.html)

~~~
divbzero
This is an excellent essay that speaks to the financial calculus of startup
investing.

In addition, I think YC partners also have a non-financial desire ( _e.g._
first footnote in that same essay) to encourage entrepreneurship more broadly.
Hence the larger YC batches and experiments like YC Fellowship [1] and online
Startup School [2].

[1]: [https://blog.ycombinator.com/yc-
fellowship/](https://blog.ycombinator.com/yc-fellowship/)

[2]:
[https://blog.ycombinator.com/onlineclass/](https://blog.ycombinator.com/onlineclass/)

------
sobellian
I went through YC in S14 as a co-founder of a hardware company. I agree that
YC optimizes heavily for SaaS companies, but smaller checks would probably
exacerbate this trend. Hardware companies need to not only subsist on the
$120k but also develop prototypes. That's difficult enough, but it is
completely impossible on $25k unless the co-founders are independently wealthy
or have already raised money.

------
lisper
I find it disturbing that this is getting so much attention. The argument
(such as it is) is utterly without merit, unsupported by anything other than
the tweeter's personal opinion. It is, quite simply, a troll. And it seems to
be working.

In fact, the whole cultural phenomenon of paying attention to what people
tweet is deeply disturbing. Twitter is not designed to support rational
argument supported by data, it's designed to be a morphine drip of novelty, a
machine that dispenses mental M&Ms. People who follow twitter are like lab
rats pressing a lever in exchange for a drop of sugar water. It's troubling to
see this phenomenon invading HN.

~~~
dang
Normally we'd downweight a submission this lame, but we can't do that because
[https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...](https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=by%3Adang%20moderate%20less%20not%20more%20yc&sort=byDate&type=comment).
We turned off the flamewar detector for the same reason.

It's nice that the commenters have pointed out most of the wrongness though.

------
ema
One thing that made YC great was that it was started to allow the original 4
partners to learn how to be investors. The first batch wasn't intended to be
profitable, it was intended to reveal what works and what doesn't. (Luckily
for YC it got a lot right by accident). Sure YC could go back to small batches
and small investments but they can't go back to "let's figure things out with
only rough theory as a guide" because YC is no longer the startup born out of
ignorance and curiosity it once was. You can't forget lessons learned and dial
back your sophistication. The magic of early YC isn't lost forever but it will
be refound among the next group of rich people who are willing to spend a bit
to figure out if this investing thing is to their taste.

------
TACIXAT
Is anyone else unimpressed with the ideas being funded? I look at Work at a
Startup and it is just new web frontends on existing industries. I'm sure that
makes money but holy hell is it boring.

Some are working on cool things, but the founder who has a PhD in that topic
will be doing the interesting work and they are hiring for infra or interface.

One company was a great match for my skill set but the equity was so low for
early hires. I get that 1% can be huge for a FB scale exit, but 180k and 1% is
generally just a paycut. In this case the founders were undergrad dropouts and
not SMEs. It just seems like a really inflexible ecosystem when you can't give
5%-10% to an early hire when they would be the SME and core engineer.

~~~
mumbisChungo
>Is anyone else unimpressed with the ideas being funded? look at Work at a
Startup and it is just new web frontends on existing industries.

If there's money basically just lying all over the ground, why wouldn't you
pick it up?

~~~
devalgo
Sure but that's not addressing his point which is most of the ideas being
funded are uninteresting and aren't really moving the ball forward. Instead
they're doing some kind of rent seeking.

~~~
mumbisChungo
I don't think it's rent seeking by definition to modernize a product and/or
make it more accessible to people. The fact of the matter is that there is a
tremendous backlog of legacy industry/infrastructure that needs to be
modernized. There is plenty of opportunity in doing so to democratize access
to services that are currently inaccessible to most, which is more or less the
opposite of rent seeking.

You can also just not do a shitty job of modernizing an old thing, and end up
creating a product like Netflix that front-end devs fawn over, learn from, and
emulate. It doesn't have to be uninteresting.

