[HN Gopher] Scaling YC
___________________________________________________________________
Scaling YC
Author : todsacerdoti
Score : 211 points
Date : 2021-03-23 14:04 UTC (8 hours ago)
(HTM) web link (blog.ycombinator.com)
(TXT) w3m dump (blog.ycombinator.com)
| zn44 wrote:
| Feels like fundamental problem with everything these days is the
| obsession with growth.
| ramraj07 wrote:
| I remember some message about a cofounder matching program, is
| that still under wraps?
| benatkin wrote:
| > This admissions team is solely focused on the all-important
| problem of sifting through the mountain of inbound applicants to
| determine who we should fund each batch and ensure we don't
| overlook incredible founders.
|
| I would rather they did overlook incredible founders. Getting a
| rejection shouldn't mean you were judged not to be ready. It was
| also nice when there could be only a couple Launch HN's a week,
| at most.
| dang wrote:
| > It was also nice when there could be only a couple Launch
| HN's a week, at most
|
| Ah, you've touched on something that I've been worrying about.
| Jared's made a great case
| (https://news.ycombinator.com/item?id=26557978) about how YC
| can grow the resources it provides to startups, but HN front
| page space is one resource with a hard limit. That means that
| as YC batches continue to expand, the percentage of YC startups
| who do a Launch HN is going to have to decrease.
|
| When are we going to hit that point? We've probably hit it
| already. During W21 we've been allowing two YC startups to
| launch on most days--but I think that's too much. My gut
| feeling is that 2 launches a day is ok during the run up to
| Demo Day (i.e. a week or two before), but not during the entire
| batch. The question is what the criteria should be for deciding
| which startups get a Launch HN. In the past it was simply
| "email the mods and they'll schedule you". Now that 150
| startups are doing that in a batch, we need something else to
| narrow it down.
| tptacek wrote:
| How are you scaling the editorial work you do for these? I
| saw the internal threads for Fly, and the work you put in was
| _significant_ , and you can see what looks like similar
| guidance in a lot of the good Launch posts. You have to be
| aware of how valuable that work is. Have you thought about
| building it out?
| cercatrova wrote:
| Looks like this perception that has recently come about is
| accurate then:
|
| > Has Y Combinator lost its way when the latest company is a Mac
| only widget? (March 11, 2021) [0]
|
| > Y Combinator has lost its soul: A YC founder's perspective (8
| months ago) [1]
|
| Seems like by scaling YC, the brand itself becomes diluted. I am
| not sure whether companies like Airbnb, Dropbox etc will still be
| able to come out of YC except by mere chance that is not greater
| than the probability of coming out of other VC funds. And then at
| that point, why choose YC anymore?
|
| [0] https://news.ycombinator.com/item?id=26435094
|
| [1] https://news.ycombinator.com/item?id=23916314
| rfrey wrote:
| From the sidelines it seems like "scaling YC" is similar to
| "scaling MIT/Harvard/Stanford degrees". Pretty good for the
| masses who can access it, but bad for alumni.
|
| The early value of YC as I recall (I got rejected from the first
| three batches IIRC) was that it pulled back the curtain on the VC
| ecosystem, and transferred some power from the VCs to fledgling
| entrepreneurs.
|
| Over time the value has shifted to 1) signalling credibility and
| 2) membership in a powerful network. That is very similar to
| something like and MBA from Harvard - you definitely learn tons,
| but the value of Harvard versus other mechanisms to learn the
| material.
| omgwtfbbq wrote:
| Seems it's the exact opposite scenario? The value of VC was
| close mentorship and network building and with a mass of
| companies this will likely be diluted. Companies already out of
| YC have presumably found product-market fit and secured funding
| so their YC cachet is already less important. If the actual
| value of YC is name brand recognition maybe that brings up an
| important question about its utility.
| gault8121 wrote:
| This implies that YC will continue to offer a remote option: "In
| a post-COVID world many of the changes we were forced to
| implement will live on just as several pre-pandemic experiences
| will return."
|
| Is that what this is saying? Or is YC saying that they are going
| back to on-site after the summer batch?
| dang wrote:
| I haven't heard anything internally one way or the other. The
| way I read that sentence is "all options are open and we don't
| know yet".
| zacharycohn wrote:
| Curious why YC hasn't added a third batch per year. Seems like a
| good way to scale faster along with increasing batch sizes.
| Eventually you could even have overlapping batches.
| snowmaker wrote:
| We've definitely talked about it. One of the downsides is that
| it's logistically quite complex to have overlapping batches.
| But it's still something we might do in the future.
| screye wrote:
| Is there a smaller scale YC out there ? It seems odd that YC
| stands alone in such a lucrative problem space.
|
| There has to be space for a YC like company which lends similar
| credentials, but provides more personalized support. (like YC
| when it first started)
| lacker wrote:
| _There has to be space for a YC like company which lends
| similar credentials, but provides more personalized support._
|
| I feel like this is backwards. Back in 2010 Paul Graham could
| advise every YC company himself. But if anything that was
| _less_ personalized. Back then YC didn 't have experts in
| biotechnology, in hardware, or in the Latin American market.
| Nowadays there are many more YC partners, with different areas
| of specialty, so you can get _more_ personalized support for
| your company.
| forgotmysn wrote:
| there are dozens of start-up accelerators, for every niche and
| size of start-up
| screye wrote:
| My question is more about if there are any that carry the
| cachet of Ycombinator.
| forgotmysn wrote:
| i dont think any of them will ever have the cachet that YC
| had, inclduing YC.
| jedberg wrote:
| Are there any smaller scale Harvards out there with the
| same cachet?
