[HN Gopher] Y Combinator often backs startups that duplicate oth...
___________________________________________________________________
Y Combinator often backs startups that duplicate other YC
companies, data shows
Author : isaacfrond
Score : 306 points
Date : 2024-11-26 08:50 UTC (14 hours ago)
(HTM) web link (techcrunch.com)
(TXT) w3m dump (techcrunch.com)
| bwb wrote:
| In executing on an idea, the end result is often very different
| from where you started. They might look similar now, but in 5
| years one went enterprise on feature set and the other consumer
| etc etc.
| blitzar wrote:
| So true, all the Blockchain startups are now LLM startups.
| thih9 wrote:
| You mean there is a trend in existing blockchain startups
| pivoting to LLMs? Is there a source / more details?
| 0points wrote:
| reinforcement learning done right, amirite?
| cadamsau wrote:
| Seems like a great idea!
|
| Stirs up competition within a cohort and there's bound to be idea
| sharing between teams. YC claims to bet on people not ideas, so
| as another commenter pointed out, if a team pivots there's no
| longer a competition.
|
| My guess is YC also believes in simultaneous invention: the same
| idea coming from multiple places at once implies said idea's time
| has come, while any team wanting to work on it must have already
| done the work to hit that forefront, making them great people to
| bet on.
| serial_dev wrote:
| It makes sense as an investor, doesn't it, you identify markets
| you see an opening, you check which companies are in that domain,
| pick the ones where they can execute and have good people on
| their team.
|
| It would worry me as a startup company, who knows where the
| information I share with them will end up...
| soco wrote:
| A more interesting question is, do you as a startup company
| have any information worth sharing? Ideas are dime a dozen and
| like you just said, the differentiator is the capabilities of
| those people. And that is not something that can be shared, and
| no other startup can benefit of it.
| srameshc wrote:
| It's not always about ideas. Growing startups often have
| proprietary information they can't share with competitors.
| onion2k wrote:
| I think there's something missing from this analysis - YC
| companies might duplicate one another's _products_ but that doesn
| 't say anything at all about their target markets, route to
| market, product focus, etc.
|
| As an example, my first startup was a requirements management app
| that, on paper at least, was a copy of IBM DOORS. Except DOORS is
| a massive enterprise app targeted at companies who are building a
| new airplane that has 250,000 technical requirements that need
| fully traceability, and my app was aimed at small businesses
| doing software projects with 1000 requirements. I was not
| competing with IBM; I was trying to apply the value of that app
| to much smaller projects (the end goal might have been to become
| a competitor one day but we failed long before then.)
|
| You can't just say "These two products do the same thing so the
| companies are dupes." It's far more complicated than that.
| meiraleal wrote:
| That's not the case for most dev tools YC startup, they are
| targeting the same HN users/ other YC startups (trying to sell
| shovels)
| fidotron wrote:
| The great suspicion with YC is what proportion of YC
| companies have all their customers being a mix of other YC
| companies and those with shared investors?
|
| There is a real danger with current era Bay Area tech that it
| is just a game of musical chairs played with money, with
| remarkably little external value being generated.
| cudgy wrote:
| > There is a real danger with current era Bay Area tech
| that it is just a game of musical chairs played with money,
| with remarkably little external value being generated.
|
| So, you don't think that is already the case?
| fidotron wrote:
| It was nothing like as bad as this 10 years ago, no.
|
| Just look at the state of successful exits - it is awful.
| This is not the same as an ecosystem producing Sun, HP,
| Apple or even Google, which all had enormous positive
| externalities.
| meiraleal wrote:
| Yes it was like this for Apple, Microsoft, Google,
| Facebook. The difference is that at that time the genius
| youngster (which is just the son of some already
| successful people) creating startups were cool. Now
| nobody wants to make or watch a movie about Sam Altman
| and OpenAI.
| HWR_14 wrote:
| Did anyone think Zuckerberg was _cool_?
|
| Even the movie about him seems to have made him seem more
| antisocial and nerdy than he really is. (Based on 3rd
| party reports about him)
| jjulius wrote:
| Ten years ago was 2014 - Sun, HP, Apple and Google were
| all _very_ much "old hat" and entrenched. Hell, HP was
| in the process of significantly cutting back it's
| business and eliminating jobs[1] (34,000 lost jobs in
| 2013 and ~16,000 in 2014 is an interesting "positive
| externality" lol). There was no ecosystem producing them,
| _they_ were the people who were either running SV, or
| realizing that their time in the sun was coming to an
| end.
|
| [1]https://en.wikipedia.org/wiki/Hewlett-Packard
| spacebanana7 wrote:
| This can be a good thing. One of the hardest things about
| building new software products is getting initial customers
| to discover your bugs, missed requirements etc and also add
| credibility.
|
| As an enterprises SaaS buyer, I'd much rather use a code
| documentation tool that'd been circle jerked around a YC
| batch a few times compared to one with no prior customers.
| hiAndrewQuinn wrote:
| Incidentally, if anyone else wants to reinvent IBM DOORS for
| ~1000-requirements fields, email me. There's a vast market out
| there for combined hardware/software shops that are in the no
| man's land of "not designing an entire literal train from top
| to bottom" and "not just hiding a Raspberry Pi in a trench
| coat".
| MichaelZuo wrote:
| Why can't IBM just sell a watered down "DOORS-lite"?
| onion2k wrote:
| They could, but it's IBM so any 'lite' version wouldn't
| stay lite for very long. They mostly excel at making huge,
| complicated things to sell to other huge, complicated
| businesses. They aren't very interested in, or very good
| at, making small things they need to sell lots of (and, to
| their credit, they recognize that and stick to what they're
| good at.)
| mrandish wrote:
| Yes, I agree and would add other reasons. It's always seemed
| obvious to me that YC would invest in multiple startups working
| on the same problem space for these reasons:
|
| First, compared to a traditional VC, YC is micro-investing in
| far more startups and doing so faster and more frequently.
