
Why YC - runesoerensen
http://www.ycombinator.com/why/
======
VeilEm
As a 3 time early employee of a YC funded startup I'm going to go ahead and
say that the first customers benefit is as much a problem as a benefit because
it presents the illusion of having a viable business. A lot of early customers
only joined because of my startup's ties to YC and it _always_ hid a problem
with acquiring new customers. In 2 out of 3 experiences it took _years_ of our
lives wasted to figure out that the company couldn't be a success all the
while trying to replicate whatever growth we had initially when that really
was just from that first YC based TC article.

Basically you need to know if you can be viable without YC before you want get
those early YC customers because eventually you're going to need customers
that come to you who don't know what YC is.

~~~
the_watcher
The problem you had sounds like the mistake that was made was in what you
learned from those customers. It's not an acquisition strategy, it's a
strategy to get early users who will give feedback on the product. Figuring
out how to sell it into non-YC companies is a separate challenge, but it comes
after building a useful product.

~~~
VeilEm
The products were already useful, there just wasn't a viable enough market for
them. It's hard to know that this is a problem when you have 5% growth for a
few months and think you've gotten something that works only to see it slowly
trickle to flat growth over time that may end up paying your bills in 10 years
from now.

If you are able to have growth before getting into YC you will be better off
than depending on YC to jump start your growth. Do you not think that lots of
people are signing up to YC to get that jump start in growth?

~~~
pj_mukh
People use YC for a myriad of reasons. Some use it to raise capital so they
can build a product that requires upfront capital. Some use it to jump start
growth for a product they know is useful already. Some use it because they are
complete noobs, are technically capable but have never built a product before.
Those are all places YC is hugely helpful.

~~~
VeilEm
Sure, I'm not saying YC is bad, it's immensely helpful in many ways. I'm just
sharing some lessons that were very expensive and painful to learn.

------
suhail
There's one missing point on this post that I believe is important. I don't
blame them for not putting on there either though since it's a bit intangible:

YC really encourages commitment. Commitment to your idea and co-founders. That
commitment inspires a lot of motivation to do a lot with little in a very
small amount of time.

You go from a rag tag group working on weekends and evenings due to school or
your day job to a competitive, hungry machine ready to usurp your market
leader.

The effect of the peer pressure amongst your batch mates continuously making
progress each week is substantial.

YMMV - it worked for us at Mixpanel.

~~~
tchock23
Commitment to co-founders is great, but commitment to your idea is a double-
edged sword. It can lead to teams less willing to pivot because they're so
committed to the concept they applied with.

(Source: Been on the teaching team of a few accelerator programs and seen
founders make poor choices due to commitment to their ideas, despite advice
otherwise from mentors and their market).

~~~
dmix
This is indeed double sided as most ideas will take years to fully flesh out.
Not everything works out immediately. So while not pivoting is a risk, I
believe it's equally risky to give up to early before fully testing your
product in the marketplace. I find most startups are willing to abandon
products before they launched to a real audience and/or due to negative
feedback from industry insiders (people in the tech bubble).

Steve Blank always spoke about testing technology in markets and using that as
the feedback loop. But I've worked with and also heard of stories of founders
pivoting before they get to that point or after only testing a small subset of
the market.

------
pbreit
I can't help but think as quantity has gone up, quality has flattened. I was
just browsing a list of the last few classes and don't see a (m)any obvious
winners. I know it takes awhile but you'd think a few would stick out.

~~~
LukeG
fwiw — and I say this as a cofounder in probably the least successful YC batch
of all time — the stuff coming out of the program these these is years ahead
of what it was then.

~~~
hooande
Least successful YC batch of all time? Harsh. Probably true, but harsh. Still
miss you guys though <3

------
dsugarman
I would undoubtedly do YC again if I start another company in my lifetime even
though many of the listed benefits last for life after you are in once. The
value wasn't as crystal clear to me when applying as it was after going
through. I can't speak for others, but I would imagine a very high % of
founders who have gone through YC would agree.

~~~
swampthing
Ditto - in fact, one of the main reasons we did YC was because we talked with
a lot of alumni who said they would do YC for their next startup without
hesitation.

------
blammail
The 7% really is not relevant. Getting useful people (for many contextual
definitions of 'useful') to care about your success could be a direct reason
for your success.

That's really the model of YC overall - the money is just "don't die before
you start because of something so simple as money"

~~~
amatic
> Getting useful people (for many contextual definitions of 'useful') to care
> about your success could be a direct reason for your success.

That is what it seems like. In the early phases of a company, founders meet a
lot of challenges they never could have prepared themselves for. Having a
community of people who've gone trough the hurdles give you advice and guide
you is what makes startups succeed. The money certainly helps, but it is the
condensed knowledge and tried methods of problem solving that really drives YC
companies.