| screye wrote:
| Caltech is smaller and just as prestigious. Amherst
| College is really small for the reputation it carries. In
| India, the IITs are big, but IISc has a small intake +
| equivalent cachet. For design, you have RISD vs USC/CMU
| and Juilliard vs Berklee for performing arts.
|
| tl;dr - yes
| acheron wrote:
| So all those years of "the only place in the country that you can
| possibly start a company is in San Francisco" turned out to be
| nonsense?
| randall wrote:
| I'd argue this is a reductionist point of view.
|
| COVID forced so many things, including an acceleration of a
| trend toward distributed advice. It's entirely possible
| (probable?) SF was the best place to start a company. It
| probably still is 2-10x better than the next startup hub for a
| complete outsider to break into startups. However, what I think
| is changing is that for insiders, ie ex big tech employees, or
| former founders, SF / SFBA at large are no longer requisite.
| jedberg wrote:
| I would say that advice was applicable until March 2020.
|
| What will be interesting is if we move back towards in-person
| meetups or keep doing them online.
| PragmaticPulp wrote:
| As someone who lost out big on a previous startup situation
| because I wouldn't move to San Francisco, this stings a little.
| In retrospect, SF really would have been the best place at the
| time, but I don't believe it was the _only_ place to do a
| startup like it was portrayed.
|
| COVID really forced a shakeup of the status quo with remote
| work. We all saw that coming.
|
| What I didn't see coming was the massive amount of capital
| floating around in this COVID economy. Investors previously had
| the upper hand because they controlled a scarce resource, but
| now they're all fighting to get allocations in interesting
| startups. Investors have to branch out of the usual startup
| cities to find deals.
|
| Should be interesting for the startup world. I don't see SF
| declining as a startup hotspot, but at least it's no longer the
| only acceptable option.
| omgwtfbbq wrote:
| >What I didn't see coming was the massive amount of capital
| floating around in this COVID economy
|
| This is not a new phenomenon and certainly not caused by
| COVID. For years now you could raise a few million by having
| Stanford/MIT/Berkeley/etc somewhere on your resume and a half
| baked idea about AI or Blockchain
| fullstackwife wrote:
| Does it make sense to compare single year of 2020 with
| 2005-2019 ?
| hkmurakami wrote:
| The building part was and is possible anywhere.
|
| People's mindsets regarding investing and buying services from
| non consensus locations likely has dramatically changed.
| ma2rten wrote:
| They never even said that.
|
| 1. Any YC advice does not apply to all companies, but only to
| startups.
|
| 2. YC has funded companies in many places.
|
| 3. YC is not in SF.
|
| 4. This announcement doesn't say anything about location.
| fastball wrote:
| Re: point 1, what is a startup if not a company you are
| starting...
| cs-szazz wrote:
| I generally subscribe to PG's definition of a startup,
| which is a company designed to grow fast:
| http://www.paulgraham.com/growth.html
| btilly wrote:
| I prefer Steve Blank's, an organization in search of a
| repeatable and scalable business model. See
| https://steveblank.com/2010/01/25/whats-a-startup-first-
| prin... for more.
|
| The two definitions are equivalent though.
| boatsie wrote:
| YC always required teams to move to the bay to maximize their
| success chances. But if almost everyone in tech is remote, then
| they aren't losing ground compared to other companies working
| remote. It's similar to saying "you have to be on site if you
| want to get promoted faster" when almost everyone is on site
| and you are the only remote person. When everyone is remote,
| the equation changes.
| skeeter2020 wrote:
| >> YC always required teams to move to the bay to maximize
| their success chances.
|
| I believe it is primarily to maximize your immersion and
| focus on your startup. If this is true remote will definitely
| not work as well.
|
| >> But if almost everyone in tech is remote.
|
| This is not true now, let alone in the next 6-12 months.
| i_have_an_idea wrote:
| conveyor belt accelerator
| throw_away_2x8 wrote:
| More companies means less attention for the 7% you are giving
| away. Why has the $125k not been raised to $200k?
|
| In this market it is easier to raise money. $125k might have been
| ok 5 years ago but is that true now?
|
| If you are an established company it would be logical to see what
| the market will give you first.
| utdiscant wrote:
| As a YC alumni, the money has been the least important part of
| the deal. Would do it again without the money.
| lacker wrote:
| _More companies means less attention for the 7% you are giving
| away._
|
| There are also more YC advisors. When I first went through YC
| in 2010, it was Paul Graham giving advice to everyone. Nowadays
| it's more like each company has a few partners that are focused
| on their industry, along with some generic advice from the
| weekly events. I actually think each startup gets more
| attention now, since there are more people giving out
| attention.
|
| Maybe in Plato's Academy every student could be taught by Plato
| himself. But a modern college gives you a much better education
| by hiring many educators with different areas of specialty.
| Things have to change as they scale, but if YC scales right,
| things can actually get better.
| [deleted]
| 11thEarlOfMar wrote:
| I'd be very interested in seeing valuation performance by batch.
| How did the first batch do in 5, 10, 15 years?
|
| Then, how did successive batches do over time?
|
| Just curious what the trade off is (if any) of quantity over
| quality.
| lhnz wrote:
| How will the prestige scale?
| cj wrote:
| Perhaps it doesn't need to so long as the
| quantity/quality/availability of VCs funding YC companies
| scales with the batch size.
| lhnz wrote:
| I guess a few break-out companies might be the rising tide
| that lifts all boats.
| jonwachob91 wrote:
| Why should prestige matter? Too many Corporate Ladder Climbers
| have used YC as a resume point to get that next promotion at a
| corporation b/c they view it as more prestigious than things
| like a graduate degree. That's not a positive for YC, it's a
| negative. Corporate Ladder Climbers block out those that
| actually want to do a startup.