~~~
dumbfoundded
Netflix was started in 1997. This conversation is about companies started a
decade ago versus now. The rise post 2010 startups seems much more focused on
creative interpretations of laws instead of actual innovation. The whole gig
economy is a way to circumvent employment laws.

~~~
mumbisChungo
I am responding to the comment about

>just new web frontends on existing industries

The gig economy is just some subset of that.

In reality, 'just new web frontends on existing industries' describes the
majority of the demand for software development right now. It's not good or
bad, though some of the actors and some of the businesses will be good or bad.
It's not boring or interesting, though some of the applications and
implementations will be boring or interesting. It just is.

------
KoftaBob
He says "the check sizes are too big" as if they're giving prelaunch startups
$50M or something. The $125k that YC gives startups is nowhere near big enough
to remove the drive/urgency to succeed.

If startups are coming into YC with a more mature product than in the early
years (and it seems that way), then adjusting the focus towards fundraising
actually makes sense.

Not to repeat what's been said in other comments, but to say that founders
should be willing to put themselves in deep financial risk to prove their
drive...that just comes from an incredibly privileged mindset.

It reminds me of the people saying that if their school is going online-only,
students should instead take gap years to build something, incorrectly
assuming that no one needs that student loan money for living expenses.

------
george_morgan
His perspective seems built around ego. It's no longer the special club he
wanted it to be, it's not "hard enough" for the people he sees as "wrong" to
participate. He liked YC when it was a band no one else had heard of etc. etc.

Without knowing the metrics for how YC judges the performance of its intake
and their future objectives, there's no way of making sensible recommendations
for how (or if) it should change.

------
noahlt
FWIW, the vast majority of YC founders I've met have told me "It was good when
I did it, but I don't know if I'd do it today. The batches are so big!"

I chalk it up to a pretty typical nostalgia. Everybody is biased towards
thinking the experiences of their youth were perfect, and any change is
detrimental.

~~~
Axsuul
There's a term for that:
[https://en.wikipedia.org/wiki/Rosy_retrospection](https://en.wikipedia.org/wiki/Rosy_retrospection)

------
anotherfounder
The SAAS thing is real. In my own broader network, I've seen so many
interesting new consumer companies not even get an interview but SAAS
companies of all stripes not have a problem getting an interview. It also
heavily correlates with FAANG/Stanford phenomena which then leads to a mostly
white male batch.

There are so many reasons why all this is, including the fact, these
applications heavily bias towards 'solving a big problem that the interviewer
CAN grep', and so many of those readers and interviewers are themselves from
SAAS backgrounds.

Anecdotally, within female founders, it is quite understood that if you are a
female founder with a consumer startup, good luck getting an interview whereas
if you are FANG employee with event hint of an idea, you get an interview!

~~~
a13n
I would guess that if you are a _founder_ with a consumer startup, good luck
getting an interview!

I think this makes sense too – YC is in the business of picking will-be
billion dollar companies. The number of consumer startups that make it this
far is probably significantly lower, percentage-wise, than B2B SaaS companies.

------
blueyes
This is the Twitter version of bad journalism.

* pick something famous * say it's dead * cherry pick the worst things about it * get your 10 minutes of fame

All it costs you are some burnt bridges. I've met several really smart
founders from recent batches who are building something interesting. Making
blanket statements like this is not particularly helpful to YC.

Famous institutions always attract climbers. That's inevitable, but it doesn't
invalidate the institution.

------
atarian
Check sizes are 125k now; you won't be able to hire a rockstar dev but you
have something to hang onto for a year if you budget wisely:

[https://www.ycombinator.com/deal/](https://www.ycombinator.com/deal/)

~~~
xwdv
You can absolutely hire a rockstar dev, you need to think in terms of
cashflow. You may not be able to pay a full year of salary, but you can still
pay their full weekly salary as you go until you either run out of money or
produce enough revenue to get to that point.

~~~
_curious_
Agreed, it's not even about the money.

My last company had a technical cofounder who by all means was highly sought
after and managed a team of 15-20 other developers in their primary dev
consulting company meaning not only did they rock technically but also had biz
acumen.

That individual worked FOR FREE for 3 years 25 hrs/week before collecting any
money.

Don't ever think you have to pay a developer some market salary (or any
salary) upfront. If the idea + company + team is legit, they will jump at the
chance to be involved.

