Full disclosure, I'm a YC alum whose last start-up was acquired by Google, who applied to this batch and didn't get an interview.
YC is not the stamp of quality it once was, to be sure, though it still works as social proof, because investors (especially VCs) want to invest in companies other investors like (or failing that, companies they imagine other investors would like). YC would say that they aren't trying to be a stamp of quality or social proof, they are just trying to help start-ups.
If I had to take a stab at articulating how YC has changed, it's that it's become a VC, picking ideas to generate returns.
This rejection email from 2022 that someone posted online cements the idea for me (excerpted):
"Unfortunately, we've decided not to fund {Company} this batch. We enjoyed our conversation today and were impressed by you as founders building something they are passionate about bringing into being. However we weren't convinced that this product strategy is going to yield a big company in its current form. ...
Of course, things are very early and you are still figuring out the right way to build and structure your business. If you're able to make significant progress with it, we'd be very interested in hearing about it for a future batch."
Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback.
It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky.
Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools. Cryptocurrency is a whole exploration of this effect, turning hype into money by building a streamlined mechanism for bringing in greater fools, but we can also look at examples like Theranos. (There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself.) The point is, the greater fool "strat" works. In a moral vacuum, if you are trying to maximize returns, you lean into it.
If I were running a fund like YC with basically unlimited money at my disposal, balancing the goals (strategies?) of 1) make money for money's sake, 2) advance technology for technology's sake (let's go to Mars, etc), and 3) make the world a better place, I would focus on (3). Like can we at least try to build a unicorn that feeds people, and maybe fail, rather than trying to build FooBarBazCoin that eats the word, and failing? We mostly see a mix of (1) and (2).
> It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky.
It seems to me that there was an early '10s milieu that enabled YC to behave like it did. Web apps and mobile fundamentally transformed everyday life and communication in very visible ways and there seemed to be a lot of low hanging fruit. I observe, similar to your 2), that YC seemed to have a bias toward products for tech people by tech people, and that wasn't a bad strategy, because there was still a lot of plumbing to do; there still is, but I feel that there are established solutions for the mass market to a degree that there wasn't.
There were a lot of preferable options for connected, generally non-technical people after the dot-com implosion, for the first ~15 years of the 2000's. I joined a comp sci grad and his engineer brother in a software startup because we couldn't get jobs with an established company, big corp, investment bank or other much more likley "sure thing". The equation has completely changed, and the startup landscape with it.
Startups went from “let’s become the next Google” to “let’s get acquired by Google”. FAANG+ have become way too big and have effectively become a multi-opoly (oxymoron and a half) that has ossified the entire market.
10-20 years ago the internet was still an unpopulated continent that everyone was rushing to settle. It just isn't the same wide open green pastures it used to be. This is my guess of what is the largest reason for the declining success of YC companies.
That seems to be a lost art, these days. I worked for a corporation that had one of the most powerful brands in the world (but has taken some real hits). I watched them dilute that brand, and make lots of money, but really get clobbered. They are now regrouping, and, I hope, re-establishing their original luster.
They were able to take a fairly small corporation, and compete with mega companies, on the strength of their brand. When they grew rather explosively, in the 1990s, they sowed the seeds of their own demise, in the mid-2010s.
I would say you could trade hard-earned goodwill and respect for a number of different things, maybe because it is such an unquantifiable asset.
I think earned leadership can be legitimately exploited where everybody wins up to a point, and if you put your mind to it you can engineer an operation to approach that point more successfully than those who do not.
You could be monetizing your "prestige", at a maximum sustainable level, without drawing down the asset.
OTOH it would be possible to go overboard on the march to maximum monetization, and arrive where the asset begins to dwindle. It may not be such a clear picture since it's so unquantifiable, and dwindling returns as a consequence can be some of the most easily misattributed.
That doesn’t provide any information since an incubator like YC is hoping for Stripe/Reddit successes. That’s not changed.
But I know W20 guys who pivoted inside YC three times, and eventually raised money. Their company didn’t exist when they applied. So what OP (of Etherpad IIRC fame) posted about the rejection comes as a surprise to me.
> That seems to be a lost art, these days. [...] I watched them dilute that brand, and make lots of money, but really get clobbered.
Maybe this is the normal lifecycle of a successful organization, unless one decides to grow more slowly? Infinite growth is what ruins most things. Scaling is hard.
YC seemed to attract genuine founders, back when starting something up was not so trendy. As it became fashionable, and YC began to be seen as the Harvard of startups, it has still attracted some great founders but also some less genuine ones. All successful organizations experience this issue.
A key element here is that neither PG nor Jessica Livingston seem to be actively filtering out people. I doubt anyone from batches curated by them would have posted on Twitter bragging about quitting a $270k job to work on a re-licensed fork.
It was sad to read about this whole affair and, frankly, I think discussion on HN has become less interesting, reflecting a similar trend. Front pages were full of technical discussion back in the late 2000s and early 2010s. Content of that kind is less frequent these days.
YC's original appeal was for builders/creators who were truly passionate about building a great product that solved a real problem. Dropbox for example at the time.
In my opinion, effectiveness of anything dilutes over time especially as you increase volume. There is no way you can maintain the same level of vetting and quality when you have a batch of 50 vs batch of 500+ which is now where YC is. So they must have to pivot to a different model of vetting companies.
I am curious as to why they continue to do more batches instead of less. Is it really a numbers game now ?
For example, what was the last truly great product out of YC built by a true hacker/team ?
It looks like a numbers game. As Brian Chesky said, Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. Now, YC seems to be operating in 'Manager Mode.'
When we got accepted into S23, our call started with Seibel saying something along the lines of "We like you, but we're pretty sure you're going to have to pivot." A non-trivial amount of my batch mates also joined with minimal product strategy, so I don't think you can read too much into the rejections.
I don't have anything to add re: YC over the years, just that my anecdotal experience differs.
> Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc.
Imagine you ran a startup accelerator that didn't invest in a particular business model or product, but instead invested in a team of founders you thought had the potential to produce something great, even if it takes a few pivots.
Now imagine you didn't want to invest in a given company. Would your rejection letter say you disliked the founders, as people?
Of course not, you want to be on friendly terms, just in case. Far safer to just be "unconvinced" about their "product strategy" in its "current form".
This sounds like an episode of "Shark Tank" - If you have $1 mil in orders which will generate a profit of 500k they will fight each other to invest 100k for 40% of your company. If you dont have a full order book and a production pipeline - no bueno.
I can only assume your product didnt fit into the current hype investment bucket (you should have put Ai in the pitch and you would have been funded). LPs in the VC funds want their Blockchain Ai and whatever hype they hear about exposure - the VCs have to deliver it and have it in their portfolio. The investment hype cycle is self reinfocing; as the investment headlines get bigger and the hype gets bigger.
He won't be starting such a fund for awhile, because the two of us are building company to make technology to foster a creative and curious childhood. We would be a good fit for any investors trying to do (3) though :)
This feels like a side tangent, but why have you focused on technology for creative and curious childhood? I'm curious if you have considered the following:
I.e. Maria Montessori (founder of the Montessori methodology of teaching) did a pretty good job showing that's the natural state of kids, and there's quite a bit in her teachings about the importance of physical things, being outdoors, etc.
There's some pretty strong reasoning that technology might in fact be the problem, and while I'm sure you can make better technology with that focus in mind, it seems like a better approach might not be technology.
I definitely don't think babies should have iPads or preteens Instagram, but I believe that technology can be great for childhood because I had a computer from age 4, in 1987, and it was great for me. I learned how to program, I wrote an entire ~50 page book (which I wouldn't have done with pencil and paper), and by middle school I was sitting down with adults and showing them how to use the computer, which was really empowering for me.
Balls and blocks and Magna-tiles and Legos are forms of "technology" that we universally recognize as good for kids, and a semiconductor junction doesn't magically make something bad for kids. What makes today's technology bad for kids is that it's designed to be hyper-addictive and hyper-extractive.
In short, I am a huge fan of Maria Montessori, and the company we're building, to a first approximation, might be what Maria Montessori would have built herself if she was a TypeScript developer in 2024.
This feels like a side tangent, but why have you focused on technology for creative and curious childhood? I.e. Maria Montessori (founder of the Montessori methodology of teaching) did a pretty good job showing that's the natural state of kids, and there's quite a bit in her teachings about the importance of physical things, being outdoors, etc.
There's some pretty strong reasoning that technology might in fact be the problem, and while I'm sure you can make better technology with that focus in mind, it seems like a better approach might not be technology.
It does not seem very "viral" or income-generating. I know this is premature at this point, but children don't have much disposable income, is it reasonable to expect to make money off of this?
There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself
---
Forget "ideally": the experience and world-view of the collective deciders for that money is financial. Other factors are filtered out. Vanity investments - for the glory of the human race or technological progress - only reflect inefficiency and excess discretion that are squeezed out with a few selection iterations or process controls. (This is setting aside the large cohort of big-money behind overt/covert national funds, with major non-financial strategic objectives.)
That finance focus won't change with YC's focus or with more morality or regulation. The only path I see is innovation not in finance or technology but in law: to somehow create and sell a stake in the future, to avoid future environment and peoples being now basically a huge externality sink.
"YC's reputation" matters mainly insofar as it provides access and credibility for individual YC startup's, based on their collective promise. If governance access and credibility were conditioned on long history/holding period of protections for future, then both selection and resources would flow in favor, and we'd have a race to the top instead of the bottom.
The most inexplicable miss by VCs (YC included)is the lack of interest in funding climate change remediation. Billions of people to help and billions of dollars to be made. E.g.: Could funding protection of Tuvalu’s dry land and status as a nation pay dividends through licensing/leasing fishing rights?
Such things are an area for innovation, and tech could be a part of it, but isn’t.
Prometheus has all the hallmarks of vaporware, over promised (self proclaimed "first electrofuel unicorn" lol) and under delivered. They've been at it for over 5 years and 120M dollars later they have nothing to really show.
120M could have bought a lot of rainforest or planted a lot of trees.
That's not inexplicable. There's not much interest in it because a lot of things founders believe about climate are false and believing false things is a quick way to lose money. Tuvalu is a good example of this phenomenon. If you'd invested in a startup planning to make money by protecting Tuvalu from global warming, you would have lost all your money because Tuvalu is growing, not shrinking.
Results highlight a net increase in land area in Tuvalu of 73.5 ha (2.9%), despite sea-level rise, and land area increase in eight of nine atolls. Island change has lacked uniformity with 74% increasing and 27% decreasing in size. Results challenge perceptions of island loss, showing islands are dynamic features that will persist as sites for habitation over the next century
You didn't get unlucky with your choice of Tuvalu, a lot of common beliefs about the impact of climate change are like that. There's little discussion of this phenomenon, because it's taboo to criticize climate related narratives. Only argumentative gits like me are willing to do it. But the smart money knows this and quietly stays away.