|
| As long as the quality of the program remains high, and that is
| entirely dependent on the quality of the partners, then the
| program can scale.
| throw_away_2x8 wrote:
| Seen people list on linkedin, twitter, and others places the
| batch they are in without listing the company it was with.
| Who cares what we tried to build look I was in Ycombinator!
|
| It is weird to see.
| parhamn wrote:
| I wonder what this will mean for the 7% they take.
|
| Quite a few people reduce that 7% to the price of the stage on
| demo day which I'm sure is less valuable if shared with many more
| people. I'm sure YC is happy with the same size chunk of more
| companies!
|
| For the founders, is the YC network going to stay worth 7% of
| every company that joins it? Will founders get as much value from
| the network as before with much less spotlight?
| vram22 wrote:
| >For the founders, is the YC network going to stay worth 7% of
| every company that joins it?
|
| That 7% is not at all a single number. Effectively, it is 7% of
| the valuation of each company in YC, which can vary from very
| low, zero or maybe even negative, to Dropbox-like highs.
| hctaw wrote:
| GP is talking about the equity cost to join the YC network,
| not how much money YC is able to get for that equity way down
| the line.
|
| The question is whether increased participation will dilute
| the pool of VCs who come to demo day with their checkbooks,
| or if the network effects will scale.
|
| I don't think anyone knows the answer to that.
| vram22 wrote:
| Yes, I was quite aware of, and was referring to, that (the
| first clause of your first sentence), but also something
| more. Maybe I did not make it clear. Will try to restate it
| better tomorrow.
| lacker wrote:
| If the value of YC goes down, it should be clear soon, because
| the valuation of YC startups on demo day will go down. That
| hasn't been the case at all though - since 2010 when I first
| went through YC the typical valuations have pretty clearly been
| trending up.
|
| I hope YC can keep scaling, because the number of startups is
| not fixed. I would like to live in a world where a startup is
| going public every day, where YC funds tens of thousands of
| startups every year. Maybe we can get there.
| parhamn wrote:
| That would definitely be a misleading measure of this
| change's success. Valuations have been rising steadily across
| VC, significantly so. I'm sure it would at YC regardless of
| this change as well. Founders will be speaking about how
| useful it is soon and we'll most likely trust them. Hope they
| keep quality because it is awesome to have it be more
| inclusive!
| ericjang wrote:
| I see this as a natural progression of VC industry - the game is
| not about who can predict the winners and losers, but rather
| about capturing as much early stage equity on new business
| opportunities.
|
| In this sense, YC acts as an index fund on startups.
| Traditionally the IPO process weeds out the fraudulent
| businesses, and YC's application process is supposed to function
| the same way (with obviously less diligence) so that the
| efficiency of passive index returns aren't exploited.
|
| In the limit, YC would be essentially investing in the equity of
| the totality of the younger technology workforce (who have
| majority of their earnings and talent and capital lying in the
| future). This is a good investment.
|
| Where it differs slightly from a "indexing" model is that YC is
| allowed to encourage portfolio companies to buy and sell from
| each other, much like how Berkshire Hathaway does the same for
| its portfolio companies.
| jacquesm wrote:
| > Traditionally the IPO process weeds out the fraudulent
| businesses, and YC's application process is supposed to
| function the same way (with obviously less diligence)
|
| I wouldn't be so sure about that last part. YC has a small army
| of alumni and they're pretty clever, I would happily bet that
| their diligence capabilities _far_ outshine anything applied to
| businesses during the IPO phase in all but the financial
| department.
| igammarays wrote:
| I've been rejected from YC several times. Now, I actually have a
| profitable company with real growth, and this time I've decided
| NOT to apply.
|
| Because I don't need it. Unless you're in an industry which is
| fundamentally capital intensive, or you absolutely need to hire
| staff very early on, capital limitations are actually a good
| thing. My first startup (which failed) was funded, but now I find
| I make better decisions on a shoestring budget. You really are
| forced to be creative and cut the fat to make things work. It's
| also a natural inhibitor to growing too fast. I find my thinking
| is clearer when I know I cannot spend more than I earn.
|
| True "networking" is done on the basis of trust, merit, and
| warmth of the intro, not on having more people in your batch to
| spam. This article gave the example of finding a contact at Apple
| to get something done. But the larger the batch size, the less
| warm the intro you can get/offer. Why should I provide an intro
| to a random other YC member whom I have no relationship with? At
| some point it becomes about as valuable as LinkedIn.
|
| If I actually felt that getting into YC would help me grow faster
| or better, or I really needed access to capital, then I would do
| it. But so far I feel like it would just be a distraction.
| jacquesm wrote:
| > If I actually felt that getting into YC would help me grow
| faster or better, or I really needed access to capital, then I
| would do it.
|
| Unless of course they rejected you again.
| vs2 wrote:
| I came for the TLDR!
| forgotmysn wrote:
| sounds like once again, YC is choosing to dilute the quality of
| their offering in order to capture more of the VC pie. I suppose
| this inevitable for any entity in a competitive space, but it's
| still disappointing to see.
|
| nevertheless, everytime YC does this, it makes every other
| accelerator program out there more valuable comparatively.
| ramraj07 wrote:
| Crazy to think it's dilution now that more atypical companies
| are funded? I also have genuine concerns with the quality of
| evaluation in bio fields but when we make criticism that can
| also be explained by bias then we critics have a burden to
| clarify if we gave enough thought to that possibility that we
| are just offended by the new.
