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Updates from YC (ycombinator.com)
359 points by peteratt on Mar 8, 2019 | hide | past | web | favorite | 152 comments

> The current total market capitalization of YC companies is around $150 billion. The YC network now has over 4,000 alumni and 1,900 companies, and it has become a reliable source of advice, customers, friendship, and support for YC founders.

A question for people more savvy about VC than me. What's your ballpark estimate on YC's bottom line? They put $150K at least into each company, right? So that's $285M right there? But some of those are non-profits, in which case they only put $100K into the company. And then they get 7% of each company, which would theoretically be $10.5B? $150B * 0.07 = $10.5B (just removing non-profits from the equation). But accounting for dilution, it would probably be less than 7% ownership? In other words, I guess we'd need an estimate of how much YC actually owns in its overall portfolio.

Forgive me if my numbers are wildly off or naive. VC isn't my domain.

I think its about 3% as the 7% gets diluted so approx $4.5bn for the assets. Of course a lot of that is illiquid and unrealised. The GAAP bottom line would be a lot less and not give a very accurate picture as it wouldn't include most of the gains.

Their 7% stake has pro-rata and YC publicly states that it will follow-on to maintain that ownership up to $300m valuation.

The 7% ownership also allows YC Continuity to be more attractive to later stage companies. If YC already has a 7% stake, then it only needs to invest an additional post-money 13% in order to raise its ownership to 20%. A new firm coming to the cap table would want to invest 20% post-money. So, if the company doesn't need 20% capital, then YC Continuity has a significant advantage.

I think YC only fairly recently started exercising their pro-rata. IIRC there was a while before YC Continuity was started when they didn't have funds allocated for pro-rata. They've had it for a while now but I think they may have missed out on some of the earlier successes, like Dropbox, Airbnb and Stripe, which is where a lot of the gains have been realized at this point.

On the contrary - GAAP earnings give the most accurate picture of cold hard cash. That is the reason they exist , and securities regulators are specific about its definition.

Paper gains are notoriously easy to stretch.

Maybe but say YC put $20k into Airbnb for a stake now worth $1bn and $80k into 4 other statups that went bust. GAAP would show a net loss of $80k which would not reflect very accurately how they were doing. GAAP has been designed more to provide a consistent way of calculating corporate income tax than to accurately show how a company is doing.

You're welcome to suggest a more accurate way of consistently accounting income tax requirements.

That seems like an ungenerous interpretation of the parent's comment. I didn't take that comment to mean that GAAP is not a good way to calculate income tax, but that it's not a good way to judge the true financial prospects of a company.

I took it the same way. If there is a better way to judge the true financial prospects of a company we should be taxing them accordingly.

My point was that GAAP is probably the best we're going to do because of the consistency problems.

The moment you start applying special rules or caveats per company you stop being able to compare companies properly as an investor, at which point the measure becomes useless as a talking point as well as being useless for tax calculations.

My original post was framed against tax because it doesn't really make a difference. If the new method is good enough for comparison between companies it's good enough to replace GAAP - unless it's not.

I don't agree with this sentence at all, "If there is a better way to judge the true financial prospects of a company we should be taxing them accordingly."

The main thing investors want are some measures that are reasonably forward looking, with the caveat that some of those forward-looking measures will of course be inaccurate when the future comes.

Taxes, on the other hand, should be mostly past looking, taking into account events that are fully settled and guaranteed.

If, as an investor, you're only examining trailing metrics, you're going to be a pretty horrible investor.

It's actually an interesting question as to whether something different from GAAP should be used for tax. For companies based in one country it's a time honoured system that has worked for decades but for multinationals it's become in my opinion too easy for them to use loopholes and pay little or no tax.

Like with YC they are US based and if they sell their dropbox stake they'll be taxed but more tax avoiding companies might say have held the dropbox stake through a Cayman Islands trust or some such and try avoiding it. I'd vote for something like for multinationals they do accounts as if all their multinational bits were in one country and then allocate the earnings to different countries in proportion to the sales there. So if Microsoft had a lot of Windows sales in Germany say they'd pay tax on the profits there rather than saying they were all generated at a DVD stamping plant in Ireland for example.

Easy: they only realize taxable gains when the startups have a liquidity event -- ie go public or get acquired. (Or die, for the losses.)