BTW this isn't specific to climate. I've known and talked to a few VCs over the years, and what I learned is that if there's an important and valuable area they're all collectively ignoring it's usually because they know things that other people don't. For instance, you may have noticed that Silicon Valley VCs usually avoid biotech startups, despite biotech being seen at one time as a high tech industry with potential similar to computing. That's because such startups often come out of academia, and VCs were aware of the replication crisis/fraud problems in biology earlier than most.
Kench et al is a historical study of satellite imagery. Unless they made a counting error there's no way for a new study to invalidate it.
But let's take a look. That document starts by admitting that it's motivated reasoning:
"this report is written in support of the objectives of the Rising Nations Initiative (RNI), enabled by the UN Global Center for Climate Mobility"
and it goes downhill from there. They're providing ammo for their clients, not attempting to neutrally answer questions. As a consequence they never mention the fact that Tuvalu is growing. They very carefully avoid the topic of whether the country is getting bigger or smaller despite that this is the entire problem the report is predicated upon, indeed they don't even seem to cite Kench et al, let alone try a refutation. Instead they rely heavily on presenting a few isolated data points followed by model predictions (of the type that were already proven wrong) and give you a good hard inferential shove in the direction they want you to go in.
This isn't scientific but it is what the UN Center for Climate Mobility needs in order to advance their own mission of maximizing immigration. It's clever in a way: when someone calls them on it, they just say "oh! well we never said Tuvalu was sinking, that's all in your head, don't blame us we're just scientists it must be journalist's fault".
Which is the problem I'm highlighting. There's lots of misleading material out there. You could read this report and very easily conclude Tuvalu sinking beneath the waves is a great problem to devote your life to. Investing in solutions to non-existing problems can sometimes work temporarily, but it won't give you a new Google or Apple.
Apples and oranges. The 2018 study shows increasing landmass at the coast lines in middle to large non-sand islands during the raising water levels.
The newer 2023 study merely shows the rising sea levels, as also shown in the first study. It concentrates on the risks of more salt water intrusion, so they'd need to invest in closed sewing systems or salt water filtering systems.
What I am seeing is that among Harvard/Stanford grads, being the CEO of a venture backed startup is the highest status. Some of them hate technology and view programming as "low class". But they still go into it, so when they see their peers its something to brag about. They may even stretch the runway as far as possible to maintain the status.
YC is just another brand they can add. It was so odd for me when I first realized this is how it works. And the investors are often just investing based on where they went to school. Real metrics dont come into play until later, during which they have the capital to hire people that actually know what theyre doing.
>Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools.
Amen brother. VCs and the Valley elite think the society at large has turned on them, without introspecting on how VCs seem to reward bad behavior and grift.
>Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback.
My controversial opinion is that they should stop giving feedback. "Tis better to be silent and be thought a fool, than to speak and remove all doubt."
My startup got rejected because "valuation is unlikely to cross 100 million". Everyone is entitled to their opinion but we are already at 10m valuation and AI in ecommerce doesn't really have 100m cap.
Most of the founders on reddit and discord take the YC feedback as gospel and give up/pivot when its absolutely the last thing they should be doing. Unfortunately we will always have this power imbalance between VC and startups
> Everyone is entitled to their opinion but we are already at 10m valuation and AI in ecommerce doesn't really have 100m cap.
Or so you think. Keep going at it! Chatting with a lot of enterprise retailers for my startup (not in AI for e-commerce), but there's a shit ton of stuff where AI in e-commerce can help imo.
YC would be stupid if they dismissed your startup on valuation grounds - enterprise retail can't be arsed with this AI debauchery directly but would gladly pay for the privilege of claiming to use AI.
IMHO this post misses the fact that YC becoming a prestige institution is itself a sort of failure mode. You don't want to attract founders who figure YC is a low-risk alternative to grad school that will look good on their resume.
It's tough to avoid that outcome while still conferring positive signal to VCs/potential employees, though.
I'm sure YC/Garry see something in the PearAI founders' ability to market themselves, but I find the whole debacle a bit embarrassing for YC and I know some of my YC batchmates quietly do as well.
For the uninitiated like myself, PearAi just took the source code of continue.dev (not fork, they copy pasted) and did some clunky work on it. That was their entry to YC.
for additional uninitiatedness: one of the founders is "Frying Pan", a popular youtuber. There has been previous discussion on the fact that the cost to build software is approaching 0. If that is given, maybe "taste" is all that matters. Funding a ~productless popular youtuber is a great way to test if "taste" and "brand" is better to invest in than tech in the years to come.
“Taste” is something that’s developed through repetitive exposure to differentiated items in a particular set, combined with extremely high abstract analytical abilities, and that’s something completely different from having marketing or personal branding skills.
I think you’re right that that’s the evaluation happening, but it’s totally misguided. If you’re indexing for differentiating levels of taste I would be very wary of empty vessel young influencers. Taste is built over years and years and imo requires a certain disdain for the crowd. Look at Linus Torvalds as a pinnacle of taste in code for example.
> There has been previous discussion on the fact that the cost to build software is approaching 0.
People have been claiming that since COBOL came out (actually, probably before; I bet some people claimed it about _assembler_), so, er, yeah, will believe that one when I see it.
"did some clunky work on it. That was their entry to YC"
For more context, YC doesn't judge your code, never has. It was never a code quality competition. Orthogonally, they do judge the results (user metrics).
Did they? YC regularly funded competitors. This was always true. Fundamentally, YC is betting on founders. They're optimizing for founders who can move fast enough to find a moat before they die, that's it.
They fund competitors because most YC companies usually pivot out anyway.
> You don't want to attract founders who figure YC is a low-risk alternative to grad school
Of course YC would want that (in the short- to mid-term).
The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that.
The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.
> The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that.
That's really short term thinking.
It might work for a class or two, but eventually VCs will realize that they're getting bad returns from their investments, and YC won't be nearly as attractive as it is today.
For long term success, YC needs to pick companies that will eventually become successful. Particularly the big, standout successes.
> The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.
If you think that's the path to good long-term ROI, I have a startup to sell you.
> but eventually VCs will realize that they're getting bad returns from their investments
I'm not saying that they are necessarily bad returns. It's just that for many reasons there is a strong opportunity for a disconnect between viable business models and seed-investments. E.g. exit event horizons are currently so long[0] that it becomes hard to correlate exit success to seed-funding (for better or worse).
> If you think that's the path to good long-term ROI, I have a startup to sell you.
Oh, I don't disagree with you. But from the actions of YCombinator it seem like either:
- They don't see this as a risk to their long-term ROI (due to some factors we are not seeing here)
- They don't have proper means of self-assessing their selection quality and think they are scaling well while they don't
- The situation is not as bad as the article and some of the comments here make it look like, and everything is fine with YC
Saw one recently that literally forked VSCode and Cursor and called it a company with some really shady practices. Not even sure what YC was thinking with that one, but it indeed falls into the category of comical vaporware.
How did something like this get funded? They must think there will be a follow through to liquidity event, but no clue how. Maybe YC is playing into the bigger fool theory that someone else will come along and pay more so YC can extricate their equity.
A high-quality early stage team that self-selects out of follow-up rounds may be a decent outcome for some VCs. This means early liquidity in all of the "positive" events. If the founders were high quality, spinning an acquihire out can still recoup some of the loss.
The challenge would come where the founders are not serious, and instead are viewing YC as a stepping stone to a level up position in a big tech/large firm. While I'm sure everyone has this idea to some extent as a fallback, you need people to be committed to making their business work.
Sure, that would be a theoretical failure mode. But that's not really what's happening right now, is it?
YC doesn't look to have a problem of people joining just to get the stamp on the resume and then "half-assing" it after they get into YC. I think that's something that YC is still quite actively selecting against. As long as they are selecting companies that make it to a series ~C (which most founders will stick around for as long as they are on an good-enough upward-presenting) YC can (partially) liquidate at good enough fund performance.
> The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that.
This is completely incorrect. They need liquidity events. Simply getting to follow on funding without ever making it to an exit is a negative outcome for YC.
While an exit (= aquisition, IPO and similar) is obviously always the optimal end-goal, every round of fundraising is a potential liquidity event for all existing stakeholders.
It's very common to have partial liquidation from roughly Series B-C onwards on the side of founders (e.g. wanting to keep up lifestyle with your C-level peers; removing personal financals as stress factor) and earlier investors (e.g. their funds entering the liquidation period of their lifecycle).
Just looked up the etymology of prestige and it’s interesting.
It comes from Latin praestigium ("delusion, illusion"), then 1500s French prestige meaning “deceit, imposture, illusion”. In the 1800s it started to mean “an illusion as to one's personal merit or importance, a flattering illusion”.
I would have wrongly guessed it originally meant “good reputation” (same as the article author meant it, I assume) and that the association with bullshit/fakery is just a modern twist from people using the word with cynical irony. But bullshit/fakery was in fact the core meaning.
Without being aware of the etymology I've still had a lifetime feeling since childhood that it is very fragile for some reason that is hard to pinpoint or bring into focus very easily.
Really is about the same feeling as when you know something is hype or BS and for that reason more subject to collapse like a house of cards.
A very straightforward way that this manifests: when a VC funds a developer tooling company, all their other portfolio companies are strongly encouraged to use it. Built in customers! The test is how much revenue you can actually bring in from outside the VC bubble.
The "something" that they see is that they have a 1% chance of success. YC is an investment strategy. They noticed that equity which is 99% sure to be worthless is heavily under priced and bought a ton of it. That bet paid off handsomely.
If your batchmates are seeing embarrassment from who else is at the top of such a funnel I don't think much of their judgment. Investors provide capital, not prestige.
YC was a child of its time though, right? Are you asking what could YC have done differently in the context of its history, or are you asking what a new accelerator started today would look like?
I ask because I’m not sure that now is the time for a new startup accelerator to succeed, and we have no way to predict the circumstances that are required for success without couching it in some major changes to externalities.
Great question; the latter, because as you mention, YC was a product of a moment in time and that moment has passed, but during that time horizon, they were very successful (imho).
Edit: YC says "Build something people want." and so I'm going to riff off of that in a bit of a meta way: "Support experiments worth conducting." The accelerator bit comes in once you've reached product market fit and need fuel for the rocket ship, but until then, you're just running an economic science experiment.
It's interesting to consider what the evolution YC 2.0 could be. I do think we're going to be seeing more innovative organizational models that can be facilitated by adept use of AI.
For example, a network organization that hires individuals and small teams. The organization works on various projects and product streams, which which can be spun out as new businesses.
This is a flexible model that allows for many different outcomes and journeys for the people. Less of a startup factory and more of an enterprise garden.
