

How does Y Combinator scale Y Combinator? - dko
http://techcrunch.com/2012/04/02/yc-y-combinator-scaling/

======
ph0rque
_They once used the program to generate a top 10 list of factors predicting
the probability of acceptance. ”I don’t want to share it, but it was
fascinating,” Graham said._

This is understandable, but a pity nonetheless. I'm sure HNers would love to
read about the factors. PG, can you tell how well these factors sync with the
characteristic of a good founder you've written about in your essays?

~~~
pg
It's at the level of spam filtering: individual words in application fields.
So the insights were the sort I noticed when I first tried statistical spam
filtering-- e.g. that ff0000 was highly correlated with spamminess (because
it's html red).

Incidentally, the past tense in the article is misleading. We're using that
software now. It's the product of a company in the w2012 batch. I don't think
I can mention the name because they're not launched yet, but we're very
impressed by its performance. SV Angel is using it too.

~~~
groby_b
I'm wondering if it says more about the companies or the people judging them
:)

Kidding aside, I'de be surprised if specific words correlated with the
probability of success. So there's a good chance this is measuring only if
there are key-words that please the reviewers.

I'm sure you've looked at prediction models for individual partners and
compared them (or at least considered it, what with days only having 24 hours
:)

It'd be fantastic to see you write about the results of that - maybe once the
company has launched.

The reason this has me so curious? If the predictive models are _not_ partner-
specific, this could indicate that there are very specific things that
successful companies/founders say and/or do. Sharing that might or might not
mess with the models, but it has a good chance to increase the likelihood of
success.

~~~
rdl
People have done simple word frequency analysis in various domains, and it's
been effective -- from (housing listings, resumes, car listings) the takeaway
I have is specific, quantifiable things seem to raise value, vague or weasel
terms tend to lower value. I think the #1 word for housing listing value is
"granite" (as in granite countertops), and various hedge/weasel words like
"cozy, comfortable, ..." lower it.

Naively, I'd assume the same might be true of something like a YC app. Harj
has said in many places that he turns to the "impressive achievements" section
first (<http://askolo.com/harj#4f74bc2be6c38a8e50000077>). I'd assume that's
fairly similar to a resume and would have the same statistical properties.

~~~
elangoc
for those interested, a nice explanation of the correlation of words to value
/ weaseliness in real estate is covered in a chapter of the book Freakonomics.

~~~
groby_b
Like anything in Freakonomics, I'd take that with a truck-sized grain of salt.

Curious: Are you referring to the book? I don't recall reading that in
there... I guess I'll need to go back and take a look.

~~~
rdl
Chapter 2. (I googled "freakonomics real estate" and got a helpful google book
search except. I love living in the future; Book Search and Google News are
the best-executed Google products of the post-gmail period.)

------
yabbadabbadoo
_Last October, Graham said that the firm was seeing about one submission per
minute for the most recent class._

Is this right? It sounds wrong. Or was it just on the last day of submissions
or something?

~~~
pg
Yes, that was during the last day.

~~~
brianbreslin
Is there a total published anywhere on yc with total applicant teams vs
accepted during last two batches? I remember someone saying yc was more
exclusive than HBS now. Is that true? (harvard accepts roughly 7% of
applicants)

~~~
sskates
It's about 3%- [http://techcrunch.com/2011/08/23/y-combinator-demo-day-
the-u...](http://techcrunch.com/2011/08/23/y-combinator-demo-day-the-ultimate-
roundup/)

~~~
brianbreslin
thanks

------
nchuhoai
As a current applicant, I'm glad to see that YC is thinking hard about
scaling. With rising application numbers, I'm sure the noise to signal ratio
gets worse and considering that funding a bad startup is probably better than
missing a good one, I can only applaud any measures that help in that
direction.

Actually, the cost of funding a bad startup are relatively low, aren't they?
It's more the time of the partners and the resources of the alumni network,
I'd personally be concerned about.

~~~
kenrikm
As another current applicant patiently awaiting the yay/nay email I wish you
luck! I know it's got to be difficult for them to sort through all of the
applications with so many great teams/companies. I tried to condense mine to
make it easier on them but if you do the math (Number of questions * 180
Words) they still come out 3-4k words each! Now I know not all of the
questions will fill 180 limit however it's still a lot of reading.

------
ubi
I find it interesting that articles always point to AirBnB and DropBox but
rarely mention Heroku... YC's largest exit to-date.

~~~
rdl
The valuations of both AirBnB and Dropbox are >5x that of the exit value of
Heroku, and are still in play.

It's entirely possible either (or both) could be $10b companies (yes, this
seems crazy to me at some level too, but it's consistent with economic reality
as it currently exists). If AirBnB totally disrupts the hotel industry, it
could be bigger still. If Dropbox totally takes over as how documents are
stored, edited, and managed, of course it would be bigger.

~~~
robryan
These valuations can go just as fast as they come though. I know for me, and a
lot of people, the concrete value that was determined because someone actually
paid it holds a higher weight than the valuations speculative investors have
given the lastest hot startups.

