
Y Combinator's Founding Principles - craigkerstiens
http://www.ycombinator.com/principles/
======
mgpc
Alternative perspective:

Like many universities, the value of YC to founders is mostly signalling and
network. What you actually learn at YC is a minor component of the value
(since you could learn most of it just by reading or watching videos)

As YC batches get larger, the signalling value of being a YC company goes
down. If everyone is special then nobody is.

As YC batches get larger, I suspect the value of the YC network also goes
down. This is maybe a little bit counter-intuitive, but I think a large influx
of less highly-selected startups will dilute the network and prevent it from
functioning effectively.

Unfortunately YC is not completely aligned with founders here. There is a
strong temptation for YC to increase batch size. YC gets 7% of a company for
far below market price. So increasing batch sizes makes short-term economic
sense. However, if YC increases batch sizes too much and harms its brand, it
will eventually break its own model. So increasing batch sizes could be seen
as form of spending down the brand equity.

This all hangs on a few premises that may or may not be true: 1) You can't
have larger batches while keeping quality constant. 2) YC doesn't directly
influence the success of participants that much. 3) If the value of YC drops,
good founders will eventually stop applying

I suspect an argument like this has been going on inside YC for quite a while.
And the blog post was written by the original founders to try to settle the
dispute in favour of the pro-scale faction.

~~~
ausjke
120K for 7% at SF area is indeed not attractive, not to mention you must move
there and find your own working space etc. It might be interesting for the
very early stage startups and money-hungry (no-kids-yet) young founders. Yes
the connections and advice are priceless but still money talks the loudest for
most start-ups.

~~~
austenallred
Both my co-founder and I have kids. I would have given up 15% to do YC if I
had to. The money is beside the point, but it’s enough, even in the Bay Area.

It was, hands down, the best and most important thing our company has done.

And we were profitable before YC began, so we didn’t need it.

~~~
ausjke
So why is the YC/120K the most important thing your company has done even
though you don't need it financially, YC somehow helps you to expand quickly?

~~~
adventured
The YC provided money is the least important benefit to doing YC. The parent
very specifically notes that money wasn't the most important thing, you appear
to have glossed over that.

The value of getting accepted and how that acts as a filtering mechanism to
prime venture firms. The network: YC alumni, investors, executives in the
industry, mentors, etc.

In other words, getting into YC will usually: enable you to raise venture
capital from the best VC firms far more easily; it'll open doors that you
previously likely could not open (especially for newer entrepreneurs); it'll
help you with recruiting talented and experienced employees (critical to
success); it's a halo, by getting accepted into it, you get to borrow
reputation from what YC has built up.

------
tptacek
Say what you will about YC, but they've pretty much managed to live up to
these; they were in that sense well-chosen.

~~~
edanm
Not to detract from YC's adherence to good principles... but I think this post
was written now. Just putting it out there because if seems from your comment
that you're assuming these were written in the past, which is what I assumed
before reading the article and seeing the "October 2017" date on it.

Would love to be told I'm wrong if I'm misunderstanding the publication
date...

Edit (based on comments): I agree that this accurately summarizes YC's
principles as stated over the years. I was just mentioning/wondering whether
this specific list was ever put in this form before. I absolutely think this
is a good list of principles and it has guided YC, if not explicitly in this
form all these years, certainly in spirit.

~~~
chaostheory
You can say it was written in the past. pg and Jessica have written about YC's
philosophy multiple times in greater detail over the years. This post just
summarizes all of their writing. imo most of the post is still accurate except
for one: "by helping founders to start them." I could be wrong, but I feel
today's YC is more about helping companies get from seed to series A and
beyond instead of just getting started. Not that this is a bad thing, but it's
different from old YC. It's also understandable since the former is much
harder to scale and building products is much cheaper today.

I think the other big allure for joining YC, aside from the promise of helping
you grow, (at least for me) is that it's like a union for startup founders.
Unlike other firms, YC won't screw you. In fact, they will fight for you if
anyone else attempts to screw you over.

~~~
throwawayknecht
> union for startup founders.

"Any industry that still has unions has potential energy that could be
released by startups... industries afflicted by unions are sclerotic so have
left lots undone."

~~~
pc86
Typically when you quote someone you attribute the quote to them.

~~~
tptacek
He's pretty obviously referring to what Graham said, and not favorably (this
is one of the more disappointing Paul Graham twitter quotes).

------
mkolodny
> Startups are on balance a good thing. Their founders and early employees can
> be much more productive than they’d be working for an established company.

I found this super vague. In what way will people be more productive at a
startup than they would be at an established company? And why does that mean
that startups are a _good thing_?

One way you could make this clearer is replacing the phrase "can be much more
productive" with a more specific goal that's more obviously _good_. Will
startup founders learn and grow more in a shorter period of time? Will they
have a larger positive impact on the world than they will at an established
company? And if so, why?

