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Is Y Combinator worth it?

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Re: Is Y Combinator worth it?

#71

Post by SpeckOfDust »

langitbiru wrote: post #50
SpeckOfDust wrote: post #46

Slightly different question. Is Y Combinator still worth it in its fully remote format? Didn't they themselves said they couldn't deliver their value remotely a couple of years back?

Covid-19 changed many people's mind. I mean, big companies like FB / Google didn't believe remote works in the past. Then, they accommodate remote workers now.

True. None of the bigtech companies ever took a hard stand against it though. Some people were always working remotely in some capacity in these companies.

I'm curious if there are people who've done YC in both remote and non-remote format. Would be interesting to hear their comparisons.

Re: Is Y Combinator worth it?

#72

Post by 3np »

doh wrote: post #64
langitbiru wrote: post #47

Earlier quoted context omitted.

"abusive investors" -> Tell me more about them.

I believe this was meant as a sarcasm, but in a chance that it wasn't here are some extreme cases (these are all different investors): - they asked me to pay for attendance in their seminar that will teach me how to raise money before they consider investing - I got stood up for a meeting with no word from the person. He followed up two weeks later that they are not interested. 3 years later we met at an event thrown…

Thanks for sharing. BTW, you still have time to insert extra whitespace for those bullet points.

Re: Is Y Combinator worth it?

#73

Post by [deleted] »

amacneil wrote: post #57
dustingetz wrote: post #15

> If your company is really successful, you may find yourself in a position where you need to negotiate some of those pro-rata rights in order to make the round work (i.e., make enough room to accomodate new new investor demand). ... early seed-stage commitment may upset other investors. Other angel/seed/Series A investors can become unhappy when having to live on a cap table alongside YC. What's this about?

YC takes 7%. Lead seed investor wants to take 15-20% to make it worth their while. Lead series A investor wants to take 15-20% to make it worth their while. Other investors and option pools each round increase dilution further. Founder doesn't want to give up 50-60% of company by their series A, so because they gave YC 7% they must either convince the lead investors to take a smaller percentage, or convince YC or see…

[deleted]

Re: Is Y Combinator worth it?

#74

Post by throwaway2048 »

benjaminjosephw wrote: post #67
closeparen wrote: post #40

Earlier quoted context omitted.

At some point “chugging along” rounds down to “failure” for employees with equity compensation. Particularly at 10 years when it expires.

Who would consider building a successful and stable business a failure? Surely not the people that helped build it. Isn't early employee equity compensation more a case of "if the founders make a lot of money from this, I deserve a fraction of that too" rather than being an IOU in place of compensation?

The people who invested money in it expecting explosive growth at high valuations.

Re: Is Y Combinator worth it?

#75

Post by codingdave »

marcinzm wrote: post #52
msoad wrote: post #49

Earlier quoted context omitted.

As an engineer I would love to work for a company that makes money and pays me from that money.

Curious, why does it matter if your paycheck comes from VC money or revenue money? In the end the same amount comes to your bank account.

Because VCs work by pushing for high returns on some of their investments, not low returns on all of their investments. They therefore push for business decisions to force high growth, when there can be a better chance of success with a slow burn in some situations. So you end up taking business risks to chase high growth, instead of simply focusing on a niche market to stay profitable, and having a flexible timeframe for growth.

As an engineer, this does hit the paycheck directly - if they go hire more devs to speed product features to market while at the same time increasing sales and marketing... it can change from a bootstrapped model with no end to the runway into a situation where you do have a runway, and it is counted in months, not years. Instead of steady pay with plenty of time to deliver new product, I'm being pushed to deliver quickly, and if we fail, we're unemployed.

And yes, we probably get lower salaries for that model because we are taking less risk. But steady, lower stress work is desired by some of us, and a small bootstrapped group delivers it better than a VC.

Re: Is Y Combinator worth it?

#76

Post by ArtWomb »

I think the "magic" of YC is that it attracts "genuine hackers". People with technical wizardry, who don't readily fit in traditional academic or industry roles (though they typically create tremendous results in those arenas). What's surprising is how uniformly distributed that talent is throughout the world.

My main feedback from YC SUS was that there should be a second course. The first semester is about everything around the product: ideation, corp formation, staffing up, etc. But there shuld be a dedicated semester just on product design. Perhaps modeled on the Stanford D.School product design course. With a library of case studies from past YC companies. As well as a practical component, akin to the YC SUS Design Sprints.

Product in this sense isn't just about say "creating a new podcast". It's a deep dive into "how was the iPod born". And how that in turn gave rise to the entire podcast industry ;)

Re: Is Y Combinator worth it?

#77

Post by ticmasta »

marcinzm wrote: post #52
msoad wrote: post #49

Earlier quoted context omitted.

As an engineer I would love to work for a company that makes money and pays me from that money.

Curious, why does it matter if your paycheck comes from VC money or revenue money? In the end the same amount comes to your bank account.

There can definitely be different psychological motivators at work IME: VC => we're building something big and I want to ride on the rocket ship; Bootstrap => We're cultivating something that embodies part of me; I'm in the product.

Of course there's always the other outcome where both of these are just jobs and you are not invested beyond that. Then there's no real difference beyond the economics.

Re: Is Y Combinator worth it?

#78

Post by [deleted] »

benjaminjosephw wrote: post #67
closeparen wrote: post #40

Earlier quoted context omitted.

At some point “chugging along” rounds down to “failure” for employees with equity compensation. Particularly at 10 years when it expires.

Who would consider building a successful and stable business a failure? Surely not the people that helped build it. Isn't early employee equity compensation more a case of "if the founders make a lot of money from this, I deserve a fraction of that too" rather than being an IOU in place of compensation?

[deleted]

Re: Is Y Combinator worth it?

#79

Post by aerosmile »

samblr wrote: post #68

Let's compare seed valuations & dilutions of : a YC company vs Non YC Company YC : takes 7% for 125K and then let's say you raise $1m at $12m post money. Total diluted 15%. Non YC : If you want to raise $1m for same 15% dilution - your post money would be $6.5m. So these are pure numbers[1] With YC, I guess Founders' gain a network, bay area connections etc [1] : https://docs.google.com/spreadsheets/d/1kxOBF0CPhcktmg…

Highly underrated comment. A lot of people are approaching this topic from a philosophical point of view, which tells me that they haven't gone through YC's Demo Day and don't understand how it's different from other incubators' Demo Days. It's very different - there is an entire cottage industry of YC-only or YC-preferred funds built around this event, and if you play your cards correctly, those funds will be fighting to get onto your cap table. I do know that there are investors all over the world, but investors don't behave like this anywhere else.

Re: Is Y Combinator worth it?

#80

Post by ticmasta »

benjaminjosephw wrote: post #67
closeparen wrote: post #40

Earlier quoted context omitted.

At some point “chugging along” rounds down to “failure” for employees with equity compensation. Particularly at 10 years when it expires.

Who would consider building a successful and stable business a failure? Surely not the people that helped build it. Isn't early employee equity compensation more a case of "if the founders make a lot of money from this, I deserve a fraction of that too" rather than being an IOU in place of compensation?

not if you traded early comp for the promise of astronomical equity returns. Especially if you were sold hard on this by the founders; in this scenario they have failed because the goal was not to build a stable, self-sustaining business.
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