|
| Second, YC highly prioritizes founder/team quality over ideas
| but teams come to YC by pitching an idea. I just read an
| article yesterday citing evidence that in the last 10-15 years
| the diversity of startup ideas has declined significantly. This
| makes sense. Enormous amounts of information about what other
| very early stage startups are doing as well as which areas are
| currently being funded is readily available in near real-time.
| As a serial entrepreneur who did my first startup in the 80s,
| second in the 90s and third in the early 00s, I can attest we
| had nothing like this visibility in earlier eras. Ideas which
| are getting funded and which sound like good ideas in hot areas
| are obviously going to influence founder idea selection and
| cause clustering.
|
| Third, YC knows that many startup teams will pivot away from
| their initial idea once they engage with real customers in real
| markets. So much so, YC considers it a sign of a smart team
| working well together. However, like all VCs, at any given time
| YC has broad sector themes it considers especially ripe for
| various reasons ranging from new technologies enabling
| disruption to expected high growth in an emerging sector.
|
| Fourth, is the reason you identified. Having a good enough
| high-concept idea is necessary but far from sufficient for
| startup success. In addition to the execution details like go
| to market that you mentioned there's also timing. Even being 12
| months earlier or later can make a difference toward making it.
| Finally, there's the luck factor. While it's true that quality
| teams are better able to maximize good luck when it happens and
| also have a tendency to increase their overall odds too, luck
| still matters. In my successes we had to get a lot of things
| right but there were also three or four serendipitous things
| that made a big difference at important moments. The only way
| for YC to solve for both the micro-timing and luck factors is
| betting on multiple similar startups around the same time.
| newsclues wrote:
| Investing in a market opportunity rather than a company or
| person.
| aabhay wrote:
| One of the reasons that YC is so great is that they back
| founders, not ideas. YC has never backed the same founder twice
| in a batch to my knowledge, and doing so is antithetical to its
| values.
| blitzar wrote:
| VC sees buzzword in pitch and throws money at it, data shows.
| lccerina wrote:
| This! Other comments imply some kind of strategy from YC, but
| it's likely a VC bias and/or a lack of communication inside YC.
| paxys wrote:
| > Yet, a deep dive into the data from all of the nearly 5,000
| companies YC has backed to date [...]
|
| The answer is in that number. YC is a startup accelerator. These
| days they back 500-1000 companies _every year_. There is no
| intention of having only one horse in every race. At that volume
| that is impossible. Their funding model allows them to bet on as
| many horses as possible to increase their own chances of success.
| Ballas wrote:
| It makes sense. If you are an investor and have a strong belief
| that a specific product or idea is a good one - you might want to
| decouple your odds of success from the people/team/company
| executing that idea.
| bingemaker wrote:
| YC also says that they don't believe in the idea, but the
| founders -\\_(tsu)_/-
| ethagknight wrote:
| Seems reasonable to pick two horses in a race you believe is
| worth running
| billy-ilograph wrote:
| This creates an extremely obvious conflict of interest.
| pavlov wrote:
| The conflict of interest is simply dead and forgotten in
| an era where the president-elect has his own cryptocoin,
| his own social media company, and appoints his
| billionaire supporters to improve efficiency in the parts
| of government that directly oversee those billionaires'
| own businesses.
| xpe wrote:
| Yes, political corruption is a drag/loss on everyone
| except the corrupt ones. Worse, it can shift a system out
| of its viable operating zone. Corrupt individuals in a
| market can destroy the market.
|
| But what is the connection to the parent comment? No
| matter how corrupt one part of government or a market
| becomes, it doesn't excuse further corruption. If
| anything, more corruption makes additional corruption
| more likely to break the whole system.
| BeefWellington wrote:
| I think it's reasonably straightforward they were making
| the point that conflict of interests are no longer taken
| seriously, along with many other related things. Politics
| tends to be a trailer of social views, not a leader.
| svnt wrote:
| The connection is that the conflict of interest being
| discussed was only ever a social/ethical contract.
|
| That social contract is in the bin right now, so the
| question is moot.
| xpe wrote:
| Individuals who voted for Trump don't necessarily want to
| throw away a social contract. Many of them do support
| societal norms, albeit different ones. And some don't
| even think in these terms; they are more motivated by
| other factors.
|
| Along with many, I think their collective actions point
| in a direction that (a) undermines democratic rule and
| (b) enables Trump's corruption, but they seem to be
| relatively unaware or disagree with such effects.
|
| Many of them think Trump will combat one some types of
| corruption (the "deep state").
|
| Overall, I'm more inclined to think many/most Trump
| supporters have reasonable core values, especially at the
| individual and family levels, but due to their
| information sources and mental processing, their overall
| choices don't bode well for us, together. The biggest
| breakdown I think has to do with epistemic values: how
| does one find truth.
|
| I don't think most people, of any party, have the
| individual ability and discipline to make sense of a
| modern world in a rational, scientific manner. This isn't
| something easily achieved, after all.
|
| About me: I strive to not "blame" individuals in the
| traditional sense, because I reject free will as a
| meaningful concept. (Roll back the clock and a person
| will the behave the same in a deterministic universe. And
| if the universe has intrinsic randomness, we can't
| ascribe free will to that randomness.)
|
| So instead of blaming individuals, I focus on systems and
| their statistical effects.
| xpe wrote:
| We need to define conflict of interest. Question: is an
| investor who gives money to one organization, but is not
| involved in the decision-making, conflicted if they give
| money to another organization? Are they self-conflicted
| (undermining their own likelihood of success)? Are they
| contractually or legally conflicted? Have they breached
| the trust of people they invested in? Are they ethically
| conflicted?
|
| Answers to these questions are non-obvious. Attempts to
| simplify the set of relevant questions means imposing a
| worldview.
|
| On the ethical question, a consequentialist would say it
| depends on the outcomes. Like many consequentialist
| analyses, this is complicated. Consider this: Investing
| in a similar company might validate the market and make
| it more likely for the company and/or its people to reach
| viability.
| Suppafly wrote:
| >This creates an extremely obvious conflict of interest.
|
| That's not necessarily bad though. People like to throw
| out these terms that sometimes have negative connotation
| as if they are inherently negative. If you think the
| conflict of interest is a bad thing, you need to
| elaborate on why you feel it's bad, not just pretend it's
| prima facia bad.
