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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

#51

Post by faangiq »

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…

This is a good way to look at the ROI.

Re: Reflections on my time in Y Combinator

#52

Post by dheera »

upupandup wrote: post #48
dheera wrote: post #35

Earlier quoted context omitted.

> Isn't running a business and especially a startup is supposed to be risky? No, it is risky, and you want to actively eliminate as many of the risks as possible. Having a decent sized pile of cash is one way out of several of the risks. Supply chain shortages, founder medical expenses, mishaps and accidents, rising costs of living, personal emergencies happening to founders or employees requiring leave, there are a…

If something is risky, you should treat it as such. What I see people caught up in the startup/hustle/entrepreneur porn is the belief that they are different. No, statistics still show 95% of startups fail. You shouldn't be telling people to spend your youth on something that has 5% of less of success.

It depends a lot on personal circumstances, and this is what I wish was mentioned more.

For example, if you graduate with an engineering degree, can code, and don't have any grave medical conditions or loans to repay, I'd wholeheartedly encourage trying to start a company if you want to. It's risky in that the company would have a 95% chance of failing, but in that case you still learn a lot and it's fairly easy to land a job if you keep up your technical skills.

If you're stably married, your partner earns a high income in a stable job, and is supportive, that's another case where I'd say go for it, take the calculated risk.

In a lot of other cases, such as if you're knee deep in student debt, or (live in the US + have a medical condition + not a lot of savings), I'd advise building up a modest amount of savings first.

It really depends.

Re: Reflections on my time in Y Combinator

#53

Post by tetromino_ »

dheera wrote: post #28
chrisfrantz wrote: post #26

Earlier quoted context omitted.

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…

> It's also the ballpark of what 2 technical founders could easily make by working for ~6 months in the bay area

I think you're assuming the two founders don't need to pay rent or taxes.

Re: Reflections on my time in Y Combinator

#54

Post by taaron »

alixanderwang wrote: post #31

We could easily have slammed together off the shelf components and potentially grown at a similar rate. Also potentially not, sales is hard! Seeing founders with less care for detail and more for the sheer growth of their user base was impressive and deflating. It felt like everyone I compared myself to, they were devoting 90% of their time to selling and 10% to building. I share the feeling. There's success stories…

I think one downside is that because you are optimizing for sales in the short-term, it can lead to product design/architecture decisions which unknowingly constrain the direction or limits of future development/innovation (or at least make it very expensive to retrofit). I think Notion is potentially suffering from this now as users try to push its limits into more complex applications.

Re: Reflections on my time in Y Combinator

#55

Post by personjerry »

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…

> A year post-batch and I find my default state is much more ambitious than before.

But you no longer have a choice right? Now that you're VC funded you're expected to hit that 1000x valuation?

Re: Reflections on my time in Y Combinator

#57

Post by dustingetz »

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…

startup valuation milestones are based on how well you can communicate why/how you will win to the next set of investors, what your next set of risks are and how a few more data points remove them and extrapolate to an inevitable future business. present cash flows don’t matter, only future cash flows do. we can only invest in what we understand, so more clarity = more prospective investors = more competition for your round. traction numbers are super helpful to communicate that certain risks are cleared but are not necessary early if your story of how/why you will win quickly is crystal clear without them. this applies from concept stage all the way to public cos like Tesla.

Re: Reflections on my time in Y Combinator

#58

Post by vecter »

charxyz wrote: post #56

Genuine question — what is work-life balance like in YC? Is it possible to maintain a decent work schedule or are you essentially sacrificing that to be in YC (or start the company in general)?

That's entirely up to you. It's your company. Startup life in general is probably going to be busier than working a corporate job, but the answer is: whatever the company needs. Sometimes that will be 80 hour weeks, and sometimes you can do 40 or take a vacation (which you should do from time-to-time anyways).

In my opinion, you should do everything you can to maximize your valuable time during the YC batch, so it'd make sense to work harder then. But even a startup is not everything in your life. If you have a family and kids, those need time also.

Re: Reflections on my time in Y Combinator

#59

Post by wawjgreen »

swyx wrote: post #49
sevazhidkov wrote: post #45

Earlier quoted context omitted.

The problem with these monetary estimates is that they involve current valuations, which are probabilistically based on future outcomes, not enterprise value. PG once formalized YC value prop as average outcome multiplier [1]. Whatever the current valuation, would YC improve your expected outcome over lifetime of the company on 7.5%? If yes, then you should do it. [1] http://www.paulgraham.com/equity.html?viewfullsit…

interesting framing. (and awfully convenient for yc/pg, haha, but fine) this feels like a second order analogue to the "ideas vs execution" debate - we know that idea is worth ~0, execution worth ~100 - but the harder question is - what is YC-fueled 3 months (where lets say you spend max 24 hours with YC partners/peers/events) + say 1-2 years worth of residual relevant connections worth vs a ~10 year hard grind on yo…

to swyx: wow, i like the way you approach problems--and how you see things. Do you recommend any good books on critical thinking?

Re: Reflections on my time in Y Combinator

#60

Post by swyx »

wawjgreen wrote: post #59
swyx wrote: post #49

Earlier quoted context omitted.

interesting framing. (and awfully convenient for yc/pg, haha, but fine) this feels like a second order analogue to the "ideas vs execution" debate - we know that idea is worth ~0, execution worth ~100 - but the harder question is - what is YC-fueled 3 months (where lets say you spend max 24 hours with YC partners/peers/events) + say 1-2 years worth of residual relevant connections worth vs a ~10 year hard grind on yo…

to swyx: wow, i like the way you approach problems--and how you see things. Do you recommend any good books on critical thinking?

very kind. the silicon valleyite answer is annie duke's thinking in bets. get the book or crank up any of the 3000 podcast interviews she's done.

the realer answer is have about ~16 years of being in love with/thinking about microeconomics. maybe do some math/linear algebra (where you get very used to projecting spaces onto different dimensions), and then make a few high stakes decisions with regards to job negotiations optimizing for cash, salary, learning value, career path, etc.

but dont think for a second i have any of this figured out haha. i just write well.

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