~~~
edanm
If you mostly believe in capitalism, then the link is basically: people being
productive = more stuff gets done, and if they're earning money for it, that
means people are happy to pay for it. So basically, productivity is a good
thing in general.

I'd wager most economists would say that productivity is the single most
important thing to improve in general, though they'd be talking about the
economy in general, and YC is interested in taking specific people and making
them more productive. The same principle applies though - more stuff is done,
and if someone is paying for it, it must in genearl be good.

(There are obviously exceptions to this - cheating/scamming/doing illegal
things, etc).

~~~
QAPereo
How about the legal, but net-negatives like Juicero or insecurely networked
teledildonics?

------
peterburkimsher
"And since the only way to be consistently benevolent is to actually be a good
person, YC’s employees must be."

YC has been involved in controversy regarding the political stance of its
employees.

[https://news.ycombinator.com/item?id=12726970](https://news.ycombinator.com/item?id=12726970)

I'm not here to make a judgment about that situation (we've heard enough
already), just to say that there are times when the vague "good person"
principle has been disputed in the past.

~~~
adnam
YC has also made ethically-questionable investments in the cannabis industry.

~~~
throwawayknecht
Also payday loans.

Also, repeatedly, laundry services that fail to scale but shut down all local
laundromats while they have the money to price below-cost.

I would again recommend this Atlantic article about how Silicon Valley
interprets "goodness" in a "tautological and narcissistic" way -
[https://www.theatlantic.com/technology/archive/2013/10/what-...](https://www.theatlantic.com/technology/archive/2013/10/what-
is-evil-to-google/280573/)

~~~
hawkice
I think reasonable people could disagree with both points you could be making
here:

(1) That marijuana or payday loans are immoral.

(2) Something that is _debateably_ bad should be avoided, even if you've
resolved that debate to your satisfaction.

If you reject both of those (I do), then I'm not sure what the concern is.

~~~
throwawayknecht
I can't speak for adnam but I would consider YC's cannabis-related investments
questionable for reasons beyond just "it has to do with pot." If you are going
to make your fortune selling pot, IMO you have a moral obligation to assist
those (predominantly young men of color) whose lives have been ruined cracking
that market for you. Meadow is just another gross Uber-esque intermediary (not
to mention the YC partner working as part of the most tough-on-drugs executive
branch in decades).

More generally, if you want to establish yourself as a "good person" I think
you need to make the argument _when you fund the thing_ as to why your loans
aren't predatory, or your pot isn't white people getting rich on the back of
black lives, or your laundry service won't leave a community unable to wash
their clothes. Part of "doing good" is working with people affected to
establish your bona fides. YC doesn't attempt this; they are concerned with
"being good" which, as the article covers, is a semantic game that lets you
justify any behavior you want.

~~~
pjvandehaar
> [YC] need to make the argument [that their investment in the marijuana
> industry] isn't white people getting rich on the back of black lives

Sorry, I don't quite understand. Which of these is your view:

1\. YC/Meadow is harming black people by connecting marijuana-buyers to
doctors and dispensaries.

2\. YC/Meadow are more responsible for the problems caused by the marijuana
industry than the rest of us, simply because they interact with it more. _You
're_ not obligated to help all those people harmed in the marijuana industry,
but YC/Meadow _is_.

If you hold the second view, I'm curious whether you'd find this article[0] on
"the Copenhagen Interpretation of Ethics" convincing. Excerpt:

> The Copenhagen Interpretation of Ethics says that when you observe or
> interact with a problem in any way, you can be blamed for it. At the very
> least, you are to blame for not doing more. Even if you don’t make the
> problem worse, even if you make it slightly better, the ethical burden of
> the problem falls on you.