| edm0nd wrote:
| but two horses can still win though. One can come in
| first and the other come in second. That's two wins.
| robertlagrant wrote:
| > YC also says that they don't believe in the idea, but the
| founders -\\_(tsu)_/-
|
| That still doesn't preclude them backing two founder groups
| that have similar ideas.
| CuriouslyC wrote:
| If that were true, there'd be no point in ever applying a
| second time to YC.
|
| Anecdotally, people do get accepted after 2-4 failures. Maybe
| YC was on the fence about those founders and their
| willingness to slam themselves against a wall repeatedly
| tipped the scales, or maybe they invest in a certain kind of
| founder and when they run out of those they invest in
| "promising" ideas.
| authorfly wrote:
| What's interesting is that the people who are able to predict
| and come up with the idea (e.g. a researcher using AI in 2021)
| are often not the best ones to execute on it (typically, lack
| of experience or capacity to handle the pain of growth while
| marketing).
|
| What's most interesting is that most people aren't just "one
| type". In your life you go through multiple roles. Just like
| how most people, regardless of their income at age 20 will be
| earning top 35% income by age 35, people move up in their roles
| (and struggle at a young age to understand that this will
| happen to them). It's all about timing and age.
|
| I believe some investors go for multiple teams purely because
| the ratio of those types is different - like a different risk
| profile. They invest in one with 80% AI boffins, and one with
| 80% business folks, and one will likely win in the circumstance
| of the moment (in the ChatGPT era - mostly the business folks.
| In the data driven AI era - mostly the AI boffins)
| MrMcCall wrote:
| Human beings are the only creatures capable of self-
| evolution, using our minds to analyse the world around us and
| the world we have nurtured within us. Over time, we can
| stagnate into ossified animalistic patterns of selfishness,
| or we can expand our curiosity, consciousness, and,
| hopefully, our realization that compassion for others is the
| source of our own happiness. We can either find ways to
| better integrate ourselves into a better future for those
| around us, or wall ourselves off from the world around us. We
| would do well to remember that carpenters don't make hammers,
| nor computer scientists their own food, soil, packaging,
| tractors, or trains.
|
| The use of the vast sums available to successful tech
| investors gives them a greater point of leverage than the
| rest of us not so endowed. And the more power is given, the
| responsibility is required, though few acknowledge or heed
| such wisdom.
|
| At the end of the day, no matter how confident many folks
| are, who really has the humility and intelligence to know if
| a person is a genius? Very few, I guess. Very, very few,
| indeed.
| bwestergard wrote:
| "Just like how most people, regardless of their income at age
| 20 will be earning top 35% income by age 35"
|
| Could you say more about this, or perhaps provide a link
| where we can read more?
| hibikir wrote:
| The general is that income, like wealth, is correlated with
| age, not ransom. Most workers under 18 will be making near
| minimum wage. Workers in their 20s are probably still
| starting their careers. People fall off again when they are
| older, as they either retire early or in some professions
| just become less capable.
|
| So when you put it all together, a lot of people with an
| under average career will have an over average income at
| 35: Just not an over average income within the cadre of 35
| year olds.
|
| The lack of correlation with income at 20 comes from how
| many careers require training that doesn't give good early
| income. A future doctor, barista or AI programmer are not
| likely to have. a great income at 20, but their incomes and
| wealth diverge rapidly as some have longer training with
| different outcomes. The doctor will hit the 1% after
| residency. The AI expert might start making money earlier.
| The barista is probably ahead in his 20s, but it's unlikely
| their income grew quite as much, although many a barista is
| working on doing something else. So again, looking just at
| percentile of income at different ages is going to lead to
| mistakes as different life curves are being aggregated
| together.
| HWR_14 wrote:
| "Most people will be earning top 35% income by age 35" seems
| like a patently false statement. Clearly more than 35% of the
| working population is over 35.
| codegeek wrote:
| Exactly. I think this is a brilliant strategy by YC. They know
| that some ideas have great potential. They just back multiple
| teams and hope that one of them will win with their execution.
| wslh wrote:
| That approach is perfectly valid and could even be smarter than
| other VCs that avoid funding competing projects. I also think
| that, since YC operates at an earlier stage than major funds like
| Sequoia, different heuristics could apply. Ultimately, it's about
| balancing risk and reward--duplicating efforts can increase the
| chances of success while mitigating risks. Of course, it's not
| easy to establish processes that help competing companies in the
| same space without inadvertently favoring one over the other.
| phyzome wrote:
| It's interesting how many of the commenters are starting from the
| assumption that this is both intentional and desirable (or in
| some other way smart on the part of YC) and then reasoning only
| on that basis.
|
| (Or maybe it's not interesting, since this is on YC's own site...
| :-P)
| Gormo wrote:
| Concluding that it's not intentional depends on the premise
| that they don't know they're doing it, which seems unlikely.
| smt88 wrote:
| There's an enormous amount of evidence that almost no VC
| knows what they're doing (almost none beat index funds in the
| long run).
|
| YC seems to have a spray-and-pray approach, and it used to be
| run by Sam Altman who has repeatedly failed upward, so I
| think it's very reasonable to assume this is either not a
| conscious strategy or it's just a bad strategy.
|
| Either way, the VC's value is to be able to predict whether
| Dropbox or Zumodrive deserves their bet, and they clearly
| couldn't.
| empath75 wrote:
| > Either way, the VC's value is to be able to predict
| whether Dropbox or Zumodrive deserves their bet, and they
| clearly couldn't.
|
| This is an extremely wrong-headed view of what VCs do, and
| one thing investors do _in general_ is to have a strong
| idea of what they know and don't know, and in particular,
| what _nobody_ knows is which companies or products in
| particular will succeed or fail. If they knew that, they'd
| put all their eggs in one basket.
|
| What VCs do is allocate capital in a way that mitigates
| risk for themselves.
