
How YC Has Changed - katm
https://blog.ycombinator.com/yc-has-changed/
======
jedberg
I've been going to Demo Day off and on since 2007, and one big thing I've
noticed is a change in who gets accepted. I see a lot more "sure bets" and a
lot fewer "long shots". When I go to demo day now, I see a lot of companies
that are fairly interesting, founded by an amazing team with a lot of
accolades and/or exits or previous experience, and most of the companies have
already launched and have revenue.

What I don't see a lot of anymore are two people who just finished college (or
maybe they didn't even finish yet) working on something that could be amazing
or a spectacular failure, who haven't launched yet or have no revenue yet.
Look at Dropbox, reddit, and even your own startup, JTV, which of course
morphed into Twitch. All of them founded by guys just out of college, all of
them now worth over a billion dollars (and unless I'm mistaken, all of them
pre-revenue at demo day). And while AirBnB was started by guys who had a
couple of years work experience, they didn't have much experience with running
a company or anything other than a few years working in industry (and of
course also worth well into the billions).

It feels like for the most part the risk analysis has shifted from "a couple
of folks just out of college with an amazing idea" to "a couple of folks with
a proven entrepreneurial track record and an amazing idea".

I'm not saying it's good or bad, but it's definitely different.

~~~
mwseibel
We still fund a lot of young early stage founders. I think there are two
things that make them stand out less on Demo Day. First, batches are much
larger and the average age of the batch has increased. Second, these founders
are much less likely to be starting consumer startups and therefore they blend
in better with the other startups.

Another important change over the past 10 years is that many talented young
potential founders are being vacuumed up by the big tech companies once they
graduate from college (or before in college internship programs). Essentially,
the big companies are pre-hiring their future competition. The combination of
these actions and the strangling of distribution channels (messaging, social
networking, and email) is preventing consumer startups from getting a
foothold. And by and large young founder tend to be attracted to consumer
startups.

We are doing a number of things to counteract the recruiting efforts of big
companies including YC Early Decision: [https://blog.ycombinator.com/early-
decision/](https://blog.ycombinator.com/early-decision/) and YC Startup
School: [https://www.startupschool.org](https://www.startupschool.org).

~~~
jedberg
> And by and large young founder tend to be attracted to consumer startups.

This, and everything else you said related to it, are an excellent point I
hadn't thought about, and maybe that's why it seems different. Thanks for
pointing that out.

------
adam
Having been through YC in the second batch in 2006 - their first one in
California, and again in 2011, the differences were indeed pretty stark. In
2006, there were 8 startups. We knew each other well and we met with PG at his
house a few times which obviously was pretty cool. He was also the one
actually doing the cooking at the dinners! There was also lots of interaction
with Trevor and Jessica and (less so) Robert. In 2011 there was no such type
of interaction as they were just trying to figure out how to scale with 64
startups in the batch, outside money being involved, etc.

The other big difference no one has mentioned is the speakers that came to the
dinners. They get the highest profile speakers now, but in 2006, the speakers
would meet with each startup after their talk. You could demo to them and
they'd give you feedback and personal advice. I distinctly remember a talk by
Ev Williams about his failures at Blogger for example. Very raw and emotional.
Some of the lessons I carry with me today, 12 years later, were from a few of
those talks and after dinner conversations. In 2011 (and on) you're not
getting close to one of those speakers unless you just so happen to get to sit
by them at dinner.

------
sytelus
Before YC, startup funding was truly wild west with too many term sheets with
bad deals for founders. So kudos to YC for setting standards for founder-
friendly term sheet and continuously pushing funding amount up. Some of the
things I wish were different:

* Eliminating the whole "batch" concept. Ideas don't tend to born at YC deadlines. There should be a way to continuously accept applications as they arrive.

* Moving away from CA as center: Being in CA costs way too much for startups. I think startups should come to CA for hiring (may be) and then go away to places were things are dirt cheap, distractions are minimal and internet is fast. This alone can extend runway for many startups by an order of magnitude.

* Less discrimination against old veterans: PG had once mentioned that he typically doesn't prefer people who have worked for 10 years at BigCo because a true founder would have left long ago out of frustration. I think this is misguided line of thinking in many dimension. Even if it was somewhat true, it would be hard to rigidly generalize on entire population.

~~~
Latteland
> * Less discrimination against old veterans: PG had once mentioned that he
> typically doesn't prefer people who have worked for 10 years at BigCo
> because a true founder would have left long ago out of frustration. I think
> this is misguided line of thinking ...

Great point - I have thought of doing a startup. I am even "worse" in terms of
experience, 20 years at big companies, in various leadership roles the last 10
years - no I'm not a vp or president.

But I could even self fund my company for a few years. Being in Seattle I
probably have less connection with startups than in SF, but I have even worked
for two! I did do some early stage funding for a friend's company that
eventually failed. As an experienced person who has been fortunate, I could
actually work for free for a few years, and could provide early funding for my
company. I can actually tolerate risk - how come this isn't an area of
attraction for vc funding?

------
koolba
> In 2007, if you had a B2B startup, you had to reach out cold to potential
> customers. Now there are over 1000 YC companies you can sell your service to
> and all of their contact information is in Bookface. As a result, YC alumni
> companies are often over 50% of your new sales during YC.

This alone would be an interesting angle if you consider the equity given to
YC purely marketing and sales spend.

