The communication about his leaving though, was subpar (to use a polite wording) and seems just off. No strong appreciation/thanks for his time neither from YC's LPs nor Graham. Also his next challenge sounds not like something significant, rather like a rushed filler.
So, this feels like an overnight decision from whomever and doesn't leave a good taste on YC either. That's just not the way to say goodbye (after five years of being together).
However and again: this happens everyday but Sam should have had a communication pro on his side framing the situation properly.
Sam, I wish you all the best and hope to hear from you soon again!
I wouldn't be surprised if this indicates few, if any, changes other than formally removing the CEO title. In light of that, it's possible that they tried to downplay the public message because internally not much has changed and it truly isn't a big deal.
This is pure speculation, of course.
Given the murkiness of GP-level VC economics, it’s often tough to evaluate departing managers. Altman, by running YC more like a company or institution than traditional VC firm, offers a unique opportunity to examine that part of Silicon Valley.
I also think his tenure raises valid questions of what early-stage investing should look like and aspire to be. Operationally limited and difficult to access but de-centralised, i.e. friends & family and angels? Or involved and more accessible but centralised?
PG seemed like someone who didn't have all the answers, but was on a journey to find them and he was happy to take you with him.
By contrast, my first take on Sam was that he came across as more matter-of-fact and confident which was a slight turnoff for me. But, I think he was a fine choice to take the helm.
I do miss the cult-of-personality days :).
I think the cultural winds have changed anyway, post Jobs, as the wider perception of SV has gone from tech utopia to bro dystopia etc, where there's less collective naiveté and appetite for cult-worship (though still enough for a steady stream of people to throw their best years at someone else's get-rich gamble). PG probably left at the right time when he sensed the winds changing. I don't think the trajectory would have continued if he had stayed. This might all the wrong, of course.
the Series A program, which coaches seed-stage alums on how to nab follow-on funding
Pushing startups further into the hands of VCs who'll get rich whenever they're acquired or IPO.
YC China, a standalone program that will be run out of Beijing once it gets up and going
Lots of ethical questions about this that are just never answered. Is it okay to funnel capital into another country that is vastly different from the US in terms of politics, market, etc.?
“We’ll fund a lot of people doing a lot of things that sound really dumb, and most of the time they will be. And some of the time, it will seem like a bad idea and be jaw-droppingly brilliant. The very best startup ideas are at the intersection of the Venn diagram of, ‘sounds like a bad idea,’ ‘is in fact a good idea.'”
This particular quote from Altman just reminds me of PG's essay on why smart people have bad ideas: http://www.paulgraham.com/bronze.html
It just makes me see OpenAI as suspect now because they just opened a for-profit branch? And they are keeping some of their research hidden? I mean, where's the openness in that?
"We expected the most common proposal to be for multiplayer games. We were not far off: this was the second most common. The most common was some combination of a blog, a calendar, a dating site, and Friendster. Maybe there is some new killer app to be discovered here, but it seems perverse to go poking around in this fog when there are valuable, unsolved problems lying about in the open for anyone to see."
It sounds like a lot of people were trying to make Facebook in 2005.
Why would it not be? What are the ethical questions here?
The US is certainly not on some ethical highground such that considering funding companies in different countries is questionable.
Why not YC North Korea then?
I cannot believe in 2019, with the mass surveillance systems being built, you cannot see that there is are ethical questions to be asked.
(As I say, this merely comes from a position of curiosity. Sam seems to be a very capable guy and seems to have done a good job.)
"Honestly, Sam is, along with Steve Jobs, the founder I refer to most when I'm advising startups. On questions of design, I ask "What would Steve do?" but on questions of strategy or ambition I ask "What would Sama do?"
What I learned from meeting Sama is that the doctrine of the elect applies to startups. It applies way less than most people think: startup investing does not consist of trying to pick winners the way you might in a horse race. But there are a few people with such force of will that they're going to get whatever they want."
Im not saying its not true, just that their is other motive.
Seriously though, from the 5founders post mentioned above force of will and ambition seem to be why.
Do we live on the same planet? On my planet, my mom, my grandma and my dog would all have applied for the job.
The article makes this sound like these are unfavourable terms that come back to bite founders. But surely at the stage YC invests these are higher-risk startups – where 7% for 150k seems somewhat more fair.
