
YC Demo Day, the Morning After - dmor
http://distributionhacks.com/racehorses-gotta-run
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colmvp
From the WSJ article:

Don Dodge, a startup investor and well-known “developer advocate” for Google,
said today’s startups are more focused than ever on revenue—as evidenced by
the large revenue-growth charts most of them showed off during the
presentations to investors. In prior years, founders focused more on the
number of people using their service, he said.

Refreshingly, he said, there are no longer social-networking-related startups.
“It’s run its course,” he said. “Now startups are more focused on solving
boring problems that make money,” said Dodge, who last year invested in a YC
company that helps programmers create mobile apps.

I wouldn't be surprised if he's being tongue-in-cheek by saying 'boring'. Or
at least, it's not meant to be negative. Besides, there are lots of boring
problems that can be made into interesting and beautiful solutions. For
example, Square is made payment processing into an elegant and holistic
experience.

~~~
t0
That's exactly it. Revenue. I've heard PG say in numerous interviews that he
doesn't want to incubate small companies. He said he wants "the next big
thing". Has he changed his mind?

~~~
edanm
Perhaps the average group going into YC has shifted in their goals. I believe
there's a general trend towards focusing more on small-risk small-reward
startups, I assume this trend is trickling into SV as well.

~~~
karamazov
It's a common misconception that "big hits" can't have early revenue. I'm not
sure why.

~~~
bishnu
The reason is, Google.

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pbharrin
I think what everyone here is missing is that the press is looking for "Tech"
companies doing wild, innovative things with technology. -The WSJ article was
in the "technology news and insights" section. -TechCrunch has the word Tech
in its name. -Demo Day is held at the computer history museum -this is Silicon
Valley

Sorry I didn't attend demo day, but when I read the summary I felt none of the
companies were very high tech, and I'm sure that's what the press felt too. I
was waiting for Peter Thiel to say: "we asked for flying cars and you gave us
painless divorce."

Don't get me wrong, I would love to invest in companies that make money over
companies that use some fancy new technology.

~~~
gfodor
I call bullshit on the claim that there were no tech-oriented companies. One
of them is a platform for automating flying drones. Another is a platform for
EE circuit design. These are both pretty nerdgasmic if you ask me. edit: oh
and how could I forget Thalmic.

~~~
pbharrin
Well they did not convince the "tech press" that they were the next Google.

~~~
jfoster
You don't need to be "the next Google" to be an exciting tech company, though.
Even AirBnB are not "the next Google" but they're still hugely successful.

~~~
cocoflunchy
That's exactly his point though: AirBNB is not really a high tech company.
Other than scaling issues, it's a relatively simple CRUD web-app, their
competitive advantage is in their business/social/whatever skills.

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gbelote
This makes me wonder if there's a perception issue: many of the companies are
doing very well and delivered solid presentations, so no one really looks
"10x" ahead of the rest. Especially since each company gets only 2:30 and many
share the same structure. _"This is what we do. Look, we have awesome
traction. And we're making a bunch of money. And our growth is very healthy.
There's a big potential market to capture. And this is how we see ourselves
changing the world."_ And on top of that, you don't get a very strong sense of
product and user experience within that narrow timeframe, sitting in an
audience of a few hundred.

My guess is that if the quality distribution was more like what an angel/vc
sees outside of YC, it'd be more obvious that that there are some amazing
companies in the W13 batch.

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baddox
> _Founders risk everything, move across the country or further, endure
> endless stress, damage relationships, sacrifice their health and pour their
> every waking moment into creating something people want — and they’re
> rewarded with a yawn._

Risk and effort are admirable and impressive, but at the end of the day it's
the product that is being demonstrated. No one is entitled to the awe of the
crowd just because they took big risks or made big sacrifices.

~~~
xauronx
But I sold my house to buy these crayons and broke up with my girlfriend over
the construction paper, how DARE you say my drawing isn't good!

~~~
sharkweek
It's like on Shark Tank when the people break into a sob story about why they
deserve an investment despite no revenue and a terrible business plan.

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bradhe
> Founders risk everything, move across the country or further, endure endless
> stress, damage relationships, sacrifice their health...

Why should anyone care about that?

> ...pour their every waking moment into creating something people want

Isn't that the part we should care about?

> and they’re rewarded with a yawn.

Why is that anyone's fault except for the founders'?