~~~
rdl
There is some value to that, certainly.

Pro: I think selling the whole company for $x is harder than selling 10% for
$x/10.

Con: Big companies can also destroy value effectively (doesn't appear to be
the case at all with Salesforce/Heroku, but...look at anything Yahoo has
bought, and a bunch of things Google, Microsoft, etc. have bought. Skype, etc.

There's also some bias in the press here -- people reading mass-market
publications actually might use (or at least understand) dropbox and airbnb;
they have no idea what Heroku does. And, in tech/venture press, independent
companies are more interesting because they might get bought; it's unlikely
anyone will buy Heroku from Salesforce, or buy Salesforce, so it's less
interesting to the press.

~~~
robryan
The value destruction is a good point, it just depends on where we are
looking. Whether people consider a good sale price that was driven into the
ground as more of a success than a lower sale price which goes on to continue
to thrive and be a good investment for the acquirer.

------
motti_s
When it comes to the applications and the fear of missing good startups, I
think the biggest bottleneck is how many groups they can interview.

If I'm not mistaken, for W2012 they interviewed 180 groups and accepted 65.
That's 36% acceptance rate, but it shouldn't distribute evenly. If the
applications were properly graded and the acceptance rate didn't get very low
for the lowest graded applicants who were interviewed, then they need to
increase the number of groups they interview. I guess that's the case, since
pg previously commented that for S2012 they'd probably interview 270 groups.
The "problem" is that for every new batch they probably get more applications
(and most likely of higher quality), so this might be just playing catch up.

Maybe one day an Anybot robot will perform a preliminary interview so they can
scale :)

~~~
pg
Alas we are in fact going to be playing catch up. We got about 50% more
applications than last time, so interviewing 50% more startups will put us
exactly where we were before.

Maybe this time we'll do a perfect job at the reading stage. Not likely, but
we can always hope.

~~~
solnyshok
3000 applications this time?! do you remember by name every founder from last
batch? ' cause that's the line that I would draw in the sand re:scaling. Of
course it is just me, as 500 startups prove that this criteria is arbitrary.

~~~
amirmc
_3000 applications this time?!_

If acceptance still hovers around 3% that implies next class should have
around 90 startups. Wow.

------
staunch
I'm waiting for "StartupAdvisor", a program written in Arc and trained on
paulgraham.com/articles.html

Office Hours will consist of chatting with the program and (if necessary)
pushing the "Request a Bag of Mostly Water" button if it reaches its
(temporary) limits.

------
azarias
It seems like the academic publishing model would be useful here (and in fact
that might be what they are doing with alums reading applications.) Each paper
gets a few reviewers, which quickly determines the definite accepts and
rejects, and the whole committee need only discuss the ones in the middle. The
way partners and alums are structured in YC, it would probably be ideal to
weigh reviews accordingly.

There will definitely be some noise, but one would hope things will shake out
as they should most of the time. At least that's what I am hoping.

~~~
eli_gottlieb
Ugh, completely disagreed. Do we really want startup funding run by Statler
and Waldorf? Academic reviewers tend to be looking for ways to reject your
paper, not even _trying_ to give an honest evaluation.

~~~
azarias
A surprising amount of peer review is actually done by lowly graduate students
who are assigned papers by advisors. I really try to give an honest evaluation
:) [and my experience is most people generally do]. However, like it was
mentioned above, the penalty for rejecting a good paper is really low.

~~~
eli_gottlieb
Yeah, true. The whole incentive and informational system for academic
reviewing is pretty broken.

------
crcastle
Why isn't the title of this post _How Y Combinator Scales Itself?_ or just
_How Does Y Combinator Scale?_

Is it supposed to be copying this post title? [http://zachholman.com/talk/how-
github-uses-github-to-build-g...](http://zachholman.com/talk/how-github-uses-
github-to-build-github)

------
vaksel
why should they want to scale?

the point of YC is quality over quantity...if they go after quantity, they are
just diluting what they have to offer.

If they have 1000 startups, how much support can they really offer?

~~~
pg
The reason we want to grow YC is (a) to see how big an effect we can have and
(b) as PB says in the article, because it's better for the startups.

As for not being able to support 1000 startups, maybe we couldn't. 1000 is a
lot. But if you'd asked me in 2005, I would have been skeptical about the idea
of supporting 66 startups at a time, and yet the last batch turned out better
than ever. That's the thing about scaling. You can always do better than you
expect. I'm not saying there's no upper limit, just that experience has taught
me to reserve judgment about where it is.

~~~
netcan
Scaling could also mean ways of making individual startups bigger, on average.

Thats obviously the point with startups but do you have thoughts on ways of
scaling in this dimension?