~~~
ricardobeat
> Don't ever think you have to pay a developer some market salary (or any
> salary) upfront

"A developer" should definitely be paid market rates, otherwise they are a
founder and should be rewarded accordingly with equity. I think this mindset
of "getting work for free" is very damaging to the person holding the short
end of the stick.

Someone who already has a well paid job, is willing to do a startup on the
side, and actually be effective at it is extremely rare. What you'll usually
find is someone at the beginning of their career that doesn't really
understand what they are getting into.

~~~
_curious_
"otherwise they are a founder and should be rewarded accordingly with equity."

Of course - as they were. My point was on cash money comp. Never said they
worked for free hence their title of technical cofounder which implies equity.

"...and actually be effective at it is extremely rare. What you'll usually
find is someone at the beginning of their career that doesn't really
understand what they are getting into."

The onus is on the founding team to be sufficiently compelling to attract such
a rare breed and if they execute correctly there is no short end to the stick
to be had.

------
AdenRyan2323
"this was the sam altman effect.

pg kept the entire system small and personal on purpose.

but sam wants trillion dollar funds. sam approaches everything from "how can
sam altman own the entire galaxy?"

now YC is an endless low effort 90s-era "groupware for groupware nerds" fund"
\---
[https://twitter.com/mattsta/status/1285988679958138881](https://twitter.com/mattsta/status/1285988679958138881)
this retweet is also true

~~~
dang
That's quite wrong. pg always said that YC should operate like a startup and
his primary definition of startups is growth. The original spirit behind YC
was let's-hack-the-economy with an experiment in the mass production of
startups. That's encoded in the name itself.

In other words, much larger batch sizes were guaranteed as YC grew. How pg and
the original founding team might have gone about it, compared to others, is a
different question—but certainly not by "keeping the entire system small".
Whoever wrote that is speaking from ignorance, which fits with the personal
smear against Sam.

~~~
TigeriusKirk
>The original spirit behind YC was let's-hack-the-economy with an experiment
in the mass production of startups.

If the experiment is no longer working as well as it was, it's time to change
the parameters. That's how experiments work.

~~~
dang
Who says it's not working? That would be an argument that batch sizes haven't
grown large enough—something no one here seems to be saying. Actually that
would be more interesting than the things the OP and some of the commenters
are saying, most of which have been going around for 10 years or more.

------
breck
My suspicious is that this is satire, but I'll pretend it's not and if so I
like your gusto for publicly criticizing YC, even if I disagree with nearly
all your points. I personally think YC has gotten way better over the years,
but fun to contrarian read opinions.

Point #3 doesn't seem to be talked about in this thread yet, so let me bring
it up:

> Free SaaS and Dev tools...IMO YC should ban them

YC's #1 investment of all time
([https://www.ycombinator.com/topcompanies/](https://www.ycombinator.com/topcompanies/))
is a SaaS/dev tools company (Stripe), and nearly 50% of their top 20 fit this
category. Also, ViaWeb fits that category as well. Are you suggesting they
should stop investing in their most successful category, the category they
know best?

------
soneca
So his suggestion to improve YC is to increase financial pressure on founders
so you filter the ones that _”really believe in their product”_ , ignoring
what would happen with the ones that failed all the same and ignoring that an
obvious consequence is also filtering people for who can afford 3 months
without pay.

Also, his suggestion is to block the startups that are most likely to succeed
(the ones who can validate and gain traction from within YC network). And the
reason for that is... a sense of nostalgia when B2C was a majority in YC? He
assumes B2C is the spirit of YC and that should be reason enough to make a
decision that will make YC select companies less likely to succeed at YC?

Reducing batch size is the only idea there that make any rational sense at
least (which doesn’t mean it is correct).