Anyone valuing startups on GAAP earnings is an investor who will never invest in a startup. Appreciating it as a measure in this context is not a virtue.

I'm under the impression that the IFRS (international accounting standard that replaces GAAP) changes this: equity instruments need to be measured at fair value, even if they have unrealized gains or losses.


If I recall correctly, this prevents shenanigans where you over-represent the book value of assets that have lost value.

New GAAP Rules also mean you have to report unrealized capital gains (as of last year I think)

I'm not totally up on this but in the most recent Berkshire letter Buffett was saying they changed that for listed investments but not unlisted.

Their earlier stage companies certainly aren't doing 100%-compliant GAAP accounting -- it would be cost prohibitive.

Thus, YCs GAAP ownership numbers would be nebulous. They probably use funding round valuations as the proxy, and that's commonplace for VC funds.

No, that’s completely incorrect especially with new accounting standards. Cash flow is much harder to fake than earnings and new GAAP standards mix the two.

> Cash flow is much harder to fake than earnings

Unrealized gains on private, illiquid investments are neither earnings, nor cash flow.

My comment in relation to the comment that stated GAAP earnings are more sane. I think using GAAP as a standard for valuing an investment fund is a little asinine. Unrealized losses/gains yes, but GAAP doesn’t save you from mark to market. There’s a reason PE returns are smoother than public equities. Public PE firms wrote down assets way less than the decline in public equities in Q4. My problem with the new GAAP rules is that it distorts operating earnings and investment earnings. For example, when Stripe goes public, Amex will have fluctuating security in its earnings statement, or Booking and Ctrip, etc.

Maybe less. They’ve sold off shares in secondary markets too. But still very impressive: more than a 10x return.

I'm a bit worried that we might be seeing "peak YC".

Clearly, Sam Altman and Michael Seibel are the most influential and impactful people that drive YC forward. Sam's on the way out, and I wouldn't be surprised if Michael also leaves in 1-2 years. Is YC going to be able to innovate without them?

Furthermore, I would suggest that YC is becoming more risk-averse as it grows (as any organization does). Will that mean worse decision making?

Another point is that the average age of YC partners is growing. Will that hinder them to spot and understand new trends, and pick the right companies?

Now, this is an outside-view analysis. I've spoken to a few YC partners (as part of office hours or at events), but never went through YC myself. I know quite a few people who did, and they seem always most impressed with Sam and Michael.

Edit: Typos

One could have made the same observation when Paul and Jessica stepped aside. But instead of flattening or falling, YC bloomed to new heights. As long as the folks who take over are as capable and motivated I think it will keep getting better.

As for the comments about the partner ages, I don't think that's true because they keep brining on partners. Also, I'd say they had the opposite problem before: to many young partners who were only enamored with new stuff and not interested in "boring old things".

As to the risk averseness, that one I agree with you on. I get the impression that they have so much data now that they rely more on the data than on intuition which of course probably gives them better consistent smaller returns but might mean they are missing out on the next AirBnB or Dropbox.

The entire partnership is incredible and does a huge amount of valuable work, and startup advising, that they don't get nearly enough credit for.

I'll still be involved (and will ensure we continue to take risks and grow!), and obviously Michael is amazing.

By damn, I just love when the big kahunas still involve themselves in the community they cultivated so long ago. Cheers, Sam; the best of luck to you and the team at YC.

I didn't mean to say that not all partners are great at what they do :-)

We're nearly always worried that we're past our prime, which is part of what drives us to try new things.

Rather than become more risk averse, I've actually seen us take increasingly large risks in the five years since I've joined. A few examples: investing in a greater number of sectors, investing in new markets, investing in different stages, advising thousands of companies (startup school), challenging the norms of fundraising (series A program)...The list keeps going.

Taking on increasingly risky projects can be a sign of risk aversion though. E.g. working on (or funding) moon shot projects can be a way to avoid having to hold yourself accountable if the project fails, whereas it's much harder to put all your eggs in one basket behind a strategy that should actually succeed if well executed.

I'm not saying YC is guilty of this generally, but I do see it sometimes. E.g. I think pursuing the artificial kidney thing is kind of a cop out compared to getting states to change their laws so that people are opted into organ donation by default, since if the former fails you can just say it was because the technology isn't here yet whereas with the latter it concretely shows that you just weren't able to get it done.