~~~
Balgair
Network Effects, cool!

I get this vibe of FB back when you could connect to people just in your
classes. I mean, if corporations are people, then they should have their own
version of FB, right? =P

------
zackmorris
Hey it's Friday and I always wanted to ask: what do the people at YC think
about bringing back some kind of smaller-scale investment for a larger number
of applicants?

There was a time in my life after I graduated in college in '99, after the dot
bomb, before the housing bomb, before YC, when I could have made just about
any app/website in 6 months for $10,000. I wasn't driven by money, I just
needed basic living expenses for enough runway to get ahead before someone
snagged me back into working another day job to make ends meet. To me,
microlending to this vast pool of untapped potential was the basic premise of
YC and what I found so revolutionary about it.

Would you consider breaking one of your $150,000 investments into 10 or 15
smaller investments? Why or why not? Thanks!

~~~
mwseibel
That is what we are doing in Startup School -
[https://blog.ycombinator.com/announcing-startup-
school-2018/](https://blog.ycombinator.com/announcing-startup-school-2018/)

~~~
lettergram
I was half regretting doing last years startup school (as opposed to this one)
-_-

At the same time, those AWS credits went a long way for me -- I'm sure that
grant could go very far for others. Kudos for doing it!

Honestly, the most valuable aspect of startup school is the feedback from your
peers. Half of my group I still stay in contact with (even intro'd them to a
few customers). I guess, it's similar to YC; the networking effects.

I do think the money would be better upfront, as opposed to at the end.
However, I guess there's no bar on entry and it's "free" so, I can see the
reason to wait.

------
bitCromwell
It's the world that has changed. Launching into a relatively open world wide
web is fundamentally different to breaking into the consolidated platforms of
today. Startup culture was at its peak in the PG days today it's closer to a
nadir.

~~~
IsaacL
> Startup culture was at its peak in the PG days today it's closer to a nadir.

Yes, totally. I became interested in startups in 2009. I was a CS major and
there was a tiny group of other students who shared my interests - we had a
weekly "internet entrepreneur society" meetup where we'd discuss Paul Graham,
Eric Ries, "Getting Real" (37Signal's book), and so on, along with the various
projects we were working on and ideas we had.

By the time I graduated in 2012 the field was already starting to change. In
the first two years out of university I worked with 3 different co-founders on
various ideas, none of which went anywhere (frustratingly). Two of those co-
founders had no genuine interest in technology or innovation -- I believe that
they only became interested in startups after they became the hot thing to do.
They wanted prestige and they wanted to raise funding for the sake of it. They
weren't excited by the potential of the new platforms that had just appeared.

(After that I ended up working for a medium-sized tech startup for a while,
got disillusioned and burnt out, took some time off, and then spent the last 3
years building myself back up. I still want to take a real shot at starting a
startup, but the industry has changed so much now. The fun and excitement has
gone).

I think there were several factors that changed startup culture:

1\. The technology of the web matured. We are now in the Gartner cycle
"plateau of productivity". Once upon a time you could upload some PHP scripts
and a little bit of AJAX and have an interactive app that was admittedly
crappy, but also genuinely novel and interesting. Now you need to know a
complex backend framework, the modern JS ecosystem, automation/build tools,
etc, just to compete. That's fine for a 10-man dev team, for 2 founders out of
college it's a daunting amount of work.

2\. Startups became a much more popular and prestigious career path. "The
Social Network" movie (2011) made startups much more glamorous. Tons of
articles were boosting "disruptive innovation". By the time I graduated,
suddenly all the kids who'd been polishing their IB/consulting applications
decided they wanted to be entrepreneurs, maybe after 2 years at
Goldman/Bain/etc. Some of these guys were genuinely talented and cool. Many
were arrogant and douchey, had a shallow understanding of tech, and treated
their technical cofounders as code monkeys (yes, I had a few bad experiences).

Many interesting startup ideas (Apple, Microsoft, Facebook, Google) came from
young technologists working on ideas they thought were cool, yet were niche
and weird at the time. Once the IB kids started entering tech _en masse_ the
culture shifted. (Granted the Winklevoss twins tried to recruit Zuckerberg
back in 2004. So this is not completely new. But I think the techie/suit ratio
changed dramatically in the early 10s).

3\. Lots of cheap capital. This meant more ideas funded, ideas that got funded
raising more money, and more market saturation in web, mobile, everywhere. In
some ways this helped entrepreneurs, but it also made fundraising more
necessary.

4\. A controversial one: all the "sexism in tech" controversies that kicked
off a few years ago. I paid close attention and I remember that this exploded
in 2013. You had things like a Github founder being ousted (along with Github
apologising for their "meritocracy" carpet), people being fired for tweets,
etc. Sexism is wrong and there were probably many invisible barriers to female
founders. However the big social justice activists (Shanley Kane, etc) were
not concerned with technology, they were motivated by ideology, and they
created a very hostile atmosphere. Make an edgy joke on a blog post intended
for about 100 friends to read? Suddenly 50,000 people on Twitter have read it
and are calling for your head. PG made a poorly-worded comment during a long
interview -- suddenly every media outlet quotes it out of context, takes it as
proof of his sexism, and it becomes untenable for him to remain in charge of
YC. (I know this wasn't the only reason he stepped down, but it was a factor).

5\. Regulation. GDPR is the biggest one, though there are others. It is not a
startup killer, startups can still operate, but it makes it much harder. The
idea of putting a prototype online, getting some early users, and rapidly
iterating based on feedback is now much more dangerous. You need to invest
heavily upfront to become compliant (even then your legal status will be
unclear), and if you pivot, or make drastic changes, you bear the risk of
becoming non-compliant. The EU legislators assume that everyone is a big
company with a stable business model, not a 3-man team experimenting with
various ideas. These regulatory changes went hand-in-hand with increasing
political hostility to tech entrepreneurs. Say you manage to succeed despite
all the obstacles put in the place of tech entrepreneurs in 2018, and become
the next Mark Zuckerberg -- you can expect to be treated like the current Mark
Zuckerberg, that is, have everyone hate you and try to get you fired.

------
andygcook
Surprised Stripe didn't explicitly make the list of notable startups from over
the years. Bigger than even Dropbox by valuation (obviously not apples to
apples vs. public market cap) and arguably has had a bigger positive impact on
the world than any other YC startup by actively increasing the GDP of the
internet.