------
mathattack
I like the last one the most. I think it captures the spirit of Silicon Valley
very well.

 _When one company in YC does well, the whole community benefits. Because YC
has such a strong track record, early adopters, investors and press are often
more willing to take a look at YC founders, even if they’re first time
founders. To maintain the strength of the community as it grows, we developed
a set of principles that YC founders are asked to live by._

~~~
bobby_9x
Why is this a good thing? Shouldn't we be striving for a merit based system
and not a system that benefits the few people that are able to get through the
YC interview process?

~~~
pjlegato
I'm not sure what you are calling for here. The YC interview process _is_ a
merit-based system.

It doesn't matter who you are, where you went to school, or what family
connections you have. It's an open application available to anyone in the
world to sell some venture capitalists on the merit of your ideas. How does it
get any more merit-based than that?

~~~
Kinnard
I'm sure those things do actually matter(family connections could turn into a
Friend's and Family round; the school you went to could mean you learned how
to hack when others didn't).

------
alexis
Reddit would absolutely not exist if not for Y Combinator. Sure, we'd all be a
bit more productive at work, but I don't think it'd be worth it.

------
_pius
Once a startup has made enough progress to be competitive for YC proper, that
startup could just raise a round from reputable angels. Why bother with YC at
that point?

As a founder of an early stage startup, YC just seems much less compelling
than it did, say, 5+ years ago. If you aren't far along yet, makes sense to
submit an application for the same reasons you might buy a lottery ticket, but
if you're further along, what it takes to be truly competitive seems identical
to what it takes to just raise an early round.

I think YC is a huge positive macro force in the ecosystem, but on a micro
level it doesn't seem clear why applying makes sense anymore.

~~~
Mahn
That's exactly the point this article is trying to make, that you get more
than just seed money being part of YC.

~~~
_pius
_you get more than just seed money being part of YC_

It's not clear to me how much value that adds over, say, raising from a few
reputable angels in the Valley.

As a non-alum, it looks like the YC applicant pool has become so competitive —
on maturity, not ambition or potential — that by the time they want you, you
don't need them. Not that you ever _need_ anyone.

One exception I can see is that if your startup will mostly have other
startups as customers, YC could effectively gift you your first customers.

~~~
cornellwright
the bump in valuation you get is bigger than the 7% slice of the pie YC takes.

People often seem to get too hung up on what percent they own. While you
should pay attention to this, it's more valuable to direct your effort toward
how big you can make the pie.

~~~
_pius
_the bump in valuation you get is bigger than the 7% slice of the pie YC
takes_

Not sure if that's true anymore.

 _People often seem to get too hung up on what percent they own. While you
should pay attention to this, it 's more valuable to direct your effort toward
how big you can make the pie._

Agreed and I tell friends that all the time. It's orthogonal to the point I'm
making.

~~~
terravion
Not only is it still true, it is probably getting more true. I've had multiple
YC and non-YC CEOs tell me this. And look at the announced valuations in the
last batch for raising on safes.

------
dutchbrit
What does YC get for 120k? And is this a fixed % for all applicants? How does
this amount get determined?

------
SandersAK
Also, the best damn lemonade ever at dinner!

------
nzonbi
I am curious about how many applicants are they getting in this round, S16.
Also what kinds of companies are YC most interested in nowadays, given their
accumulated experience, and the current market conditions.

~~~
katm
It's too early to tell how many will come in for S16, but what we're looking
for hasn't changed. We like smart, tight-knit teams who are effective and
resourceful and have a track record of getting things done. In this batch
(W16), there are companies in almost every category -- from enterprise
software to biotech to aerospace.

------
blazespin
I got to ask, exactly how is this good for our economy to have an elite group
which when you get membership into you get preferential treatment?

Why not just let people compete on their own merits rather than the merits of
the group they belong to?

"Elitism is the belief or attitude that some individuals who form an elite—a
select group of people with a certain ancestry, intrinsic quality or worth,
high intellect , wealth, specialized training or experience, or other
distinctive attributes—are those whose influence or authority is greater than
that of others; ."

~~~
davemel37
I think you might be mistaking reality with fantasy. Call me a pessimist, but
in my reality people look at all sorts of social cues and shortcuts to make
decisions.

You can either acknowledge reality and let it work for you, or ignore it and
let it run you over.

------
debacle
I'd be interested in a list of bad reasons to apply to YC.

~~~
rudolf0
Or how about reasons why _not_ to apply, if there are any? I imagine it's
stressful and time-consuming for many people, for example. (Though of course
that comes with starting any company.)