More people involved almost always leads to less risk taken within an organization. Of course, "risk" is hard to back up with data in the short-term in this instance.

However, number of sectors, number of companies and challenging the norms of fundraising is not what I mean by risk. I meant rather investing in companies where 99.99% of all other VCs would pass. And I'm not saying that you're NOT doing that, I'm just saying that theoratically that could become an issue and I'm worried about that (because I want YC to be successful!)

Or, to put it in another way: It's not clear to me if in YC's case bigger = better. Maybe there's an optimum somewhere?

Don't worry - I'm not going anywhere :)

That's exactly what I've said about three days before handing in my two weeks notice in the past ;)

A few years ago, you could have written the same post except with the name "Paul Graham" instead of "Sam Altman".

YC has become a brand like harvard or stanford. The best are going to apply there.Even if you are terrible picking winners and loser you are picking from bunch of impressive people so you will have winners.

I don’t buy that. A significant number of people around the world have heard of Harvard, while I doubt that most people in the U.S. alone have heard of YCombinator. I’m yet to talk to a friend or family member about this place without having to explain what YC is. Nobody has to explain Harvard.

Not to say YC isn’t a big, impressive brand that draws talent, just that it’s still orders of magnitude from the top of the Ivy League.

Harvard is well known amongst people who attend college or who are interested in college. YC is probably equally well known amongst entrepreneurs or people who are interested in entrepreneurship.

It's just that people who attend college or are interested in college is a much bigger group than entrepreneur.

Harvard is probably one of the top 10 global brands along with Coke and Nike.

Absurdly not the case. You are in a bubble.

Not sure what bubble that would be. I didn’t attend Harvard and don’t think I’ve ever met anyone who has. I also don’t live in the United States.

The concept of a university is fairly universal (pun intended) and surely Harvard or Oxford are considered the “best” at least in terms of name recognition.

You’re on HN. Go to yemen and ask your question.

According to Wikipedia, there are more than 20 universities in Yemen. I’m pretty sure they’ve heard of Harvard.


Which is different to being in the most recognisable brands in the world, with coke, disney, manchester united, etc etc.

The parent simply stated that YC had become a brand like Harvard or Stanford. That's very clearly true, YC is the best in the world at what it does and it's extremely well known in tech. It is a potent brand. I don't see where the parent was implying YC was as well known globally as Harvard.

Harvard also isn't as well known as Coca Cola (not even remotely close in fact). That lower recognition doesn't mean that Harvard isn't a brand that represents eg a very high standard in its field.

Coca Cola is the most recognized brand on Earth, Harvard is the most reputable university brand on Earth. It actually seems like a good comparison.


I think comparing an accelerator to a university is flawed for so many reasons.

It's not, because the comparison was about brand value and brand perception. YC and Harvard have a very similar elite only-the-best-get-in-and-then-you're-set perception in their respective markets (plus a scarily similar "if you know guys who knows guys, it'll be easier to get in" aspect).

They're more similar than dissimilar. For example, both try to have a selective process where they try to gauge potential of applicants, and whether they're worth investing resources into. Universities are actually a specific subset of accelerators..

> I would suggest that YC is becoming more risk-averse as it grows

YC Startup School shows the opposite

Which big outcomes do you think represent particularly savvy trend spotting?

I think it says something about our industry that I assumed they were about to discontinue something or make a change that negatively impacted people.

Or maybe it says something about you.

I don't mean to say you personally, but perhaps cynicism is an easy trap that a lot of the industry falls into.

Perhaps. But when it’s good news it usually makes it into the headline.

Well, I mean they kinda are discontinuing Sam.

I'm curious why more bay area startups haven't come to Oakland. (maybe it's happening and it's just not obvious?)

Always felt like there was plenty of potential office space relatively close to BART but maybe that's wrong.

A lot of really-early-stage startup activity (eg. solo engineer working on a project, or 3 guys working out of an apartment) seems to be happening in Oakland and the East Bay generally. It's the last place rents are affordable, so it's naturally attractive to people who need to go without income for a while.

The commute over the bridges is terrible, so with the bulk of investment capital and experienced engineers living on the peninsula (and oftentimes more down by Palo Alto & Menlo Park than in SF), it remains difficult to scale East Bay companies. Unless you're someone like Elon Musk where you can just invest $100M of your own capital and need more semi-skilled manufacturing workers than skilled software engineers. Fremont/Milpitas is coming up as a bedroom community for mid-career engineers though (because if you work at Facebook it's just across the Dumbarton, while if you work at Google/Apple you can take 237 and avoid the bridges), so that may increase the engineering supply along the East Bay BART corridor.

