

James Siminoff: I would create a fully self contained incubator - jkopelman
http://jamessiminoff.com/post/64336227/y-combinator-is-dead

======
pg
Investors haven't stopped investing. In fact the record series A valuation for
a YC-funded company was set just a few weeks ago.

Even if investors did stop investing, it wouldn't kill us. At the last Demo
Day, 4 of the companies presenting were already profitable. (All 4 have had
offers of investment, incidentally.) At the next Demo Day the ratio of
profitable companies will be even higher.

As for his alternative suggestion, among other problems, it wouldn't give
startups any more runway. There's no reason to suppose that if we got into the
real estate business, we could offer space to startups any cheaper than they
can get it on the open market.

~~~
brezina
wow, record series A valuation? Did this company start working on their
product near the beginning of their YC funding cycle or had they been working
on it for a while? It appears to me that a higher percentage of YC companies
are coming into the program with a developed product and traction than we had
during the reddit, loopt, kiko days.

As an aside, I love the author Jamie Siminoff, I enjoy our product
brainstorming sessions, and think his company Phonetag is awesome, but I think
this article is a bit empty. I wonder if companies would be as hungry to
succeed if they had guaranteed place to stay in a hotel that resembled a 24
hour lan party? Probably not.

~~~
Siminoff
Matt thanks for the comment and I agree the article is a bit empty, because in
reality it was a quick post based on what I have been feeling lately, not so
much an article...

I should probably write a follow up about how I would envision the "24 hour
party". For example for sure you would not be gauranteed to stay, the ability
to stay would be based on how the company and team are working. So in essence
every week or 2 would be viewed as an additional round. However with this cost
basis unlike others you could keep a company going a lot longer if you
believed traction would come.

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SwellJoe
This seems to wholly miss the point of YC, associating it with a sweatshop
style mentality: live for work, etc. But, YC has many, many, companies,
possibly a majority, that would not fit into a "Hotel de Startup" model.

It wouldn't have fit my company, for example. We have baggage...family, dog,
lives outside of our company, etc. I kinda doubt several of the most
successful YC companies would have signed on at all for such an intense sort
of experience.

Beyond the basic expenses of buying a hotel in the valley (I think the cost is
being underestimated, even in this economic climate), the expenses of
operating it are going to be very high, even without staffing it as a hotel.
It's obviously a mandatory expense, and everyone needs somewhere to live, but
you're not going to save a huge amount of money over individuals placing
themselves in their own apartment or house. And, more importantly you're going
to self-select out of being able to fund any company that doesn't exactly fit
the stereotype: Fresh out of college, no family, not from the area and thus
not already settled somewhere in the valley, not needing to have a presence
outside of the valley for business reasons, etc.

This is one of those things that sounds cool, but I think it takes the simple,
and obviously successful, kernel of YC and adds a non-essential boondoggle
that doesn't actually improve on the model.

I believe the solution to the "what happens after" shouldn't be "make sure the
founders never have to think about after by infantilizing them and making sure
they never have to think about necessities", but instead should be "make sure
the founders are well-prepared for after". After is going to come eventually,
if the company is to be a success.

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gruseom
Argumentless linkbait. I want my thirty seconds back.

~~~
snewe
Agreed. I thought only diggers fell for big, empty headlines. Angel investing
is more likely to survive in the IT segment than standard VC investment due to
the small barriers to entry. I just said more than that entire blog post.

~~~
aaronblohowiak
Headline has been revised from when the parent was posted, it used to talk
about YC being "dead".

------
fallentimes
I'll post here, what I posted there:

 _But the idea that you can put something out there on the cheap, get traction
and become profitable is very much alive._

You can run a startup for two years for less than the cost of grad school. If
anything, the YC model is more alive than ever. The labels should be worrying,
not the talent.

~~~
olefoo
Your comment has me attempting to map web companies to rock bands.

I got as far as:

Google = Beatles

Myspace = Monsters of Metal

37Signals = Led Zeppelin

#silly I know.

~~~
vlad
I've been reading PG's stuff since way before YCombinator existed, and that
was my initial analysis of YCombinator.

First of all, my belief was that PG graduated from five different colleges
around the world because he liked being around smart young people, and to
continue to be in a college-like atmosphere of optimistic young people without
going to school in the U.S. and Europe for yet another degree, he started
YCombinator, where he convinces smart young people to come to him, which is a
much more efficient way of being around smart young people.

Another way I've thought about it was that PG was like a manager of boy bands
of 2-4 young people, who try to entertain fellow college men instead of young
girls (and later on, the general population, once their "act"/app caught on).
These bands couldn't always sing, but they used technology to help them get a
marketable product out, similar to how startups make up for their inexperience
by using frameworks and web services to make their product improve, so they
could continue to release "new records" regularly.

Over time, I've found that both the number of startups YCombinator has
launched and the addition of the jobs page to news.ycombinator has shown that
PG is actually not like a manager of boy bands, because the companies hire
their own people and PG does not micromanage every decision, from what I
understand. Also, I've noticed that media articles now describe these
companies as their own beings, without always mentioning that these companies
are part of YCombinator, something that is different from when YCombinator
first started.