| forgotmysn wrote:
| i dont think you need to worry about bias in that case. there
| are definitely more competitive accelerators out there for
| bio and biotech companies
| dyeje wrote:
| This seems to be good for YC, bad for companies in YC. The value
| of YC, as far as I can tell, has been access to great advisors
| and a cohort of folks going through the same thing as you (maybe
| some other fringe benefits as well like discounts for services).
| As you scale up, both those things seem like they will be watered
| down (the quality of advisors and peers goes down as the quantity
| increases). This reads to me like YC has decided that a spray and
| pray approach is best.
| [deleted]
| snowmaker wrote:
| (I work at YC)
|
| This is most people's first reaction - they assume that if YC
| is getting bigger, some limited resource must be getting
| diluted. But that's actually not the case: there is no limited
| resource that isn't being increased. And it also misses an
| important trend that works in the opposite direction: the
| network effects that make YC _more valuable_ for companies when
| the batch is larger.
|
| These network effects aren't obvious to outside observers
| (actually some of them weren't obvious to us at first!), so
| here are some of them.
|
| 1) The larger the batch is, the more companies there are that
| are _similar to you_. The author of the parent comment
| described this as a "cohort of folks going through the same
| thing as you".
|
| Suppose you're building a fintech company in India. In an
| earlier batch where we only had 75 companies, you might well
| have been the only India fintech company in the batch. Now,
| there are probably 4 other companies in the batch that are also
| India/fintech. Those companies are likely to be the ones that
| can be most helpful to you.
|
| 2) Related to (1), having more scale in each vertical has
| allowed us to specialize our program and deliver more specific
| advice for different kinds of companies.
|
| We now have specialized advice, content, and events for
| devtools, fintech, saas, consumer, enterprise, bio/healthcare,
| hard tech, & hardware companies. Much like AWS's large scale
| allows it to offer more and more specialized products, our
| larger scale allows us to offer more specialized programming.
|
| 3) For a large percentage of the YC batch, other YC startups
| and YC founders make up an important customer segment. The more
| YC companies there are, the more potential customers they can
| get from this community.
|
| Related to that, the YC network is also a powerful tool for
| getting introductions to non-YC companies. Suppose you want an
| introduction to a key person at Apple. Apple isn't a YC
| company, but the YC network of founders who used to or
| currently work at Apple will be very helpful for reaching the
| right person. And that gets better when we have more founders.
|
| 4) The YC companies effectively collectively bargain for a
| large variety of things: discounts on services (worth over $1M
| / company now), press exposure, investor attention, etc. The
| more companies in the pool, the stronger our bargaining
| position becomes.
|
| 5) The more highly successful companies YC has, the more brand
| recognition YC's name has. That's obviously good for YC, but it
| is also good for YC companies. One of the hurdles new companies
| have is getting other people and particularly big companies to
| take them seriously. The YC brand name is now pretty helpful
| for accomplishing that in the tech world; we're still getting
| to the point where it works in every other industry and that
| requires more scale.
|
| 6) With more YC companies, we're now able to run
| https://www.workatastartup.com/ to help YC companies hire. From
| the standpoint of someone who is looking for a job at a
| startup, the more (successful) startups there are on Work at a
| Startup, the more useful the site is.
|
| 7) Most of the advisors who work with companies (we call them
| "group partners") are YC alumni who started a successful
| company. Because of this, when we fund more successful
| companies, it expands the pool of potential great group
| partners we can hire. To scale to the next level, we need more
| group partners (a.k.a more expert advisors). The trick of
| hiring our own alumni allows this seemingly limited resource to
| actually scale more-or-less proportionally.
|
| 8) As YC becomes better known, more great founders become
| interested in applying. YC is well known in silicon valley but
| still has a long way to go to be well known everywhere in the
| world. We've consistently noticed a trend where after we fund
| our first company in a new country, we get a surge of
| applications from that country. When we have more companies in
| each country, we make YC more accessible and useful to new
| companies in that country as well.
|
| Interestingly, some of these network effects have just become
| apparent to us in the past couple of years - we had to reach a
| certain scale to even see them. This makes me think there will
| probably be other network effects that kick in as we reach even
| larger numbers.
| ipaddr wrote:
| "The more highly successful companies YC has, the more brand
| recognition"
|
| The more unsuccessful companies YC has has the opposite
| effect and reduces YC's status as a kingmaker.
|
| The bigger the batches the less close the relationships.
| dsr_ wrote:
| That depends on how fast they fail. A successful company
| should be around for years and will have lots of money to
| publicize itself; how long does it take the typical
| "failed" YC startup to fold?
| utdiscant wrote:
| Love this comment - really insightful. We did YC ourselves,
| and I guess there are two points here where I think YC can
| help improve things further.
|
| 1) Regarding getting other YC companies as your customers, I
| don't think there is a really great mechanism for that yet.
| With a network of thousands of founders, it is hard to pitch
| your company to the YC network without it becoming spam.
|
| 2) I agree that we learned most from companies relatively
| similar to ours. But it is also clear now that there is a lot
| of direct competitors within the YC network. I don't see a
| way to avoid that, but it feels important to think about at
| this scale.
|
| Thanks for running YC, and thanks for scaling it!
| breck wrote:
| > there is a lot of direct competitors within the YC
| network
|
| I would never view other small startups in the space as
| competitors. I would view them as 1) people that will help
| lower our r&d costs b/c you can watch them 2) potential
| companies that could acquire you if they turn out to be
| executing better 3) potential companies that you could
| acquire if you turn out to be executing better.
| mnd999 wrote:
| True, if others think what you're doing is a good idea
| and the want to do it too, it's probably a good idea.
| skeeter2020 wrote:
| >> the network effects that make YC more valuable for
| companies when the batch is larger.