The East Bay really hurts from BART & Caltrain being two separate systems; it's easily BART accessible, but much of the peninsula's population only has Caltrain access, so you need a very time-consuming transfer to get there without dealing with the bridge traffic.

I think tech employment in downtown San Jose is going to blow up for this reason, once the BART tunnel goes in. Combined access from electrictrified Caltrain/BART/ACE/VTA/Amtrak is going to be killer for bringing in people from all over who don’t like being stuck in traffic. Google sees this coming and is building the new campus there. And that will push up prices for homes near any of those rail systems.

It will also be possible to commute from SJ or Santa Clara to Oakland via BART, which may marginally improve recruiting there.

It would be fantastic if Caltrain or somebody rebuilt the burnt-out rail bridge next to the Dumbarton, but that’s wishful thinking. It would be useful to integrate ACE, Caltrain, and Amtrak.

I put almost zero faith in Bay Area governments fixing the mess that is Bart/Caltrain/etc.

I don’t have any hope for system integration without a major culture shift in the government, but I do think that the expansion projects that are in progress are likely to be completed eventually.

Facebook is going to do that.

> The commute over the bridges is terrible, so with the bulk of investment capital and experienced engineers living on the peninsula (and oftentimes more down by Palo Alto & Menlo Park than in SF), it remains difficult to scale East Bay companies.

The reverse commute (peninsula to east bay in the morning, east bay to peninsula in the evening) is perfectly fine, as long as you don't have to take 880 anywhere. If you can avoid 880, that reverse commute can be serene and almost surreal (as you whiz past gridlock coming in the other direction every day).

There are a bunch of industrial parks right over the bridge in Newark that seem like great places for a new small company.

Yeah, there are plenty of "good" reverse commutes in the bay area still. The only problem is it only takes one chunk of "bad" road (eg, as you mention, avoid 880, or going the 'wrong' direction on any piece of road, or being near a major interchange) that not THAT many people have a truly 100% reverse commute. Ours is, and yeah, it's pretty funny to cruise at 90 while the traffic coming the other way is stopped.

>but much of the peninsula's population only has Caltrain access,

Fremont has a lot of potential if Caltrain were to reopen the old Dumbarton railroad:


Facebook has offered to contribute but so far the Bay Area urbanist movements have been disappointingly silent about this.

Yes! It would be great if the old Fremont Area Rapid Transit was running again.

The FART train?

It's possible but has it's own challenges. If the benefit of moving to Oakland is lower costs, than that has to be made up for partially by lower salaries (most of a startup's costs are in people.)

Being near BART is fine, but not if your employees are coming from SF. Then they still need to pay SF salaries to make up for cost of living.

Living in Oakland can be less compelling due to the housing stock. Oakland has many single family homes, which I personally feel is a good thing, but less compelling for many workers.

(We can, of course, debate whether the kinds of workers who aren't in the life-stage to want/need a single family home are the right kinds of workers to go after, but that's a separate conversation.)

agree with most of the other comments in this thread, but would add

- BART is an extremely filthy and dangerous transit system by any 1st world standard, and I say this as a lifelong transit rider.

- Oakland, Berkeley, & Richmond govs/regs are business unfriendly & tech hostile. It's a traditionally poor working class area undergoing massive housing displacement & the political class is all old money or non-profit types.

- BART is an extremely filthy and dangerous transit system by any 1st world standard, and I say this as a lifelong transit rider.

This is hysteria. I have many coworkers who ride BART on a daily basis for 15+ years and not a single reported incident from any of them, other than stinky homeless people that very rarely ride during peak hours.



slightly depends on your entry/exit stations but I would regularly see crack/heroin use, defecation, deranged meth heads screaming and/or picking fights. I doubt I am alone in this.

Definitely not Hysteria. I have inhaled second-hand crack smoke walking up the stairs at Civic Center, watched a man defecate on a crowded train, and saw a person get stabbed in the past 5 years of riding BART. It's not this bad in NYC or LA and I couldn't even dream of seeing things like this in Europe or Asia.

