[HN Gopher] Reflections on my time in Y Combinator
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Reflections on my time in Y Combinator
Author : chrisfrantz
Score : 71 points
Date : 2022-08-22 18:49 UTC (4 hours ago)
(HTM) web link (chrisfrantz.com)
(TXT) w3m dump (chrisfrantz.com)
| CoffeePython wrote:
| Great read Chris! I was in the S21 batch and definitely relate to
| a lot of the things you posted. Especially re: batchmate quality.
|
| One big thing that YC did for me is it was an ambition
| multiplier. Pre-YC I thought it'd be cool to make software that
| could just pay my bills. A year post-batch and I find my default
| state is much more ambitious than before.
|
| It's a crazy feeling seeing so many people start from 0 and the
| progress they can make in just 3 months. YC helped me and my
| company tremendously.
| chrisfrantz wrote:
| Thanks! Yeah, sounds like we shared a similar experience. YC
| definitely starts to make anything feel possible. They give you
| the tools, it's up to you to take it from there.
| bko wrote:
| >One big thing that YC did for me is it was an ambition
| multiplier. Pre-YC I thought it'd be cool to make software that
| could just pay my bills. A year post-batch and I find my
| default state is much more ambitious than before.
|
| When you talk about an "ambition multiplier", do you mean
| personal wealth? YC is great for receiving favorable terms in
| the future. But you can't really take that money out of the
| firm, or pay yourself some stupid salary. It's just paper
| wealth. And a bigger valuation and more ambitious growth
| usually means scaling up a lot faster (fail fast), rely more on
| future rounds and maximize your valuation.
|
| For a fund they'd prefer a 10% chance for $100 million
| valuation to 90% chance for an $11 million valuation, but
| personally I would prefer a 90% change for a million opposed to
| 10% chance of 10 million, because I can't diversify and run 10
| startups simultaneously like a VC can. So I guess that's the
| downside of the "ambition multiplier"
| edgyquant wrote:
| I'm at my third YC company and it seems like each time what I
| thought my career was completely changed. I'm leading a whole
| company engineering team where at my last job I was a principal
| engineer who spent Covid working (sadly) alone.
|
| My first I thought I'd be lucky to land a entry level gig and
| did so well I become the lead engineer over a couple of guys
| within a month (as soon as we found them.)
|
| I would never have gotten that experience that fast. Sure
| looking bad I was a senior at entry level because I had
| practiced so much: but at a traditional corp I would have had
| to wait years to get to that level of experience where YC
| basically throws you at it and hopes you don't fail
| swyx wrote:
| this was a great ad for YC :)
|
| i think where people are more borderline is if they can raise at
| a decent seed valuation elsewhere already (eg based on existing
| revenue or prior reputation/technology being far more
| established).
|
| It's well understood that YC has some value add. So the fun
| question is - what is the valuation you can raise at which it
| does NOT make sense to enter YC?
|
| YC values you at ~2m when they invest (120k divided by 7%, 380k
| MFN SAFE aside). Lets say you come out of it worth $10-20m on
| average. Maybe the connections and other stuff gives you value
| worth $5-10m. so if your business is valued above 15-30m you
| should consider NOT going into YC.
|
| Is that a good way to think about it? any of these numbers you
| would change?
| dheera wrote:
| S16 here. I think the greatest value add was actually being
| able to work heads-down for 3 months knowing that you would
| almost certainly get investment on Demo Day. Almost all
| companies got investment, since YC was extremely selective back
| then (batch sizes were much smaller) and investors generally
| trusted YC's judgement. Prior to S16, this was probably even
| more true.
|
| If it weren't for YC one would have to spend 50% of their
| working hours having coffee chats and preparing demos, since
| investors generally had their own contorted idea of what a good
| demo is before they would invest, and it was usually not what
| the customer wanted. Being able to get twice as much work done
| in return for 7% was a good deal.