[0] [https://blog.jaibot.com/the-copenhagen-interpretation-of-
eth...](https://blog.jaibot.com/the-copenhagen-interpretation-of-ethics/)

------
jamestimmins
I'm curious what the reason was for publishing this specific piece at this
particular time. Was it in response to something external?

~~~
adora
I can see how people might think the timing is clever. But in reality, the
four founders are no longer full-time so they just decided to put this
together. It's a good reminder of what YC has been and should always be about
and what they wouldn't want us to deviate from. In general, writing this down
is a good idea for any company. It helps get everyone on the same page.

------
amirhirsch
I wonder about the efficacy of directing hopeful youths into entrepreneurship.
The median outcome for founders is basically poverty, which is not a problem
for those who have less utility for money and more desire for independence and
who want the freedom to pursue dreams. But the harsh reality is that you need
to make money to survive and YC often funds founders before they have
validated their economic opportunity. They also provide founders with all the
kool-aid they need to justify unreasonable optimism. The cost of increasing
the number of early-stage startups and directing a higher percentage of them
towards positive outcomes is that it also increases the likelihood of the
worst-case outcome: failing slowly. Maybe it's easier to find injections of
money to keep petering along, and maybe the cost of failure feels higher. So
founders pinch even tighter, constantly anticipating the train derailing
making just enough money to hurl down new track in front of your engine. Just
enough to survive, but not enough to thrive and go faster. Maybe it's a
quixotic quest fighting for every inch to find customers, funding, and not
really advancing technology or your product. There's some schadenfreude to
seeing others around you fail, especially one's who have raised more funding
than you. There's also some jealously when your founder-friends advance to
greater wealth and maybe a little jealousy towards the risk-averse among your
friends who stayed at Google for 4 years and can now angel invest in your next
startup. You have some experience now and should do better this time, but you
can't cash in your existential dread.

~~~
hasenj
PG actually has a talk where he does advice young people that maybe starting a
startup may not a good idea, at least not for everyone, because it's all
consuming.

------
Geekette
_" YC is also a startup itself, and (what’s more difficult) must remain one."_

As an organization centred on fostering creation of startups, YC can claim to
making effort to adhere to startup mentality itself. However, as a 12-year old
company that has greatly expanded over the years, YC itself isn't a startup
and claiming otherwise seems a bit disingenuous.

Based on post date (Oct 2017), I assume this was just published (vs a repost
from 2005).

~~~
akharris
"Startup" is more a state of mind than an exact coordinate in age and size.
There are brand new companies that wouldn't call themselves startups, and
companies worth 10s of billions of dollars that are commonly referred to as
such.

While we may be 12 years old, we constantly experiment with new ideas,
programs, and processes within YC to see whether or not we can get
meaningfully better at what we do. That feels like a startup to me.

~~~
j45
Startups are about the ability to constantly innovate. In the early days,
everything is new and innovating towards a business model. A lot of people
find something and stick with it, instead of continuing to innovate on
existing momentum to remain relevant.

------
Kevin_S
I've always been really impressed by YC and have followed the company for a
long time now.

I just hope that long-term their strategy works. It has already scaled pretty
well, but it feels like there will be a next big step for them soon. I'm just
not sure what that will be.

------
uptownfunk
Curious as to how YC has done in comparison to other incubators? Any
benchmarks available?

~~~
_sentient
They are about 10x the next best (Techstars) based on valuation of the
companies they've funded (~$80B vs ~$8B). Valuation isn't a perfect metric,
but it's a reasonable proxy for performance.

~~~
jacquesm
Those numbers only makes sense when places in the context of the number of
investments made and the total investment made.

~~~
akharris
I think the numbers make sense with or without the total number of investments
figure since the large outcomes in venture are driven by a small number of
companies, and not the pack.

That said, the total number of companies funded isn't that different. We're at
~1400 and according to the below, TS is at 1000:
[https://www.techstars.com/content/accelerators/growing-
world...](https://www.techstars.com/content/accelerators/growing-worldwide-
network-techstars-impact-report-2016/).