|
| There's actually a _really_ interesting way to think about
| what VCs do, which is that they _offload_ their own risk
| onto founders and early hires of startups. VCs invest their
| money across a broad basket of investments, founders invest
| all their time and money into _one_. VCs and early hires
| are taking a massive amount of personal risk. Almost all of
| the profits of VCs come from what is essentially a risk
| arbitrage -- they get more profits than they should be from
| the smaller risk they're taking by investing in a startup,
| and founders and early hires get less profits than they
| should be from the personal risk they're taking by starting
| a company.
|
| The structure of investment deals is often setup in such a
| way that even events that "feel" like they should be a
| payday for the founders, such as a funding round or even a
| sale, could end up with them getting nothing because their
| shares get diluted, because they have lower priority
| ownership stakes than the VCs do.
| smt88 wrote:
| Your description of a VC's value is describing them as an
| index fund of startups, and I suppose you could say YC
| has moved in that direction.
|
| But most VCs are paid to make bets on which companies are
| most likely to succeed. I never said they're supposed to
| know with certainty. That's a silly straw man that no one
| who understands basic finance would suggest.
|
| But they spend much of their time supposedly screening
| deals to find good ones, and there is a preponderance of
| evidence that they're worse at it than a dumb index fund.
|
| There have even been experiments to automate picking
| deals, and even a fairly naive algorithm is better than
| most VCs.
|
| Only people on the VC side of the table think they have
| any added value other than lucking into being trusted to
| invest other people's money.
| svnt wrote:
| > VCs and early hires are taking a massive amount of
| personal risk.
|
| I think you meant "Founders and early hires" here?
| dahart wrote:
| Why is that interesting to you? Do you have a contrasting point
| of view to share? Do you have experience with startups and/or
| venture capital?
|
| I have no involvement with YC, but with a little startup and VC
| pitching experience, I can tell you that in my experience, lots
| of VCs like the idea of founders doing something incremental
| that builds on successful ideas. The article notably did not
| compare YC to any other VCs, but the truth is likely that all
| VCs "often" back startups that duplicate others in some way.
| VCs will tell you not to build something original, because
| there's no demonstrated market for it. And statistically
| they're right, your chances of success with an unproven idea
| are lower than with an incremental change to something people
| already buy. The article also notably did not talk about how
| often startups duplicate other businesses on their own, before
| there's VC involvement. In that sense, despite the claim in the
| title that there's data, the article is unscientific.
|
| This article struck me as one of those "studies" that shows
| something everyone already knows, and the title kinda seems
| designed to sound dramatic and/or accusatory to appeal to
| readers drawn to controversy even if there isn't really any
| controversy there.
| mailarchis wrote:
| this was true 17 years back too. dropbox and zumodrive were both
| in same batch and were tackling the same problem with different
| approaches.
|
| P.S. Not saying its a bad thing. Early stage startups evolve and
| like YC has shared a lot of the early bet is on the founders.
| _heimdall wrote:
| This isn't anything new. Heck, the first season of Silicon Valley
| called this out with Peter Gregory backing a number of
| compression startups.
|
| Interestingly for the OP, that same season featured Tech Crunch
| Disrupt. It's a bit ironic to see TC publishing this concept now
| as though it is a new revelation.
| MrMcCall wrote:
| It makes sense to scatter a bunch of seeds on fertile ground,
| and then pick the strongest plant that shows the most growth.
| There are many kinds of smart, ambitious people; some will form
| teams that succeed, others will fall prey to unforeseen
| impediments, and not.
| ChrisMarshallNY wrote:
| This isn't really a big deal. Usually, obvious market
| opportunities have multiple organizations, trying to enter, and
| it makes sense for an investor to diversify.
|
| That's different, from Amazon and Microsoft, who used the data
| they gathered during their work with smaller orgs, to then
| actively compete with those orgs.
|
| A classic Microsoft joke (hope you like Comic Sans):
| https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM
| zitterbewegung wrote:
| Just because you have similar or the same idea doesn't mean at
| the end you have a sustainable one. Also, companies get bought
| out but while ideas are the same execution and scope can change
| given the level of technology available .
| mst wrote:
| If nothing else, having competition helps validate the market.
|
| Which is often an advantage to all companies involved - a lot of
| the time, you're only notionally competing with each other, your
| main enemy is "people not using a product in that space at all."
|
| e.g. for a lot of business SaaS the only enemy worth caring about
| is Excel.
|
| (I've more than once been involved with companies where the
| "competitors" were all on friendly terms because convincing
| people that using *some* product in that space was a good idea
| expanded everybody's addressable market)
| xpe wrote:
| Yes, this can happen. How often and under what conditions I'm
| not sure.
|
| I'll give some other lenses:
|
| 1. From the point of view of an individual person, growth in
| the overall market is often an advantage. If one company
| doesn't survive, there will be probably be others. Your skills
| and connections can help in a similar organization with a
| slightly different angle on the problem.
|
| 2. From the point of view of memetics, good business ideas are
| likely to appear and survive and take many forms in many
| niches. If you find yourself with competition, this can suggest
| that the underlying ideas are suited to the current
| environment. (Warning: this tendency can be distorted by
| irrational herd behavior and intentional gaming.)
| mst wrote:
| Yes, and as a variant on (1) from the point of view of
| potential *customers* it makes adoption (at least feel) less
| risky because if your original chosen supplier goos *poof*
| there'll be another one to switch to rather than you having
| to re-adjust your internal processes to go without.
|
| (I'm not sure under what conditions either, I mostly know
| this from having lived it and I wasn't on the business side
| in any such cases so)
| snarf21 wrote:
| I see it more as more of a hedge. If you believe in the
| opportunity, placing extra bets makes sense. Uber and Lyft
| weren't the only ride share companies but sometimes luck wins
| out and sometimes execution does.
|
| Additionally, if one seems to be winning, you just acqui-hire
| the "loser" in the winner, use that problem space expertise to
| scale faster _AND_ you still get to claim a higher _exit_ rate
| even if it was just to yourself.
| zachthewf wrote:
| Exactly right. Traditional VCs come up with a thesis and then
| buy 20% of the company they think will be the winner who fits
| that thesis when they're at like $1M to 10M revenue (series
| A)
|
| YC can instead get ~10% of every plausible winner they come
| across when they're at $0 revenue
| mst wrote:
| As noted elsethread, I think that almost certainly *is*
| what's going on; I was explaining why it's probably a good
| thing from (at least many of) the companies' perspectives
| too.