|
| I don't think that applies anymore, sadly, with the large batch
| sizes they accept now. Nowadays you'll have to waste half your
| summer having coffee, not have guaranteed investment, and still
| give away 7%. Not a good deal.
|
| Also, if you live in the bay area, it's fairly easy to come
| across most YC advice and get investor intros just by going to
| enough house parties with seasoned founder attendees.
| chrisfrantz wrote:
| Nowadays you start with $500K though, which puts you in a
| much better position when speaking with investors as your
| initial runway isn't as close to nil.
| dheera wrote:
| Yeah. It's better, though $500K is still low for a couple
| founders plus company expenses, given how much rents and
| cost of living has gone up in the past 6 years.
|
| Especially if your startup isn't purely software, and
| involves some operational or hardware expenses, $500K is a
| no-go.
|
| It's also the ballpark of what 2 technical founders could
| easily make by working for ~6 months in the bay area, and
| not have to give away any equity at all.
|
| So if you're doing it for $500K, I'd say there are better
| ways to get $500K than giving up 7% of your company.
|
| Now if YC handed out $2M and cut their batch size by a
| factor of 4 (being more selective in their applications), I
| think it'd be a really good play for them.
| therusskiy wrote:
| Isn't running a business and especially a startup is
| supposed to be risky?
|
| "We have an idea that's not materialized yet, give us
| money so we can live comfortably and reap all benefits it
| it works out and not lose anything if it doesn't." -
| sounds like a wishful thinking.
| dheera wrote:
| > Isn't running a business and especially a startup is
| supposed to be risky?
|
| No, it _is_ risky, and you want to actively eliminate as
| many of the risks as possible. Having a decent sized pile
| of cash is one way out of several of the risks. Supply
| chain shortages, founder medical expenses, mishaps and
| accidents, rising costs of living, personal emergencies
| happening to founders or employees requiring leave, there
| are a million things that will bite you if you don 't
| have cash and runway.
|
| "Supposed to be risky" isn't a good way to think about
| it, IMO. A lot of the time you'll hear people romanticize
| a couple of fresh graduates living on couches in a
| garage, living on ramen, and building a unicorn, but the
| reality is that most billion-dollar companies weren't
| actually built that way, and it isn't the best way to
| optimize your chances of success.
| yurisagalov wrote:
| I think it's really hard to put a purely monetary value on YC,
| but I think it definitely does a disservice to say that the
| program only adds $5-10M worth of value.
|
| If you speak to YC alumni, you'll hear from many of them that
| YC made them dream bigger. There's a founder in the comments
| here who said YC was an "ambition multiplier" for him[1]. How
| do you value that?
|
| [1] https://news.ycombinator.com/item?id=32556060
| swyx wrote:
| right, sure, that is a huge value. but it's not, for example,
| $1B worth of value. should John Carmack do YC? no. etc.
|
| the goal of rational decisionmaking is to try to convert all
| factors into some kind of comparable numbers, and $ is just
| one utility function on which to project all these
| nonmonetary qualities. call it "utils" if you like
| (https://en.wikipedia.org/wiki/Utility#Cardinal).
|
| so fair point if you disagree with 5-10m of nonmonetary value
| equivalent. Is it more like 50m? 100m? what is the lowest you
| can make the upper bound?
|
| a fun academic question for most, but for me personally, i
| have been offered a $2-3m seed pre product so that suddenly
| became a lot more real.
| jacquesm wrote:
| If all you see is the numbers, then yes. But there is more to
| YC than just the numbers, I think they do not only increase
| your chances of raising money (and likely more than if you did
| it yourself) but they are also _very_ experienced in mentoring
| start-ups to the point where they become viable businesses and
| that is quite difficult.
| nkotov wrote:
| I had a similar experience (S20) and one of things I wished I did
| more of during the batch was to connect with more people, not for
| the sake of selling something but to just meet people from all
| over the globe. I'm working on a new idea now and most likely
| will apply for YC again as well.