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joonix
I know of a lot of "boring" businesses that make buckets of cash. That's what
I'm interested in. The tech press isn't, because interesting reporting on them
involves lots of research and diving into the real story. They want an easy
headline filled with buzzwords to drive clicks.

~~~
bradhe
They're boring businesses. When has the press ever been interested in
reporting on boring things?

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phil
Here's the opening sentence from Anthony Ha's top list for TC. How much more
positive can you get?

 _Y Combinator was tougher to get into than ever this season, and the quality
showed on stage._

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inthewoods
My guess is that about 10-12m from now we'll see the media talking about one
of these companies that "you've never heard of" that is "crushing it" on
bookings/revenue.

People tend to forget that the media has little to no memory and is usually
staffed by people in their 20s who have little idea of what they are talking
about. Obviously not always the case, but using the media (or other bloggers)
as your measure of success is a very bad idea.

And in case anyone jumps to this conclusion - no, I'm not saying that anyone
in their 20s will have no idea what they are talking about. :)

~~~
dorseymike
Agreed. It's hard for a recent college grad to get really excited about "human
capital management software". In contrast, it's very easy to understand the
use case for something that lets you edit videos on your iPhone. Thus, young
people have a difficult time inventing Workday while they eagerly can imagine
the use cases and are stimulated by xyz-instagram-of-video.

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hojoff79
Thalmic Labs I think is the only one that should not be considered a yawn. The
applications are endless, if you have not seen it watch the demo video below,
shows some very consumer friendly applications which currently have no equal
substitute. Only question is how long until it works that seamlessly?

[http://www.youtube.com/watch?v=oWu9TFJjHaM&feature=youtu...](http://www.youtube.com/watch?v=oWu9TFJjHaM&feature=youtu.be)

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rdl
I don't think "there were lots of good companies, but no standouts" is related
to "there were no social companies".

The companies I considered standouts in previous batches at Demo Day were
_not_ the social ones.

(S12: Eligible, Bufferbox, HD Trade, Keychain Logistics, Plivo, BoostedBoards,
...)

W12: Exec, Farmlogs, Matterport, PlanGrid

S11: Clerky, Parse, Aisle50, meteor, MobileWorks, Sift Science, Science
Exchange, Rap Genius)

~~~
lquist
Rap Genius seems decidedly social...

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OoTheNigerian
I like FlightCar a lot and I have said so previously, if I could invest in
only one single company that launched yesterday, it would be this. It is
instantly useful.

That said, I can 'understand' the non excitement of the press. Except WeVorce
which is arguably a service business, nothing _seems_ to be pioneering.
Magical. Crazy. They all seem to be X of this or Y of that. The 'this' and
'that' are what the press might have been looking for. This/that= YouTube,
AirBnB, Heroku, Kickstarter etc.

I think the criticism is the downside of the expectations and premium accorded
startups coming out of YC.

It is still good though. The founders can put their heads down and focus on
their business without having the noise of expectation distracting them.
Hopefully, they would prove all the doubters wrong.

~~~
johnrob
I don't think any of your examples would have looked impressive just based on
the idea. In all of those cases, the wild growth is what made the company a
big story.

Tell the world that your startup will deliver burgers, and nobody will care.
Then mention 1 million burgers served per day and you'll be a legend.

~~~
2pasc
Agree with your comment. I think it's more a matter of startup fatigue. Few
startups seem that great without testing the product or seeing their growth.
Dropbox? The idea is not so great, but the execution was just awesome. Google?
(yet another search engine), eBay? (a place to buy and sell beanie babies),
Facebook? etc...

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ronilan
Critics aside, the video in the post cuts too short. It thus misses the
message: win the crowd.

<http://www.youtube.com/watch?v=uGWQ4SwM2fc>

Figuring out who "the crowd" is. That's another story...

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timjahn
Who cares? Are you in this for the flash-in-the-pan press? Or are you in it to
make money and/or change the world?

Every day, I'm focused on growing matchist (<http://matchist.com/talent>) so
it can make more money and become a better business. If that produces yawns,
so be it.

~~~
bradhe
Here here. Don't tie yourself to press--one write-up in TechCrunch won't make
a measurable difference in the long rung.

~~~
robryan
Yeah, I have seen businesses that rely too much on press as a growth strategy,
which is dangerous when you turn from hot startup of the week to yesterday's
news.

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duncanmcdowell
How is what Thalmic is doing in any way considered boring? Insanity.

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jonathanjaeger
"and they’re rewarded with a yawn."

Let's hope they're rewarded by making a business that creates value and makes
them some cash in the process rather than being the tech darling of the next
seven days!