~~~
api
I can only speak for myself. Here's why I never applied:

\- In its beginnings ZeroTier was a one-man band for several reasons (some
circumstantial, some historical). PG has explicitly written against single
founder ventures, so I decided I had near zero likelihood of being admitted
for that reason alone. Add to that the fact that my degree is from a
Midwestern state school and I have not "worked at Google," etc., and I figured
the lack of impressive credentials coupled with single founder status reduced
the likelihood of admission to the point that I'd be better off spending the
time to purchase a PowerBall lotto ticket.

\- I am older, have kids, and am not rich. The Bay Area's real estate costs
are simply too high, and I can't relocate on a whim because I would have to
uproot family. It would make no sense to move there unless it were a permanent
move, and YC's stipend is not sufficient to support a family in the Bay for
even one year. Post-YC, being in the bay would cause our burn rate to be
unacceptably high. (Almost 2X by my estimations.)

\- At the time ZeroTier already had 10% month/month user base and active
device count growth and I already had clear ideas about how to grow further
and monetize, etc. I didn't feel like I needed _that_ much hand-holding and
already had some idea of the advice I'd get, etc.

By the time I became a we and this became a full time venture with everything
it needed, we were too far along and YC fails cost/benefit analysis. At this
point we'd have a chance of getting in but we don't need to get in.

There's one more point that didn't factor _specifically_ into not applying to
YC but is relevant:

I think there's a perspective advantage to not being in The Valley. It's very
faddish up there and we'd be much more likely to end up in a situation where
everything we build and our entire marketing pipeline is optimized for selling
to other startups and Valley companies and that's not a good place to be in
when that industry is extremely cyclic.

Our product is very useful to a lot of less faddish, trendy enterprise users
and institutions like universities, etc., and we do not need to be in the
Valley to reach these customers.

SoCal is underrated IMHO. It has a great talent pool minus the completely flat
out insane real estate costs and is about two hours by plane from SF/SV.

I can't stress enough how crazy the RE costs up there are, especially when
compared with what you get. First time I visited SV and toured a $3000/mo
apartment with a lobby that smelled like dog urine I called it "perhaps the
world's only six figure slum." Manhattan is that expensive but you're in
Manhattan, not a crap vanilla apartment in a boring suburb. You have to spend
over $5000/month there if you have a family to get an _acceptable_ place to
live. We currently spend under $2000/month for a clean, modern, nice place and
are 20 minutes from this:

[http://media-
cdn.tripadvisor.com/media/photo-o/04/a5/d7/5a/c...](http://media-
cdn.tripadvisor.com/media/photo-o/04/a5/d7/5a/coastline-view-of-main.jpg)

~~~
zippergz
Really nice to hear from someone else in OC here. Sometimes I feel like I'm
the only one....

~~~
api
There's a lot of tech in San Angeles (I consider it one city), but it's more
spread out. We are a distributed network of hundreds of suburbs, not a hub-
and-spoke network. :)

We are located here and likely will be for a while:

[http://peoplespace.us/](http://peoplespace.us/)

Click on my handle and drop an e-mail if you want to meet.

------
Kinnard
YC's copy(inlcuding PG's writing) is always so succinct and practical. I think
my company has benefited just from reading it.

------
rdl
The biggest recommendation for YC is: if you founded a company in YC, would
you do so again (or recommend that other founders do so?)

I would, although I have some very specific things I'd be sure of before doing
YC; doing YC "correctly" is worth some effort. (not too early; with specific
goals achieved during YC, and with focus on the right things)

------
ybx
The title of this post is the same as the Calgary Airport's IATA.

------
dvt
Good luck to all applicants! :)

------
pm
Bookface seems interesting. Any more info on that?

------
exdeath
Let me explain why YC is coming out with this now.

In the wake of the Zenefits scandal (which is only just beginning) there's
going to be a lot of scrutiny on Y Combinator and the entitlement culture
(and, hence, the cheating culture) that tends to emerge from an old-boy-
network.

They're trying to put a good foot forward and distance themselves from the
culture that created Zenefits and (more importantly, in the long term) from
the appearance that YC is just a bunch of companies buying each others
services at high prices, like artists who'd buy each others paintings at high
levels (to bolster each others' reputations) while secretly settling the bill.

I don't fault YC for doing so, and I doubt that they had any official, direct
responsibility for the Zenefits fiasco (although I certainly don't buy that
Mr. Conrad acted alone.) It's just useful to be able to read between the lines
and see what's going on. Y Combinator's PR wing is definitely going to be
active as long as Zenefits is in the news.

~~~
asdfologist
Meh, that's a stretch. Much of the material on that page dates to 2014. I
think a more plausible reason is to attract more talent for the Summer 2016
batch - the application deadline is next month.

~~~
timrpeterson
Yeah, so it is PR to re-surface that content exactly when the wheels are
falling off.