| chrisfrantz wrote:
| Good luck!
| therusskiy wrote:
| Very strange hearing such stories.
|
| I remember a company I worked for went through a YC interview.
|
| We were rejected with "we are not sure you can deliver".
|
| At that point, we had built 2 mobile apps, a big customer
| wesbite, rich portals for partners, contractors and admins, had
| thousands of customers, were almost profitable. Our CEO had a
| history of delivering in that he sold his previous startup.
|
| I must sound bitter, but it's pretty gut-wrenching when someone
| gets throgh by making UI mockups during a zoom call.
| chrisfrantz wrote:
| I could be wrong here, but it sounds like you would have been
| further along than anyone I met in the batch. The majority of
| folks I spent time with were starting from scratch.
| therusskiy wrote:
| The founder never told it in great detail, but he did say he
| thought "they started on the wrong foot" with the
| interviewers.
|
| Now that I think about it, you mentioned you had a laugh
| together.
|
| Like with everything in life, there's probably a big
| subconcious bias towards people you like that extends to
| products they build.
| upupandup wrote:
| I'm willing to bet race has some underlying influence whether
| they like to admit it or not.
| therusskiy wrote:
| The founder was jewish in his late 30s :-)
| balsam wrote:
| Probably not skin color, but maybe founder was born in an
| authoritarian place (like Russia)? Far more likely that he
| used Windows, Word, or preferred Java, though.
| henning wrote:
| > But, we got to the 2 week mark with 0 revenue and we still
| didn't have a completed product. That's not really an excuse that
| flies in YC
|
| What are they going to do, take their money back because you
| didn't meet their ludicrous immediate-term expectations?
| tptacek wrote:
| Nothing would have happened at all.
| chrisfrantz wrote:
| Hah, well they didn't! But the high expectations definitely
| encouraged us to perform at a higher level, even if we didn't
| hit the initial goals.
| alixanderwang wrote:
| _We could easily have slammed together off the shelf components
| and potentially grown at a similar rate. Also potentially not,
| sales is hard!_
|
| _Seeing founders with less care for detail and more for the
| sheer growth of their user base was impressive and deflating._
|
| _It felt like everyone I compared myself to, they were devoting
| 90% of their time to selling and 10% to building._
|
| I share the feeling. There's success stories of companies doing
| the same (e.g. Notion, Replit), so I know it's not completely
| off-book, but I constantly wonder whether there is downside to
| that approach of focusing on sales in the beginning. I can guess
| things like less likely to be innovative, but is that true? Maybe
| since they average being alive longer than the ones that focused
| on product in the beginning, any potential downsides are negated
| in the long term (e.g. just innovate later with the infinite
| runway they now have). Would love to see some study/survey on
| this.
| falsemove wrote:
| Thanks for sharing. It seems like everyone was mostly focused on
| sales and some were doing quite well. Were there any strategies
| that stood out to you that were working? Was there some leg up
| provided to companies in their sales efforts who were in YC?
| [deleted]
| talhof8 wrote:
| Great read! Applied for W23, so it was super relevant and
| interesting for me to read. :)
| chrisfrantz wrote:
| Good luck!
| talhof8 wrote:
| Thanks!
| bko wrote:
| This was a great read, but after reading it and how the group got
| funded with just an idea and a mock-up that took 15 minutes to
| make would make me less likely to apply for YC in the future.
| Imagine you're building a business and put a lot of thought into
| the the product and start building it out. And you're basically
| getting the same deal as someone who just came up with an idea
| and wung the whole process?
|
| Sure, you're investing in the person, but you either have the
| right experience or not. If you had the right experience and a
| product, you should probably look to bootstrap or other funding
| options.
|
| A stat I read before is that 29% of the batch has just an idea
| while 10% had more than $50k of monthly revenue when accepted.
| Imagine being that guy that grinded to create a business that's
| generating a million a year and getting the same terms as some
| dude with just an idea and "the right experience"?