|
| This is only part of the story though. THe size of the
| network doesn't mean nearly as much as the quality of the
| connection; i.e. edges over nodes.
|
| Every other point is true to some extent but addresses the
| accidental vs. essential aspects of a startup. Collective
| bargaining for services? hiring pool? potential customers?
| These all seem like nice-to-haves vs. must-haves.
|
| Call me jaded but I see a VC machine that hires it's friends,
| associates and good-but-not-great investments, and then needs
| to fuel the machine with startups at scale. This could work
| but I can't see how it's better than smaller batches for
| anyone but YC.
| filmgirlcw wrote:
| I think this is totally valid and for YC, scaling has obvious
| advantages (more chances of finding the next hit).
|
| For founders, the reality is that the scaling of YC, fairly
| or not, does change the perception of being admitted into YC,
| in that having a larger class size gives off the impression
| (whether true or not), that the program is no longer as
| highly-selective/elite. For what it's worth, I _don't_ think
| YC is at that stage and I don't think the expansion dilutes
| the YC name (this isn't like TEDx). There is a big gulf
| between admitting everyone and expanding class size the way
| they have been expanded now. Still, as I said, an increased
| class size can absolutely change the perception, amongst
| applicants, alumni, or outsiders, that the program is no
| longer as "elite."
|
| This isn't unique to YC. Elite colleges and universities are
| often artificially limited in their admission figures
| (Harvard College has about 6600 undergrads whereas Harvard
| University has like 14,000 graduate students across the
| different schools and programs) and while some have attempted
| scale through either extension schools or online programs,
| there is a not insignificant social construct surrounding the
| idea of keeping something deemed "elite," selective.
|
| So everything you write is true. But it's also true that the
| perception of scaling can be negative in some ways, even if
| the program isn't actually diluted.
| dang wrote:
| When you put it that way, to me it sounds like a great
| thing. YC has always sought to filter out the resume-
| padding sort of founder who sees YC as a step up the status
| ladder. They're not up for the gruelling slog of really
| building a startup, and tend to bail not long after the
| batch since they've already gotten what they wanted out of
| it.
|
| People should apply to YC because they believe it would
| them them build a successful startup, not because they want
| prestige. If expanding YC leads to a decrease in prestige
| (alongside an increase in actual value to startups, as
| Jared explained above), that's a win for everybody: more
| business-builders get access to YC, YC gets to fund more
| successful companies, and status-seekers can find something
| else that will look better on their resume.
|
| In this sense YC is very different from the elite colleges
| whose brand depends on their exclusiveness. The upper bound
| on YC's expansion is how much startup opportunity exists in
| the world.
| justinboogaard wrote:
| I think status has as much value as what someone is
| willing to give you for it. If the YC "Badge" is a
| currency that opens doors based on its perceived status,
| that feels like a helpful bonus to founders. I agree that
| if someone is in YC for status, that trait alone is
| likely not sufficient to help them create a successful
| company. However if someone is able to get a meeting with
| a VC because of their enrollment in the program (or a PM
| with a larger company to discuss a partnership, etc) that
| seems helpful and worth preserving.
|
| That being said, it's not clear to me that YC is lowering
| it's acceptance rate. By accepting companies from all
| around the world, it's pool of potential applications
| exponentially increases. If YC accepts 100 more companies
| from 10,000 more applicants that still feels like a
| pretty exclusive acceptance rate.
|
| What could be going on is that people are comparing the
| batch sizes now to the batch sizes in the past and
| assuming the same rate of company applications. I'm not
| sure if YC publishes their application data, but without
| it I think it's tough to say based on batch size alone
| whether or not YC is statistically becoming easier to get
| into.
| emmett wrote:
| It's obvious that there is some upper limit of companies per
| batch, past which it will be impossible for YC to source
| quality companies and advisors for batches. But why should we
| believe we've hit the point where the quality of advisors and
| peers decline as YC gets bigger? There are a lot more than 300
| companies started per year...YC still only makes up a small
| fraction of the total. (And anecdotally just looking at this
| batch...I wouldn't care to bet that the quality of peers has
| decreased!)
| hi wrote:
| > But why should we believe we've hit the point where the
| quality of advisors and peers decline as YC gets bigger?
|
| We shouldn't, it's the exact opposite. As the network grows,
| the ecosystem of high quality advisors goes up, not just
| because better people join, but people are learning to become
| better advisors through being a part of the network. Not only
| that, but as the network grows so does the YC economy of
| potential partners. Instead of YC companies purchasing goods
| and services from outside the network (and thus bleeding
| valuation of the network) keeping money flowing in the YC
| economy only accelerates the value of the entire network. As
| this monetary flow through the network grows and accelerates
| so does the quality of the people managing the companies in
| the networks and thus potential future advisors to new
| companies joining the network.
| robotresearcher wrote:
| ... until every person in the world is simultaneously an
| advisor and a peer and total value of being in the network
| is maximized for each individual.
|
| Really?
| nend wrote:
| You write like these are guaranteed outcomes, but
| organizations lose their ability to deliver value as they
| grow all the time, which is where startups come in...
|
| Granted YC is probably more aware of these downfalls than
| most companies, and are trying to mitigate them, but to act
| like YC can only get better as it expands is really short
| sighted.
|
| I'm sure every person on this board can think of dozens of
| companies that failed because they got too big and could no
| longer deliver value as well as smaller companies. The tech
| space is littered with them every year.
| vram22 wrote:
| >but organizations lose their ability to deliver value as
| they grow all the time, which is where startups come
| in...