| mst wrote:
| Sure, though I'm not sure that "I see it more as" makes sense
| in context given -
|
| You're talking about how YC sees it.
|
| I was talking about how it affects things from the
| companies's point of view when YC does that.
|
| As such, so far as I can see our actual statements about the
| upshot of the situation are probably both correct :)
| MaxPock wrote:
| Reminds me of some German guys who specialise in copying
| successful companies and have made billions in the process .
|
| https://en.m.wikipedia.org/wiki/Rocket_Internet
| ninth_ant wrote:
| Of course YC backs multiple companies in the same spaces, they
| have for quite some time if not from the start.
|
| The controversy with pearai was not because it competed the
| market space of another YC company, but that it had the
| appearance of being a direct clone of the exact product of
| another YC company.
| addcn wrote:
| Useful here-say from some investors at the last few demo days:
| not all of the companies that are "copiers" apply + are accepted
| with the "copying" idea. Many founding teams end up pivoting
| during the batch and scramble to get proof points on the board
| before demo day. They're most likely to end up pivoting to well-
| known problems, therefore the clustering around a few common
| themes. It doesn't explain all of the data, but it's a big part
| of it. When you have to come up with a fundable new idea in a
| week and prove it out in a month this can happen...
| svnt wrote:
| Not to be pedantic but maybe it will help in the future: it is
| spelled hearsay. You heard someone say it.
| gwbas1c wrote:
| > YC commonly accepts startups that are building similar or
| nearly identical products to previous YC grads. Some of them are
| direct competitors; others differ slightly by targeting a new
| geography (Asia or Latin America), or are a subset of a larger
| market (point-of-sale software for bars versus coffee shops).
|
| If you're going "by the book" with Crossing The Chasm,
| (https://en.wikipedia.org/wiki/Crossing_the_Chasm), all startups
| need to conquer a niche before they can own an entire market.
|
| It seems like a wise strategy to, if an investment does well (or
| otherwise proves a market) in one niche, to invest in another
| niche. It certainly increases the odds that you've invested in
| whoever will become the dominant player.
| BeefWellington wrote:
| It seems pretty obvious to me that in modern times successful
| companies pick a segment of business to build expertise in and
| then expand outward from there.
|
| Your ability to understand a specific client's business is
| usually gonna be your key differentiator against large
| incumbents.
| T4iga wrote:
| This is reads as if that is negative an unusual. One might think
| supporting copycats is bad but obviously a company cannot simply
| be copied and is more than just its product. While a product
| might be, you can still outclass your competitors with better
| engineering, or sourcing of materials or marketing.
|
| You wonder if this is a telling story about YC or just one about
| the startup space in general.
|
| Possible outcomes include:
|
| 1. There is little unique ideas going around. YC is truely and
| knowingly funding blatant copycats.
|
| 2. There is little unique ideas going around. Due to the large
| amount of duplicates, all accelerators invariably invest in
| mostly copycats.
|
| 3. There is unique ideas going around, they are just not popular
| with YC. This could have various reasons. I wonder what they
| might be
| dangoodmanUT wrote:
| And Garry apologized for being wrong shortly after, but that's
| not mentioned?
| light_triad wrote:
| > YC startups don't have to be unique. Far from it.
|
| Slow news day. YC has made it clear over the years it's almost
| all about the founders not the idea. It's almost impossible to
| know if an idea is good at the early stages, and ideas change,
| startups pivot, often the timing is wrong, and the market
| unproven etc. More often than not most of what startups do is not
| unique, otherwise there's no market for it. A new take on an old
| idea has a much higher chance of success than something totally
| new that ends up being too early.
| JumpCrisscross wrote:
| > _More often than not most of what startups do is not unique_
|
| The message is also that if your start-up is based on deep tech
| moats choose another seed. (Think of YC's home runs. None had
| an industry secret/IP secret sauce.)
| light_triad wrote:
| YC's roots are definitely the software hacker/painter/kill
| FAANG from a coffee shop type founders, although they've
| shown that deep tech teams can make interesting progress
| without years of R&D. Finding investors that get your idea
| and can help with their network is paramount. YC might not be
| the best fit in all cases.
| j45 wrote:
| YC is more focused on B2B now, so this will change.
| jedberg wrote:
| YC has only been investing in deep tech for about a decade,
| I'm not sure that's long enough for them to have had a home
| run yet.
|
| For example, Boom Supersonic was founded 10 years ago, and
| just this summer completed their second test flight. They are
| scheduled to launch commercial operations in 2029.
|
| Lucid bots was founded in 2018, and just did their Series A
| to fund their growth of their autonomous drone fleet.
|
| I wouldn't count YC out of the deep tech game just yet.
| Cthulhu_ wrote:
| The article lists a few, none of which were unique - coinbase?
| Cryptocurrency exchanges already existed. AirBnB? Booking.com
| and other hotel or bed-and-breakfast booking websites already
| existed. Stripe? Yet another payment provider. Reddit? A Digg
| clone. Dropbox? rsync. etc.
| keiferski wrote:
| Airbnb was basically a monetized form of Couchsurfing, not a
| hotel alternative. It only later turned into a direct hotel
| competitor. To my knowledge there was no similar service at
| the time.
| light_triad wrote:
| Folks had been using alternatives to rent space like
| HomeAway.com, VRBO.com, BedandBreakfast.com and Craigslist
| for years.
|
| Airbnb won because:
|
| - Better design, easy to use, nice pictures they took
| themselves at first (per PG's advice)
|
| - Integrated payments and reviews in a seamless experience
|
| - Popularized the idea of sharing a space when the host is
| there
|
| - Offered unique accommodations in urban places
|
| - Lots of buzz about treehouses, castles, teepees, shipping
| containers, etc.
|
| - Their timing benefited from the Great Recession
|
| - Very good at promoting their rag to riches story with
| YC's help
|
| - Also you didn't need to constantly repost like
| Craigslist, just post once
| keiferski wrote:
| I agree with the reasons for their success, but I don't
| believe that any of those alternatives allowed you to
| book a room/couch in someone's apartment. They were
| merely ways to either use properties for vacations
| (VRBO), semi-hotels like beds and breakfasts, or just
| regular renting space (Craigslist) for short/long term.