------
11thEarlOfMar
Ultimately, YC exists for the benefit of the investors. It's symbiotic with
startups, of course, but the measure of success is ultimately the return YC
achieves for itself. It seems unlikely that anyone but the inner circle has
that data, but given the type of people that run YC, I'd expect they
experiment and then observe results, refactor, experiment again, ultimately
heading in the direction of what improves their return. I'd be surprised if
they haven't debated class and check sizes at great length since the
beginning, and then settled those debates by observing the results of the
changes over time.

------
jlokier
> "make founders take on massive personal debt to survive"

That assumes massive personal debt is even an option.

A lot of poorer people are turned down for personal debt with respectable
institutions.

They go to the bank, credit company or whatever, and the answer is a straight
no, we have nothing for you. Maybe if they're lucky they can have a small
overdraft, worth less than a month's rent. Not enough to move the needle. Loan
sharks exist but that's a terrible idea.

I mention this because I have the impression some people, who are used to easy
credit (especially credit cards), don't realise there are a lot of people who
can't get _any_.

------
IAmEveryone
I'm not usually one to think in these terms, but this somehow still strikes me
as a caricature of white middle-class privilege:

"Having to take considerable financial risk definitely sucked, but it was also
was a great filtering function. If you didnt have conviction in yourself or
your product theres no way you would have been there. For those who made the
leap, it made success the only option."

~~~
vikramkr
Based on the responses in this thread, you're not alone. It's not often that a
series of arguments is so thoroughly undermined by just one spectacularly bad
one, but that's really the comment that's been driving all the discussion. His
point about batch sizes is maybe something worth actually discussing, but
there's nearly no discussion on that (and maybe a couple comments on how YC
should stop funding everything but consumer companies which is also IMO
ridiculous).

------
qppo
$25k is like 2 developer months + ops overhead. I don't think that's going to
buy anything _but_ high margin/quickly realizable ideas like B2B SaaS and
developer tools.

~~~
vikramkr
According to the thread it's not supposed to be enough. You're supposed to go
deep into credit card debt because that's how you know you're a Real
Founder(tm). You know, if you're privileged enough to have limits high enough
on your credit cards to go into that sort of debt, dont have people dependent
on you, have a safety net to make this not so big a deal, etc. Clearly the
best founders are the ones starving themselves so they can lower their risk of
having to file for bankruptcy. And the best thing to do to fund a high risk
tech startup with uncertain cash flows is apparently debt. Equity financing
exists for a reason, you know. And the point of incorporating as a separate
entity is liability protection/equity financing etc. For an investor, pushing
your founders to increase the risk levels of their high risk companies by
levering up with a personal guarantee is ridiculous. They increase the risk
level so debtors can get the reward if things work, which is now less likely
because of the compounding interest and personal stress.

------
vikramkr
A smaller check size hurts startups in capital intensive industries. Others
already made excellent points about the diversity if founders that can be
attracted with a smaller check size, since less money favors people with money
already in the bank or with easy "friends and family" rounds. I'd also like to
add that smaller sizes work against company and market level diversity as
well. If YC is purely for software, sure, but they've been trying to fund
hardware/biotech/etc, and you need that cash to build an actual prototype.
Smaller class sizes makes sense as a proposal, but if you reduce funding to
original levels as well, you'll be stuck with an overwhelming number of
overrepresented demographic founders starting b2b SAAS companies. From a
financial perspective that locks out a talent pool and limits your investment
horizons in a pretty big way.

------
barrald
Would love to know YC's real matriculation rate. I know of several teams that
got accepted in and opted not to go, in part because of ballooning batch size
and dilutive terms.

~~~
swyx
then why did they apply? signaling?

~~~
btowngar
The YC application process in and of itself can be very useful for founders.
It forces them to really think about what they're building and why it's going
to bring value to customers.

------
forbiddenvoid
I'm curious if the author has data that the 'free sabbatical' folks are less
successful as founders than others. If YC is selecting the wrong types of
people/companies for their batches, I think they'll figure it out pretty quick
when those companies fail to pan out and their fund suffers as a result.