|
| >I'm sure every person on this board can think of dozens
| of companies that failed because they got too big and
| could no longer deliver value as well as smaller
| companies. The tech space is littered with them every
| year.
|
| Yes to both points. And so is the business (management)
| consulting and literature space littered with stuff,
| a.k.a. work and talks and books and confs about all that.
| Throwing out a few words that give a flavor:
|
| Disruption (ha!), Clayton Christensen, Tom Peters,
| reengineering, innovator's dilemma, the HP way, Lou
| Gerstner, Teaching Elephants to Dance, Jack Welch, the HP
| Way, the IBM Way, the Toyota Way, Made in America, Made
| in Japan, etc. Tip of the iceberg.
| Zababa wrote:
| I've heard a few times that recent YC companies often find a
| lot of customers in previous YC companies. I have no idea how
| true it is, but if it's a substantial effect, increasing batch
| size could increase this as well.
| notyourday wrote:
| It is just revenue kiting. Company A enters $20M deal with
| company B which enter a $19.975M deal with company C which
| enters a $19.970M deal with company A.
|
| Ma, look at our revenue! Lets do another raise! Investors
| will eat it up!
| ppezaris wrote:
| It depends quite a bit on what type of product or service you
| are selling. For us, we expected to find customers in our
| batch, but when we did not we learned a valuable lesson: that
| it was larger companies that valued our offering more.
| frakkingcylons wrote:
| Indeed and that was mentioned explicitly in the article as a
| benefit of having larger batches.
| Judgmentality wrote:
| That sounds like a ponzi scheme.
| cheriot wrote:
| It sounds like every B2B company. It's only a Ponzi scheme
| if YC companies are all B2B and primarily sell to each
| other.
| patentatt wrote:
| It's like the banner ad economy of the late 90's. Every
| startup making money by selling banner ads to other startups.
| What could go wrong?
| rkagerer wrote:
| I'd love to hear from more companies on their take on this
| (especially any "repeat founders" who can contrast their recent
| experience to an earlier one).
| [deleted]
| smallnamespace wrote:
| So one mental model of what YC does is that it has social
| capital (e.g. prestige, connections). It gives some of that to
| its portfolio companies so they'll be more successful and so YC
| gets better yields.
|
| If social capital is mostly fixed, then this is a zero-sum
| situation and increasing batch sizes is bad for each company,
| even if it's better for YC as a whole.
|
| Another mental model is that social capital is generated by YC
| companies themselves, as they e.g. network with one another,
| trade advice and other resources, and otherwise collectively
| learn how to build better startups.
|
| I'm not sure which mental model is correct, but if you think
| the value of the YC ecosystem scales at Th(N2), then a bigger
| batch can better for each YC company, even if they're get less
| 'direct' support from YC itself.
| afarrell wrote:
| Social Capital is not fixed, but Dunbar's number does provide
| an upper bound to it.
| btilly wrote:
| _I 'm not sure which mental model is correct, but if you
| think the value of the YC ecosystem scales at Th(N2)..._
|
| The correct scaling for social networks is almost always n
| log(n). See http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf
| for a collection of arguments using various measures that all
| conclude that that is the right scaling laws.
| duxup wrote:
| If there are more companies wouldn't the quality of those
| companies get watered down and so would the value of
| networking?
|
| Even just 'networking' doesn't always have value.
| [deleted]
| vram22 wrote:
| >This seems to be good for YC, bad for companies in YC.
|
| If it is bad for those companies, isn't it bad for YC too?
| Those companies are how YC makes its money, right?
| tshaddox wrote:
| It seems unrealistic to suppose that the incentives of YC and
| YC companies are 100% aligned.
| vram22 wrote:
| They don't have to be 100%, and I did not say so. But there
| has to be some alignment, say 60 to 80%, or the whole YC
| biz model falls apart, for obvious reasons. Good sales and
| profits, or being acquired for a good price, or a good IPO,
| etc.
| jedberg wrote:
| I think YC has the companies best interests in mind
| because that's just who they are how they were built.
|
| But I don't think there has to be much alignment at all.
| One unicorn every couple of years is all that YC needs to
| "make their fund" since they don't have LPs to satisfy.
| And one every few years will also keep the applicants
| coming.
| skeeter2020 wrote:
| >> I think YC has the companies best interests in mind
| because that's just who they are how they were built.
|
| Serious question: "Who" exactly are they? I could have
| told you 10 or even 5 years ago, but now? There are a lot
| more hands in the cookie jar.
| jedberg wrote:
| There really aren't all that many more hands in the
| cookie jar. You can see them all here:
| https://www.ycombinator.com/people/
|
| All the group partners and management are people who have
| been with YC for many many years.
| vram22 wrote:
| On a rough count, ~60 people, not including founders.
| rorykoehler wrote:
| Spray and pray has another name... venture capital. I think a
| lot of founders are waking up to the misalignment of interests
| between founders (growing a sustainable business) and VCs
| (dilution)
| vram22 wrote:
| That has been happening for quite a while now, and has even
| been a topic on HN for some years now. PG started YC partly
| because of that, in fact. See his early essays, including one
| called something like "A theory of VC suckage". Edit: Found
| it:
|
| A Unified Theory of VC Suckage
|
| March 2005
|
| http://www.paulgraham.com/venturecapital.html
|
| Got to love the title, like the grand unified theory of
| everything that is physics's holy grail.
| rorykoehler wrote:
| It's interesting that natural organisational entropy made
| them become who they replaced. Arguably it's just the
| nature of capital itself.