| Not the same thing as AirBnb at all.
| dowager_dan99 wrote:
| >> - Popularized the idea of sharing a space when the
| host is there
|
| this was not a popular option, and I don't believe was
| ever intended to be. It also opened the door for VRBO to
| gain traction explicitly marketing NOT sharing
| accommodation. The "rent out your spare bedroom" has
| never been a major component; it was a fake-out to
| counter the regulatory & licensing complaints they were
| facing.
| thrw42A8N wrote:
| Yeah, back then Booking was hotels only, not people's
| apartments or couches.
| j45 wrote:
| The first resonating problem you solve is rarely the bigger
| problem you end up completely solving.
| keiferski wrote:
| But AirBnb didn't "completely solve" the hotel industry,
| and hotels still exist. If anything, they seem to still
| basically be operating in the same space as they started:
| owner-based rentals, for both individual rooms and entire
| properties.
| j45 wrote:
| It disrupted it in the way of bringing new inventory
| online, and owning demand search for lodging while
| travelling, without owning any assets like hotels.
|
| This pattern, of owning demand for food (instacart),
| transport (uber, etc), delivery (uber eats, etc) is a
| different model that doesn't own the assets outright and
| facilitates it instead.
| nonameiguess wrote:
| What do you mean no similar service? You put it in your own
| sentence. couchsurfing.com was founded in 1999, launched
| the website in 2004, and still exists. It was, of course, a
| nonprofit founded on a principle of reciprocal generosity,
| not a way to make money, so it might be fair to say no
| similar service existed _for homeowners looking to rent out
| spare rooms without a formal lease agreement_ or people
| looking to turn property into a hotel without it being
| zoned or licensed for that.
| keiferski wrote:
| I literally mentioned couchsurfing in the previous
| sentence, so yes, that is obviously what I meant: no
| similar business services existed.
| ActionHank wrote:
| Steve Jobs or maybe just Apple used to pit teams against each
| other to develop a solution to a problem and then pick the
| strongest of the two.
|
| It also offers a convenient way to pull investment out early if
| the doppelganger startup isn't meeting targets. Just get the
| original startup to buy them out.
|
| It's not something that is a negative for YC, but it could be
| for the startups they back.
| drewda wrote:
| Even today there are decent odds that within Apple the macOS
| and iOS groups are locked in a multi-decade long fight in
| which one may prevail...
| throwaway894345 wrote:
| Reminds me of how pelicans will raise two chicks and then
| kick the weakest of the two out of the nest and devote all
| future resources to foster the stronger of the two.
| YCombinator as convergent evolution, I guess.
| dxbydt wrote:
| > how pelicans will raise two chicks and then kick the
| weakest
|
| there is a youtube video ( pls don't watch ) that gave me
| nightmares for days on end. i had completely forgotten
| about those pelicans and now you had to bring it up again
| in the comments. the little pelican had a broken leg. It
| was limping, so mom and brother together pushed it out of
| the nest. Very cruel.
| alganet wrote:
| Pelicans are brutal mindless beasts. They are known to
| fly to neighbour nests and eat other birds, sometimes
| other pelicans.
|
| So similar to companies.
| osigurdson wrote:
| Agree. I have watched several YC videos where they state this
| again and again. What they are less specific about is how
| precisely founders are selected.
| synergy20 wrote:
| last time I read it's concentrated to a few elite school
| graduates
| fsckboy wrote:
| > _Steve Jobs or maybe just Apple used to pit teams against
| each other to develop a solution to a problem and then pick
| the strongest of the two._
|
| probably that's Apple. Steve Jobs is more famous for jumping
| from the failing project (Lisa) onto the winning team
| (Macintosh)
| JohnMakin wrote:
| Worked for a major ecommerce company that did this too - It
| was extremely unpleasant to work under (yet profitable if you
| won) and I don't like the practice but it was pretty
| effective. I'd guess that YC would take the "sea turtle"
| reproduction pattern here of hatching a bunch of mostly
| similar turtles and hoping a couple of them make it to sea.
| Stinks for the small guys that don't make it though.
| Lerc wrote:
| I think this is what happened with the Dune PC game. They
| both turned out pretty well so they released the second one
| as Dune II. A 'sequel' despite the fact that it was not a
| follow-on, nor did it bear any similarity to the other
| contender. I'm not sure which game was more commercially
| successful but Dune II was certainly the most influential,
| launching the modern realtime strategy format onto the PC.
| mrcwinn wrote:
| They say that, but what if the opposite was the actual truth?
|
| Look every VC is "founder friendly" because without founders
| there's no deal flow. At the end of the day though every VC is
| optimizing for exit value.
|
| So it makes sense to bet on the same idea twice. If Founder A
| screws the pooch, you've still got Founder B.
| ericjmorey wrote:
| This matches typical VC investment patterns.
| Taylor_OD wrote:
| The CEO of YC gave a talk about how you should first assemble a
| founding team and THEN come up with an idea. The idea seems way
| less important than identifying founders they want to back.
| itsoktocry wrote:
| > _The idea seems way less important than identifying
| founders they want to back._
|
| Especially when you can take an idea you like from a team you
| don't, and give it to a team you do!
| itsoktocry wrote:
| > _It 's almost impossible to know if an idea is good at the
| early stages_
|
| But identifying the "right" people is easy?
| thatguy0900 wrote:
| It's not, but that's ycs entire business model
| throwaway314155 wrote:
| Spoiler alert: it's "easy" when you narrow down to
| applications who come from wealth and/or went to a
| prestigious university.
| shahzaibmushtaq wrote:
| A good idea will not scale if the founder and founding team
| are bad, and a mediocre idea will scale if the founder and
| founding team are good.