I like the idea of gateways as a system for managing ideas and new business developments. Regular gateways every 6 or 12 months that assess projects for continuation, funding and further development. People can be involved in several projects.
I see this type of organization structure as a kind of 'hyper network'. By using AI to monitor and report on network activity it should be possible to have effective management oversight, direction and communication ... beneficent controlled creative chaos.
completely data driven and pseudonymous. Everyone enters what they are building, traction, progress so far, team etc and internal team votes based on the data progress without looking at founder profile.
make it fair instead of funding the same golden-spoon cliquey gang over and over again.
YC pretty openly and deliberately tries to convince prospective and actual Big Tech employees who are curious or on the fence to quit and do a startup already. There's a great Startup School video about this [0]. I think the critics are right about "doing a startup" and chasing an exit having become an equally normal, precedented, socially-supported path as joining a big company and chasing promotions. But I'd be surprised if YC itself would characterize that as failure.
HN is a lot more jaded towards startups and founders’ games these days. Back in late 2019 there was this thread about a pre-YC Garry Tan video where the tone of the discussion was fiercely against working for startups, saying it was better to join FAANG or start your own company instead:
There is a part in the Netflix culture doc where it talks about how sometimes people do bad things, and Netflix tries to not overcorrect by implementing burdensome policies on the company as a knee-jerk reaction to a single bad actor.
The conclusion (YC's brand has been tarnished because of the lower quality companies in their larger batches who do bad things) doesn't follow from the evidence of this ONE company doing something that people could view as a low integrity move.
This exact situation could have occurred even if they kept their acceptance rates, and cohorts, incredibly small. There can always be bad actors (not saying this company is a bad actor though). I think you wanted to share your conclusion, even if the available evidence didn't necessarily support your claim.
I think the bigger issue is that the main signal to YC (and other elite institutions) is the acceptance rate (<1%). That's probably the #1 thing people know about YC. A lot of people try to get in, and few do.
The main criticism I have of YC is their constants chants of "everyone should apply!". Here is what you commonly hear:
YC: You should apply to YC!
Person: But I don’t have a product
YC: You should still apply, we let in a lot of people with just an idea!
Person: But I don’t have a co-founder
YC: You should still apply, successful solo founders have made it into the program!
Person: But I [perfectly valid reason not to waste your time]
YC: You should still apply!
Person: Wow, you’re being very encouraging, does this means I have a chance to get in?
YC: Almost certainly not!
At a certain point, I can't really take the org's mission in good faith with this kind of messaging. They want a high application rate, a low acceptance rate (even with bigger batch sizes). Just infinite optionality and founders being strung along.
The reason they want you to apply is twofold -- the application itself is a good exercise in getting you to think about things you should be thinking about. Honestly even if you have no intention at all of applying to YC you should still fill out the application for yourself, it makes you think about important things.
And the second reason is that they get to see as many options as possible, because that's obviously better for them. If every startup in the world applied and they could choose, of course that would be better.
> If every startup in the world applied and they could choose, of course that would be better.
Would it? With numbers that large, how could anyone possibly do a meaningful comparison and pick out the twenty or thirty or fifty that would get in?
In other words, if it's obvious to everybody that you are getting too many applications to meaningfully evaluate all of them, they everybody knows that you are not meaningfully evaluating all of them. You're applying some kind of mindless algorithmic filter to narrow down the possibilities. But that's not YC's brand. YC's brand is providing meaningful evaluation of startups. Once that brand is undermined, it's gone.
This is true of all top universities too. We get so many applications for grad school that we could admit several classes and not lose any quality.
But I would never discourage anyone from applying. Even if the quality is high, having many applicants gives you good 2nd order choices. This depends on what mix of things you care about from DEI, to looking at specific ideas like the YC calls, to hedging across different markets, to building a portfolio that balances short term wins vs. long term hard tech, maybe some fraction you optimize for publicity, or legacies, etc.
So yes, encouraging applications is the smart move even if by your primary metric you can't distinguish between the top folks anymore.
Only if you can actually do the due diligence required to maintain the quality of the student body, which is what you say the objective is. But if the number of applications is large enough, it's simply not feasible to do that due diligence for every application, and no amount of spin will prevent people from realizing that. So no, I don't agree that it's always the smart move to encourage more applicants.
> even if by your primary metric you can't distinguish between the top folks anymore
It's not a matter of distinguishing between "the top folks". It's a matter of whether or not you can plausibly defend the position that you are taking enough of an in depth look at every applicant, not just "the top folks", to maintain your quality metrics.
I'm convinced those that say "I think its a good exercise filling out an application" have never actually read the application
Here are a few questions:
"How far along are you?"
"What tech stack are you using, or planning to use, to build this product?"
"Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making?"
"Who are your competitors? What do you understand about your business that they don't?"
"How do or will you make money? How much could you make?"
It's really not that deep or thought provoking. Its fine, you should have answers for these questions, but its hardly worth a founders time going over this as closely as many do.
> And the second reason is that they get to see as many options as possible, because that's obviously better for them
Yes, that's the infinite optionality for them. If I was running YC, I would obv promote the same strategy. As a founder, I think their incentives don't necessarily align with mine.
I've read the application. In fact I've filled it out three times, once successfully and twice not. It is indeed an excellent exercise. Among many other things: if you're a first-time founder then it teaches you what's important, and if you're a second-time founder then it reminds you. (Many second-timers do sometimes need to be reminded, myself included.)
Then I started to interact with founders and listen to pitches. Oh boy. I used to think that then VCs are just exaggerating when they say they're like 15 minutes into a conversation and have no idea what the founders are saying. Wow. That's so not true.
The whole ecosystem would be better if every founder at last filled out that sheet.
i realised this too late. and then noticed -- the type of founder they let me. for us the unwashed masses, who are blue collar coders who went to state school. we're just filling up rejection numbers.
yet the arbiter of what determines who succeeds is not YC but the market.
I don't think the main issue here is that a YC company acted with questionable ethics. As you say, people are people and that can happen with even the strictest due diligence.
The problem for YC's prestige stems from funding a company with an unoriginal idea and not even the beginnings of a prototype. I'm aware that YC funds founders more than it funds specific ideas or projects. Nonetheless, you'd expect an impressive group of founders to do more than just fork an existing open source project.
In short, cases like this show that YC is getting (non-illegally) scammed by some of its applicants. That makes YC look foolish.
Even the evidence listed (the retweeted tweet in the article) doesn't support the claim of the author to me. If you open source software and give it a license that permits commercial use on top of it, then you are okay with that use. If I was a cohort of a team that built an open sourced AI editor I would think they would WANT me to build on top of it. Otherwise, why permit that use? They may have a bad business model, where their business does not work if they open source their tech and other companies build competitors on top of it. But that's a questions for them and their decision to open source. But it doesn't seem shady to use open source software from another company that permits commercial use.
"The issue isn't that PearAI did something illegal—it's that they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies."
This shows a fundamental misunderstanding on how YC functions. YCombinator was never a test of how good (or unique) your code was. At its core it was a filter of people, people who can work well together and people who can build something useful. That's it. You can read more about this straight from one of the founders [1]. The fact that you used open-source code (within legal bounds) to get their quicker just shows your resourcefulness, something YC actually optimizes for.
More often than not, "good people" tend to be domain experts sometimes really good and unique coders but that, to me, was always a byproduct of the search pattern.
You can obviously disagree with this methodology, but it has worked pretty well.
I think something people might be missing is the context around this post, which is that the founders are being dragged on twitter, essentially.
Since a lot of you hate the site, I'll summarise briefly: one of the founders did a thread starting with the following post:
"
I just quit my 270 000$ job at Coinbase to join the first YCombinator fall batch with my cofounder @not_nang
We're building PearAI, an open source AI code editor. Think a better Copilot, or open source Cursor. But you've heard this spiel already...
"
One thing not conveyed here is the first line is in unicode bold and the end is littered with emoji spam. Essentially, the post ticked a few rage inducing boxes for a certain kind of tech twitter user. It was rather cringe, reading like a thread from get-rich-quick influencer types while also likely imbueing some readers and quote tweets with a little jealousy they wouldn't openly admit. This was probably the impetus that pushed one or two angry people to poke around their product and find out about the open source code cloning and the fact the founders were overselling (which founder doesn't, I guess...) which lead to a rout of publicly mocking them and YC in general, resulting in blog posts like the OP, I guess.
I personally don't really think one company amongst the whole batch is enough to judge the start of a trend for YC "trading prestige for growth" or whatever. I think the discussion of prestige is in general is an interesting one, I just don't think PearAI is indicative of it more than they themselves just being hucksters which happens in tech in general.
The founders showed hustle, as every founder must. nothing wrong with that in my book.
But they need adult-guidance on communication. You dont go around twitter boasting about your 270K job etc. They need to show grown up hustle (grit, perseverence, etc). Not high-school (mine is bigger than yours) hustle.
I feel like that "270K job" comment was some sort of cultural signal to Zoomer devs on the FAANG leetcode job grind. I'm in my 40s so it just seems both tacky and unimpressive but maybe for folks half my age it's a meaningful signal towards competency?
270k is on the low end and would indicate incompetency if anything if you're older than mid-20s, esp since it's not like he's taking a pay cut to work in a cool or interesting field (coinbase lmao)
The simpler break-down here is that they are crappy con artists and need to be be better at con-artisting. Which is fine, but please let's not pretend it's very different.
Honestly, I hate X/Twitter specifically for this - the click/rage bait cesspool that it has become in the past year after content engagement became monetized.
Every other day, or at least every week, there is a new topic that everyone piles-on rage and hate to - even accounts that have nothing to do with the topic. This is because eyeballs make users money from X - so getting any audience possible, and getting them inflamed enough to engage is the point.
Even worse, the algorithm is gamed such that the latest rage is pushed to every other users eyeballs, resulting in a constant stream of hate in your feed.
I think the real pain point you're hitting on there is that people feel like they don't get selected when they deserve to be. While there are those who don't deserve it but get selected anyway.
While I often feel this sadness/jealousy myself, and most probably a lot of the rage bait X replies do too (despite not admitting it) - someday they have to wake up and realize that life is/has always been that way.
Despite our collective desire, Tech is not a guaranteed meritocracy either.
VC firms are betting on the people. Most early startups are still looking for their market fit. The VC firm is betting that the people are able to identify that market which they'll be able to scale.
yc is a club looking for members. A lot of the members share similar traits/backgrounds which is why there's sorta this "populist" backlash. It's not meritocracy for ideas or viability.
I don’t see how any of the evidence martialed in this article proves the conclusion.
There’s a tendency in contemporary online culture to want to condemn the whole person. It’s not enough, it seems, to condemn Altman’s self-serving decisions with OpenAI. We also have to pretend he’s a bungling businessman, whose self-inflicted downfall is imminent. The same pattern can be observed with other public figures. It just doesn’t seem to me to beget a workable understanding of reality.