| vram22 wrote:
| Yes. Although I would label it a bit differently, not
| plain "capital": human nature and group / organizational
| dynamics. That's the reason why many smart companies try
| to stay small, the reason for spinoffs, skunkworks, for
| creative destruction or reinvention a la HP (see the HP
| Way and other articles about them - of the time when they
| were in their prime decades ago, not now or recent). And
| that is also the point of my comment in this other
| subthread, about the IBM, HP and Toyota Ways, Sam Walton
| / Walmart, Tom Peters, etc.:
|
| https://news.ycombinator.com/item?id=26558308
| rorykoehler wrote:
| Capital creates a power dynamic when it starts to
| consolidate. The newcomers then change from innovation to
| defence as to maintain their wealth.
| vram22 wrote:
| Yes, but I was saying earlier that I didn't prefer the
| use of the word "capital", because it is abstract - a
| thing (money), not an actor. And I mentioned human nature
| i.e. people, who are real actors. Your use of the word
| "newcomers" (who are people, not money) says the same.
| Maybe just a matter of wording or interpretation.
| dang wrote:
| That doesn't match what YC is doing at all. YC is trying
| to be a force multiplier to literally anyone in the world
| with an opportunity to create a great startup. Part of
| that involves expanding as rapidly as is feasible without
| breaking the system or diluting the effect. It is about
| creating wealth, not defending or maintaining it.
| vram22 wrote:
| >misalignment of interests between founders (growing a
| sustainable business) and VCs (dilution)
|
| Not all foundrrs are interested in growing a successful
| business. In fact, what with all the brainwashing that has
| been going on for years by VCs ("go big or go home",
| "10-bagger _" - old, now it is "unicorn", or is there
| another more current mot du jour, ha ha?, "lifestyle
| business" passive-aggressive shaming, etc.), it's a wonder
| that anyone exposed to that shit still has the balls for
| doing a traditional business that relies on, you know, just
| honest sales, customers and profits. But there are still many
| who do (have the balls for it).
|
| _Who do you think bags the 10(x their investment)? VCs, not
| founders or emps.
| european321 wrote:
| Looking outside, YC has also been a key indicator that a startup
| might have higher chance to succeed than a typical startup. When
| scaling to hundreds/thousands of companies per batch, I feel like
| that indicator will no longer be as valid.
| ramraj07 wrote:
| Why not? Looks like the majority of the companies are
| international now so it makes perfect sense that the quality of
| the batch is still quite good, unless you think only SV folks
| are the smart good ones or something. It's amazing to know that
| companies in Asia and Africa can essentially get the same
| footing as someone in SF.
| forgotmysn wrote:
| very much so, but that trend has been on-going for years now
| nmfisher wrote:
| > YC has also been a key indicator that a startup might have
| higher chance to succeed than a typical startup.
|
| Is that empirically true?
| goatherders wrote:
| I don't accept this premise. What data are you relying on to
| suggest YC participation is an indicator, much less a key
| indicator, of a higher chance of success than a "typical"
| startup?
| jpadkins wrote:
| (not OP) % of companies that reach $1/10/50M ARR?
| snowmaker wrote:
| (I work at YC)
|
| I'm glad you brought this up!
|
| It would be very easy for us to expand the YC batch by being
| less selective in the companies we accept. However, we wouldn't
| knowingly do this because it would run directly against our own
| financial incentives, and also degrade the quality of the
| experience for founders.
|
| The hard thing is to increase the batch size while also keeping
| the quality of companies the same or better. To do that, we
| need to attract more great applications every batch. That's
| what we need to do.
|
| For a lot of people, it's hard to imagine how that would be
| possible, but actually YC still funds only a modest percentage
| of all the successful companies started every year, so there is
| a lot of room to grow.
|
| It seems that we're doing it. By every metric we can measure,
| the YC companies we fund today seem _more_ successful on
| average than in previous years. They 're more likely to raise a
| Series A, more likely to make $1M / year in revenue, more
| likely to be worth $1B, etc.
|
| Many people outside YC for years have thought that because we
| are growing, we must be becoming less selective. But actually
| within YC, we're more concerned about the opposite: that we
| risk becoming too selective and need to constantly fight
| against that.
| pyb wrote:
| On the other hand, the companies YC are funding today seem
| less impactful than the Reddits and Airbnbs of the past. This
| is harder to measure, but that's the impression.
| adav wrote:
| Aren't the cited measures all lagging indicators? It might be
| that the batch size has now increased past the sweet spot but
| the impact won't show up until they look to raise Series A.
| reducesuffering wrote:
| > The hard thing is to increase the batch size while also
| keeping the quality of companies the same or better. To do
| that, we need to attract more great applications every batch.
| That's what we need to do.
|
| You need to illustrate the path from tech employee -> founder
| for more people in some sort of go to resource. Why should an
| intelligent, capable person drop their $300k TC career when
| it looks like their chances of failing are 90%, and an
| opportunity cost of at least $1M, even if one gets into YC?
| What is one in for: hours, health insurance, managing
| employees, difficulty competing against entrenched companies,
| etc?
|
| Unless you want to specifically filter out all candidates
| with a hint of risk-averseness or something else not
| explicit...
| toomuchtodo wrote:
| TLDR Going virtual has allowed YC to scale beyond physical
| limitations and fund more companies than ever before without
| sacrificing execution and value delivery.
| neilsense wrote:
| I mean, they don't know yet if they've sacrificed execution and
| value delivery. Time will tell.
| [deleted]
| [deleted]
| hanniabu wrote:
| Yes but admitting this would sacrifice their article and
| ability to look cool and progressive for supporting remote
| work only after being forced to.
| neilsense wrote:
| Which is the same generally for the Bay Area VC circuit.
|
| Same VCs that a year ago "didn't feel like [they] could
| provide value" to remote companies, are suddenly flooding
| your inbox saying they only believe in remote companies
| going forward...
