
Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?) - amichail

======
jwecker
While it sure is generous and I'm sure the founders appreciate it, a couple of
months worth of rent and ramen noodle money isn't really funding a company.
What you describe is already what YC is- it's just making sure that you are
available full-time to really do something about the advice and contacts. :)

~~~
brett
Yeah, given the amount YC gives it's as if they just want to make sure poorer
founders won't have to get day jobs in the time they've alloted to impart
advice.

~~~
pg
That's exactly how we look at it: the most important thing we offer is advice
and connections, and the money is just to pay your living expenses so that you
can focus entirely on the startup for long enough to get it properly launched.

It always annoys us when people say YC is a ripoff because we want an avg of
6% of a co for $15-20k. One reason we don't argue (much) with people who say
that is that we treat the question as a sort of preliminary IQ test in the
application process.

~~~
Harj
hoarding your equity like it's gold dust is a typical mistake of inexperienced
founders. we did exactly the same and it got us nowhere. when we realised our
equity was worthless unless it was held by the right people, with the right
connections, things moved far more smoothly.

------
danw
Sound good in principle but there are a lot of people who want advice. You
need to find a way to prioritise who would benefit most from your advice and
connections. What better way to decide than to ask yourself "Who would I
invest in?". Then you're back at the YCombinator model.

If someone can figure out how to make this work then great. I'm not sure YC
will work without you narrowing applicants down and giving them money.

Perhaps instead of having a single team who advise founders you could have a
self supporting community. Put all the startups in a coworking/barcamp like
environment for a summer and tell them to help each other out and to share
connections. It would be interesting to see how well they could do on their
own. You still have the problem of where they would get money to stay alive
without funding.

[sorry if this is incoherent, I'm sleepy. Will edit to make sense in the
morning]

------
amichail
Since advice and connections are the major benefits of Y Combinator, why not
take on many more startups without funding most of them at all?

I suspect that many people would be happy with such an arrangement and Y
Combinator may end up making quite a lot more money as well.

~~~
RyanGWU82
Two hypotheses:

1.) Y Combinator's advice and connections are a limited resource. There are
only so many phone calls their partners can make in a day. Y Combinator's
business is not scalable unless they generate more y combinators.

2.) Y Combinator's application process allows them to invest in startups that
are most likely to succeed. If they spread their resources around a larger
base of companies, they would be investing in startups less likely to success.
With more failures, their return on investment would fall, not rise.

~~~
pg
Actually the scalability of YC is a fascinating question. As hackers we're
always thinking about that. And of course as hackers we have ideas about how
to do it. We've been gradually growing the number of startups in each batch.
But we often speculate about what we'd have to do to fund, say, 1000 startups
per year. There has to be some way to do it. Whatever the answer is, it would
be something to see, wouldn't it?

~~~
jullrich1
VCs = Angels = YC = Agents They all finance and support young entities for a %
of a future asset.

Compare a very scalable model, IMG Worldwide. Take baseball for comparison
sake.

Talent Scout = PG colleague who reviews applications using performance
criteria = bank using advanced credit scoring system to approve or reject
loans

Reddit = Alfonso Soriano = Successful loan applicant

Paul Allen = PG = Drew Rosenhaus

YC is popular not because they aren't a VC but because they are a VC who
provides more perceived value for what they charge. That means just like IMG,
their model is scalable as long as their value proposition is maintained and
continues to be favored. All YC needs to do to fund 1,000 companies next year
is to hire/acquire/develop 50 more PGs with specialties in more focused
markets and sub-markets. Not simple but definitately doable. Also fully
automate the application and evaluation process so that "people" only touch
the top 3%. Continue to be careful with funding amounts but generous with time
and connections. Continue to distribute and increase your value through your
customers by financing their meeting each other and adding value to each
other. Basically, YC is a social network with most of the value right now
distributed offline through their customers. News@YC will change that to be
sure. I think it's not only possible to grow up real big, but the direction
you are already headed. Just make sure your scalability has a bit of Ben &
Jerry's thrown in, they did a great job of keeping their value system in place
long after they grew. PG, you mentioned it's the scaling of the partners
responsibilities that is hard. If the partners maintain the integrity of the
barriers to entry (active role in developing and maintaining your application
evaluation tool) and support (ensuring key events and high-level connections
are solid and cascaded down from their organizations to yours) you can do it.
Just my $.02.

~~~
danw
So what your suggesting is creating mini YCs with specialist interests?

For example you could have a mobile apps 'agent'. This person would seek out
the best ideas for mobile apps, find the best teams, maintain connections with
mobile blogs & mobile network operators and pass the best teams back up to
main YC.

O'r you could have geographical specialists who, for example, look out for
startups in the UK and send the most promising over to Boston/Mountain View.

~~~
jullrich1
Yeah Dan, that's right on. The basic business practices employed today would
flow through to the tentacles of specialization and the over reaching controls
and management would still reside at the top like any other holding company
structure. It's likely you could improve on the typical holding company
structure but something along those lines. I work at the Group level of a
global financial services firm and I think my stripes are showing a bit here
:) Not just mobile apps but also a p2p apps expert, b2b apps expert,
transaction processing expert...the options are as broad as the marketplace.
I'm thinking big.

------
volida
I don't think the money is the issue here, which results to many companies
being funded because of the relatively low cost for them to bring up to life
startups, comparing to VCs.

So, they invest enough money to get u going. Their actual contribution is
their network and their guidance, which isw hat consumes their time and what
everyone applying wants.

So, the quantity and the limit of the "many people" is relevant to how big YC
is and how many people they find worthful to invest.

------
danielha
YC-organized Startup School supplies advice to a larger audience, along with a
chance for connections. I'd also contend that news.yc is another such tool
offered by YC.

The summer/winter batches are a chance for picked companies to receive
specialized attention. YC can't do that for everybody.

------
jamongkad
I myself rank advice and connections a little more important than the money
itself. That's what really pulled me here to Y Combinator in the first place.

------
JoeEntrepreneur
Wouldn't it be in YC's interest to take some equity WITHOUT providing any
funding in return of advice, Guidance, and a platform and connections.

------
pixcavator
Makes sense to me. But my guess is that time would be an issue.