> I have many coworkers who ride BART

Have you personally taken BART on a consistent enough basis? I took it two days a week for a significant length of time and calling it filthy is not hysteria at all.

Seconding a couple of other replies here: it is not hysteria. In the 20 years I've lived in the Bay Area, BART has gone from tolerable to completely revolting.

I don't ride it often and haven't seen any violent crimes, but I've seen police remove quite a few people. Last time we had to wait a while as the police asked the guy to pick up his own used needles.

On BART: in 2017: 428 Violent Crimes: 293 robberies, 130 assaults, 5 rapes(!!). In 2007 -- 245 violent crimes.

Ridership has increased 22% over the past decade, however violent crime has increased 75% over the same period.

Fascinating. I'd love to read more... Where did you find these stats reported?

I grew up in SF, now live in Toronto and spend a lot of time in NY. Pretending that Bart/MUNI arent on a completely different level than other major cities is ridiculous.

As an out of state resident who needs to ride that train to get to the airport thanks for the warning. I'll keep my wits about me.

> This is hysteria

I've taken public transit all my life and I'm scared every time I take the bart :/

>It's a traditionally poor working class area undergoing massive housing displacement

Kind of makes you wonder why the existing folks are hostile...

I think its slowly happening.

Square just took the building Uber was building out, all 356,000 sqft. This is going to make them the largest tech company in Oakland.

And some company named Marqeta just put their name on a building...no idea how long they have been here but they now have enough money to have their name on both sides.

Its slow but its definitely changing.

Hot tip for startups: A lot of ppl who work for the big co.s (me included) live or have migrated to the east bay for housing over the years but hate the commute.

Hot tip? How does this solve anything? People who work at big tech companies migrate to Oakland pushing those who have been there out by driving rents higher.

And you think those companies will forfeit their offices in the city/SV?

Maybe you can kindly migrate back to where you came from?

I've been here for 15 years?

The founding principle of North America is displacing unwanted people. Although the shift from John Locke's "justified" massacres to the somewhat less violent market forces is an improvement I suppose.

An improvement in the way living in an ancient car is an improvement over sleeping in small pox blankets.

But blaming an employee for living where he works is misguided, they're not the ones asking outrageous prices.

Build the wall?

Housing would be more appropriate.

oh those poor flailing and flailing liberal coastal cities!

maybe Republicans can teach them something, by, for example, the coastal city of......Knoxville, TN.


We moved from SF to Oakland more than a year ago and could not be happier! Here's the view from our Gravitational's Oakland office right now:


Looks great, refreshing view in Oakland!

Where in Oakland is that? Looks nice!

This is Embarcadero West, right near Jack London Square!

That's a great spot, and right next to the ferry for SF commuters. Good find.

Take this with a grain of salt, because I'm from Canada and have only been to SF once, but:

If I had to guess, I'd say race and class conflict. I wasn't used to how heavily divided a culture could geographically be, and it seemed to me that Oakland was far more heavily multi-ethnic and financially poorer than the rest of the area.

Before the hate poors in:

- Yes, Canada still has a racism problem. But I don't know of any areas around me that are strongly of one ethnicity versus another. The major exception being "Indian" reserves, which is a whole other topic.

- Yes, it's ridiculous for me to comment after only one visit. But that's how strong the difference seemed to be. Every cab and uber driver I had was from Oakland.

- SF was beautiful and I don't mean any disparagement. You're all wonderful people and I love you.

Multi-ethnic is not a problem in the Bay Area. Most of the people with money & skills are also immigrants, and many of them are various shades of brown or yellow.

Poor is. The Bay Area is one of the least racist places I've lived in in my life, but it's also one of the most classist. There's still a big class stigma based on where you live. (Though sometimes gentrification flips this on its head - the Mission and EPA used to be poor, crime-ridden areas, but now they're rich, crime-ridden areas.) It's very strange - I think that people who are used to the race & class social systems of much of the rest of North America don't really know what to make about the Bay Area, because in some ways we've busted out of those social systems and just replaced them with other ones which are...weird.

I'd like to add that this isn't restricted to the bay area. All of America has a huge classism problem, and it's often misdiagnosed as racism (not saying the latter doesn't exist at all, of course).