~~~
birchbird
It looks like YC is actually shifting to investing in products that have a
real way of generating revenue this time. I'm not sure if this is a trend in
the whole VC community though.

~~~
jonathanjaeger
There are great VCs that spot trends before they are big trends and then there
are VCs that miss the boat because they invest when things are already frothy.
So buzzwords like "social" and "mobile" happen and then "enterprise" becomes a
hot story in the tech press after people get sick of thinking social will be
the end all be all of VC investing. The things is VCs are going for 100X
exits, so something that generates revenue that doesn't have the potential to
be big is just as bad for a VC as a social product that probably won't make
revenue anytime soon.

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rokhayakebe
_CEO & Cofounder of Refer.ly, formerly 1st employee at Twilio_

Interestingly, the first employee of a successful API company targeting
engineers was a marketing manager.

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pron
Well, investors bitch and moan because, let's face it, that's how they roll.
They also have an incentive to do that in order to lower prices (as long as
they all do that, and these guys have a dominant herd mentality gene).

Also, let's not forget that most of them are quite mediocre, to put it mildly,
at what they do ([http://dealbook.nytimes.com/2013/02/04/venture-capitals-
slug...](http://dealbook.nytimes.com/2013/02/04/venture-capitals-sluggish-
performance/)).

Now it seems that their problem is one of an efficient market. If startups
play it safe (according to the investors), then their performance has a higher
expected value but with less volatility, so the VC can't strike rich on the
off-chance. I do think, though, that they might miss the volatility in the
market size. Very successful products tend to change the market size, and they
might get 10x and even 1000x returns yet.

Anyway, sometimes they bitch about too much risk, and now about too little.
You just can't please these guys, but, like Danielle says -- neither should
you.

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levlandau
Not sure what the hoopla is about as there are a ton of great technology
companies in this batch. Not sure how wearable computers and drones don't
count as bleeding edge tech.

It takes about a year or two for these things to play out and for the trends
YC is currently observing to become the next sexy thing for startups to mass
replicate. The "next big thing" is always boring until it isn't :)

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rdl
It's interesting how pretty much everyone I ask about W13 has a different set
of favorite startups, and the top one on one person's assessment can be the
bottom on someone else's. That means any of the rankings really say more about
the evaluator and his/her metrics vs. the startups themselves.

This really wasn't the case with previous batches, or most other groups of
startups.

~~~
pg
We noticed that, and it's actually an encouraging sign. If YC reached the
limit case where we had all the best new startups, that's what it would feel
like: there would be so many good ones that it would be hard to pick the best.

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replicatorblog
This is a great analysis. I would also challenge any of the jaded reporters to
dig through their publication's coverage of the Demo Day from Airbnb's class
and see how many correctly called it as a "10X" startup. It seemed insane at
the time, but brilliant in retrospect.

~~~
dorseymike
Agreed. I remember being introduced to Chesky back in 2009 and thinking "yeah,
right! there is no way that will work".

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mindcrime
Thalmic and Semantics3 are absolutely working on crazy exciting stuff. I don't
see how anybody could consider either of those boring.

The only problem I see with Semantics3 is access to the data they want to
index. If they can sell merchants that having their stuff listed in their
index is a valuable discovery mechanism and will help sales, it could work.
But if merchants decide they don't want to be part of it and close off access
to the underlying data, I think they'll have a tough row to hoe.

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gfodor
Say what you will, but this is the first YC class in recent memory that has a
product I am going to both remember and use when needed: FlightCar.

Personally I'm glad things are looking like the "bubble" slowly deflated
instead of popped. And instead of a crash and destruction of wealth, we're
left with an urge to pursue viable business models. I think we can point to
FB, GRPN, and ZNGA for this (the stocks, not the companies), thanks guys.

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robryan
I don't know about others but I quite enjoy working on something that would be
considered boring by most. We just quietly work away generating real profits.

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dm8
I agree with OP on overall premise. Majority of startups look boring at the
start. Just doing software for computers was considered boring in 70s. So was
yet another search engine. Peer-to-peer money transfer using Internet, who
would've thought that would be interesting. Or online bookstore. Twitter, all
of my non-techie friends thought it was stupid. Even YC itself was considered
crazy in their early years.

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bmelton
Interestingly, Semantics3 is starting up in a space that we're currently doing
quite well in. Seeing the messaging that they're putting forward has given me
some better copy ideas, so I guess it's time to get to A/B testing.

And, considering we've sold somewhere in the realm of $xx million last year
with a beta product (which has since matured), there is definitely money to be
made 'the boring way'.

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devinblais
I agree with WSJ, and this is the first time I didn't get excited about the
companies coming out of YC. But I don't think it's entrepreneur's fault.
Investors are starting to go after companies that generate revenue from the
beginning (as a result of the series a crunch?), which shifts the focus on
what companies individuals can start if they want to find funding
(unfortunately).

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lopatin
_Founders are tackling “boring” problems that generate cash_

B = set of all companies that are boring

C = set of all companies that generate cash

B ∩ C = {}

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johnrob
All told, you can only seem so impressive on a stage. Nothing impresses me
more than when a non technical/startupy friend or relative casually mentions a
new product.

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d0m
> founders are tackling “boring” problems that generate cash

And proud of it. "Boring" problems/solutions for you might be a painkiller for
someone struggling with it every day.

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jacoblyles
If they are generating cash then they are at least providing real value to
someone.

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setheron
The video at the end was a great touch