I don’t have a dog in this fight, except that I like reading HN, and I’d like it if this place didn’t descend into the kind of friend-enemy thinking so prevalent on much of the internet.
> I don’t see how any of the evidence martialed in this article proves the conclusion.
Agreed. Making this level clam requires a lot more evidence. It would have been better if the author presented this idea as something like 'YC better watch out, quality does matter' or something like that. Even then they would need to bring in more evidence and outside examples of industries where this trend took hold.
Only punishment and court judgement requires that level of evidence.
Corruption often never gets exposed at all and at best is only revealed through weaker anecdotal evidence or even rumors.
A blurry picture is often better than no picture at all. Form your own opinion about my link above. If it’s actually true, then that post I made is likely the only thing you’ll ever read about it.
To make my comment clearer, the article made many statements like:
> If the main appeal of joining YC isn’t the mentorship but the prestige of being able to write "YC W22" in your Twitter bio and on your company’s landing page
and
> Take Harvard, for instance: the reason they don’t accept a higher percentage of applicants isn’t because they can’t scale—they have the resources to build more facilities or could even switch to remote like YC—but because they choose not to.
These statements are made with no backing evidence for them. They could be right, but without any evidence that they are I just have to take it on faith that they are, which I won't. At least link to another article making the case for these statements.
This is just bad writing and it is a problem with modern journalism and blogging. The author may, or may not, have a great point, but they did nothing to actually argue their point except point out one tweet at the end. Even that was predicated on the many statements before being true. Take away all the unsubstantiated claims in this article and you are left with, at best, a re-tweet and an argument that Dorai is being a little overly defensive and that may indicate something worth looking into.
The solution to a low volume of information isn't to place extra emphasis on weak data.
A blurry picture is better than none, but this behavior seems like taking a blurry picture, creatively extrapolating it to crystal clarity, and then fervently claiming it is reality.
Confidence and conviction in an arbitrary belief can help an idea compete in an information poor environment, but that doesnt mean it isn't delusional.
Yep, ideally OP should formalize their theory into a bet and accept people to bet against them. Say, $5k on OpenAI <insert some horrible outcome> in 10 years. Money could be kept in escrow with a trusted third party.
I love the posts about how YC was better back in the day.
It was the same, it's the same. It's just bigger and there's more timeline now to reflect.
If you think the partners (the core of which have been there since day 1) have really changed their outlook that much then you've not been paying attention.
YC has always been a smorgasbord of status seekers, dreamers, ruthless pragmatists, creators and artists. It's a big community that keeps growing, the good parts and the bad parts.
There were scandals then, there are scandals now. They pick some teams perfectly and others totally wrong. The most important thing is that they keep doing it every year and more people get access and a shot at doing their thing.
FWIW I was YC W14 and yes it was totally better back then and we were all geniuses and pure lovers of startups only with no ego...
Note that when YCombinator first started in 2005 (the batch that Sam Altman was part of, as a college dropout), they were not prestigious. They largely funded college students that nobody else would invest in. But part of Paul Graham's philosophy for it is that "If you do anything well enough, you'll make it prestigious" [1].
Rather, I think that what's happened with YCombinator is that it's followed the growth arc common to all institutions. You start with somebody who has a good idea and a passion for making things better for some subset of humanity. That attracts other people in a virtuous cycle. But eventually you hit a growth limit and saturate your market. At that point, the focus of the people in charge turns to wealth extraction, leveraging your brand, reputation, and market position to make ever increasing profits. Eventually you squeeze everything there is out of your market, your product is shit, your employees don't care about you anymore, and you get replaced by a younger more beautiful que^H^H^Hstartup.
I wouldn't bother applying to YC now - I don't feel like they give enough for the equity they take, their advice has become formulaic and well-known, and I'd rather go do what I love. But in 2005, when nobody was funding college students and the popular wisdom was that the Internet was a dead fad, they were revolutionary.
We were in YC S22 and it definitely has become a status seeker magnet. However, entrepreneurship is itself a status seeker magnet.
The point the author misses is that you need to think of YC not as an organization but as a segment of time for personal and team reflection. It can help you develop a coherent narrative for your path and goals. Others may deride this characterization and say it’s too expensive. But the only way to enforce that kind of reflection is to raise the stakes and give it a real opportunity cost.
YC did not have prestige in their early years (Jessica mentions they had to beg their friends to come to demo days). Yet people were dropping out of Harvard to join. So it seems prestige is not necessary for success and in fact may be a negative signal.
It wasn't. If you told someone you dropped out of Harvard back then they would think you were making an odd choice. That said, it was never very risky since Harvard will take you back if you drop out, but it was at least unusual.
> (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies.
YC never said they were anything else, though? YC's strategy is simple.
Vet for y intercept, do little due diligence, and make it up through investing in enough people.
They never claim to be perfect. In fact, there's a number of YC founders who have had scandals:
Something that I think is a bit misguided about this is that YC, at founding, was pretty unfashionable itself. The "accelerator" model wasn't particularly proven, and the thesis was that there was an untapped talent pool of "hackers" who just needed to figure out how to run a business and get connected to the right people/resources in order to be successful founders. Compared to other accelerator-type opportunities at the time (and some that still exist), YC was extremely founder friendly.
YC 1.0 made good on that vision — the success rate in the early batches is indicative of that. Once PG stepped back and handed the reigns over to Sam Altman, YC focused more on scaling up, while the startup ecosystem grew significantly as well, specifically around "Web 2.0". At the time, it wasn't particularly difficult to create a venture-backable web business if you had the technical skills and the right resources to achieve distribution. Along the same lines, being a startup founder became a viable alternative to becoming a banker or management consultant for high-achieving individuals. So naturally YC, as a backer of hyper-successful startups that generally have an easier time fundraising, became a magnet for the status-seeking subset of high-achieving individuals, leading to it becoming more of a stamp of prestige.
Since Sam Altman's tenure, it seems like a lot of the initial edge that YC had at founding is significantly diluted. There are a lot of aspiring founders seeking funding, but the Web 2.0 opportunity doesn't really exist anymore (at least not at the same scale). So today, YC looks much more like a large seed fund that funds more specialized businesses rather than the types of founders of the initial cohorts (i.e. hackers that want to build Web 2.0 businesses), and I think people are overly critical of that scale up. 2005 was a very specific point in time for the startup industry, and the YC thesis was not only well-timed, but extremely effective through ~2014 — but it's been difficult for them to figure out how to continue the momentum given changes in the ecosystem.
I don't agree at all with this post. YC's mission is to help founders start companies and help them build sustainable businesses. Towards that they've made it super simple to get started and funded, and provide guiding principles and support in the form of advice and a strong network to help the startups survive. They were never about prestige -- that came as a byproduct.
Scaling this model is hard, however, and I think they may be running into scaling limits. There just may not be that many fast growing businesses (startups) every year. We won't know until years from now.
Everyone is missing the reason they got accepted: they are some kind of tech influencers have 300k subs on YouTube.
You have 10 mins to pitch your idea, so they went in and said ”look, we work for coinbase, we're competent. Look, we have 300k subs on YouTube, we know how to sell shit and get attention. Look we have <some random AI thing>, we got it all" and that's all it takes. The problem is, they want to sell dev tools and those tend to be more grounded in reality than <some random social media thing> where their attitude and skills might be a better fit. Lots of devs like calling out bullshit as a hobby and making fun of shoddily built stuff, so it's a tough audience.
YC doesn't do "due diligence" and never has, not worth it for the $125k they put in. The real danger is they become known as the place for bullshit peddlers, influencers, etc.
What happened is adverse selection due to a stubbornly low valuation that doesn't even try to keep up, in the midst of a growing number of alternatives, worsened by a formal and therefore somewhat gameable process of getting in. The kind of person who really has an idea they are going to pursue regardless that he's actually committed to isn't going to part with his equity at the low prices a YC would offer. Instead what you get is people creating companies explicitly with the intention of applying for VC, which removes an important filter reflecting founder buy-in, and therefore average quality; and there's no way you can really tell one from the other.
Surprised this doesn't mention meticulous.ai, who seem to spam HN with "we're hiring!" each month but i've never heard of anybody using them, nor do LI show any new employees. Hey Gabriel, what's going on?
I thought I was the only one who noticed, I'd much prefer the YC companies do a monthly "here's who's hiring" much like the "who's hiring" instead of individual ones.
I interviewed for Meticulous a few years ago, and I'm pretty sure I was almost hired, but it didn't go through because they decided they wanted to go fully in-person in London, and I didn't want that. Gabriel seemed like a good guy, I was given a very believable project demo, Quentin also seems legit, my understanding is the product is difficult currently to roll-out to smaller customers but they have a good number of larger paying customers.
I don't think the continuous hiring posts are anything other than a sign that it doesn't cost them anything and they get good leads every time they do it.
I don't think that's really connected to the topic here?
What you are describing here just sounds like one of their portfolio companies taking full advantage of one of the perks that comes with YC? I don't know what the limit on the "We're hiring" posts is for portfolio companies, and I also have a few on the top of my mind that showed up a lot, but having that as "ads" on this website isn't too bad.
With the recent drop of batch quality comes more lifestyle companies and less disruptors. I can't imagine the YC of even 10 years ago funding quite so many zombies 3+ years no product but still holding out for the fabled founding engineer...
A half-decent Schemer in found3rm0de would've built 5 failed MVPs and exactly one unicorn in that timeframe.
I briefly worked for Imbue, and got paid for it, and as far as I know they are still legitimately hiring -- their current team page shows a good number of people who have been hired since I was there -- so I don't think "spams fake hiring ads" is a fair thing to say; they are legitimately hiring people, and paying good money. My impression is that they make the top of the hiring funnel as wide as possible but end up hiring a tiny fraction of the people who start the process.
Article's assumption is that a totally incompetent set of startup founders were admitted to YC because it "loses quality in exchange for quantity" (not a direct quote but the gist). And this startup was nothing more than a copy of a different startup.
Maybe it is the prestige game that became a death knell for YC. Because it is "cool" to be accepted to YC, the "cool people" with a coolness factor started applying and tried to game through the evaluation process into acceptance. But these cool people aren't really cut out for doing sweaty, gross, sleeve-pulling work. So they likely fail.
What does Sam do? Refocus the company to drift away from the "cool" tech sector where cool people are looking to make their name cool. And start doing stuff in multiple sectors (that will seem cool in the future!).
What didn't he do? Make the grind of becoming a YC selectee even sweatier and harder. Or change the selection process entirely so that all previous books trying to get you through the system fall flat on their faces.