> The Bay Area is one of the least racist places I've lived in in my life, but it's also one of the most classist. There's still a big class stigma based on where you live. (Though sometimes gentrification flips this on its head - the Mission and EPA used to be poor, crime-ridden areas, but now they're rich, crime-ridden areas.)

The rich get crime-ridden places, too? Sounds less classist than most places.

Yup, they do. Most of the Google engineers I know who live in the Mission have been mugged or had their car/house broken into at least once. You just learn to not carry a lot of money or expensive stuff with you.

The reason I say it's classist is that because you have both millionaires and people who are dead broke in the same space, people have invented a lot of subtle social signaling cues to understand just who they are dealing with. Like when my wife & I go house hunting, every realtor asks "Where do you work?", and we answer "Los Altos" and "from home", and then my wife says afterwards "I think they meant which company do you work at?" Or the time I met a black dude on Muni who had a bet with his girlfriend that he could identify techies by sight, because he asked me "Excuse me. Are you a techie?" and then got it right (apparently it was the Columbia fleece that gave it away, which is odd to me because it cost me < $20 off Amazon). Or the realtor who first took me around when I moved out here, showed me a kindy dumpy midtown Palo Alto apartment, then said "It's got a Palo Alto zip. That's important to some people."

Undoubtedly this happens in the rest of the U.S, but it's different in the Bay Area, precisely because wealthy and poor live in such constrained spaces. Many of the social signals of wealth in the rest of the U.S. don't apply here because they're stupid - if you park your Lambo in the Mission, it will get taken for a joyride, if you wear an Armani handbag it will get lifted from your car, and there's no room for your gated community outside of Atherton. Our billionaires are too busy coding, raising capital, rollerblading, and kiteboarding to worry about things like their wardrobe or car. You get startup founders who own companies worth tens of millions and yet use a 5-year-old iPhone with a cracked screen.

Re "It's got a Palo Alto zip. That's important to some people.", my parents tell the story that when they were looking for housing in New Jersey in the late 1970s, the real estate agent said things like "This house has a Princeton address", and "This house has a Princeton phone number."

What!? I've lived in the Mission for 5yrs and know plenty of others who also have. Never once been mugged our had my house broken into!

The car thing, though, everyone in SF who street parks has had their window shattered and car scavenged...

3 out of ~7-8 people I know in the Mission (uncertainty is because of different definitions of "know" and "the Mission" - is Dolores Triangle part of the Mission? Bernal?) have gotten mugged. One was on 16th & Folsom, another around 24th or 25th & Mission walking home to Bernal Heights, a third around 22nd & Van Ness. This is also over a fairly long period of time - over 10 years or so, though the people in question largely don't live in the Mission anymore.

It seems like the East side of the Mission (Folsom & Van Ness) is significantly less safe than the west side (Valencia & Guerrero) - I'll walk down Valencia and feel perfectly safe, while I'm always looking around me between Mission & Folsom.

Not that there aren't plenty of signals of wealth, but yeah, it's far more infrequent to see flashy cars in the bay area than, say, los angeles. The thing about the 5 year old iPhone with a cracked screen is spot on. Most of the exec types I know from tech companies give off a "too busy to even bother replacing my busted old phone" vibe.

   "It's got a Palo Alto zip. That's important to some people."
It was important enough for the Four Seasons hotel by 101 when new that they initially lied on their website and letterhead that they were in Palo Alto, not East Palo Alto. EPA isn't even in the same county as PA.

>Yup, they do. Most of the Google engineers I know who live in the Mission have been mugged or had their car/house broken into at least once. You just learn to not carry a lot of money or expensive stuff with you.

It's incredible that this could ever be considered "normal". And all in the name of political correctness, no less.

I dont know where you are getting “political correctness “ from lol

I buy this argument, more or less.

Oakland is starting to become more attractive to people in SF precisely because of its diversity.

"Really starting to enjoy Oakland—have you been to Drake's?" is the new climbing, hiking, etc.

Oakland is a difficult town to characterize as it is much larger than SF. Parts of Oakland are dangerous. But other parts of Oakland are actually nicer and cleaner than SF. Rockridge, Oakland Hills are examples. House prices there are comparable to the peninsula.

I hate essentially all of San Francisco (so I am biased), but Adam’s Point, Rockridge, Jack London, and a few other neighborhoods are ok in Oakland.