| light_triad wrote:
| Picking people is also hard, but if you narrow it down to:
|
| 1) folks who follow the directions on the application, 2)
| have the technical ability to build, 3) demonstrate high
| achievement in school/career, 4) show commitment/persistence,
| 5) have an idea that makes some sense, 6) are able to clearly
| communicate the idea, 7) have good team dynamics, 8) have
| some plausible strategy for growth
|
| AND are willing to sell 7% of their startup for 125K
|
| then the resulting pool of startups is probably smaller than
| you would think.
| soheil wrote:
| "Don't have to be unique" is very different than "actively
| trying to copy".
| vonneumannstan wrote:
| They have shifting and conflicting and nonsensical reasons for
| what they do. Just like PG lambasting someone as being too
| stupid to see when they asked why so many YC companies are
| things that should just be features on other software.
| tptacek wrote:
| You mean they're just a bunch of people working on a
| complicated problem? Why, I never.
| meta_x_ai wrote:
| HN has turned into an anti-billionaire, anti-VC, anti-success
| cesspool. It's a very dangerous echo chamber that'll destroy
| within
| cyanydeez wrote:
| Sounds like you're describing complicated nepotism.
| bhouston wrote:
| I think this is actually okay. Execution matters, not the idea.
| Also if YC was trying to do coordination between its portfolio
| companies, it would be against the interests of the founders
| themselves because the founders do not care if another company in
| the YC batch succeeds or fails - they don't have a stake in that
| other company.
| typeofhuman wrote:
| > Execution matters, not the idea.
|
| Execution matters _as much as_ the idea.
|
| A good idea executed poorly produces bad results.
|
| A bad idea executed well produces bad results.
|
| This is what YC is hedging (was it the execution or idea) by
| investing in duplicative startups.
| bhouston wrote:
| I guess I am saying that ideas are a dime a dozen. Every idea
| will likely get executed by multiple teams - it is incredibly
| rare for an idea to only get explored by a single team. Those
| teams that succeed did so because of execution.
| _fizz_buzz_ wrote:
| It's more like 90/10. 90% execution and 10% idea. And
| actually almost all successful startups didn't have
| "original" ideas:
|
| - google wasn't the first search engine
|
| - facebook wasn't the first social network
|
| - tesla wasn't the first electric car
|
| - ChatGPT wasn't the first chat bot
| snarf21 wrote:
| I disagree. True "good execution" will not produce bad
| results over the medium and long term but that is what good
| execution is actually solving for. Good execution should
| recognize when/how pivots should be made to produce value.
| evoke4908 wrote:
| > Execution matters, not the idea.
|
| This is the core ethos driving Chinese manufacturers to rip off
| anything and everything they can
| bhouston wrote:
| > This is the core ethos driving Chinese manufacturers to rip
| off anything and everything they can
|
| I think everyone does this. We just like to focus only on
| Chinese companies when they do it, because many times when
| Chinese companies do it, they do it so well that it is a
| threat.
| mhh__ wrote:
| Hedge funds that use a "pod" structure (Chinese walled groups of
| traders) will hire one pod to mimic another pods strategy. Not
| hard to guess why.
| petesergeant wrote:
| I don't mean this in a bad way, but like, at this point YC's
| business model is spray and pray right? They weed out obvious
| losers, and then use vibes to pick a section of the rest, push
| them through a standard accelerator program, and demo day at the
| end, and this works because having been accepted into YC is like
| being able to say you went to a fancy university: no guarantees
| on future performance, but you're probably not an idiot.
|
| They should be (and are -- YC Fall Batch!) trying to maximise the
| number of companies they take on while not diminishing returns
| below their cost of capital and brand dilution.
|
| This is not a boutique investment shop.
| RecycledEle wrote:
| YC should back duplicate startups because each startup's chance
| of success is low. If it makes sense to back a startup with a 10%
| chance of being a big company later, then a second such startup
| also makes sense, even if there is a 1% chance that they both
| make it and one of them is not needed.
|
| The problem is when someone says the quiet part out loud, and the
| duplicate startups start talking to each other. The people at one
| startup refuse to do useful work because they incorrectly believe
| the other startup have a better idea. You want to leave those
| decisions to senior management, who can move technologies to make
| one company successful.
|
| Have you ever suddenly received an influx of employees because
| someone jast realized that there was a duplicate company doing
| the same thing (fake gasp) and that it was time to combine the
| best parts of both the get a product? Somehow, despite nobody
| knowing there were duplicate startups, a proof of concepts has
| been working for a few months combining the best bits from each
| of 3 (fake gasp) startups, and the third one had very little to
| contribute so you will not see their people around.
|
| I'm sorry if my post hurts anyone's plans. Fell free to delete
| it.
| whoknowsidont wrote:
| I think a different, perhaps weird, way of looking at this is
| that YC looks at the founders first and then market opportunity
| ("idea") secondly as justification.
|
| YC doesn't need a single version of an idea to "win", and it's
| often stated plainly it doesn't even necessarily value the "idea"
| behind a lot of these investments but the founders themselves.
|
| If you look at it that way, it's no surprise that multiple
| startups are working at the same market opportunity ("idea"), and
| that YC actually just wanted the founders themselves regardless
| of whose execution of the "idea" ends up winning (if any).
| paulryanrogers wrote:
| The cynic in me wonders if one of their goals is to keep the
| most talented people away from the competition, as cheaply as
| possible. With the goal of preventing independent competition,
| which could be seen as a greater threat to their golden boys.
| jjulius wrote:
| Pardon my ignorance, but is it wrong for my reaction to this
| piece to essentially be, "... okay, and?".
|
| If we're being honest with ourselves, platitudes are just
| platitudes and the ultimate point of YC is to further enrich
| investors, and to enrich founders. _Of course_ they 're going to
| try everything they can to make that happen.
|
| It's not like YC's #1 mission is, "Do original, world-changing
| things", no, it's, "We want more money".
| oceanplexian wrote:
| There are a lot of people who seem to think that zero-sum
| economics is how businesses work when it couldn't be farther from
| the truth.
|
| For example, if I open a bar downtown it may attract 100
| customers. But if two entrepreneurs open two bars next to each
| other, they might attract 300 customers between them. The same
| can apply to entire market segments.
| neallindsay wrote:
| Making lots of bets is a core part of the venture capital model.