There was a discussion a few weeks ago about YC betting on essentially the same product of adding support for chatting with LLMs inside your IDE (Continue.dev, Void, double.bot), which is a great example of this. No differentiation between investments, just spray-and-pray technique hoping that at least one of the contenders will succeed.
I understand that in broader terms, VCs operate in this way - investing in many things hoping that one will stick. And if this is spread across different products, industries, ideas, then it is a good signal that your company was handpicked and got attention of one of the best VCs, among many many contenders.
With examples like this, this signal is basically gone and getting a YC investment means nothing.
Counter point: there are so many more accelerators now. It was basically getting into MIT/Stanford in term of opening up big doors. Now you have schools with accelerators right out of undergrads. So, YC has to compete in the space (sort of). It’s still one of the highest prestige (as in validation) you can get EVEN IF YOU FAIL.
Just from public information my impression is that prestige was never a goal while scaling was in the plans from fairly early on.
Anecdotally, some of the best recent founders I know are opting not to apply, which I think is a bad sign. But their reasons have nothing to do with the scale, competitiveness, or prestige of the program.
I don't track these things, but as far back as I can remember, the appeal of YC was the tutelage of experienced founders, availability of office hours, and the atmosphere of being surrounded by like-minded, ambitious people.
Basically, the proxy objective is "getting into YC" -- the real objective is producing value of course.
We've started optimizing for the proxy. Which produces outcomes like this, where YC is a Thing You Do, after Graduating From Stanford, and before Becoming a YC Alum.
> This decline will continue until cool, innovative companies no longer see any reason to apply.
I am the furthest thing from a business man / start-up news addict, but even I know that the point of starting a company is to make money (perhaps fulfilling a need or niche, sure) and "being cool" should have nothing to do with it. Hell, "cool" often doesn't really square with being "innovative" anyway.
Startups determine their ability to execute, and thus generate revenue (or promises of same) from appearing “cool” to prospective talent and future investors. Without it, they wither and die.
However review my last month or so of post history for my views on earned/employment income, unearned income and asset income.
In essence I differentiate between revenue within income, but not income/investment. I don't think taxes should either. Specifically, I think capital gains/intermingling of asset taxes while requiring up to date taxed-upfront employment taxes is one of the worst decisions society ever made.
To anyone with eyes? Job seekers looking for startups to join, investors looking for places to put money, etc.
I'm sorry if your company got accepted into YC, better luck next time. At least you can hang out with the founders of... 100 AI-assisted Code Editors, 'The first Travel Credit Card for Gen Z', 'Starbucks memberships for restaurants', 'a video first food delivery app, tiktok meets doordash', and 'the operating system for vacation rentals'. Truly a staggering group of talent.
Not going to name names, but so far my favorite has been “AI for [somewhat arcane process]”.
I had no idea how “AI” could possibly be of use, so clicked through out of curiosity. Hilariously, it boiled down to “we occasionally use an LLM to email people for you.”
A) Security is always an afterthought at YC companies - I know from firsthand experience.
B) YC companies are risky to use, obviously we meme about people using IBM for "saftey", but there is an opposite side of that which is going with a seed stage company - it's very risky.
C) Even if you are a happy customer, if you are too niche they will typically abandon you. I've been on the decision making side for this, sometimes your early customers don't fit your new market, so you have to let them down slowly.
I mean I can't speak for that commenter, but I hold any VC backed startup in suspicion for a good amount of time because if they can't reach the size demanded by their investors, which runs the gamut from ambitious-but-achievable all the way to not-in-my-or-your-lifetime, a perfectly profitable modestly sized business is almost bound to be shut down and it's services terminated with little drama, leaving behind potentially useless products, or yet another fucking ZIP file to add to the pile of the things I have yet to open up and sort into other mediums.
Folks always bring up the increasing number of startups in YC which I don't think is a problem. YC is a people business. There were several key changes:
- PG and Jessica 'retired' - they were the killer combo in terms of identifying talent in tech and culture.
- YC became massively successful - when it started YC was prestigious because of the startups it funded, now the startups are prestigious because of YC.
- Selection is much harder - tech & startups became mainstream unlike when the self-selection consisted of PG essay readers and niche programmers.
The blog post is dumb, in the extreme. Sven doesn’t know the PearAI founders, the key metric YC says they assess when they make a funding decision. Where they forked a codebase from is a deminimus consideration — as Gary says, if it’s in the license, it’s in the license. Maybe Sven thinks that’s unethical, although in this case it’s funny to complain on behalf of YC, “Hey, YC, your money went to an open source codebase, and then some more of your money got to use it! You guys suck!”
Comments here miss a lot as well, (although I agree that YC’s prestige days are over) — PG’s plan was ALWAYS to be able to do more. He lays out the reasoning in an essay maybe eight years ago — if your portfolio looks like 1-2 companies (now 3) out of 500 made 80% of the returns, what should you do?
There are basically three answers to this: Rejoice, Write 497 less checks next time, or write 1,000 more checks in the hope of getting a fourth.
PG’s head was at: write 1,000 more checks. I like this attitude a lot, and believe there are good social, macroeconomic and financial reasons to act this way. Of course you will put up with more failures in that mode — you already went and got the “good” ones — you are now picking ones you didn’t love that much in the sure knowledge that you’ll happily be wrong about one (or maybe even two) of them.
Especially when you’re considering what to do mid-ZIRP, this is I think the only rational strategy if you want to make more money and help the world see more cool things.
That said, one thing YC companies benefitted from immensely in the height of the prestige era was just that, prestige; it was a virtuous cycle in that getting in to YC guaranteed a quality seed and probably A round just on the name. In that way, it was like getting in to Stanford or MIT. Today, along with mentoring, one of the main benefits is the larger network internally, and this is a different thing. Possibly better, possibly not. I do think that if the prestige is needed for their model, they’re probably over scaled for today’s markets and venture money.
Of bigger concern, I would say should be the question: “what does pre-seed/seed even look like in five years?” — Much of what seed capital is for can be done with quality LLMs today — and I expect that trend to continue. We saw the rise of pre-seed firms in exactly this economic environment — through the middle of the dotcom one boom, a tech startup was EXPENSIVE — ten engineers, $30k sparcstations, long data center contracts — the cash was needed. YC started at an inflection point when open source tooling and availability was driving that cost down.
The next YC / early stage fund is going to look very, very different than the last one. And that’s okay! It will be fun to see what’s next.
YC gets such great terms (because they invest so early and have great deal flow) that it's hard to see them declining unless the current venture model stops working. It does seem that recent YC batches are less impressive, but IMO that's less due to the quality of person that YC attracts and more that there's less low-hanging fruit. The "software is eating the world" thesis still seems true but now it's a lot harder to compete just on software you often need domain expertise in a complicated field.
> they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything,
I don't see it that way. This is NOT the first time YC has funded startups that are in direct competition. It seems to me that having multiple companies with the same product makes your net larger for customer acquisition, and the startups can always merge later.
One of the biggest shocks to me was that YC now invests in war and killing people. Before their closest connecting to killing people was investing in companies that had severe negative effects for society, like Doordash or AirBnb. Now they're helping people make missiles.
There are 40,000 people killed in Gaza by US weapons, in what even Biden called "indiscriminate bombing". YC should not be making cheaper ways for our allies to commit genocide.
If you put it that way, lot of people have been killed by Russia’s weapons in Ukraine. US’s weapons are used to protect civilians there. Think of all the Russia’s missiles shot down, or artillery depots blown up.
Contemporary weapons are also much more precise. That means lower collateral damages. A lot of development efforts are to further enhance on that front.
Weapon development is essential. Of course we should condemn mis- or excessive use of force, especially against civilians.
Until we actually have controls to protect against excessive force, which we patently do not and have never had, building better weapons will always be used against civilians to commit attrocities.
Right now, we ignore the controls we do have. The US is not supposed to provide weapons to anyone violating human rights, which Israel is very obviously doing, as is agreed universally outside the US. But we still provide them with weapons as they are our "allies". While this is the case, de facto any better weapons we build are used to commit "better" crimes against humanity.
We can clearly see from how the US aids and abets genocide[0] in Gaza that they make no judgments based on international law, ethics or sound moral values but only based on the geopolitical interests of their ruling elite and their lobbyists regardless of what the majority of the population they rule over thinks in this regard. If you believe for a second that America is helping Ukraine out of the goodness of their hearts or because "it's the right thing to do" then I have a bridge to sell you.
It's a proxy war for them and the US would let happen to Ukraine and Ukrainians that which it lets happen to Gaza and Gazans if it were aligned with their geopolitical interests. US politics couldn't be possibly more machiavellian than it already is.
This entire article is premised on the idea that YC accepts more startups now than before, but if I'm not mistaken, their acceptance rate has gone down every batch.
And since the OP specifically called out Harvard as a paragon of prestige institution, it should be noted that YC acceptance rate is lower than Harvard's too.
Part of the earlier appeal of YC was that it was a batch of approval that, at least imo, was a strong signal to VCs to take a good look at the company and more-likely-than-not invest in.
With larger batches and more lax selection that signal is so weak that YC comapnies are mostly like other companies with some traction.
I always thought YC growth was to fuel it's portco's initial traction. My understanding is that they solved each other's problems and then raised on traction largely within their own ecosystem. Having a wide breadth of companies would better enable this
It's pretty clear that many VCs are starting to play the carry-game, it's much easier to scale up and make money on carry than it is picking winners or even pricing the 'winners' correctly as we saw during ZIRP. Tax advantaged too.
Oof just watched a video from the Pear.ai guys and was happy to hear they made it into YC. I don't know much about the project, but they seem like good people.
"What we're doing isn't technically illegal so stop talking about it" isn't generally a phrase used by what I'd call good people, but we'll agree to disagree.
The beauty of forking/open source is the ability to contribute back to the original project or take over an abandoned project. In this case, the original project Continue.dev isn't abandoned and actually has more traction/commits than the PearAI fork. But what PearAI did not do is a traditional fork. They took the commit history, re-branded everything to PearAI, pushed it up to their own repo, and claimed that the contributors of VSCode & Continue were their own contributors on Twitter.
That's not the spirit of open source. I'm sure the authors of Continue.dev did not intend for their work to be used this way, even if the license is permissive of it.
I'm not sure how to parse this, and one possibility is worse than the other.
Did they go through and alter each commit in the history, making it look as if the committer was talking about brand B instead of brand A at the time they made the commit?
Or did they clone the commit history, and add commits to rebrand, while keeping the historical commits intact?
That's because there's literally no such thing. It's a licensing choice, not a seance. If you don't want people to use your code, license it correctly.
There's a difference between forking to make a OSS project better and forking to create a clone just for the sake of VC funding that doesn't trickle down back to the original code.
Even if it's allowable by the permissive license of the original code, it's not a net positive for OSS.
I think the assumption people are making is that the YC selection team are dumb idiots, and don't understand that all the founders of that project did was fork an open source project and ask them for some money.