| gailees wrote:
| They said the same thing to me about hackathons when we did 300,
| then 500, then 1000, then 2000. And I still think hackathons
| could scale more and benefit from doing so.
|
| But it seems as if no one is bold enough to do so. YC is.
|
| This quote from Sama echoes through my head constantly: "The
| central learning of my career so far has been that you can and
| should scale up things that are working. The power of scale, and
| the emergent behavior that sometimes comes from it, is
| tremendous. I think about the potential energy of future scale
| for every investment I make. Most people seem terrible at this,
| so it's another bug you can exploit."
| loceng wrote:
| The issue is a lack of leadership who're given adequate
| resources to reach a self-sustaining point - especially
| difficult as you're competing with relatively dumb money of the
| current status quo VC-finance industrial complex who're looking
| to maximize returns in 10 year periods, to pump and dump while
| putting as much pressure - extracting as much value as possible
| - from society.
|
| If you extend the time horizon to 20-50 years with the right
| system, policy, and protocols in place to allow an exponential
| growth path - then you'll be "laughing to the bank;" Elon Musk
| is on this path because he understands the holistic,
| foundational principles, and the only limitation of how much
| he'll guide or lead success is his organizational and emotional
| regulation skills (stress management etc).
|
| YC sees the path and has been working on organizational
| structures, created a great funnel for themselves. Elon
| similarly built up his nest egg through the work he's done and
| subsequent sales and paydays he's had - to then invest the
| substantial necessary investments into Tesla and SpaceX. It's
| really incredible to study to find the insights and nuances of
| how these seeds form and out of all the seeming chaos and
| pressures they can sprout, start blooming. The odds seem
| impossible, they however make it through the rigidity and
| conservation of the status quo - creativity seeming to lead the
| way for progress.
|
| Great quote, thanks for sharing.
| ralusek wrote:
| A difference in magnitude is a difference in kind.
|
| 2-5 people is a conversation
|
| 5-15 is a dinner party
|
| 15 - 200 is a party
|
| 200+ is an event
|
| You aren't guaranteed to be able to scale things and maintain
| fundamental dynamics.
| Areibman wrote:
| In my experience, hackathons don't scale. The value is lost
| when the resources are spread too thinly across hundreds or
| thousands of attendees. Mentors can't teach, and hackers can't
| get feedback. It becomes impossible for meaningful discussions
| to arise, and winners start optimizing for all the wrong things
| (i.e. fancy slideshows, needlessly complex designs, worthless
| ideas) because nobody ends up solving real problems. Worse yet,
| the hosts celebrate all the wrong metrics such as attendee
| count and lines of code written, as if those mean anything.
|
| As a prospective YC applicant, I see every batch size increase
| as a dilution to the value of the incubator. Most of YC's
| content is already free online; the key value is the
| personalized insights from partners, access to a professional
| network, and co-experiencing starting a company with other
| early stage founders. These sorts of things scale linearly, at
| best.
| tlb wrote:
| In almost everyone's experience, almost everything doesn't
| scale. Figuring out how to make something scale is a rare
| event.
|
| I say this having heard, while debating the potential of
| various startups, probably 10000 arguments for or against
| something being able to scale. In the end, no amount of
| wisdom makes you very good at predicting it. Everything
| doesn't scale until someone figures out how to make it scale.
| So you bet on smart, energetic founders to figure it out.
|
| Often the scalable version looks different than the initial
| version. Maybe the million-person hackathon looks more like
| Repl.it than a room with laptops and teetering stacks of
| half-empty pizza boxes.
| hertzrat wrote:
| I take part in a decent number of game jams. A jam with 10-60
| people is fun. A jam with 1000 people isn't any different than
| just programming on your own, there are too many people to get
| a nice community vibe going. In small jams you make friends and
| chat constantly
| dadrian wrote:
| Did the larger hackathons have any benefit, besides to prime
| the organizers for PM and "growth hacking" positions?
|
| Thinking back to MHacks 2013, I know of more companies started
| by people who could have, but chose not to attend MHacks, than
| came out of the hackathon. And that's assuming company creation
| is even a good metric! I also don't know of _any_ company that
| thinks they have a good ROI on recruiting.
|
| Perhaps no one is bold enough to do larger hackathons because
| they've realized hackathons are sham to inflate the organizers
| resumes.
| taldridge wrote:
| Doesn't this presuppose that what works with n things will work
| equally well for 1000 * n things?
|
| For example, the artisan workshops of Paris worked really well
| at making things but it turns out that they couldn't be scaled
| up to produce at an industrial scale.
| arduinomancer wrote:
| Meh
|
| Large hackathons are worse for the participants
|
| < 50 people actually feels like having fun hacking around
|
| The huge ones feel super commodified these days, like it's just
| an advertising/recruiting opportunity for the sponsors.
|
| It's like if you were interested in Chess, would you want to
| join a 2000 person chess club or a 30 person one?
| enumjorge wrote:
| > you can and should scale up things that are working
|
| That may be, but I think another bug is not knowing when to
| stop scaling. Few things (if any) can sustain unbounded growth.
| neilshevlin wrote:
| We ran a summer camp program for college students for several
| years. It started with 40 college students and each year we
| started adding more people. What was interesting was that each
| year believed that it's group size was perfect, and that any
| bigger would just be too big. They said that at 40, 70, 120, 300
| and beyond. I've never been able to fully understand why that is.
| But the fact that you get that at hackathons, summer camps and
| incubators alike, is really cool
| truetraveller wrote:
| Oh, that makes sense.
___________________________________________________________________
(page generated 2021-03-23 23:01 UTC)