
Was Y Combinator Worth It? - sama
http://wiwillia.com/post/80862769673/was-y-combinator-worth-it
======
paul
Thanks Walker!

I love telling people the story of how some investors scoffed at Teespring on
demoday -- I remember one person asking why they were even there. It shows why
it's still possible to make a lot of money in this business, and that startups
shouldn't be put off by a weak reception from investors.

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carterschonwald
One thing that i never see addressed concretely for me is this:

assuming I dont want to raise capital unless i really really really really
have to, assuming im doing not b2c, assuming I actually am friends with a
number of people who've done YC, etc etc

then why YC?

Unnuanced advocacy makes me nervous (and thats all I typically hear). Every
single time in my life where I have taken unnuanced, uncaveated remarks on
face value, it has blown up in my face. There are many fine businesses that
have been certainly enabled by YC, and many that have not been.

Is YC suitable for businesses whose risks have been shifted to be strictly of
the "can technology of this caliber actually exist?" sort, rather than
"explore the business premise, do an MVP for the tech" sort? (admittedly, one
challenge with sophisticated tech is educating folks about it!).

I guess I'm asking for nuance in why. If you can't give me nuance on that, why
should I trust your advice on anything more complex?

[edit: to be clear, if someone convinced me, i'd totally apply to YC, just not
sure if it makes sense for me]

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larrys
"then why YC?"

This stood out in the post:

"If I could only pitch you one reason why Y Combinator is worth it, it would
be the people."

Exactly. And along the same lines the reason that I always give for why it's
good to go to a "known" grade a institution (say a top business school if that
is your major) is not necessarily for the education but because of the people
that surround you and raise the experience level.

In other words a higher degree of non slackers and people who are serious just
like you are. Of course they exist everywhere. But there are generally more of
them at the top schools. And likewise there are more of them in YC. (And if
you read some of my other comments you will see that I'm not a fanboy by any
means but this benefit stands out clearly to me..)

And this doesn't even have to do with whether those people became life long
friends or associates or not (although that is icing on the cake for sure). It
has to do with the immersive experience in being in that type of group.

~~~
carterschonwald
I appreciate the remark, that said Speaking as a person whose gone to some of
those schools.... That doesn't make me feel excited. While I learned a lot in
those envs, they were toxic and homogeneous in many ways.

Also I'm deep enough in some OSS ecosystems these days that I already have the
pleasure of being the (in my mind) slacker in a community of amazing
technologists.

Heterogeneity and brilliant folks who are wildly different from me, who I can
still communicate with, are how I thrive. Variety is good for the brain!

I'm not in any way suggesting YC isn't great for most folks. I'm pretty weird,
being an general extrovert and a deep technologist in the same day is a really
odd combo. Both as a help and hinderence

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johnbroccoli
Just curious, are there any reports/posts of people or companies who think
that Y Combinator was not worth it?

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zt
As to the usefulness and worthwhileness of YC there cannot be two opinions.
The affection and praise of the alumni alone would prove the point even before
you consider the companies that have built out of it. And at the heart of that
is what Walker points to quite clearly: candor and the clear support that can
only spring from it.

~~~
mildtrepidation
There "cannot be two opinions?" Actually, there can be as many opinions as
there are people (not just companies, but individual people) who have gone
through the process. And they can reasonably vary, because not everyone and
not every company _needs_ YC or something like it, or can necessarily even
benefit from it.

It's ridiculous to suggest that YC is a universally positive experience, just
like it's ridiculous to suggest it's completely without value (based on the
significant praise you refer to).

~~~
wdewind
Honestly curious, is there any company you know of who has publicly stated
they weren't happy they went through YC? Not saying it's conclusive either
way, would just be interesting to read why.

~~~
dshanahan
I do know founders who've said as such. Wouldn't say it publicly, I'd imagine.

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jason_wang
I can say unequivocally entering YC is one of the best decisions I have ever
made both personally and for my business.

I'll let others debate the monetary economics of YC and just say that the YC
network effect is the most under-rated aspect of YC. Both the W14 batch mates
and the YC alums from past batches have been amazing in terms giving us
strategic and tactical advices. This aspect of YC simply can not be ignored.

~~~
icinnamon
Completely agree. This line sums it up best "If I could only pitch you one
reason why Y Combinator is worth it, it would be the people.". I don't know
any other place in the world where you can meet such a concentrated group of
amazing, brilliant individuals (and companies!)

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djb_hackernews
If you don't care so much about access to investors, but do want a community
of like minded entrepreneurs I'd check out the Startup Chile program. It's not
for everyone but it is 40k equity free, and everyone is working on something
they are passionate about and it has a really strong community where everyone
helps and listens.

Downside is no prestige and of the few investors it does attract, they tend to
be low quality by SV standards.

~~~
larrys
"Downside is no prestige and of the few investors it does attract, they tend
to be low quality by SV standards."

Taking you at face value (meaning I don't know the facts and I'm relying on
what you are saying..) that's a huge downside.

Prestige is important. While YC is not Harvard have you even noticed how many
doors going to Harvard, Wharton etc. open? That said not everyone with an open
door is able to capitalize on it but I'd say it's a pretty big advantage to
have.

Once again, this is based on my many years in business. I have nothing to gain
from touting YC and I have been critical at times as well.

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Xdes
I doubt I'd find a YC-ruined-my-startup article. To me this seems like more
confirmation bias for those that drink the kool-aid.