Berkeley is the really underrated place, IMO. Somehow they went from being the city with the whacko leftist government as a negative outlier, to actually being relatively sane as a city in the area. Emeryville is the only really good government in the are, though.

I live in Oakland and I see more tech activity there every day. LaunchDarkly, VSCO, etc.

It's an interesting discussion because the city is huge and has many good and bad parts. West Oakland along Broadway is basically SF west. Go east of Lake Merritt and things get bad pretty quickly.

We (Fivetran) moved to Oakland over a year ago and it's been fantastic. Great office right next to BART, great restaurants, and it's a big recruiting advantage. SF sees itself as the center of the universe, but most of the people in the Bay area actually live over here.

Startups with office space have VC money, and can afford SF (in theory).

Tons of small shops, including consulting, freelancing, etc, in Oakland. Companies with people who need to go to SF on a semi-regular basis and who work best in person but don't need to be in SF.

In general, I have observed socially that East Bay people are willing to take BART to SF, but SF people mostly won't come to the East Bay for any reason.

Because it's rare, when an SF person does come out here to visit, I feel really loved. :)

Oakland is dangerous and gross compared to SF, and that's saying something as I found heroin needles next to a bench eating lunch in a beautiful office courtyard. I was accosted outside of the Oakland station in broad daylight and local police couldn't have cared less. "The violent crime rate in Oakland, California, is 1,421 per 100,000 residents. Forty-nine people were murdered in the city in 2016." https://www.cbsnews.com/pictures/the-most-dangerous-cities-i...

Please let's make smarter choices about where to move businesses to, given numerous options. Oakland definitely should not be one of them.

Wouldn’t moving some businesses there eventually lower the crime rates?

Violent crime is twice higher in Oakland, but property crime is about the same: 5,983 per 100,000 in Oakland [1]; 5,715 in SF [2] (6,168 according to [3]).

[1] https://www.areavibes.com/oakland-ca/crime/

[2] https://sfgov.org/scorecards/public-safety/violent-crime-rat...

[3] https://www.areavibes.com/san+francisco-ca/crime/

How would moving more businesses there lower the crime rate?

Poverty is always touted as the source of crime in communities, but businesses moving from SF to Oakland wouldn't be employing Joe/Jolene poor person. If anything, doing so would just rehash the standard complaint about gentrification and alienation of current residents.

didn't work at all for SF.

49 people seems dramatically low for Oakland. For context Chicago had 500 murders in 2016 or 2017 I believe. Although Chicago has a higher population but not 10x Oakland

Chicago is wayyyyyy bigger than Oakland.

population of Chicago: 2.716 million (2017) population of Oakland: 425,195 (2017)

It's cheaper but way more dangerous imo. That puts away a lot of people. Having said that it's changing and a lot of start ups do move there.

I feel like if a company decides it doesn't want to be in SF proper it's more worth it to go south rather than north.

Because Oakland is sketchy (way more so than gentrified parts of SF) - people want to live in SF, that's what the blog post alludes to also. Some parts look post-apocalyptic with dozens of tents in a single encampment. I bet you if city manages to clean up the homeless and finish the bike line across the Bay Bridge there will be an explosion of startups because it's a perfect place to be in otherwise.

There are huge portions of Berkeley and Oakland which are awesome and where houses are as expensive as the peninsula. Piedmont, Montclair, Rockridge, Claremont etc

I was in YC W16 batch.

Coming from abroad, part of the YC experience was, besides the program itself, renting a house in a residential area of Palo Alto where our team of 4 lived and worked. We didn’t have a car and the nearest bars & restaurants were at a 20 minutes bike ride. This set up felt like a retreat, and really pushed us to 100% focus on our startup. Basically the only things I did for 4 months is working, exercising in the surrounding parks and eating homemade food.

Had YC been located in SF it would have been a totally different experience. It’s a vibrant and exciting city specially for new comers.

However, I understand YC’s rationale: most local founders live in SF and the 1h commute is painful, the current building is not easily accessible, and doesn’t scale to bigger and bigger batches, etc.

I definitely understand the point on moving to SF. I was there for a YC hackathon few months ago, and their current office wasn't logistically easy to get to without a car/Uber. It wasn't close to a Caltrain station either, so it's a much bigger pain point for those commuting down from the city too.

This is really bittersweet news.

On the one hand, this is a huge loss for YC. Sam's energy and vision helped herald in YC v2.0. His leadership will be sorely missed.

