Are you building a company, or your credentials?

Educating, finding, hiring, training, cultivating and retaining talent is extremely difficult. Companies recruit at colleges, where students have worked hard enough on their credentials to gain admittance and even harder getting good grades and joining clubs and participating in activities. They will identify a few good candidates. They will recruit these candidates, along with every other relevant company. Making offer letters, a few will accept. These will be trained for months, then cultivated for years. Now you've got to get these people to work together in teams, and some of those teams will work out and some will not. Most workers will leave in a few years, some even sooner. Some will grow, advance and go on to become leaders. One will go on to become the company's CEO. The funnel chart on this system is daunting, going from millions of students to one CEO.

On the other hand, Y Combinator will take anyone with a convincing video, the 'right look' (see: Moneyball) and attitude, and gung ho fervor. The program teaches these teammates to work together to build and ship experiments quickly and get real people using them, and then to adapt to new data to conduct new experiments. Upon graduation, the teams get more money to continue conducting experiments as they seek their market. Most are acquired in 'acquihires.' Buying a working team bypasses the lengthy process outlined above. Huge value to the acquirer, and contracts/incentives tie the team up for a few years.

Bottom line: these acquihires are profitable for the acquiring companies, the founders, and Y Combinator. Making the acquihire machine turn does not require an idea, a cohesive team, or much of anything except the ability to successfully complete the training Y Combinator provides. Some companies go on to find a market, the rest get the degree, a bonus and a job.

YC training is boot camp. It is the new Harvard, formed to match post-web realities.

Or something.

* Not asserting Y Combinator discriminates, but any time 3 people in a room make a decision without a lot of hard data on the candidates' performance at that task... bias must enter. This is one checkpoint in a new system.

http://www.exratione.com/2012/01/the-future-of-the-venture-c...

The present direction of some incubators is towards the concept of schools, in the older sense of the word. To some eyes present experiments look like an early stage in the development of a new scholastic institution of practical business development. With well tuned entry requirements such an entity might serve as a filter that allows venture investment in all graduates with comparatively little detailed due diligence, trusting to the quality of the school (the filter) to raise the expectation value of these blanket investments. Experiments in this sort of model are already taking place at Y Combinator, and others will no doubt follow. If they see success, expect to see more rapid movement towards formalized schools of practical entrepreneurship, which will orbit established venture funds to act as feeder mechanisms. You might look on this as a structured, industrial manifestation of the informal process of apprenticeship and networking that always existed in the startup community - and either like it or loathe it for exactly that reason, depending on your tastes.

It is worth remembering that while venture capitalists and organized groups of angel investors can enter the space of incubators-as-schools from one side, existing scholastic institutions can just as well enter it from their side. I can't image that the traditional schools will be any good at this if they do try, given long-standing academic hostilities towards the business of being in business, but some of the younger less hidebound institutions might well be successful. Consider the present University of Phoenix, a future Khan Academy, and a range of other entities establishing their own early stage venture funds, or partnering with venture funds to do something new in this space - it isn't so far fetched an idea.

Note that a more scholastic form of incubator is, to my mind, a very different concept from what I'll call Vingean Scholastics. This is the vision put forward by Vernor Vinge in Fast Times at Fairmont High in which building startups is a part of the curriculum for all young people and at least ramen-level economic success is necessary for graduation at a high school level. Building a business, or at the least a short-term economic success, is how the students pay for school and how the schools earn their keep as businesses themselves. In that fictional near future, this is all a part of teaching young adults how to live in a world of constant, enormously rapid change driven by computational technology, in which the idea of holding down a job doing roughly the same sort of thing for five years is laughable, and everyone must know how to be an entrepreneur in order to flow with the pace of change.

But this too will come to pass, I think, with Vingean Scholastic organizations as another sort of filter to build and channel groups of startup founders - with, collectively, a positive expectation value on investment - towards future forms of venture fund.

Aren't you just reading into it what you want to read? I don't think that was the point of the article at all.

Anyway, I think that school-like institutions for entrepreneurship with a formal process that you need to go though are destined to fail. They go against everything that entrepreneurship stands for. As soon as they become successful, they will start attracting people, who just go there for credentials, but don't have the actual passion it takes to start a company. The guy in the OP is the best example.

And yes, ideally it's better to be acqui-hired than hired. For a software engineer with the right talent mix it's the difference between being paid $300k for 3 years work (which is nothing to sneeze at, certainly, but you can't retire with it), vs being paid $3-30m+ -- if the upside scenario happens, of course. And these aren't even mutually exclusive choices.