------
Siminoff
I am a little surprised that this got picked up, did not realize that my blog
had the readership to even become link bait...

While the title might have been a little aggressive it was how I was feeling
today. I have seen a lot of stuff recently which is what brought this post
about.

Hope I did not piss off anyone at Ycombinator (or the companies that they
funded) as this post (if you read it you will see) is much more about the VC
market changing and in my mind hurting the scrappy entrepreneur's chances.

~~~
jmtame
I thought this was an interesting post, you raised a point which I haven't
seen anyone refute yet: wouldn't it be more cost-effective in the long-term to
purchase a bankrupt hotel? I'm not the finance guru in the room, but I feel
like it would be cheaper long-term.

I've done apartment hunting in the bay area, and it sucks. You have to look
around, sign contracts, deposits, etc. It's a huge time and energy drainer.

I like your idea, I find it to be creative. Can someone please discuss the
downsides to doing it this way? Let's put aside the whole "YC is dead"
argument, that's obviously only going to degenerate this otherwise meaningful
discussion.

~~~
jimbokun
"wouldn't it be more cost-effective in the long-term to purchase a bankrupt
hotel?"

It would be the ultimate extension of the Google (and Microsoft before them)
"keep them at work" model. Bed, board, work in one location. Every cost could
be amortized over the number of people/companies you have living there.
Incomparable face to face networking opportunities.

Certainly one of those brainstorming "this is way too crazy to work...or is
it?" kind of ideas.

~~~
nihilocrat
It works on college campuses, why not elsewhere? Dorms largely eliminate the
apartment-hunting roadblock and provide very close contact with
(theoretically) interesting people.

I lived off campus for the last two years of college, and it made the
experience suck a lot more.

This is the reason why I gave my upvote, nothing about a linkbait title or
talk about VCs.

------
alex_c
Admittedly I am a bit sleepy right now, but am I somehow missing the part
where he supports his argument in any way?

~~~
noodle
i think his point is that seeding and growing businesses that lead to external
VC capital and acquisitions is dead/dying.

his alternative is to essentially do the same thing, but gear it not towards
external funding/buying, but just a single company that grows, fosters and
continually owns the companies it helps to start.

its sparse on the details, but i had/have similar thoughts and would love to
start or participate in something similar.

~~~
jcl
Isn't this kind of a model Google is approaching?

~~~
noodle
yeah, i was thinking the same thing, but didn't edit to add it. i think the
main difference is that google has a moneymaker product that helps to fund the
other small ones, which wouldn't be the same as this concept. or, maybe it
could be, with coworking space being the main business to keep it above water
on the basic expenses.

------
zvikara
I would call it The YMCA Combinator.

------
zhyder
Where is the new YScraper these days? (I thought the original one evicted
YCers after a justin.tv incident.)

~~~
jamiequint
it only evicted Justin.tv. There are still a lot of startups (YC and non-YC)
in the building.

~~~
zhyder
Cool. Just curious, which non-YC startups are there? Is it just as social? We
(Dabbleboard) are a non-YC shop that could benefit from moving there.

~~~
jamiequint
not sure if they want everyone to know, email me

------
dangrover
I've kind of had my doubts about YC myself (not the YC model) -- I was
thinking this might be an intelligent piece addressing YC itself and the role
of that sort of funding in startups.

But the hotel idea is cool too.

------
stcredzero
The real self-contained incubator:

Save up 30 or 40k. Quit your job. Take 6 months out to build your app.

------
rokhayakebe
He doesn't sound very smart for someone who created such a company.

~~~
alecco
Not very different _then_ how it was before.

------
jpwagner
think before you blog

~~~
Siminoff
Everything I blog I am obviously willing to have put out in the open. I stand
behind the post, the title I would probably slightly modify for the wide
audience (this was intended for my normal readership of about 100 people) it
seems to now be getting...

But if you read the post I think the point I am making is clear and the title
does fit that as well.

~~~
ivankirigin
The problem is your tense. You make a prediction that will affect investors
like YC, yet declare the firm immediately dead.

I would recommend writing to the audience you want to have, and nurture your
current readership into loyalty through respect. That means reasonable
headlines and fleshed out arguments.

I must admit though, I've toyed with the idea of a "dev bunker". Really cheap
housing + coworking + startup community = super cheap collaboration.

I think PG is right, that it wouldn't be cheaper than the open market. But the
benefit is in the colocation, not just cost.

There are plenty of YC companies that don't fit the super scrappy model
though. We at Tipjoy have a house, for example.

~~~
Siminoff
I love the name, "Dev Bunker".

I think it would be a lot cheaper. Getting contracts for office, housing,
etc., is very expensive (both from a cash perspective and a business energy
perspective).

~~~
ivankirigin
Scrappy startups dont have offices. They work out of their apartments. I don't
think you can do better than that market. Utilities, food, etc. might be
cheaper, but that is very, very marginal.