| swaptr wrote:
| Not surprising. This reminds me of HBO's Silicon Valley:
|
| Ron LaFlamme: So Pied Piper, You're one of Peter's compression
| plays, huh?
|
| Richard: One of? How many does he have?
|
| Ron LaFlamme: Not too many, like six or eight.
|
| Richard: Okay. Why are there so many?
|
| Ron LaFlamme: You know how sea turtles have a s*t ton of babies
| because most of them die on their way to the water? Peter just
| wants to make sure that his money makes it to the ocean.
| pilingual wrote:
| "Y Combinator seems to be the perfect place for mergers. Every
| winter for the past three winters, Y Combinator has funded a
| podcasting company. In winter 2017, Breaker. In winter 2018, The
| Podcast App. And in winter 2019, Brew."
|
| https://dan.bulwinkle.net/blog/there-should-be-more-mergers/
| joshdavham wrote:
| Any idea why mergers aren't more common? The article doesn't
| really seem to have an answer to that.
| debacle wrote:
| How much should one company with a 40mm valuation and no
| revenue pay for another company with a 25mm valuation and no
| revenue?
| cynicalpeace wrote:
| "That is already being done" is a good sign in the world of
| startups. It means there is a market.
|
| It's hilariously used to shoot down startup ideas.
| Jabbs wrote:
| Does anyone know the best alternatives to YC?
| jakubmazanec wrote:
| Is this surprising? almost 10 years ago even Silicon Valley (the
| TV show) made fun of the fact that the main guys' company was
| only one of many compression startups their investor invested in.
| frigidnonce wrote:
| Diversification is a hedge against ignorance. Investors are
| always more ignorant than founders to begin with (breadth vs
| depth), and at the stage YC backs most companies at, even the
| founders don't have much of a clue how successful they will be.
|
| This is the "correct" investment behavior.
| dowager_dan99 wrote:
| >> The Silicon Valley dream is to build a tech startup that is
| such a unique idea it alters the commercial universe and turns
| its founders into billionaires.
|
| The headline is a false assumption. While there are still people
| who are trying to build off unique ideas to change the world, it
| seems very few of them are motivated by becoming billionaires.
| The latter have no intention or particular desire to create a sea
| change, and actively look to (at best) have a "X for Y" strategy.
| Even more are "Yet another <already successful> X".
| postit wrote:
| To be honest, I would do the same.
|
| If it's a good idea, maybe the only difference between It's
| succeeding or fail is the team executing it.
|
| So in order to maximize the outcome, you double the bet and it's
| even better than have someone doing it outside your control
| Taylor_OD wrote:
| I dont think the headline is all that surprising. YC makes a lot
| of investments and most start ups fail. They are hedging their
| bets.
|
| The more surprising thing about this article is that one YC
| company blatantly copied anothers product. To the point where the
| founder said they would start over and build their own product.
| logtrees wrote:
| Makes sense. That way it reinforces those accumulated companies
| so they remain best in class.
| tptacek wrote:
| And? As the article says, they've funded thousands of companies.
| Of course there's overlap. It would be weirder, much weirder, if
| they kept a conflict list like a law firm and avoided funding
| things that intersected their portfolio.
|
| It's hard to emphasize enough how little YC knows about the
| companies they fund, and how little influence they have over the
| companies once they've funded them. Often, there's barely a
| company at all, just a small team that YC takes a shine to. Even
| if YC wanted to keep a conflict list, they couldn't: companies
| joint the program with one idea and launch with another.
|
| To have a problem with that is to have a problem with the entire
| concept of YC; this is the process they invented, that they're
| notorious for.
| fsckboy wrote:
| > _It would be weirder, much weirder, if they kept a conflict
| list like a law firm_
|
| modern portfolio theory (MPT) is the only acceptable measure of
| investment performance, and calculating co-variance is the
| salient feature of MPT, so no, it would not be weird to track
| overlap.
|
| to sum it up in a single sentence, is OpenAI a good investment
| for you at $50 a share? Without even knowing anything else
| about the company, if the rest of your portfolio is already
| 100% shares of OpenAI, or even AI companies, no, for you,
| probably this would not be a good investment: the market does
| not reward diversifiable risk.
| tptacek wrote:
| At 5000 companies this is a little like saying that investors
| should avoid the S&P 500 because it includes both Coke and
| Pepsi.
| seizethecheese wrote:
| It's clear why this is good for YC, but it's probably also not
| terrible for founders. I've heard of funds that avoid funding
| competitors passing in investments because they didn't want to be
| locked out of other startups in the space. This removes the
| perverse incentive that the better your idea, the more
| scrutinized you might be as a founder.This also allows YC to be
| fund a lot more companies than otherwise.
| nextworddev wrote:
| It's more the case of YC batch members often copying fellow batch
| or older batch's standouts usually
| josh_carterPDX wrote:
| We took our startup through Techstars in 2016. The next year they
| took a very similar company that ended up getting more funding
| and attention. We didn't understand it at first, but looking back
| it was definitely because they were the better team.
|
| In the end, both teams failed to scale so it ended up being the
| wrong platform at the wrong time, but if one of them could have
| taken off then the bet they made would have paid off.
| anthomtb wrote:
| Have we forgotten how venture capital (VC) is supposed to work?
|
| A new technology comes out. The new tech has high startup costs
| and low marginal costs. You invest in 10 companies developing
| this new tech. 8 go bankrupt, one hangs on by a thread, the last
| one returns 1000x on what you invested.
|
| Last I checked, Y-Combinator is still considered a VC firm.
| Investing in a bunch of firms doing the same or very similar
| things is what YC should be doing.
| dehrmann wrote:
| They're really just keeping multiple irons in the fire. If the
| space is a winner, another player increases YC's chance of
| betting on the winner. More players also means the space gets
| explored in different ways.
| bookofjoe wrote:
| https://news.ycombinator.com/item?id=42235793
| j45 wrote:
| The idea doesn't have to be special, who you are and how you case
| can be.
| jrvarela56 wrote:
| I think it's a Jeff Bezos quote, but forgot the source:
|
| "I'd rather have 2 of something than 0"
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