
Why we applied to YC despite having gone through another accelerator - karthikm
http://www.karthikmanimaran.com/2016/01/21/why-we-applied-to-yc-despite-having-gone-through-another-accelerator/
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rdl
As a YC B2B alum, not totally impartial, but also not totally uninformed. I
think you may have the wrong take-away from your experience.

I'm sorry you had a bad experience in LA. I agree a lot of the stuff you wrote
about that accelerator sounds like unconscionable bullshit. The amazing thing
is it is far from the worst I've read about. I'm glad you realize it was
crappy.

Yes, there are ways to bootstrap a B2B business: early sales/revenue. The risk
is becoming a consultancy, or losing your market to someone who is better
funded. I wouldn't say you _have to_ raise (even for consumer), but I also
wouldn't say you shouldn't, and in the current market, raising is probably the
best choice for someone who fits the scale/size/winner-take-all model, even in
B2B.

2.9%? Why does a specific percentage matter? If someone takes 10% and tanks
your business, that's bad. If I could get YC level value-add (network, advice,
reputation) as a developer tool company focused on startups for 25% of common
from a huge value-add investor, I'd seriously consider it. But of course I'd
rather take YC for 7% and all the other YC benefits.

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paul
This is a good example of how bad many accelerators are, but extrapolating
based on that experience to thinking that he knows anything about YC is a
major error. This is a bit like saying, "I had a bad time drinking bleach,
therefore you should avoid all liquids."

~~~
godzillabrennus
Most accelerators are profit generating initiatives that while started to be
beneficial are unable to scale and fulfill their purpose.

~~~
paul
Accelerators are actually a terrible business because you only make money if
you get a big hit (which most won't), and even then it can take 10 years or
more to realize the gains. I predict most will disappear in the next 5 years.

~~~
PabloOsinaga
What's your advice for a new accelerator (or any investor for that matter) in
measuring if they are doing well? The problem is one of retarded measurement
of success. It feels like you are doing well because you are deploying money,
you are being highly selective, etc. But you can still be slowly dying without
noticing. What are some good predictors? You guys at YC have some heuristics
for identifying good founders, but I believe it would be hard for new
accelerators/investors to use those, because they are highly subjective and I
would argue most new accelerators/investors will not know how to assess those
founders characteristics when they are getting started. Would you advice
people to experiment for a few years (literally being willing to loose all the
money invested) just to develop that ability to measure, and be ready to be a
good accelerator/investor a few years down the line?

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hamhamed
I don't think YC cares about growth, or if you're early/late stage (yeah I
know this goes against what the president said..but hear me out). We also got
refused being a B2B startup with extreme growth and only less than 6 months
old solving a real world problem. The difference is that our startup was
boring web SaaS, without any crazy tech or AI. If you look at their latest
batch most companies are hardware, biotech, energy, or some batshit crazy
algorithm AI buzzwordy startup. They're going deep and risking a lot, and this
is probably what I would do too if I had a big fund 8 years later.

Quora got in YC after already raising many rounds and through other
accelator..but that was 2 years ago when YC wasn't 100% crazy tech only yet:
[http://techcrunch.com/2014/05/11/quora-y-
combinator/](http://techcrunch.com/2014/05/11/quora-y-combinator/)

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elliotec
Aside from your confusing logic, it drives me nuts that half my screen is your
body shot while I'm supposed to be reading your blog post. Very distracting.
Sorry if this is nonconstructive.

~~~
mkagenius
your body shot shouldn't occupy more than 3% of the screen ;)

~~~
jkaljundi
2.9%

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someear
I assume you plan on raising money? In your case, you would likely get even
more than a 6% valuation bump, making YC worth it on that alone.

I think there are some key details missing in this post which make it hard to
tell why you were in fact rejected. In addition to the accelerator, you've
also been going at it for 3+ years, and are only now hitting 1M For B2B, that
is unfortunately on the really slow end of things for growth (read Jason
Lemkins quora posts for whay to expect for typical bootstrapped busineeses).
The fact that you're a leader already in this market, and growth is that slow,
is maybe an indicator the market doesn't have much potential. On the other
hand it might also just be that you're in a market that is new, so the
potential is there and others just don't see it.

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rdl
I'm fairly down on Quora, but ~everything
[https://www.quora.com/profile/Jason-M.-Lemkin](https://www.quora.com/profile/Jason-M.-Lemkin)
has written looks pretty amazing -- I wish he'd write a book or something.