~~~
neerkumar
It is so hard to actually get the VC business model. If in all these years,
_every single_ YC company had failed except for Airbnb, YC would still be 4X
better than the second best competitor.

~~~
lultimouomo
To put the same fact in different words, if they had not invested on Airbnb
and Dropbox, they would not be the leading incubator.

------
RickSanchez2600
You forgot the Google Prime Directive to "Do not do any evil" in which morals,
ethics, and doing good for the community are within the goals and business
plan of the startups.

After Brandon Eich was forced to resign at Mozilla when they found out he
donated to a charity against same sex marriage, it should have clued us all
into knowing that you have to look at other areas besides marketing,
engineering, programming, math, science, etc and consider public relations as
well.

One of my friends has a business and computer science degree which are two
areas to learn to know how to handle this sort of stuff. He claims your target
market customers are more than just the people who pay for your product and
service but also those who are affected by it, or use it, or are affected by
the use of it, as well as not polluting the environment, obeying all laws of
the local, state, and federal government, society, culture, religions, GLBTQ
people, minorities, diversity, etc. He claims if your startup is not doing
these things it might fail or you might be forced to resign as Eich was.

Of course feel free to disagree with me as my electrical engineering professor
told me "Ethics don't matter, do the job as best you can, and f __* ethics. "

------
middleout
my 2c, as a casual, third party observer:

Kudos: afaict, yc is a "good actor" in contrast to "bad actor" VCs that have
received recent notoriety

yc does its part in putting out knowledge into the world re: how to build
startups (cynically, this is to promote brand, PR)

yc funds non-profits

yc promotes diversity esp relative to its SV peers

Criticism: yc is elitist. with a few exceptions (you have PMF), you have to
know someone

yc is incredible for the 1% that get in, to the detriment (broadly) of the 99%
that don't. they get a disproportionate amount of attention, capital and
support

yc is a VC firm (+bootcamp), but with a vastly superior economic model, which
is pretty incredible given how good VC economics are

the part about it not being about the money rings hollow. my guess is it's
90-95% about the money. YC partners have made hundreds of millions (in the
future, YC will probably mint a few billionaires) of dollars. every batch, 7%
of the equity of 100-150 "cream of the crop" startups goes to a handful of
partners. if YC's primary goal was social impact, the batch would look a lot
different -- not saying yc doesn't do good, but i think a typical VC is at
least straightforward that their goal, and fiduciary responsibility is to make
$. i think YC sugarcoats this for branding purposes when they de-emphasize
this.

the narrative around SV has really taken a turn for the worse. income
inequality is a real problem, and also getting worse. one could easily argue
SV is exacerbating this, and YC is a factory of many of the startups causing
this. the future is already here, it's just unevenly distributed

~~~
nwenzel
I’ll disagree with one point that I have direct personal knowledge of.

> Criticism: yc is elitist. with a few exceptions (you have PMF), you have to
> know someone

Not true for me. I knew no one and certainly did not have PMF (revenue equaled
$0 when we were accepted). I learned about YC because I saw someone on a plane
reading TechCrunch which led to PG’s essays which led me to YC which led me to
apply.

What I did have was deep industry knowledge and an awesome cofounder with whom
I had built a progressional services business.

Pro Tip: if you want an edge on the YC application, keep your application
short but dense enough that you teach the reader something. Straight from PG:
VCs know a little about a lot, so if you can teach them something new, they’re
intrigued.

~~~
middleout
nwenzel: i actually thought about covering your case (see below), but decided
it was too verbose.

edited: yc is elitist. with a few exceptions (you have PMF, second-time
founder with exit under belt, obvious deep industry/technical knowledge), you
have to know someone

in other words, there are a few types of founders (as listed above) that it's
either a no-brainer, or a very good risk-reward/expected value proposition to
fund under YC terms (ie. 2m pre-money). for everyone else, anecdotally, you
have to know someone

also, i mean this respectfully, but one counterexample doesn't disprove my
point. my belief is that we live in a world where connections matter, a lot
(whether getting a job, into business school, VC funding, a coveted
internship, etc), and that YC is no different. there are always exceptions, of
course, but i'm saying this, as a generalization.

~~~
astigsen
> with a few exceptions (you have PMF, second-time founder with exit under
> belt, obvious deep industry/technical knowledge), you have to know someone

I don't think this is true at all. Me and my co-founder had zero connections
(being from Denmark, as far from the Valley as you can get), no previous
startup experience, only an early pre-prototype (just barely above idea stage)
of our product and obviously zero revenue (so no PMF whatsoever). I would hope
that it came across that we had deep technical knowledge, but really how much
can you communicate that in a 10 min interview?

We got accepted, and we were far from the only ones in our batch like that, so
it is clearly possible to get into YC just on the quality of your idea and how
well you can communicate it.

~~~
middleout
i don't think i'm explaining this well. I apologize for that.

i looked at your company. you and your cofounder had deep technical expertise
in an area that was white-hot at the time (obviously not a perfect comp, but
that was the year zynga ipo'ed on the strength of mobile gaming). so i am not
surprised at all that you got into YC without any connections. im sure there
are many deeply technical founders in "hot" areas such as AI, robotics, etc
that are currently getting into YC without connections.

note: again, not a perfect comp, but they probably looked at you and thought
that this has dropbox-like potential. also, perhaps you will disagree that the
space was "white hot" based on your own personal experiences -- my rebuttal to
this would be YC was probably ahead of the curve, as it usually is, as that
space definitely became white hot if not around that time period, then shortly
thereafter.

my point is that there are thousands of founders that apply every year to YC,
who do not have PMF, prior exits, or obviously industry/technical knowledge in
"hot" areas -- out of these folks, the ones that get in, i am guessing, had
really good connections.

i honestly don't think i'm saying anything that outlandish. VCs don't even try
to hide that you need to be connected with a "warm" intro to get their
attention -- they make that publicly known. while there are always exceptions
such as you and your cofounder, i don't think YC (which is for intents and
purposes a VC with a better business model, a 3 month founder bootcamp, and
afaict no LPs) is any different.

------
bbd
As a startup founder, I wish every startup can be part of YC. But at the same
time, I hope YC does not end up investing ALL promising startups (which become
big later) -- because if that is the case, it will be a disaster for any other
startups that fail to get in YC, the unfundable signal is way too strong to
investors.

In that sense, I appreciate companies like Buffer, Uber/Lyft etc.

