

(More Explicit) Advice to Summer Applicants - pg

The exploding termsheets<p>http://ycombinator.com/exploding.html<p>have started to arrive.  I just talked to a group who got one, and they hadn't realized we were willing to interview groups early when this happened.<p>So I should be more explicit: If you get an exploding offer, send us an email, and if we were going to interview you, we'll do it early.
======
joshu
Exploding termsheets are beyond rude. They're aimed at minimizing your ability
to negotiate. They prevent you from forcing several funding groups to arrive
at the table at the same time and cause more pricing competition.

I recommend you consider that signing a term sheet is like entering into a
relationship. Do you want a relationship with someone that's behaving badly
beforehand? They're already on their best behavior.

~~~
webwright
Agreed-- EXCEPT in certain cases where there are only N slots to fill (like
TechStars and some others).

Techstars, for example has 10 slots (I think). If they have 300 applicants and
10 slots, how do you think it'd work if they said, "take your time, let us
know whenever". If they accept you, they aren't accepting the next startup on
their list... And basically, they can't send accept/reject notices to folks
until they fill all of their slots.

Or am I missing something? If a YC competitor has a fixed number of slots, is
there a way they could NOT have an exploding term sheet (other than not have a
fixed number of slots)?

~~~
pg
If you have a fixed number of slots you have to have a deadline. The problem
is when the deadline occurs. If the firm in question made their first round of
offers expire in 20 days instead of 2, it would be a moot point.

~~~
webwright
Ah, that makes sense and seems startup friendly.

i.e. they offer first round of 10 companies and give 'em 20 days. 8 accept.
They then work there way down an alternate list.

They could even have 2 types of acceptance. i.e. 10 offers and 20 alternates
(so the rejected companies could get on with their lives). They could tell the
alternates: "You didn't make the top 10, but you were really close. It's
possible a slot could open up within 30 days. If it does, we might call you."

If it's TechStars, they purportedly have their deadline set based on academic
calendar. You oughta try hopping in front of them to test that assertion. :-)

------
mindslight
> (YC asks people to decide that day whether or not to accept an offer from
> us, but we do this because at that point they already know all they need to,
> not to pre-empt other offers. There is no other seed firm that decides after
> us.)

How is this behavior any different? Offering last is a _unique_ position which
allows a group to already know the other options. It's not surprising that
other firms also want decisions ASAP - they certainly don't want to be
floating long term offers that function as backup plans for the best groups.

If YC wants seed funding to be synchronous like college admissions, then it
should make its own process conducive - give time to accept an offer during
which groups can interview elsewhere.

~~~
pg
It's different because it doesn't force anyone to forgo other opportunities.

While we ask people to decide that day, we don't insist on it. As I explained
earlier, if people have some specific reason they need more time, we've always
given it to them.

<http://news.ycombinator.com/item?id=528064>

And when people do accept, we never ask for more than a verbal "yes"; we don't
make groups sign an LOI agreeing to participate.

I hear a lot of what goes on behind the scenes in these situations, and I can
assure you that it's not merely out of a desire for administrative neatness
that other seed firms give applicants offers that expire quickly. It is 100%
certain they do it to pressure people into deciding before they can talk to
us. That is not the intention, or the effect, when we ask people to decide
that day.

~~~
mindslight
Ah, I hadn't realize this had been hashed out in another thread. I took
exception to that excerpt because it sounded pretty hand-wavy; I've read your
justification of why you ask for an immediate decision, and it makes sense up
until you start introducing the possibilities of multiple offers.

------
timr
Investors must smell blood in the water to be trying this nonsense. Do you
think they'd be doing this in a better economy?

~~~
pxlpshr
I hope this is not TechStars because I really like their operation as a viable
alternative to ycom from what I've seen and read. Exploding term sheets seems
pretty short-sighted, and not something anyone should do if they are embodying
the motto of "helping young entrepreneurs". If a "mentor" is going to use
force tactics, they've lost my respect and I certainly have no interest in
giving them 5pts for a lousy 20k. Rather just sell my car and bike all summer
than deal with that type of investor.

I think this applies to most people (at least for me), ycom is a #1 choice for
two reasons: 1) Huge respect for PG for his knowledge generosity and true
leadership qualities 2) ycom's presence and relationships in the media.

So my personal note to yclones: figure out YOUR value add so people want to
come to you. Force is not the answer, it's shows weakness in your operation.

------
medianama
Why don't you move the dates up for everybody?

~~~
pg
Mainly because we're not finished yet reading all the applications. When
someone gets an exploding termsheet, we can all read their application
immediately, but we can't do that for everyone.

Also, Robert flies in for the real interviews. When we interview people early,
we have to do it without him.

~~~
unalone
He's located in Boston?

~~~
pg
Yes; he's a professor at MIT.

~~~
unalone
Gotcha.

Also, purely curious question: when you're looking through applications, is
there a bar of "this is how many people we'll interview"? Or do you set a bar
for quality-of-app, then take as many people as place above that bar?

~~~
pg
There's a numeric bar for how many people we'll interview, based on how many
groups we can physically talk to in 3 days. We usually interview 50 to 60
groups; it's hard to talk to more than 20 per day. At interviews, though, we
care more about quality than numbers. We wouldn't reject a good group because
we were over some number.

~~~
prakash
Are there any stats on if more people get accepted on Day 1 or Day 2 or Day 3,
in the mornings, afternoon's or in the evenings?

For startups that were accepted, if the startups that interviewed prior and/or
after were accepted?

~~~
davidw
Well, people who interview when there's a full moon tend to get in, but of
course it all depends on what pg had for breakfast that particular day.

Joking aside, it's probably best not to publish that kind of thing so that
people inadvertently worry about something they can't control. The only reason
to do those sorts of stats might be for pg & co. to check and make sure they
don't have some sort of biases, but it doesn't seem likely.

~~~
prakash
some context.

The first part regd. time of the day was asked since PG mentioned (not sure if
it was an essay or a comment on HN) that he used to get mundane stuff done
during the day, and then code from 9 pm to 3 am.

This is not to say, PG ignores the early interviews and kicks it into high
gear for the evening ones; just that if you look at the results, are there any
insights or patterns.

Re. the 2nd one, look at #9, _Cialdini cites the case of the real estate
broker....._ :
[http://www.vinvesting.com/docs/munger/human_misjudgement.htm...](http://www.vinvesting.com/docs/munger/human_misjudgement.html)

I agree that YC should not publish these stats, but if they did learn anything
interesting that could be shared with everyone, it would make a good read.

------
prakash
Wouldn't it help applicants in the future, if the current round of folks that
applied to multiple programs to list:

1\. The last day to accept for a particular program

2\. The ones that offer exploding termsheets

~~~
abossy
2\. Is this generally known in advance? I'm under the impression that
exploding termsheets appear on a company-to-company basis.

~~~
prakash
The idea is to figure out the list of firms that provide exploding termsheets.