On the other hand, I'll sleep better at night knowing he's dedicating himself fully to AI safety and the work of OpenAI. There's no one I'd rather have leading the effort to ensure AI development doesn't lead to a dark future.

Am I the only one that feels like the YC brand is being diluted by the increasing size of their batches? 200 companies feels like too many.

No, you are not alone. The current batch (W19) is disappointing so far: https://news.ycombinator.com/item?id=19333170

Altman (YC) leans into SF

Thiel leans away

Will be interesting to see the winning move

Thiel's problems weren't with SF the city, it was with the bay area's culture. As such, a move within the bay area isn't counter to Thiel's stance.

Thiel is tiiiny compared to YC.

LA isn't much better..

I wonder when YC is forking to other cities.

Staying in the Bay Area longer than other acceleration programs which decentralized (& often diluted their network and quality) earlier was wise. That said, from the outside it seems like sticking to the Bay Area is no longer optimal.

Startup School and YC China are mentioned but I think by now there must be enough YC alumni all over the world to facilitate local communities/office hours and investment activity (while keeping the quality).

For example I like how Lambda School is expanding globally much faster. I know the two are difficult to compare and it is not a straight forward decision to make.

Would love to learn if you have some thoughts on this.

The model for YC startups is that most need to raise outside capital after YC. Part of their value proposition is being able to create a market of follow-on investors so their startups don't get totally shafted in those deals. That requires being in areas where there are enough investors to create a liquid market in fundraising rounds after YC.

China is one such area, and places like NYC or Boston could also work (YC used to be in Boston before PG & JL had kids). Those don't help much with the cost-of-living issue, though.

It doesn't help with cost of living, but it does help open the door to a new pool of founders that can't/don't want to live in the Bay Area for any number of reasons.

If there are enough quality founders and enough quality investors, it seems reasonable that YC could provide value to a new region by filtering for quality and facilitating new connections within the network

It's fairly common for startups based outside of the bay to take a fundraising trip to SF when they're raising money. Even NYC-based startups do it.

I assume they’re testing the waters given that they’re doing interviews for the next class on the ground in NYC

Interviewing in NYC has much less to do with testing the waters for a new location than simplifying the application process for a greater number of good founders.


Really surprised by the consideration of moving to SF. For a long time now YC stated that the ability to focus down in the valley was key, though immediately founders moved to the city after. I knew of a few cases where founders were based in the city and would commute down on needed days.

I'm a bit surprised as this shift now as it was positioned as thought out before, but the reality is the center of new tech startups is now very much SF.

YC in SF gonna be like Joakim Noah in NYC :-D

My question, how many of those companies funded by YC have been caught doing things we don't like, such as dark patterns, data collection, and more? I can already think of two companies off the top of my head. It's pretty much a given fact on this planet you don't get huge valuations and money unless you're about to violate someone's privacy and sanctity.

"Speaking of San Francisco, we are considering moving YC to the city and are currently looking for space. The center of gravity for new startups has clearly shifted over the past five years, and although we love our space in Mountain View, we are rethinking whether the logistical tradeoff is worth it, especially given how difficult the commute has become. We also want to be closer to our Bay Area alumni, who disproportionately live and work in San Francisco."

Telecommuting works just fine for me when it comes to designing, prototyping, and testing actual physical products with companies around the world, from LEDs to solar panels to remotely-controlled hydroponics facilities - why can't you do the same with your primarily software and speaking stuff?

> Speaking of San Francisco, we are considering moving YC to the city and are currently looking for space.

I thought YC had an office in the city?

They do but it's just offices for partners and employees. Nowhere near large enough to hold dinners, office hours, etc.

What is "the current total market capitalization of YC companies" that were accepted into YC since Paul Graham and Jessica Livingston left YC (~February 2014)?

That would be an interesting metric that evaluates Sam Altman's performance at YC.

Market cap $150 billion is insane. Never thought it is that big.

Rather than monetary valuation, what do you think have been the most innovative and significant startups from YC?

It is weird that these "Updates from YC" do not list the name of the author of these updates...

I didn’t hear anything about the 10k grants to startup school attendees. Did this happen?

Yes, it did. AFAIK, they took in 15,000 companies, but gave the grant to about 100.

I got the grant :-)

Sam finally too far off the deep end


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Sam who?

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