Is the author's YC company's success somehow contingent on YC not having these
types of founders?. If so, I have grave concerns about their company anyway.
If not, like, what are you complaining about? YC's decision to accept people
who match that profile literally has nothing to do with you.

~~~
pyb
It does, in so far as you are more likely to be successful if your batchmates
are a source of inspiration and motivation.

~~~
forbiddenvoid
I think the impact size of that effect is likely to be very, very small. The
whole thread reeks of gatekeeping around (as someone in another comment put
it) what it means to be "Real Founder."

------
felipellrocha
> 3\. When i went through YC (recently), we had a "masterclass" of sorts on
> growth with @patrickc & @collision . Once of the first questions they asked
> the group was "how many of you are consumer companies?"

> Like... 2 people raised their hands and everyone else laughed hysterically.

Are B2C inherently better than B2Bs? What's his argument here?

I, for one, was never one to enjoy B2C products (matter of fact, I think most
of them are stupid), so I don't understand his disdain for everything not B2C

~~~
aty268
His argument is that B2C is underrepresented and laughed at in YC, despite it
being a vital and huge market. He isn't saying one is better than the other.

Ebay, AirBNB, Apple, Uber, Github, heard of any? It's too bad you were never
able to enjoy B2C products, because these products are worth trying.

~~~
felipellrocha
I'm not saying these companies provide any value. Looking how I wrote my
previous comment, I might've mispoken. What I was trying to say is that early
on, whenever someone pitches B2Cs to me, I tend to think they're all stupid. I
don't get them.

That's not to say they don't provide value. Same thing on the B2B side. They
provide a ton of value, so no reason to think one is better than the other.

~~~
aty268
You don't 'get' how B2C companies work? What does this even mean? You would
pass on Uber because you can't understand how a business could possibly sell
directly to customers?

Why not just say you focus solely on B2B companies? That's a lot more
reasonable than trying to argue that B2C is 'stupid', because the market caps
of these companies would strongly disagree.

------
someperson
What exactly does he mean by "tech climber"?

~~~
throwanem
Get-rich-quick grifters, would be my guess.

~~~
vayeate
Possibly that these smart young people view everything like highschool.
Everything is a formula driven contest to outshine your peers for the limited
spots at prestigious schools. Get the perfect grades, study nonstop for the
SAT, find the perfect volunteer experience, get dad to shmooze with his
senator friend for that shiny recommendation letter, get into Harvard.

Same thing on loop. After the prestigious internships and summa cum laude,
they graduate into a FANG job at 21.

I think the criticism is that these people are conformists. They're good at
following an obvious system to the T but has never innovated or taken risks in
their life.

~~~
nlh
That’s a good insight. The problem, though, is that this pattern kinda works
(until it doesn’t). Get your FAANG job at 21, follow the pattern to get
promoted, get promoted, make more money, compete to buy a nice house, get
married, have kids, compete to get your kid into the “best” preschool, then
the “best” private school. Compete to get into the “best country club”, then
retire and...play golf all day?

~~~
vikramkr
At that point you've got enough wealth built up that if you've played things
right you have a part time job managing your own portfolio. And a lot of
people on that route that I've met have vague ideas of doing charity work or
something at that point.

------
oluomike1
I totally understand if he feels this way..his own opinion. My own opinion is
this, as a founder running our startup (catering marketplace for businesses
and individuals) for over 2 and half years. Still working with No Angel or VC
money, just friends and family funds. With our sweat and blood we tested the
market from "Uber" style, events to iterating to various verticals.. The
painful truth, it hurts when you can't pull out your best solutions to
problems because of low funds, it leads to poor execution most times..
competition is fierce and business means war. Most founders would have given
up before year one with no VC money. I see no harm in YC's cheque size and
scaling. Heck.. Covid 19 just dug out some new interesting problems in need of
urgent solutions. My Opinion. Cheers HN.

------
kevstev
Are there really many cases of founders who went all-in and lost, ending up
homeless or otherwise destitute? Asking honestly- I know a small population of
founders, and they have all failed, but generally have bounced back quite
well. They at least got to a point where they launched and at least tried to
find their market fit, and even getting to that point is an incredibly
valuable experience.

None have massive houses in the Hamptons, but generally they have all found
good jobs and are in the management ranks (aside from one who just decided
that he did not want to go that route) at decent companies. It seems to me
that if you took a decent stab and didn't completely flame out with some
obviously poor idea or execution, you really tend to fail "up" in the end.