(I'm not saying this is what happened; I know nothing about this project. I am saying this seems like the assumption the author of the article and some people in this thread are making. I bet that's not what happened, but if YC is actually full of dumb idiots who do zero due diligence whatsoever, then I guess I have to agree with the article's thesis.)
Weird that his example of YC's decline is a company putting together a hacky MVP based on open source code, which is an absolutely classic YC thing to do.
Do you have to? Doesn't YC have enough capital to spend it on meaningful endeavors instead of silly "moonshots"? How much would be enough before this happens? Genuine questions, no snark.
I was part of the W12 batch of YC (which was a lot smaller, ~60 companies, back when Paul Graham was still leading YC).
YC funds a lot of companies and has always had super high variance in the companies it funds. Entrepreneurs are a wild bunch of people. There have always been companies where the founders turned out to be BS artists or sociopaths. Companies that folded immediately after the program started. Companies with messy cofounder breakups already brewing at the beginning of the batch. Companies that turned out to be slightly scammy. Some of the founders that were in those companies pivoted and became successful.
Picking on Pear AI (which I don't know anything about) as evidence of YC failing is silly. It's also a super early stage company and you really have no idea what they will do.
The test of YC to me is, can they keep attracting and picking some of the best founders (which you can't really tell for years). And providing the inspiring, warm, but pushy environment that best sets up founders for success, and in turn keeps them coming to YC. I'd apply to YC again in a heartbeat if I were ever starting another company.
Agree completely. That entire PeerAI BS put a really bad taste in my mouth w.r.t YC. It is fine to fund Companies that might create products with their own sweat/labor which might compete with their existing portfolio companies. That is healthy competition. But what happened here is not that!
If I fork a popular repository on GitHub, say Plausible, change the name of the product and then apply to YC, you are telling me I have a non-zero chance of getting selected if I just come up with a better business plan than the Plausible team? WTAF? That is horrible! Where are the standards here?
And no YC cannot hide behind the "You choose a wrong License" argument. That is legal BS and does not apply to TRUST built between Investors and Founders.
YC used to select only top-tier startups, but now it seems more like a numbers game. As Brian Chesky mentioned, Silicon Valley has implicitly assumed that scaling a startup means shifting into 'manager mode.' It appears that YC is now operating in this 'manager mode.'
>The issue, however, is that they never truly grasped the factors behind their success, which is why YC's peak is already behind them—it’s likely all downhill from here.
I haven't been to YC but I read Paul Graham and get the impression he has a pretty good idea of the factors behind their succcess and this guy who I think hasn't been and does not live in the US does not.
YC wasn't pesitigious at the start but went out of the way to help startups and encourage them to 'build something people want' and I think that goes on.
I don't think this is the story. The story is that YC created a cult around a startup which convinced founders to give them equity in return for nothing. Now the good founders wised up to the sweatshop/meat market/factory that YC is, they get better terms from real VCs, or they self fund.
YC appears to be spending all it's time marketing itself on Twitter and pretty much all the partners, including the lead have companies that were acquihired i.e. failures
Class size of 7 = quality, class size of 300 or whatever = noise filter
But they again only need that 1 company to be the 1000x and return LP capital at a decent multiple. Any pool of their batch size is likely to produce that and allow them to self platitude after the fact.
It’s true. With 40k applications and roughly only 100s accepted… they likely only chose pearai because of nepotism. It would be self sabotage if they regularly do this so likely only a few companies are selected this way with pearai being one.
The above is a very educated guess on pearai, but whether or not YC engages in nepotism or not is unmistakable to me. They do and there is real corruption in the selection process. It’s not just gross incompetence.
Not only is there actual evidence that can be sourced but I can offer anecdotal evidence from inside sources from within the family involved with a company that passed via nepotism.
There’s whole YouTube videos about them including a post from one of the founders ex girlfriend. It’s all very shady the articles around them.
I encountered this company by being close friends with someone that is within the family related to the founders of dreamworld. I was literally told that the company succeeded because of family connections from dreamworlds ceo:
The bellacks regularly have big family gatherings in Tahoe and one of the attendees is Geoff ralston the previous president of YC.
Source not only confirmed dreamworld got selected via favors from Geoff but that Geoff was telling stories at this family retreat about how he had to fire Sam Altman from YC after getting a call from Paul graham. Yes pg fired Sam Altman from YC.
Dreamworld as it is right now got additional seed funding from VCs via connections as well and they are sitting on a pot of assets which is generating net positive income while that company can just stay afloat indefinitely. They don’t go through the hardships and risks other startup do thanks to nepotism.
There are other people in the bellack family creating startups and looking to Geoff to funnel them through YC via nepotism so Geoff is primed to make it happen again for sure.
So yeah. I’m sure Geoff isn’t the only person from within YC who does that.
Hacker news is pretty pristine, but the fund itself does shady stuff.
At least I think hacker news is pristine. Let’s see what happens to my post and my account. Maybe the moderators will be more strict with me? And use that to ban me? I am a bit rough with my opinions. But who knows?
Pg is lying according to my source. I mean my whole post is about corruption. It fits the story that pg is capable of lying.
Keep in mind. I’m a random guy on the internet and my source isn’t 100 percent solid from my pov either. So keep that in mind when judging this whole thing.
Overall this is what happened: some person at the family retreat listened to Geoff tell the story about how pg made the decision to fire Altman and that person relayed the story to me.
Overall from the fuzzy evidence I’m thinking he was actually fired but I’m not 100 percent on that either.
You’ll have to be your own judge for this. This is one of those things that people will never know for sure.
Same with the nepotism. Nothing will ever be proven here. The best info an average layman can get is rumors from someone willing to relay this gossip anonymously on a forum and you can’t even be sure if this guy (me) is making all this stuff up. You’ll have to form your own opinion and take a leap of faith in either direction or leave it as an unknown.
Indeed. Maybe the next successful incubator will learn to find hidden talent from more diverse sources. Woman. Certain underrepresented ethnicities and economic backgrounds.
How many times did the author apply and get rejected from YC?
I have heard this sentiment before, from a less successful VC. After comparing them based on track record, it was clear YC is in a league of its own. I want to get advice from people who have built startups before. Looks at YC advisors on YouTube and you'll find they're all very successful.
Look at the partners and advisors at most VCs or accelerator programs, and you won't find that level of experience. You'll get mismanaged and start thinking like an investor instead.
> How many times did the author apply and get rejected from YC?
Author is not wrong.
This “YC is actually a negative signal” sentiment started back in 2018-2019.
The “actual” good entrepreneurs (e.g., the folks you expect from Harvard, MIT, Stanford, Berkeley) stopped applying to YC a while back.
There are different signaling mechanisms in 2024, which I won’t reveal here, because the “plebs” will turn it into shit, just like they did to YC, leetcode interviews, and FANG ML jobs.
You posting "better" signalling mechanisms (in your opinion) will not be the end of them... People don't do things because you think they're good. They'll find them by looking and copying existing companies' approaches.
You have failed to mention anything except to say approximately "YC sucks and I have something better but I don't want to share"
> You posting "better" signalling mechanisms (in your opinion) will not be the end of them...
Of course it will be the end. You think leetcode mediums are enough to land a FANG job in 2024? No. But in 2015, they were.
The top-tier are always adapting. Always one step ahead of the rest. Formula 1, top 5% dating profiles, mega churches, olympic athletes, cartel drug smugglers, private elementary schools, and elite entrepreneurs, all the same.
Me posting the “secrets” of 2024 make my life more difficult, because I actively use them. Sure, I’ll adapt once the game changes. But I’ll “rest and vest” until then, right?
> You have failed to mention anything except to say approximately "YC sucks and I have something better but I don't want to share"
I am not obligated to help others. Don’t like my attitude? Well then, you’re not going to like the top-tier culture.
Programmer/hacker culture used to have the positive, helpful camaraderie you are looking for. But that shit is long gone. Like I said, adapt.
Full disclosure, I'm a YC alum whose last start-up was acquired by Google, who applied to this batch and didn't get an interview.
YC is not the stamp of quality it once was, to be sure, though it still works as social proof, because investors (especially VCs) want to invest in companies other investors like (or failing that, companies they imagine other investors would like). YC would say that they aren't trying to be a stamp of quality or social proof, they are just trying to help start-ups.
If I had to take a stab at articulating how YC has changed, it's that it's become a VC, picking ideas to generate returns.
This rejection email from 2022 that someone posted online cements the idea for me (excerpted):
"Unfortunately, we've decided not to fund {Company} this batch. We enjoyed our conversation today and were impressed by you as founders building something they are passionate about bringing into being. However we weren't convinced that this product strategy is going to yield a big company in its current form. ...
Of course, things are very early and you are still figuring out the right way to build and structure your business. If you're able to make significant progress with it, we'd be very interested in hearing about it for a future batch."
Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback.
It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky.
Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools. Cryptocurrency is a whole exploration of this effect, turning hype into money by building a streamlined mechanism for bringing in greater fools, but we can also look at examples like Theranos. (There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself.) The point is, the greater fool "strat" works. In a moral vacuum, if you are trying to maximize returns, you lean into it.
If I were running a fund like YC with basically unlimited money at my disposal, balancing the goals (strategies?) of 1) make money for money's sake, 2) advance technology for technology's sake (let's go to Mars, etc), and 3) make the world a better place, I would focus on (3). Like can we at least try to build a unicorn that feeds people, and maybe fail, rather than trying to build FooBarBazCoin that eats the word, and failing? We mostly see a mix of (1) and (2).
> It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky.
It seems to me that there was an early '10s milieu that enabled YC to behave like it did. Web apps and mobile fundamentally transformed everyday life and communication in very visible ways and there seemed to be a lot of low hanging fruit. I observe, similar to your 2), that YC seemed to have a bias toward products for tech people by tech people, and that wasn't a bad strategy, because there was still a lot of plumbing to do; there still is, but I feel that there are established solutions for the mass market to a degree that there wasn't.
> It seems to me that there was an early '10s milieu that enabled YC to behave like it did.
Definitely, it's called ZIRP and QE.
I think so many questions about “Why did business X operate like this in 10s?” Is answered with that statement.
So much was funded on economic smack high. A few sobered up and a ton bottomed out bad.
It didn't hurt that there was also a burgeoning new computing platform that everyone and their grandma was buying into for the first time.
There were a lot of preferable options for connected, generally non-technical people after the dot-com implosion, for the first ~15 years of the 2000's. I joined a comp sci grad and his engineer brother in a software startup because we couldn't get jobs with an established company, big corp, investment bank or other much more likley "sure thing". The equation has completely changed, and the startup landscape with it.
Startups went from “let’s become the next Google” to “let’s get acquired by Google”. FAANG+ have become way too big and have effectively become a multi-opoly (oxymoron and a half) that has ossified the entire market.