In any case, I thought the whole thing with YC was that it invested at a stage when VC funding wasn't typically available for things that can't be bootstrapped – where 93% of something is a lot better than 100% of nothing.
If you want bootstrap money you are better off applying to local accelerators or incubators.
That said, with their signalling , 7% for $150k is a generous offer and not at all un-favourable.
I was part of the W18 batch and I can only think of a few of the 100+ companies who had revenue streams. Some had $1M+ Annual Re-occurring Revenue but the vast majority were under $5k Monthly Re-occurring Revenue most were at $0. It was fun to watch many of them really ratchet up their sales in the 3 months of the program. As I recall there were quite few in the bio/pharam/med space and they were mostly dependent upon grants at the time of joining YC and were still years away from true profitability.
My exposure and knowledge of all local accelerators/incubators is obviously limited. Yet I have not seen or head of any local accelerators or incubators that have anything that comes close to YC's demo day. It is a value unto its own and quite the spectacle.
Thinking about it the secret sauce is probably something like:
1) Apply every time
2) Never give up with the application (like I've done on Paypip)
3) Make your application super awesome and include every detail of your vision to get people excited about it.
Probably of those number three is the most important. More important than revenue/users.
I'm still amazed and upset when I see businesses do YC have ZERO users and then raise $4.7m with just a few pretty pictures on their website... What is it they are peddling to be able to get away with ignoring the most central tennent of YC?
That's what most VC's care too (apart from other VCs investing). All the vision, values bullshit is just fluff talk from them.
I think the issue might be the second part as, if I understand correctly, it means that YC is insulated against dilution without having to invest a penny more.
Considering how many startups apply I would say that more than enough people are happy with those terms, though.
So they would have to invest their pennies :)
No this is incorrect. They have the ability to top off their investment to maintain their stake. Implicitly this investment would be at lower valuation.
This is a standard procedure for most 'early stage' accelerators although yc is hardly early stage
Yeah. They have pro rata rights to follow in their agreement.
Happy to help. Be well!
I think if you apply standard CEO metrics to Altman he did pretty damn well. YC has grown tremendously under his tenure and its reputation is still great, its startups are still making money as investments, and organizations the world over are copying one facet or another of what YC does.
During his tenure, YC got much bigger, funds many more startups per year, has made initial seed funding much more available, and perhaps most importantly, planted in the heads of many more people that it is even possible to start a startup.
In a very real sense, the president owns much of the success and failure during their tenure. I'd say YC has become an increasing relevant player and that that relevance is overwhelmingly good for hackers.
Stage- and cycle-adjusted returns, average outcomes for founders and first employees and metrics of social impact pre, intra, and post tenure (internally and relative to industry). The neat thing, with YC as Altman’s built it, is we’re relatively able to compile such metrics. That’s tough with other VC firms.
It’s not clear that this is better from YC’s perspective (or more importantly, from their LP’s perspective)
The only metric that matters here is ROI.
Did YC increases its ROI and produce a higher percentage of successful startups during Sam Altman’s time? This is the question to answer, and the one upon which he shall be judged. Everything else is pure vanity.
You can't achieve the same effect for stocks unless you are investing millions in low cap stocks to prop up it's values and even then short sellers will squeeze you out.
And there it is, the omnipresent pushing of equality of outcome from TechCruch.
This is definitely wrong. Don't know how many companies had gone through YC by 2014, but my guess is it's nearly an order of magnitude larger than 67.
my bad...although that still reads a bit unclearly to me
"YC’s terms, which see it investing $150,000 in exchange for 7 percent of each company — a stake that it can maintain throughout the company’s life it it so chooses, per its pact with its founders."
If this is true, it can afford to do different things. Picking the wrong company does not matter. Picking the right company matters a lot. In other words, false negatives are much worse than false positives.
With that type of structure, the more they take on the better.
Sam's philosophy -- from his talks and such, I don't know him personally -- seems to align perfectly with this reward structure. He has grown it in the right direction.
Now, the hit rate will necessarily be lower, and that might hurt another organization but because of their unique structure, I think it helps YC.
https://news.ycombinator.com/item?id=21791 (note that it was 7% for $15K + a small amount per extra founder at the time; at that point, it was probably still a good deal for most teams that were applying)