~~~
tdrp
I think most tech founders are more than capable of getting a decent paying
engineering corporate job if they choose to do so.

The problem (at least for me, who started off in FAANG initially) is that the
longer you're in the start-up world, the more you _hate_ the idea of going
back to a corporate job.

So in my previous start-up I went all-in, racked up tens of thousands in CC
debt and would have sold every single one of my possessions before letting it
happen. When I missed my first rent payment, I ended up reluctantly selling
the company and only accepted the offer on the condition that my transition
period would be one month or less (i.e. I don't actually have to work for the
acquirer).

Throughout that time, my previous coworkers/managers from the companies I
originally worked for kept trying to convince me to come back.

------
ycfailure
I can really empathize with this. I was an early employee for one of the
magical YC unicorns, and I thought I could be successful as a YC founder
afterwards, but then I learned the truth about startups and realized it's
hopeless.

Nowadays being a founder is only for those who are already rich, well
connected, and have a safety net to fall back on. It's super sad because I
think it means the end of the great SV meritocracy as we used to know it.

I think it's just a matter of time before another country comes along and
takes the reins from the US as the leader in terms of innovation. The entire
country feels like a failed state right now.

------
throwawaysea
I agree having large check sizes does change the culture of this game. The
filter function being talked about here is really just about the general
concept of a moral hazard
([https://en.wikipedia.org/wiki/Moral_hazard](https://en.wikipedia.org/wiki/Moral_hazard)).
Just like with insurance deductibles, there has to be a way for founders to be
committed and share in the risks significantly. Does that mean they need to be
starving? No. But it does mean they need to at least incur a large opportunity
cost (relative to working at FAANG for example).

------
reedwolf
An article [0] that takes a critical stance on Paul Graham/Y Combinator,
specifically Graham's advice that you should stop focussing on passing tests,
despite Y Combinator being entirely built around passing tests.

[0] [http://benjaminrosshoffman.com/approval-extraction-
advertise...](http://benjaminrosshoffman.com/approval-extraction-advertised-
as-production/)

~~~
dang
The 'tests' YC is focused around are getting users and customers. Startups are
strongly discouraged from working on anything else, including fundraising
before Demo Day.

------
toddmorey
Haven't followed YC closely in a while. Has anyone compiled objective data on
how it's trending and the success of the program YoY?

~~~
danenania
It takes like ~10 years to have any reliable sense of whether a batch was
successful or not, so it's not something you can easily measure YoY.

------
smithmayowa
Yc taking advantage of their b2b alumni network is common sense in my own
opinion, they are playing to their strength in fact.

~~~
site-packages1
It's helpful, I have spoken to maybe 5 companies of the current batch who were
introduced through the YC network and are working on problems that would help
us succeed.

------
PaulHoule
Is a sign that Y Co is a plant grown too large for its pot and needs to be
split up and transplanted.

In 2019 the best business model was selling pitchforks to gold miners in San
francisco, in 2020 the disruption happened. Big cities have a competitive
advantage in terms of exploiting the Bezzle, but when that is gone then what?

------
dang
"Things have always been getting worse."

------
classified
Twitter is really a terrible platform for posting more than 10 words.

------
blickentwapft
Isn’t YC just a numbers game?

Back enough companies and hopefully some will be winners.

------
djsumdog
> You're going to end up with a bunch of rich white dudes as founders

Why not just say "rich dudes" ? That is the qualifier. The race might be true
too, but it's not what defines the argument.

~~~
polk
I'm surprised you find the race unnecessary, but continue to include the
gender. "Rich people" would be all that's required.

~~~
fnordsensei
Isn’t a random sample out of the set of rich people going to yield a lot of
whiteness and dudeness though?

------
MikeTaylor
Did @pg respond to any part of this thread?

~~~
moneywoes
No