But two decades earlier couldn’t you say the same thing about Microsoft?
It’s part of the cycle.
10-20 years ago the internet was still an unpopulated continent that everyone was rushing to settle. It just isn't the same wide open green pastures it used to be. This is my guess of what is the largest reason for the declining success of YC companies.
> … yield a big company …
I assume that this sort of says it all.
Everyone wants “big.”
The article talks about brand curation, really.
That seems to be a lost art, these days. I worked for a corporation that had one of the most powerful brands in the world (but has taken some real hits). I watched them dilute that brand, and make lots of money, but really get clobbered. They are now regrouping, and, I hope, re-establishing their original luster.
They were able to take a fairly small corporation, and compete with mega companies, on the strength of their brand. When they grew rather explosively, in the 1990s, they sowed the seeds of their own demise, in the mid-2010s.
Strong brand value seems like insurance.
You don't think about it when you don't need it, but it bails your ass out of otherwise-impossible situations when you do need it.
Everything's fine for uninsured property... until it's not.
I would say you could trade hard-earned goodwill and respect for a number of different things, maybe because it is such an unquantifiable asset.
I think earned leadership can be legitimately exploited where everybody wins up to a point, and if you put your mind to it you can engineer an operation to approach that point more successfully than those who do not.
You could be monetizing your "prestige", at a maximum sustainable level, without drawing down the asset.
OTOH it would be possible to go overboard on the march to maximum monetization, and arrive where the asset begins to dwindle. It may not be such a clear picture since it's so unquantifiable, and dwindling returns as a consequence can be some of the most easily misattributed.
That doesn’t provide any information since an incubator like YC is hoping for Stripe/Reddit successes. That’s not changed.
But I know W20 guys who pivoted inside YC three times, and eventually raised money. Their company didn’t exist when they applied. So what OP (of Etherpad IIRC fame) posted about the rejection comes as a surprise to me.
the whole mythology is nobody knows what will be a big company in general.
The known big company spaces are heavily oversubscribed so nothing can be predicted.
The unknown big company spaces are unknown by definition.
> That seems to be a lost art, these days. [...] I watched them dilute that brand, and make lots of money, but really get clobbered.
Maybe this is the normal lifecycle of a successful organization, unless one decides to grow more slowly? Infinite growth is what ruins most things. Scaling is hard.
YC seemed to attract genuine founders, back when starting something up was not so trendy. As it became fashionable, and YC began to be seen as the Harvard of startups, it has still attracted some great founders but also some less genuine ones. All successful organizations experience this issue.
A key element here is that neither PG nor Jessica Livingston seem to be actively filtering out people. I doubt anyone from batches curated by them would have posted on Twitter bragging about quitting a $270k job to work on a re-licensed fork.
It was sad to read about this whole affair and, frankly, I think discussion on HN has become less interesting, reflecting a similar trend. Front pages were full of technical discussion back in the late 2000s and early 2010s. Content of that kind is less frequent these days.
> Front pages were full of technical discussion back in the late 2000s and early 2010s. Content of that kind is less frequent these days.
Yeah, noticed the same trend. Reflective of the overall, as you said.
YC's original appeal was for builders/creators who were truly passionate about building a great product that solved a real problem. Dropbox for example at the time.
In my opinion, effectiveness of anything dilutes over time especially as you increase volume. There is no way you can maintain the same level of vetting and quality when you have a batch of 50 vs batch of 500+ which is now where YC is. So they must have to pivot to a different model of vetting companies.
I am curious as to why they continue to do more batches instead of less. Is it really a numbers game now ?
For example, what was the last truly great product out of YC built by a true hacker/team ?
Supabase is one.
It looks like a numbers game. As Brian Chesky said, Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. Now, YC seems to be operating in 'Manager Mode.'
When we got accepted into S23, our call started with Seibel saying something along the lines of "We like you, but we're pretty sure you're going to have to pivot." A non-trivial amount of my batch mates also joined with minimal product strategy, so I don't think you can read too much into the rejections.
I don't have anything to add re: YC over the years, just that my anecdotal experience differs.
> Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc.
Imagine you ran a startup accelerator that didn't invest in a particular business model or product, but instead invested in a team of founders you thought had the potential to produce something great, even if it takes a few pivots.
Now imagine you didn't want to invest in a given company. Would your rejection letter say you disliked the founders, as people?
Of course not, you want to be on friendly terms, just in case. Far safer to just be "unconvinced" about their "product strategy" in its "current form".
This sounds like an episode of "Shark Tank" - If you have $1 mil in orders which will generate a profit of 500k they will fight each other to invest 100k for 40% of your company. If you dont have a full order book and a production pipeline - no bueno.
I can only assume your product didnt fit into the current hype investment bucket (you should have put Ai in the pitch and you would have been funded). LPs in the VC funds want their Blockchain Ai and whatever hype they hear about exposure - the VCs have to deliver it and have it in their portfolio. The investment hype cycle is self reinfocing; as the investment headlines get bigger and the hype gets bigger.
This hits pretty dead center from what I've seen.
You really hit home for at #3, that's the type of companies I want to see.
If you start such a fund, I'd really enjoy working on that project.
He won't be starting such a fund for awhile, because the two of us are building company to make technology to foster a creative and curious childhood. We would be a good fit for any investors trying to do (3) though :)
https://cartwheelcomputer.com/
amal@cartwheelcomputer.com
This feels like a side tangent, but why have you focused on technology for creative and curious childhood? I'm curious if you have considered the following:
I.e. Maria Montessori (founder of the Montessori methodology of teaching) did a pretty good job showing that's the natural state of kids, and there's quite a bit in her teachings about the importance of physical things, being outdoors, etc.
There's some pretty strong reasoning that technology might in fact be the problem, and while I'm sure you can make better technology with that focus in mind, it seems like a better approach might not be technology.
Here's a few articles that lead to this point:
https://www.noahpinion.blog/p/honestly-its-probably-the-phon...
https://www.henrikkarlsson.xyz/p/childhoods
I definitely don't think babies should have iPads or preteens Instagram, but I believe that technology can be great for childhood because I had a computer from age 4, in 1987, and it was great for me. I learned how to program, I wrote an entire ~50 page book (which I wouldn't have done with pencil and paper), and by middle school I was sitting down with adults and showing them how to use the computer, which was really empowering for me.
Balls and blocks and Magna-tiles and Legos are forms of "technology" that we universally recognize as good for kids, and a semiconductor junction doesn't magically make something bad for kids. What makes today's technology bad for kids is that it's designed to be hyper-addictive and hyper-extractive.
In short, I am a huge fan of Maria Montessori, and the company we're building, to a first approximation, might be what Maria Montessori would have built herself if she was a TypeScript developer in 2024.
Amazing, thanks for the response.
Because it turns out #1 is one hell of a drug.
This feels like a side tangent, but why have you focused on technology for creative and curious childhood? I.e. Maria Montessori (founder of the Montessori methodology of teaching) did a pretty good job showing that's the natural state of kids, and there's quite a bit in her teachings about the importance of physical things, being outdoors, etc.
There's some pretty strong reasoning that technology might in fact be the problem, and while I'm sure you can make better technology with that focus in mind, it seems like a better approach might not be technology.
Here's a few articles that lead to this point:
https://www.noahpinion.blog/p/honestly-its-probably-the-phon...
https://www.henrikkarlsson.xyz/p/childhoods
It does not seem very "viral" or income-generating. I know this is premature at this point, but children don't have much disposable income, is it reasonable to expect to make money off of this?
Hey, it's the author of the tweet quoted by the article!
---
There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself
---
Forget "ideally": the experience and world-view of the collective deciders for that money is financial. Other factors are filtered out. Vanity investments - for the glory of the human race or technological progress - only reflect inefficiency and excess discretion that are squeezed out with a few selection iterations or process controls. (This is setting aside the large cohort of big-money behind overt/covert national funds, with major non-financial strategic objectives.)
That finance focus won't change with YC's focus or with more morality or regulation. The only path I see is innovation not in finance or technology but in law: to somehow create and sell a stake in the future, to avoid future environment and peoples being now basically a huge externality sink.
"YC's reputation" matters mainly insofar as it provides access and credibility for individual YC startup's, based on their collective promise. If governance access and credibility were conditioned on long history/holding period of protections for future, then both selection and resources would flow in favor, and we'd have a race to the top instead of the bottom.
If you ever go after 3) sign me up.
The most inexplicable miss by VCs (YC included)is the lack of interest in funding climate change remediation. Billions of people to help and billions of dollars to be made. E.g.: Could funding protection of Tuvalu’s dry land and status as a nation pay dividends through licensing/leasing fishing rights?
Such things are an area for innovation, and tech could be a part of it, but isn’t.
I'm not sure it's a lack of interest so much as a shortage of good startups.
Here's YC's statement of interest https://www.ycombinator.com/blog/rfs-climatetech
They say they have funded over 100 of them.
Prometheus seems a good one https://www.ycombinator.com/companies/prometheus https://x.com/paulg/status/1385338452544217095
Prometheus has all the hallmarks of vaporware, over promised (self proclaimed "first electrofuel unicorn" lol) and under delivered. They've been at it for over 5 years and 120M dollars later they have nothing to really show.
120M could have bought a lot of rainforest or planted a lot of trees.
That's not inexplicable. There's not much interest in it because a lot of things founders believe about climate are false and believing false things is a quick way to lose money. Tuvalu is a good example of this phenomenon. If you'd invested in a startup planning to make money by protecting Tuvalu from global warming, you would have lost all your money because Tuvalu is growing, not shrinking.
https://www.nature.com/articles/s41467-018-02954-1
Results highlight a net increase in land area in Tuvalu of 73.5 ha (2.9%), despite sea-level rise, and land area increase in eight of nine atolls. Island change has lacked uniformity with 74% increasing and 27% decreasing in size. Results challenge perceptions of island loss, showing islands are dynamic features that will persist as sites for habitation over the next century
You didn't get unlucky with your choice of Tuvalu, a lot of common beliefs about the impact of climate change are like that. There's little discussion of this phenomenon, because it's taboo to criticize climate related narratives. Only argumentative gits like me are willing to do it. But the smart money knows this and quietly stays away.
BTW this isn't specific to climate. I've known and talked to a few VCs over the years, and what I learned is that if there's an important and valuable area they're all collectively ignoring it's usually because they know things that other people don't. For instance, you may have noticed that Silicon Valley VCs usually avoid biotech startups, despite biotech being seen at one time as a high tech industry with potential similar to computing. That's because such startups often come out of academia, and VCs were aware of the replication crisis/fraud problems in biology earlier than most.
The study you reference is from 5 years ago, perhaps the impacts cited here[1] are less “incorrect”.
