[HN Gopher] Reflections on my time in Y Combinator ___________________________________________________________________ Reflections on my time in Y Combinator Author : chrisfrantz Score : 71 points Date : 2022-08-22 18:49 UTC (4 hours ago) (HTM) web link (chrisfrantz.com) (TXT) w3m dump (chrisfrantz.com) | CoffeePython wrote: | 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 the | progress they can make in just 3 months. YC helped me and my | company tremendously. | chrisfrantz wrote: | Thanks! Yeah, sounds like we shared a similar experience. YC | definitely starts to make anything feel possible. They give you | the tools, it's up to you to take it from there. | bko wrote: | >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. | | When you talk about an "ambition multiplier", do you mean | personal wealth? YC is great for receiving favorable terms in | the future. But you can't really take that money out of the | firm, or pay yourself some stupid salary. It's just paper | wealth. And a bigger valuation and more ambitious growth | usually means scaling up a lot faster (fail fast), rely more on | future rounds and maximize your valuation. | | For a fund they'd prefer a 10% chance for $100 million | valuation to 90% chance for an $11 million valuation, but | personally I would prefer a 90% change for a million opposed to | 10% chance of 10 million, because I can't diversify and run 10 | startups simultaneously like a VC can. So I guess that's the | downside of the "ambition multiplier" | edgyquant wrote: | I'm at my third YC company and it seems like each time what I | thought my career was completely changed. I'm leading a whole | company engineering team where at my last job I was a principal | engineer who spent Covid working (sadly) alone. | | My first I thought I'd be lucky to land a entry level gig and | did so well I become the lead engineer over a couple of guys | within a month (as soon as we found them.) | | I would never have gotten that experience that fast. Sure | looking bad I was a senior at entry level because I had | practiced so much: but at a traditional corp I would have had | to wait years to get to that level of experience where YC | basically throws you at it and hopes you don't fail | swyx wrote: | 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 (120k divided by 7%, 380k | MFN SAFE aside). Lets say you come out of it worth $10-20m on | average. Maybe the connections and other stuff gives you value | worth $5-10m. so if your business is valued above 15-30m you | should consider NOT going into YC. | | Is that a good way to think about it? any of these numbers you | would change? | dheera wrote: | 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% of their | working hours having coffee chats and preparing demos, since | investors generally had their own contorted idea of what a good | demo is before they would invest, and it was usually not what | the customer wanted. Being able to get twice as much work done | in return for 7% was a good deal. | | I don't think that applies anymore, sadly, with the large batch | sizes they accept now. Nowadays you'll have to waste half your | summer having coffee, not have guaranteed investment, and still | give away 7%. Not a good deal. | | Also, if you live in the bay area, it's fairly easy to come | across most YC advice and get investor intros just by going to | enough house parties with seasoned founder attendees. | chrisfrantz wrote: | 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. | dheera wrote: | 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 any equity at all. | | So if you're doing it for $500K, I'd say there are better | ways to get $500K than giving up 7% of your company. | | Now if YC handed out $2M and cut their batch size by a | factor of 4 (being more selective in their applications), I | think it'd be a really good play for them. | therusskiy wrote: | Isn't running a business and especially a startup is | supposed to be risky? | | "We have an idea that's not materialized yet, give us | money so we can live comfortably and reap all benefits it | it works out and not lose anything if it doesn't." - | sounds like a wishful thinking. | dheera wrote: | > 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 million things that will bite you if you don 't | have cash and runway. | | "Supposed to be risky" isn't a good way to think about | it, IMO. A lot of the time you'll hear people romanticize | a couple of fresh graduates living on couches in a | garage, living on ramen, and building a unicorn, but the | reality is that most billion-dollar companies weren't | actually built that way, and it isn't the best way to | optimize your chances of success. | yurisagalov wrote: | I think it's really hard to put a purely monetary value on YC, | but I think it definitely does a disservice to say that the | program only adds $5-10M worth of value. | | If