~~~
brandnewlow
I suspect he's too busy investing and slinging tickets to his annual
conference. Conference Money > Book Money.

~~~
rdl
Nice thing about that conference: they're letting people volunteer and get
free entrance.

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tptacek
I do not understand how YC is anything at all like Paypal.

~~~
mikekchar
This also struck me. It seems as though YC gives you $120K, advice, contacts
and exposure. Obviously it's worth $120K plus whatever the other happens to be
worth. They take equity from the company in return.

Paypal offers a necessary service to a company (payment). They charge a
service fee.

I'm not going to say YC isn't useful or worth the equity for some people.
However, you've got think that a $120K loan is pretty damn cheap these days.
Also, I pay my accountant a few thousand a year and he gives me incredible
business advice. Possibly I'm just lucky, but I suspect that young founders do
not really understand the options they have open to them for growing a
business.

I view my accountant as a necessary business expense. I even get to write off
the money I pay him from my income. That's more like Paypal. Similarly, on a
loan, I have to pay interest. That's a cost (and possibly necessary expense).
If I need to pay a consultant to help me improve my image or make contacts,
that's a cost.

Giving away part of your company for a service? Not at all like Paypal :-)
Personally, I'd rather pay an expense than give up part of my company.
Obviously depends on the situation, though.

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volaski
Now it's not so convincing piece of advice when you say "Never do an
accelerator", when you just applied for one and got rejected, is it?

~~~
conventionalmem
I thought about that as well. I think it may be defensiveness and anger -
rather than a logical statement. Those feelings are natural, so I don't fault
him - but at the same time, rejection is a part of startups at every turn and
I think we have to get over it, and figure out how to use criticism
constructively.

YC has always valued persistence - so I'm sad that he applied and wrote that,
since he might have been able to get in the next time, and I think YC likely
would have helped his ability to recruit and valuation, especially given the
changing markets. But regardless, I always have respect for startup founders
(esp after 3 years of hard work) - so we should all wish his team luck.

~~~
volaski
This guy not only tells people not to YC _after_ he applied and got rejected,
but also publicly bashes someone (the LA accelerator) who did their best to
help him (Doesn't matter if it didn't work out. They did their best to help
their portfolio companies and this guy says it was a "gimmick") I wouldn't
like to work with this guy

~~~
conventionalmem
Hard to use that to say he's not a great person to work with. The LA
accelerator might have been egregious, and he may be doing a service to other
entrepreneurs by publicizing it (there are a lot of incubators today, and
entrepreneurs should beware). I do hope in the LA incubator's case that he
gave actionable feedback privately long ago.

I totally agree on the cognitive dissonance with bashing YC and saying to
never to do it, after getting rejected recently. But I can realize how it
might not be a fully rational perspective (he'd probably argue that he's more
educated now, and that's why he's changed his mind since applying - my gut is
there's some emotions involved, since I can't see a ton of benefit to him to
write this so publicly).

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prawn
Since he didn't link to it himself, for those curious, Karthik's company is
[https://welink.com/](https://welink.com/) \- location-based social media
monitoring. e.g., sentiment within a sports stadium or shopping mall.

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lazyant
You missed an opportunity to explain what your startup does, no link in the
blog entry, blog only contains that one entry. Also +3 years at it is not a
good indicator for getting at YC which as per Sam's post prefers very early
startups but good luck anyways.

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zeeshanm
To play devil's advocate, Airbnb was in business for at least two years
already before they got into YC.

Yes, one can argue, times have changed a lot since then as the applicants pool
have significantly increased. One other the thing, founders were extremely
impressive; so, Airbnb may be an outlier.

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conventionalmem
Posted this on his comment form:

Karthik, disclosure, I was a YC founder.

It doesn’t seem very thoughtful to say never pay more than 3%, full stop. If
you get more than 3% value out of the incubator, it’s often a good idea to pay
more than 3%. You should make the decision after talking to many people who’ve
chosen the incubator, and there are many companies that will say they got much
more than 7% benefit out of YC – and also companies that didn’t.

It’d be great if every incubator charges much less than they do today, but I’m
doubtful it’s a perfectly competitive market, with stickiness in things like
alumni networks and reputation (it does seem like it has some similarities to
the education market). Entrepreneurs would obviously benefit from more
competition amongst incubators – and maybe you’re right that change is at
hand.

I’m sorry that you didn’t get in to YC specifically (and maybe it wasn’t the
right idea to apply, if you felt so strongly about how incubators provided so
little value) – but I hope you won’t let your disappointment and anger get in
the way of thoughtful business decisions, including in cases like future
customer rejections.

Anyway, back to building our businesses – good luck with your own!