|
| https://www.ycombinator.com/blog/meet-the-yc-winter-2022-bat...
| intelVISA wrote:
| We considered YC at my last venture but these stories seem too
| frequent nowadays, we opted to just grind out an MVP instead
| and pitch directly.
| chrisfrantz wrote:
| I understand the sentiment. The reason the mock-up was quick to
| create was because the entire thing was already done in my
| head. There were plenty of folks with very little experience
| and some with quite a bit of experience. I can't say that I
| have any real idea what goes on in the minds of the folks
| making the decisions, but they do seem to pick an outsized
| number of winners. Whether we're in that bucket or not remains
| to be seen.
| bko wrote:
| Yeah I get it, I don't mean to disparage what you did and it
| looks like it worked out great for you. But how many hours
| would you say you've spent sketching it out, in your head at
| least?
|
| It's just odd to me that someone can compare a million dollar
| ARR business with a cocktail napkin business sketch and give
| the company's equal terms.
| chrisfrantz wrote:
| Yep, it's a fair critique and I agree it's odd.
| kevingadd wrote:
| Selection bias is a tricky question when evaluating "they do
| seem to pick an outsized number of winners." Does that mean
| that the people they pick off personal traits and a 15 minute
| demo are intrinsically winners, or is it just possible for YC
| to turn almost anyone with the right skills into a winner?
| chrisfrantz wrote:
| Great question, I imagine there is some truth in both
| statements.
|
| The failure rate in the startup world, especially when
| success means a billion dollar exit or IPO, is incredibly
| high though.
| dontich wrote:
| Note : Chris is selling himself short by a large margin -- he
| has a shit-ton of expertise on the growth hacking side of
| things. (We were also in W22 batch and he was great for getting
| advice from on various things)
| bluelightning2k wrote:
| This is a fallacy. The deal other people get has no bearing on
| your company.
|
| Yes. If you compare what you did vs what they did. But really
| it's like winning the lottery and complaining that some other
| winner bought less tickets.
|
| Imagine actually getting into YC and turning it down because
| someone you think is less worthy also got in.
|
| Tbh it sounds quite entitled.
|
| At worst those other companies are unrelated. At best they are
| inspiring.
| bko wrote:
| I think its entitled to think that your idea is worth a
| multi-million dollar valuation without a single thing to show
| for it.
|
| If you get into YC and you actually have a product or
| revenue, it's almost certain that someone else would give you
| better terms because they care about product or revenue. It's
| like getting a 1600 on your SATs and going to a school that
| doesn't check your SATs. Is it the best school for you?
| Maybe, but prob not.
| adam_arthur wrote:
| Just a signal that quality of the investments appears low
| these days.
|
| Obviously a big win can erase a lot of misplaced bets, but I
| wonder how many of the pure idea, low effort startups ended
| up reaching major success.
|
| To me it speaks of a non serious/committed entrepreneur,
| because the amount of cash that Y combinator supplies makes
| no material difference in the ability to actually bootstrap
| the project.
| ipaddr wrote:
| Who cares what someone else received vs what value they give?
| What I care about is what I receive vs what value I sell makes
| sense at my stage. This is about making your startup succeed
| not beating other companies in the program on terms.
|
| If an investment of 7% for 750,000 makes sense go for it. Who
| cares if someone else gets 8% or 6%.. it's not your money.
| bko wrote:
| If you think having a product/revenue is valuable and you
| have a product/revenue and someone offers you some terms and
| they don't care about your product or revenue, then you're
| probably not getting the best deal you could get. It could be
| the best deal, sure, but that's the floor, because that's the
| deal you could get without a product or revenue. So that's a
| big indicator that you're getting a worse deal than you could
| from someone who cares about product/revenue.
|
| It's not even consistent with YC philosophy about the idea
| doesn't matter, MVC, get to revenue fast, etc
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