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Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

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Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#11

Post by pg »

RyanGWU82 wrote: post #10
amichail wrote: post #2

Since advice and connections are the major benefits of Y Combinator, why not take on many more startups without funding most of them at all? I suspect that many people would be happy with such an arrangement and Y Combinator may end up making quite a lot more money as well.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#13

Post by danielha »

YC-organized Startup School supplies advice to a larger audience, along with a chance for connections. I'd also contend that news.yc is another such tool offered by YC.

The summer/winter batches are a chance for picked companies to receive specialized attention. YC can't do that for everybody.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#14

Post by Harj »

pg wrote: post #8
brett wrote: post #6

Earlier quoted context omitted.

Yeah, given the amount YC gives it's as if they just want to make sure poorer founders won't have to get day jobs in the time they've alloted to impart advice.

That's exactly how we look at it: the most important thing we offer is advice and connections, and the money is just to pay your living expenses so that you can focus entirely on the startup for long enough to get it properly launched. It always annoys us when people say YC is a ripoff because we want an avg of 6% of a co for $15-20k. One reason we don't argue (much) with people who say that is that we treat the ques…

hoarding your equity like it's gold dust is a typical mistake of inexperienced founders. we did exactly the same and it got us nowhere. when we realised our equity was worthless unless it was held by the right people, with the right connections, things moved far more smoothly.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#15

Post by vikram »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

It'll save you from reading the applications :-))

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#16

Post by danw »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

Thousands of little YC hatchlings would be incredible. I suppose YC news could be seen as one way of trying to scale the process of information sharing. It also covers advice in that you can pose a question to the community and get good answers usually.

Now how could the connection sharing be scaled? I wonder what would happen if someone was to post "I need introductions to VC's" or "Know any good lawyers?" to YC news. Would they get the help they needed?

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#17

Post by python_kiss »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

The issue with scalability is the same problem many corporations faced 50 years ago. This was before Ray Kroc turned McDonalds into a "turn-key" operation. This model provides the franchisee licensed trademark along with tried and proven methods of doing that particular business; which, in our case, involves establishing mini-YC companies to fund startups.

For scalability, YC will need to experiment with establishing several offices around the country and then provide guidance, connections, and resources from the central office to all the smaller branches. The essence of turn-key operations is to work on building a business rather than the product.

I don't claim to know much about this. So if anyone is interested, they should check out "The E-Myth Revisited".

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#18

Post by nostrademons »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

How about hooking up previously-successful YC entrepeneurs with new applicants? At this point, I'd value the Reddit guys as much as mentors as you or RTM (no offense).

YC would then grow like a B-tree. In the beginning, all founders are on the same "page". As the page grows beyond its size limits, the page is split, successful founders are promoted up to the parent level, and there's more room to new founders at the leaves.

You'd need to run it by former YC-entrepeneurs, and it'll probably be a few years until their startups are self-sustaining (or bust) enough for them to take on other projects. But if they're like other entrepeneurs at all, they'd probably love to take a role in mentoring new YC applicants.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#19

Post by pg »

nostrademons wrote: post #18
pg wrote: post #11

Earlier quoted context omitted.

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

How about hooking up previously-successful YC entrepeneurs with new applicants? At this point, I'd value the Reddit guys as much as mentors as you or RTM (no offense). YC would then grow like a B-tree. In the beginning, all founders are on the same "page". As the page grows beyond its size limits, the page is split, successful founders are promoted up to the parent level, and there's more room to new founders at the…

We already do this. We actively introduce new founders to "alumni" that can help them. There are now a lot of them. At the first dinner, instead of having an outside expert speak, we invite all the alumni. This time there were more speakers than audience at that dinner.

The peer-to-peer aspect of YC already scales. The hard part to scale is what we partners do.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#20

Post by jullrich1 »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

VCs = Angels = YC = Agents…They all finance and support young entities for a % of a future asset.

Compare a very scalable model, IMG Worldwide. Take baseball for comparison sake.

Talent Scout = PG colleague who reviews applications using performance criteria = bank using advanced credit scoring system to approve or reject loans

Reddit = Alfonso Soriano = Successful loan applicant

Paul Allen = PG = Drew Rosenhaus

YC is popular not because they aren't a VC but because they are a VC who provides more perceived value for what they charge. That means just like IMG, their model is scalable as long as their value proposition is maintained and continues to be favored. All YC needs to do to fund 1,000 companies next year is to hire/acquire/develop 50 more PGs with specialties in more focused markets and sub-markets. Not simple but definitately doable. Also fully automate the application and evaluation process so that "people" only touch the top 3%. Continue to be careful with funding amounts but generous with time and connections. Continue to distribute and increase your value through your customers by financing their meeting each other and adding value to each other. Basically, YC is a social network with most of the value right now distributed offline through their customers. News@YC will change that to be sure. I think it's not only possible to grow up real big, but the direction you are already headed. Just make sure your scalability has a bit of Ben & Jerry's thrown in, they did a great job of keeping their value system in place long after they grew. PG, you mentioned it's the scaling of the partners responsibilities that is hard. If the partners maintain the integrity of the barriers to entry (active role in developing and maintaining your application evaluation tool) and support (ensuring key events and high-level connections are solid and cascaded down from their organizations to yours) you can do it. Just my $.02.

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