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Reflections on my time in Y Combinator

chrisfrantz.com

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Re: Reflections on my time in Y Combinator

#21

Post by bko »

bluelightning2k wrote: post #20
bko wrote: post #9

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…

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…

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.

Re: Reflections on my time in Y Combinator

#22

Post by adam_arthur »

bluelightning2k wrote: post #20
bko wrote: post #9

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…

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…

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.

Re: Reflections on my time in Y Combinator

#24

Post by chrisfrantz »

bko wrote: post #18
chrisfrantz wrote: post #10

Earlier quoted context omitted.

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 rema…

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.

Yep, it’s a fair critique and I agree it’s odd.

Re: Reflections on my time in Y Combinator

#25

Post by dheera »

swyx wrote: post #19

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…

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.

Re: Reflections on my time in Y Combinator

#26

Post by chrisfrantz »

dheera wrote: post #25
swyx wrote: post #19

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…

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…

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.

Re: Reflections on my time in Y Combinator

#27

Post by bko »

CoffeePython wrote: post #2

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 th…

>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"

Re: Reflections on my time in Y Combinator

#28

Post by dheera »

chrisfrantz wrote: post #26
dheera wrote: post #25

Earlier quoted context omitted.

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…

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.

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.

Re: Reflections on my time in Y Combinator

#29

Post by jacquesm »

swyx wrote: post #19

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…

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.

Re: Reflections on my time in Y Combinator

#30

Post by therusskiy »

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.

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