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How Y Combinator made it smart to trust founders

elbowgreasegames.substack.com

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Re: How Y Combinator made it smart to trust founders

#41

Post by intalentive »

This mirrors the military doctrine of "mission tactics" which entrusts subordinates with wide latitude in executing orders. But it requires a high degree of alignment and competence, which explains why YC focuses on founders over product or idea.

This makes sense in a dynamic environment with sensitive local conditions and "network lag" in the chain of command. But in more static or settled market environments it may be wiser (for investors) to focus elsewhere and restrict founder autonomy. We see this pretty commonly with successful founders who get "phased out" and replaced with more experienced managers.

I wonder how much this sort of "distributed decision-making" has been formalized and studied.

Re: How Y Combinator made it smart to trust founders

#42

Post by baxtr »

intalentive wrote: post #41

This mirrors the military doctrine of "mission tactics" which entrusts subordinates with wide latitude in executing orders. But it requires a high degree of alignment and competence, which explains why YC focuses on founders over product or idea. This makes sense in a dynamic environment with sensitive local conditions and "network lag" in the chain of command. But in more static or settled market environments it may…

There is a good book on that subject by Stephen Bungay called "The Art of Action". He explains the concept of Auftragstaktik. Great book, although a bit hard to read.

Re: How Y Combinator made it smart to trust founders

#43

Post by conartist6 »

spacemarine1 wrote: post #23
conartist6 wrote: post #6

I wonder how long this can survive now that their priority is to fund AI users to use AI

AI tech has the spotlight right now for sure amongst VC’s. But I believe AI is also a huge tailwind for video games. Namely, small, clever teams will be able to do big and entertaining things that were not possible before. (But yes there will also be tons of slop.)

It can't be a tailwind for a whole industry. It can only take from some and give to others.

Re: How Y Combinator made it smart to trust founders

#44

Post by spacemarine1 »

dpoloncsak wrote: post #9
daedrdev wrote: post #5

Earlier quoted context omitted.

Great point, I think I'm just being overly pessimistic Related, I find it interesting is that gacha games seem to ahve the highest possible returns but almost none are made by western game companies.

Aren't games like CSGO, FIFA, and Overwatch almost exclusively run on gacha-profits?

I think it is possible to be successful in games without being predatory. Humble Bundle was a demonstration of that.

I don’t believe that ultra-predatory mechanics are long-term sustainable. They usually yield a “ring of fire” effect that creates a growing ring of users for a while but really you’re burning out all your core users and will implode. This is how many describe the original Zynga model.

Supercell (founded around the same time) has cultivated longterm ecosystems and IP by respecting their players.

EGG takes a similar long-term perspective.

Re: How Y Combinator made it smart to trust founders

#45

Post by conartist6 »

seizethecheese wrote: post #37
daedrdev wrote: post #3

Earlier quoted context omitted.

I feel like this is impossible given how many games flop each year.

VC math follows a power law and expects almost all investments to flop, and the one winner to pay for it all. The question here is not about the flops it’s: are the winners big enough?

And now that they're eliminating diversity in their investments are you still certain they will pick the next generation's winners? All they're investing in are AI companies...

Once upon a time someone like me for whom engineering competence is a core aspect of my identity would have never considered turning my back on YC. But now I'm just embarrassed by them. The things they now think are the only things worth investing in mostly make me want to vomit, like the vibe coding casino-IDE startup. As someone who still espouses their old values rather than their new ones, I'd rather succeed on my own.

Re: How Y Combinator made it smart to trust founders

#46

Post by spacemarine1 »

conartist6 wrote: post #43
spacemarine1 wrote: post #23

Earlier quoted context omitted.

AI tech has the spotlight right now for sure amongst VC’s. But I believe AI is also a huge tailwind for video games. Namely, small, clever teams will be able to do big and entertaining things that were not possible before. (But yes there will also be tons of slop.)

It can't be a tailwind for a whole industry. It can only take from some and give to others.

The industry has experienced slowed growth and is restructuring which is scary for many people right now. There have been continuous layoffs and studio closures. That sucks (though is not all caused by AI).