you speak to YC alumni, you'll hear from many of them that | YC made them dream bigger. There's a founder in the comments | here who said YC was an "ambition multiplier" for him[1]. How | do you value that? | | [1] https://news.ycombinator.com/item?id=32556060 | swyx wrote: | right, sure, that is a huge value. but it's not, for example, | $1B worth of value. should John Carmack do YC? no. etc. | | the goal of rational decisionmaking is to try to convert all | factors into some kind of comparable numbers, and $ is just | one utility function on which to project all these | nonmonetary qualities. call it "utils" if you like | (https://en.wikipedia.org/wiki/Utility#Cardinal). | | so fair point if you disagree with 5-10m of nonmonetary value | equivalent. Is it more like 50m? 100m? what is the lowest you | can make the upper bound? | | a fun academic question for most, but for me personally, i | have been offered a $2-3m seed pre product so that suddenly | became a lot more real. | jacquesm wrote: | If all you see is the numbers, then yes. But there is more to | YC than just the numbers, I think they do not only increase | your chances of raising money (and likely more than if you did | it yourself) but they are also _very_ experienced in mentoring | start-ups to the point where they become viable businesses and | that is quite difficult. | nkotov wrote: | I had a similar experience (S20) and one of things I wished I did | more of during the batch was to connect with more people, not for | the sake of selling something but to just meet people from all | over the globe. I'm working on a new idea now and most likely | will apply for YC again as well. | chrisfrantz wrote: | Good luck! | therusskiy wrote: | Very strange hearing such stories. | | I remember a company I worked for went through a YC interview. | | We were rejected with "we are not sure you can deliver". | | At that point, we had built 2 mobile apps, a big customer | wesbite, rich portals for partners, contractors and admins, had | thousands of customers, were almost profitable. Our CEO had a | history of delivering in that he sold his previous startup. | | I must sound bitter, but it's pretty gut-wrenching when someone | gets throgh by making UI mockups during a zoom call. | chrisfrantz wrote: | I could be wrong here, but it sounds like you would have been | further along than anyone I met in the batch. The majority of | folks I spent time with were starting from scratch. | therusskiy wrote: | The founder never told it in great detail, but he did say he | thought "they started on the wrong foot" with the | interviewers. | | Now that I think about it, you mentioned you had a laugh | together. | | Like with everything in life, there's probably a big | subconcious bias towards people you like that extends to | products they build. | upupandup wrote: | I'm willing to bet race has some underlying influence whether | they like to admit it or not. | therusskiy wrote: | The founder was jewish in his late 30s :-) | balsam wrote: | Probably not skin color, but maybe founder was born in an | authoritarian place (like Russia)? Far more likely that he | used Windows, Word, or preferred Java, though. | henning wrote: | > But, we got to the 2 week mark with 0 revenue and we still | didn't have a completed product. That's not really an excuse that | flies in YC | | What are they going to do, take their money back because you | didn't meet their ludicrous immediate-term expectations? | tptacek wrote: | Nothing would have happened at all. | chrisfrantz wrote: | Hah, well they didn't! But the high expectations definitely | encouraged us to perform at a higher level, even if we didn't | hit the initial goals. | alixanderwang wrote: | _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 of companies doing | the same (e.g. Notion, Replit), so I know it's not completely | off-book, but I constantly wonder whether there is downside to | that approach of focusing on sales in the beginning. I can guess | things like less likely to be innovative, but is that true? Maybe | since they average being alive longer than the ones that focused | on product in the beginning, any potential downsides are negated | in the long term (e.g. just innovate later with the infinite | runway they now have). Would love to see some study/survey on | this. | falsemove wrote: | Thanks for sharing. It seems like everyone was mostly focused on | sales and some were doing quite well. Were there any strategies | that stood out to you that were working? Was there some leg up | provided to companies in their sales efforts who were in YC? | [deleted] | talhof8 wrote: | Great read! Applied for W23, so it was super relevant and | interesting for me to read. :) | chrisfrantz wrote: | Good luck! | talhof8 wrote: | Thanks! | bko wrote: | 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're investing in the person, but you either have