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wiwillia
Thanks for posting this Sam!

If anyone thinking about YC has any follow up questions, happy to answer them
here. It truly was an amazing experience for us.

~~~
jtfrench
Hey Walker, great post. I remember you starting this while at Brown, and I
also remember when FishCo was shut down. I did NOT know someone used a Pokémon
card for an ID. Totally believe it though :)

Inspiring story, and I'll be in touch.

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koji
I agree with this. People ask me all the time what I thought about my
experience at YC was like. And my answer usually comes down to being with the
people. When everyone around you seems to be smarter, work harder, and be more
driven, you really push yourself too. But, it was also a supportive community.
Everyone wanted to see everyone else succeed. Basically, it was a good support
group for those days (and there were many) where you just felt down in the
startup dumps.

The good news is that you don't necessarily need YC to have much of that
experience. If you build a good network around you, with lots of hard-working
and positive people, it helps a lot.

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bunkat
Is there a breakdown on YC accepted companies by product stage? How many
companies were accepted that were already deployed, making money, and growing
vs brand new ideas not yet developed? How many companies with significant
month-over-month growth are ever rejected?

From the articles I see lately, it seems like there has been a pretty big
shift at YC to help companies go from $1MM to $500MM rather than $0 to $1MM.
Everything appears to be about pre-existing growth now.

~~~
pg
_Everything appears to be about pre-existing growth now._

It would be a disaster if that were true, because in this type of investing as
in any other, returns are proportionate to risk. Fortunately it isn't. As I
said in another thread, a quick sample of the current batch suggests half had
no growth when YC accepted them.

YC does face a danger in this respect, because as it gets better known, there
are an increasing number of applications from fairly established startups. To
avoid that danger we make a conscious effort to fund risky outliers. E.g. the
17 year old kid from Bulgaria with zero revenues or users.

~~~
bunkat
It will be interesting to see how YC continues to evolve. In the early days it
seemed like it was all about early, early investing (come to San Francisco and
build your product, we're betting on you as a founder) to today where 50% of
the open slots are no longer even available to these types of startups since
they are taken by established companies.

Seems similar to how things like the Olympics evolved. At first participants
had to be amateurs but later they started letting in the professionals and the
amateurs could no longer even qualify. Good to see that there is a concerted
effort at YC to continue to fund the amateurs but I can only assume that will
be harder and harder to justify in the future.

~~~
paul
You shouldn't think in terms of "open slots". We accept all of the companies
that seem like good bets, and we don't know how many that will be until
interviews are complete. Teespring coming in with a million in revenue didn't
push out some other pre-revenue startup.

------
ed
This is the one consistent exception to Betteridge's law of headlines

~~~
jnsaff2
I was just going to post NO for that reason only.

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nawitus
No matter how you slice it, ~$14k for 6% is a terrible deal.

~~~
wiwillia
Hi Nawitus. I completely understand that line of thinking, and it should have
been especially true for us given that we'd been running for about 1 year and
had $1m in sales at the point where we joined YC.

What I can tell you is that we thought about in the same way as bringing on a
co-founder or superstar employee. The value of YC isn't measured in their
investment, but rather the value they bring.

Even in terms of the boost to our valuation alone from the validation, beyond
everything else, YC more than paid for itself. If you look at our growth graph
there's also a sharp inflection that starts shortly after we joined the
program. That could be unrelated, but it's my strong belief that it was the
value of the program that helped us accelerate.

~~~
nawitus
Everyone seems to compare "doing YC" to "not doing YC", which is a false
comparison. YC can easily be better than not doing anything, but that doesn't
mean it's even close to the best alternative. You could've sold 4% of equity
for x million $ and used that to grow your business, for example.

~~~
wiwillia
I see what you're trying to say, but money is often not the issue - it's the
connections and expertise that are so valuable. In my humble, and admittedly
limited, opinion the network and community and shared experience/expertise
that YC brought far outweighed any million dollar investment we could have
taken (and no investor would have even considered giving us millions).

We ended up raising millions (about $22M in the last year), and I don't know
if it would have been possible without YC. All our investors and intros came
through the network we built while in the program.

Hope that makes sense, of course this is all my opinion and you can evaluate
and come to your own conclusion - I just wanted to share my experience and
perspective!

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btrautsc
Unequivocally, yes.

You can haggle over the $'s and %'s all day - but what you can't argue over is
where your company stands after YC, especially in the eyes of customers &
investors.

Some people have the ability to never worry about investors, but for those who
don't, it is insanely helpful. And most of the shift in opinion is based on
how your product is being used by customers, which is the primary focus of
many YC partners.

Once again for good measure: Yes.

~~~
asdad
After YC - Customers? Please talk about Investors. Customers have no regard
for YC. They look at your company and your product, your value addition. Which
probably you've already proved, by the time you've gotten into YC.

~~~
amirmc
If your other customers are also companies then the YC brand may have an
effect (e.g. Stripe). If it's for consumers, maybe not (e.g. Airbnb).

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lbr
"Worth it" meaning worth the equity you give up? Are there downsides other
than giving up 2-10% of your company?

~~~
opendais
The relocation and the time it costs. xD

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MCarusi
Thanks for sharing this! I've never understood how startups snub Y combinator
because it "only" offers $17,000. Think long term!

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alaustsen
For me coming from outside the US, YC is just as much about getting a crash
course and network in SV.