~~~
ecesena
Even if YC could get to a point where they fund all-and-only the successful
startups, if you're not funded in one batch it doesn't mean that you can't
learn, fix your issues, and get funded (and thus successful) later on.

------
abtinf
Is there a reason this was published now? Were YC’s principles recently
challenged?

~~~
rqmedes
ycombinator application deadline? I am so disappointed I didn't complete my
application in time, oh well there is always next year

~~~
nostrademons
I think you still have 20 hours. It's 8 PM Pacific on Oct 3, which is today
(Tuesday).

------
riemannzeta
I can't help wondering: was this posted in response to Dalio's plea for more
"shapers" to share their principles?

------
ausjke
Is there a portfolio of all the entities YC founded so far? to have a big
picture on what fits the best there.

------
tw1010
I love YC, obviously. But does anyone with more literary prowess than me have
any insight into why they chose to formulate their sentences so weirdly in
this post?

~~~
kyleschiller
I'm glad someone else noticed this. The whole thing felt really strangely
phrased.

It's possible that it was written by committee, (i.e. everyone editing a
Google doc), which often leads to this kind of writing.

Alternatively, maybe they just didn't want it to sound too much like PG's
writing style.

Still, phrases like "Y Combinator’s goal is to cause there to be more
startups, by helping founders to start them." don't exactly flow.

~~~
rhapsodic
_> Still, phrases like "Y Combinator’s goal is to cause there to be more
startups, by helping founders to start them." don't exactly flow._

Nor does this:

 _" Y Combinator represents the union of two ideas that had not previously
been combined: the application of mass production techniques to startup
funding."_

~~~
rl12345
I think that sentence is good, it's just a matter of changing the 'to' to
'and'.

 _" Y Combinator represents the union of two ideas that had not previously
been combined: the application of mass production techniques [and] startup
funding."_

~~~
rhapsodic
_> I think that sentence is good, it's just a matter of changing the 'to' to
'and'._

Which was pretty much my point.

------
vacri
> _YC is also a startup itself, and (what’s more difficult) must remain one.
> ... YC has to be fast, cheap, informal, and focused on essentials._

It's always interesting seeing how different people define 'startups'.
Generally there seem to be two groups (though there are others) - the
"designed to grow fast" group, and this group, where the definition is
indistinguishable from "being a small business".

------
dilemma
Signed by pg and others but not by Sam.

~~~
kcorbitt
Sam was not one of YC's original founders, which is the group that wrote this
document.

------
throwawaybiz
I used to be super excited about YC from a values standpoint for years.

I applied to work for a bunch of YC startups about 4 years ago. What I was
generally told was that they never heard of my college or the companies I
worked for so I was a no go.

That doesn't seem to be fostering diversity, or making the world a better
place, or completely separate from the type of bullshit practiced by big
companies.

(I still like to lurk here because its a good tech news filter, but when YC
posts self horn tooting posts its kind of irritating)

------
bactrian
Another founding principle of YC is that its for the upper crust of society.

Exceptions are made, but in general, the poor need not apply. YC actively
excludes poor people through socioeconomic discrimination.

YC truly is "the Harvard of accelerators" as their homepage proudly quoted.

~~~
segmondy
That is pretty accusatory, they have invested in companies from 3rd world
countries. Flown many of those founders at YC's expense and funded them.

Flutterwave, OMG Digital, Paystack, Platzi, etc.

Please do explain how they exclude poor people? The application fee is $0. You
could from $0 in your pocket to $100,000+ for 3 months.

~~~
bactrian
You can tell they descriminate based on who they hire and fund.

It's the country club crowd sprinkled with safe seeming outsiders that act as
token representatives. It's not merit based but class (aka "culture") based.

It's a market opportunity for a fund that doesn't think of rich people as
being better than poor people.

A lot more geniuses among the poor than the rich.

What's worse is they're incredibly thin skinned and lacking in introspection
or humility. Typical rich people.