~~~
mbesto
> YC startup by actively increasing the GDP of the internet

Sorry, but what does this actually mean? Before Stripe existed, you most
certainly could process a payment online, so why would Stripe's existence
increase the overall market for goods and services online?

~~~
1123581321
I take it to mean that Stripe is easier to use than its competitors, which
means new companies start that wouldn’t have, resulting in revenue through
Internet sales that wouldn’t have happened online yet without those companies
existing.

Obviously the premises can be debated, but developers do like Stripe’s API and
products, and it seems plausible that some of those developers have been
successful.

~~~
sebleon
While Stripe is extremely developer-friendly, the alternatives aren’t _that_
bad. They’re annoying to set up, but certainly not prohibitive to a determined
founder starting out. Today, options like Braintree are comparable in terms of
dev-friendliness.

~~~
1123581321
Yes, but I’d credit Stripe for increasing the overall dev-friendliness of
processors by introducing competition. And there were several companies
started in the years before their competition caught up. I built two
applications in 2012 using Stripe. One wouldn’t have existed otherwise, and
the other would have cost my client a lot more money.

I’d also credit Atlas with new revenue. I don’t think that program has a peer
yet.

------
mwseibel
I'll be hanging out in the comments this morning if anyone would like to
discuss.

------
ajiang
YC 2005-2014 = Doing things that don't scale

YC 2014+ = Making the magic of PG, Jessica, Sam et al scalable

~~~
tptacek
That's the whole idea, right? "Do things that don't scale" means not letting
future logistical concerns get in the way of discovering a viable market. But
once you do find a good one, you scale the fuck out of it.

------
davidiach
Why don't you start a European subsidiary? That would be a really good way to
scale without compromising on quality. The need is great for something like
that.

------
NkenuTimothy
Interesting. Personalized rejections (one worded statements given the quantity
of applications) would be great.

~~~
snowmaker
We're working on a way to do this.

~~~
arjunvpaul
Suggestion: when you folks send out that "You were in the top 10% of
startups....please re-apply" email, would be great to receive it along with
the rejection. Would be a much needed ray of hope at that point :-)

~~~
snowmaker
That's a good idea. Thanks!

------
anupgosavi111
As you have scaled other things, can't you scale feedback for companies?
Atleast, for what you consider top 10% or so?

We applied last batch and got a question around a competitor that had just
gotten funding. Not sure if that was the reason of the reject.