the | right experience or not. If you had the right experience and a | product, you should probably look to bootstrap or other funding | options. | | A stat I read before is that 29% of the batch has just an idea | while 10% had more than $50k of monthly revenue when accepted. | Imagine being that guy that grinded to create a business that's | generating a million a year and getting the same terms as some | dude with just an idea and "the right experience"? | | https://www.ycombinator.com/blog/meet-the-yc-winter-2022-bat... | intelVISA wrote: | We considered YC at my last venture but these stories seem too | frequent nowadays, we opted to just grind out an MVP instead | and pitch directly. | chrisfrantz wrote: | I understand the sentiment. The reason the mock-up was quick to | create was because the entire thing was already done in my | head. There were plenty of folks with very little experience | and some with quite a bit of experience. I can't say that I | have any real idea what goes on in the minds of the folks | making the decisions, but they do seem to pick an outsized | number of winners. Whether we're in that bucket or not remains | to be seen. | bko wrote: | Yeah I get it, I don't mean to disparage what you did and it | looks like it worked out great for you. But how many hours | would you say you've spent sketching it out, in your head at | least? | | It's just odd to me that someone can compare a million dollar | ARR business with a cocktail napkin business sketch and give | the company's equal terms. | chrisfrantz wrote: | Yep, it's a fair critique and I agree it's odd. | kevingadd wrote: | Selection bias is a tricky question when evaluating "they do | seem to pick an outsized number of winners." Does that mean | that the people they pick off personal traits and a 15 minute | demo are intrinsically winners, or is it just possible for YC | to turn almost anyone with the right skills into a winner? | chrisfrantz wrote: | Great question, I imagine there is some truth in both | statements. | | The failure rate in the startup world, especially when | success means a billion dollar exit or IPO, is incredibly | high though. | dontich wrote: | Note : Chris is selling himself short by a large margin -- he | has a shit-ton of expertise on the growth hacking side of | things. (We were also in W22 batch and he was great for getting | advice from on various things) | bluelightning2k wrote: | This is a fallacy. The deal other people get has no bearing on | your company. | | Yes. If you compare what you did vs what they did. But really | it's like winning the lottery and complaining that some other | winner bought less tickets. | | Imagine actually getting into YC and turning it down because | someone you think is less worthy also got in. | | Tbh it sounds quite entitled. | | At worst those other companies are unrelated. At best they are | inspiring. | bko wrote: | I think its entitled to think that your idea is worth a | multi-million dollar valuation without a single thing to show | for it. | | If you get into YC and you actually have a product or | revenue, it's almost certain that someone else would give you | better terms because they care about product or revenue. It's | like getting a 1600 on your SATs and going to a school that | doesn't check your SATs. Is it the best school for you? | Maybe, but prob not. | adam_arthur wrote: | Just a signal that quality of the investments appears low | these days. | | Obviously a big win can erase a lot of misplaced bets, but I | wonder how many of the pure idea, low effort startups ended | up reaching major success. | | To me it speaks of a non serious/committed entrepreneur, | because the amount of cash that Y combinator supplies makes | no material difference in the ability to actually bootstrap | the project. | ipaddr wrote: | Who cares what someone else received vs what value they give? | What I care about is what I receive vs what value I sell makes | sense at my stage. This is about making your startup succeed | not beating other companies in the program on terms. | | If an investment of 7% for 750,000 makes sense go for it. Who | cares if someone else gets 8% or 6%.. it's not your money. | bko wrote: | If you think having a product/revenue is valuable and you | have a product/revenue and someone offers you some terms and | they don't care about your product or revenue, then you're | probably not getting the best deal you could get. It could be | the best deal, sure, but that's the floor, because that's the | deal you could get without a product or revenue. So that's a | big indicator that you're getting a worse deal than you could | from someone who cares about product/revenue. | | It's not even consistent with YC philosophy about the idea | doesn't matter, MVC, get to revenue fast, etc ___________________________________________________________________ (page generated 2022-08-22 23:00 UTC)