But a few quick thoughts: Video games have always been about cutting edge technology. Because they are interactive, they are best positioned to leverage AI tech. (unlike static media)

Prototyping tends to be the most important but most neglected process for finding the fun. AI is a catalyst for rapid prototyping such that a studio can more quickly build and assess game loops and de-risk the rest of their dev cycle before staffing up or pulling team members off other projects.

AI may long-term create more leisure time macro-economically for everyone, meaning more consumer time that may be consumed playing games. (Owen Mahoney thinks the industry will soon triple in size)

Re: How Y Combinator made it smart to trust founders

#47

Post by Grosvenor »

baxtr wrote: post #42
intalentive wrote: post #41

This mirrors the military doctrine of "mission tactics" which entrusts subordinates with wide latitude in executing orders. But it requires a high degree of alignment and competence, which explains why YC focuses on founders over product or idea. This makes sense in a dynamic environment with sensitive local conditions and "network lag" in the chain of command. But in more static or settled market environments it may…

There is a good book on that subject by Stephen Bungay called "The Art of Action". He explains the concept of Auftragstaktik . Great book, although a bit hard to read.

There's also Franz Osinga's book Scince, strategy, and war, which covers John Boyd's work in detail.

Re: How Y Combinator made it smart to trust founders

#48

Post by spacemarine1 »

bob1029 wrote: post #40
daedrdev wrote: post #3

Earlier quoted context omitted.

I feel like this is impossible given how many games flop each year.

Making a game that will sell well on Steam is typically much harder than finding a bunch of boring business leaders and pitching them a SaaS or consulting package. On the surface it might seem simpler to do a game, but once you get into the mechanics of building, testing and publishing something for the masses, the fear of cold calling or emailing total strangers begins to evaporate quickly. About 99% of the work you…

Many people agree that being a video game founder is harder than being a tech founder. Staying small and being as resourceful as you can is a good way to mitigate risk.

Re: How Y Combinator made it smart to trust founders

#49

Post by spacemarine1 »

7777777phil wrote: post #26
Analemma_ wrote: post #7

Earlier quoted context omitted.

I don't think that's possible and frankly I'd much prefer capital not even try. To the best of my knowledge, the only games which generate the really outsized outcomes you'd need for a VC portfolio do really gross, anti-player shit (gacha, lootboxes, whale fishing, etc.) to get it. Or they become distribution monopolies like Valve, which is fine-ish when Valve is private but would be a ongoing catastrophe if it had b…

I appreciate this perspective.. but I think there might be a false dichotomy here. Some of the biggest gaming success stories didn't rely on exploitative mechanics - Minecraft, Among Us, even Fortnite's initial success was based on solid gameplay before the monetization kicked in. The question is whether you can build sustainable platforms that create genuine value rather than just extracting it. Steam takes 30% but…

Agreed. It is possible to make money in video games while treating customers with respect. This is the way! (and what EGG looks for because it builds stronger IP and longterm retention and good will)

I helped Indie Fund Hollow Knight back in the day and look a them now!

Re: How Y Combinator made it smart to trust founders

#50

Post by conartist6 »

spacemarine1 wrote: post #46
conartist6 wrote: post #43

Earlier quoted context omitted.

It can't be a tailwind for a whole industry. It can only take from some and give to others.

The industry has experienced slowed growth and is restructuring which is scary for many people right now. There have been continuous layoffs and studio closures. That sucks (though is not all caused by AI). But a few quick thoughts: Video games have always been about cutting edge technology. Because they are interactive, they are best positioned to leverage AI tech. (unlike static media) Prototyping tends to be the m…

1. "More leisure for everyone" is utter bollocks. We know it doesn't work like that. If it did we would all be doing nothing but leisure because of how much leisure we gained by switching to email.

2. Games are just code that's fun. How does this sounds as a process for making something fun: "Start by de-risking." Hmmm OK, yes, this tracks with my experience of private equity companies being the most innovative and successful creators of games.

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