~~~
mwseibel
Unfortunately with over 8000 applicants each batch that is very very hard but
I will talk to our admissions team to see if there is anything we can do to
improve in this area. I apologize for how frustrating it is to get a YC
rejection.

~~~
olalekan007
P.S I'll advise everyone to visit siebel's Molly page
([https://molly.com/michael/q/eyJpZCI6IDEwMTR9/what-are-
some-o...](https://molly.com/michael/q/eyJpZCI6IDEwMTR9/what-are-some-of-your-
favourite-questions-to-ask-founders\)there) are answers to most of your
questions on there. It's a great guide for your application process and you
would be able to deduce why you are accepted/rejected from the analytics of
those answers. With +-8000 applications you'll need all the help you can get
to make your application stand out.

------
documarez
When people compare how many companies get into YC vs how many of them become
successful companies should understand that beyond what YC brings to startups
which is a lot, the success also depends on the founding team execution and
the ability to find a market fit, sell and grow the product. I am a first-time
applicant and what makes me take the decision was all the great resources YC
can bring to my company (advisors, network, knowledge) more than looking at
how many big companies or brands went through the accelerator program which is
also a way of effectiveness measurement, but for me not the most important.

------
sfraise
Michael how much of that early magic is lost now with PG not actively
involved, with the bigger batches and the more industrialized machine?

Don't get me wrong, what YC has become is pretty amazing but boy what I
wouldn't give to have been part of one of those first few batches or
especially that first one with Aaron Swartz.

~~~
mwseibel
I talk about this specifically in my post... Having done YC in 2007, 2012, and
helping to run it now. I think today YC founders are given many more tools and
much more money to succeed.

~~~
sfraise
Sure, no doubt today's founders are much better equipped for success no
arguing that.

I guess I meant just from a pure experience perspective.

~~~
sctb
I think today's founders care about being equipped for success. The Y
combinator in the lambda calculus is about what it enables you express, not
itself.

~~~
sfraise
I'm a "today's founder" (although I will admit I'm pretty old) but the history
of PG, YC & the people that were in those first few batches I find incredibly
interesting. In fact I find the whole evolution of this industry as a whole in
Silicon Valley interesting & this is just the next evolution of that.

Sure, our focus is all about how to grow faster & I didn't mean to imply that
today's YC is worse than it was when it started as it relates to achieving a
founders actual goals, I didn't mean that at all.

My question to Michael was just based on this aspect of his post: "For me,
there were two amazing things in the early days of YC that are different
today. First, in 2007, batches were much smaller so it was easier to meet all
of your batchmates. Today, you have to work harder to meet and become friends
with all the talented people in your batch. We put companies into groups of
about 30-40 in order to replicate the feeling of the past. Second, getting to
work directly with PG was special."

From strictly an experience aspect since Michael is uniquely qualified to give
a perspective on being a part of both then and now there had to be a certain
magic in that 2007 batch that would be pretty tough to recreate today, or
maybe not I guess, I don't know, it's why I asked.

------
olalekan007
Im looking to get in but I have been stalking the hacker page trying to skim
every single information I can and believe me...I'm a walking hacker
news...lol. Seibel is doing a great Job in encouraging soon to be/ start-ups
to apply to Yc...he's shown an uncommon belief in startups regardless of what
they do or where they from. That to me is a great change to the psyche of yc.
If a lot more people are open as you are we'll have more start-ups. I'm not
trying to schmooze you incase I say less about yc community...I haven't had
that experience yet.

------
carapace
YC just announced YC China[1]. What will you say when they ask you to call it
the "June Fourth Incident" instead of "Tienanmen Square Massacre"? You're not
naive, you must see that moment in the future, or have some idea to dodge it
somehow? Will you _kowtow_?

What's your attitude towards the Republic of China (Taiwan)?

[1] [https://blog.ycombinator.com/yc-china-qi-
lu/](https://blog.ycombinator.com/yc-china-qi-lu/)

~~~
gerdesj
A fair question and one that might be influenced by the Google MD's response
to a request for a chat:
[https://www.nytimes.com/2018/09/28/technology/google-
pichai-...](https://www.nytimes.com/2018/09/28/technology/google-pichai-
congress-testify.html)

------
jsprenne
What's the average/median number of applications for startups who get in?

It's pretty awesome that you can actually apply 3 times within one year and
did right that with [https://fulfilli.com](https://fulfilli.com). It's good to
take a look back and see how we've progressed.

------
m_ke
What percentage of YC founders end up working for another YC company after
their venture fails?

~~~
snowmaker
I don't know the percentage but it's definitely very common. Lots of YC
companies look specifically to hire other former YC founders.

------
garryterm
Awesome!