My anecdotal evidence of VC’s level of knowledge is very consistent with people at large. That is, flawed.
[1] https://zenodo.org/records/8069320
Kench et al is a historical study of satellite imagery. Unless they made a counting error there's no way for a new study to invalidate it.
But let's take a look. That document starts by admitting that it's motivated reasoning:
"this report is written in support of the objectives of the Rising Nations Initiative (RNI), enabled by the UN Global Center for Climate Mobility"
and it goes downhill from there. They're providing ammo for their clients, not attempting to neutrally answer questions. As a consequence they never mention the fact that Tuvalu is growing. They very carefully avoid the topic of whether the country is getting bigger or smaller despite that this is the entire problem the report is predicated upon, indeed they don't even seem to cite Kench et al, let alone try a refutation. Instead they rely heavily on presenting a few isolated data points followed by model predictions (of the type that were already proven wrong) and give you a good hard inferential shove in the direction they want you to go in.
This isn't scientific but it is what the UN Center for Climate Mobility needs in order to advance their own mission of maximizing immigration. It's clever in a way: when someone calls them on it, they just say "oh! well we never said Tuvalu was sinking, that's all in your head, don't blame us we're just scientists it must be journalist's fault".
Which is the problem I'm highlighting. There's lots of misleading material out there. You could read this report and very easily conclude Tuvalu sinking beneath the waves is a great problem to devote your life to. Investing in solutions to non-existing problems can sometimes work temporarily, but it won't give you a new Google or Apple.
Apples and oranges. The 2018 study shows increasing landmass at the coast lines in middle to large non-sand islands during the raising water levels.
The newer 2023 study merely shows the rising sea levels, as also shown in the first study. It concentrates on the risks of more salt water intrusion, so they'd need to invest in closed sewing systems or salt water filtering systems.
What I am seeing is that among Harvard/Stanford grads, being the CEO of a venture backed startup is the highest status. Some of them hate technology and view programming as "low class". But they still go into it, so when they see their peers its something to brag about. They may even stretch the runway as far as possible to maintain the status.
YC is just another brand they can add. It was so odd for me when I first realized this is how it works. And the investors are often just investing based on where they went to school. Real metrics dont come into play until later, during which they have the capital to hire people that actually know what theyre doing.
Founder, CEO and Serial Entrepreneur.
How many here have that (unironically) on their linkedin profile ...?
>Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools.
Amen brother. VCs and the Valley elite think the society at large has turned on them, without introspecting on how VCs seem to reward bad behavior and grift.
>Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback.
My controversial opinion is that they should stop giving feedback. "Tis better to be silent and be thought a fool, than to speak and remove all doubt."
My startup got rejected because "valuation is unlikely to cross 100 million". Everyone is entitled to their opinion but we are already at 10m valuation and AI in ecommerce doesn't really have 100m cap.
Most of the founders on reddit and discord take the YC feedback as gospel and give up/pivot when its absolutely the last thing they should be doing. Unfortunately we will always have this power imbalance between VC and startups
+1 any feedback that is not based in data, I dismiss it as anecdotal. Congratulations on your success.
> Everyone is entitled to their opinion but we are already at 10m valuation and AI in ecommerce doesn't really have 100m cap.
Or so you think. Keep going at it! Chatting with a lot of enterprise retailers for my startup (not in AI for e-commerce), but there's a shit ton of stuff where AI in e-commerce can help imo.
YC would be stupid if they dismissed your startup on valuation grounds - enterprise retail can't be arsed with this AI debauchery directly but would gladly pay for the privilege of claiming to use AI.
IMHO this post misses the fact that YC becoming a prestige institution is itself a sort of failure mode. You don't want to attract founders who figure YC is a low-risk alternative to grad school that will look good on their resume.
It's tough to avoid that outcome while still conferring positive signal to VCs/potential employees, though.
I'm sure YC/Garry see something in the PearAI founders' ability to market themselves, but I find the whole debacle a bit embarrassing for YC and I know some of my YC batchmates quietly do as well.
For the uninitiated like myself, PearAi just took the source code of continue.dev (not fork, they copy pasted) and did some clunky work on it. That was their entry to YC.
And to save anyone else looking it up, seems to be continue.dev is using Apache License in their repos.
(also, I did some poking around, this is the founder 3 months ago talking about using continue https://www.youtube.com/watch?v=X0OylwLzBQw&t=257s - no horse in this race, just sharing)
for additional uninitiatedness: one of the founders is "Frying Pan", a popular youtuber. There has been previous discussion on the fact that the cost to build software is approaching 0. If that is given, maybe "taste" is all that matters. Funding a ~productless popular youtuber is a great way to test if "taste" and "brand" is better to invest in than tech in the years to come.
“Taste” is something that’s developed through repetitive exposure to differentiated items in a particular set, combined with extremely high abstract analytical abilities, and that’s something completely different from having marketing or personal branding skills.
I think you’re right that that’s the evaluation happening, but it’s totally misguided. If you’re indexing for differentiating levels of taste I would be very wary of empty vessel young influencers. Taste is built over years and years and imo requires a certain disdain for the crowd. Look at Linus Torvalds as a pinnacle of taste in code for example.
> There has been previous discussion on the fact that the cost to build software is approaching 0.
People have been claiming that since COBOL came out (actually, probably before; I bet some people claimed it about _assembler_), so, er, yeah, will believe that one when I see it.
"did some clunky work on it. That was their entry to YC"
For more context, YC doesn't judge your code, never has. It was never a code quality competition. Orthogonally, they do judge the results (user metrics).
>For more context, YC doesn't judge your code, never has. It was never a code quality competition.
it shows
Yea it does! [1].
[1]: https://jaredheyman.medium.com/on-the-176-annual-return-of-a...
Yeah, but they used to care about your moat and “Did some easily replicable work on a product anyone can duplicate.” ain’t it.
Did they? YC regularly funded competitors. This was always true. Fundamentally, YC is betting on founders. They're optimizing for founders who can move fast enough to find a moat before they die, that's it.
They fund competitors because most YC companies usually pivot out anyway.
> You don't want to attract founders who figure YC is a low-risk alternative to grad school
Of course YC would want that (in the short- to mid-term).
The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that.
The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.
> The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that. This is completely disconnected to building viable businesses, as they just don't have to be the ones that are left holding the bag, and as an accelerator they are in the best position to do that.
That's really short term thinking.
It might work for a class or two, but eventually VCs will realize that they're getting bad returns from their investments, and YC won't be nearly as attractive as it is today.
For long term success, YC needs to pick companies that will eventually become successful. Particularly the big, standout successes.
> The easiest way to fill that pipeline is to pair current hype XYZ with Harvard (or other ivy league) undergrads (or high-level ex-FANG people). As long as their ROI stays above a certain threshold, that's the main way to scale up YC.
If you think that's the path to good long-term ROI, I have a startup to sell you.
> but eventually VCs will realize that they're getting bad returns from their investments
I'm not saying that they are necessarily bad returns. It's just that for many reasons there is a strong opportunity for a disconnect between viable business models and seed-investments. E.g. exit event horizons are currently so long[0] that it becomes hard to correlate exit success to seed-funding (for better or worse).
> If you think that's the path to good long-term ROI, I have a startup to sell you.
Oh, I don't disagree with you. But from the actions of YCombinator it seem like either:
- They don't see this as a risk to their long-term ROI (due to some factors we are not seeing here)
- They don't have proper means of self-assessing their selection quality and think they are scaling well while they don't
- The situation is not as bad as the article and some of the comments here make it look like, and everything is fine with YC
[0]: https://www.ycombinator.com/topcompanies/ <- There are many 10+ year old companies on that list without an exit and YCombinator isn't even 20 years old yet
A question that has probably been answered, but...
In a hits business, does quality picking matter? You want to avoid adverse selection, but beyond that - isn't it just about scale?
There are probably a few levels.
Originally, at small scale, you need to pick hits better than others (or get lucky).
Next, you want to scale large enough that you can make enough bets to amortize individual bet risk across a large portfolio.
Then, once you're over that scale, you need to be back in the business of picking hits more reliably than the next VC.
>That's really short term thinking.
Isn't that exactly what we're discussing happening to YC?
YC doesn’t benefit from founders who are just looking to pad their resume because they don’t follow through to a liquidity event for YC.
How do you tell the difference? Especially when so many YCs seem almost like comical vaporware or shovelware but with a charismatic CEO.
Very true.
Saw one recently that literally forked VSCode and Cursor and called it a company with some really shady practices. Not even sure what YC was thinking with that one, but it indeed falls into the category of comical vaporware.
How did something like this get funded? They must think there will be a follow through to liquidity event, but no clue how. Maybe YC is playing into the bigger fool theory that someone else will come along and pay more so YC can extricate their equity.
That’s the company that the blog post points to as an example.
A high-quality early stage team that self-selects out of follow-up rounds may be a decent outcome for some VCs. This means early liquidity in all of the "positive" events. If the founders were high quality, spinning an acquihire out can still recoup some of the loss.
The challenge would come where the founders are not serious, and instead are viewing YC as a stepping stone to a level up position in a big tech/large firm. While I'm sure everyone has this idea to some extent as a fallback, you need people to be committed to making their business work.
Sure, that would be a theoretical failure mode. But that's not really what's happening right now, is it?
YC doesn't look to have a problem of people joining just to get the stamp on the resume and then "half-assing" it after they get into YC. I think that's something that YC is still quite actively selecting against. As long as they are selecting companies that make it to a series ~C (which most founders will stick around for as long as they are on an good-enough upward-presenting) YC can (partially) liquidate at good enough fund performance.
> The only thing YC has to do is produce a portfolio of companies that looks good enough that other VCs invest into that.
This is completely incorrect. They need liquidity events. Simply getting to follow on funding without ever making it to an exit is a negative outcome for YC.
Liquidity event != exit.
While an exit (= aquisition, IPO and similar) is obviously always the optimal end-goal, every round of fundraising is a potential liquidity event for all existing stakeholders.
It's very common to have partial liquidation from roughly Series B-C onwards on the side of founders (e.g. wanting to keep up lifestyle with your C-level peers; removing personal financals as stress factor) and earlier investors (e.g. their funds entering the liquidation period of their lifecycle).
Just looked up the etymology of prestige and it’s interesting.
It comes from Latin praestigium ("delusion, illusion"), then 1500s French prestige meaning “deceit, imposture, illusion”. In the 1800s it started to mean “an illusion as to one's personal merit or importance, a flattering illusion”.
I would have wrongly guessed it originally meant “good reputation” (same as the article author meant it, I assume) and that the association with bullshit/fakery is just a modern twist from people using the word with cynical irony. But bullshit/fakery was in fact the core meaning.
That is enlightening.
Without being aware of the etymology I've still had a lifetime feeling since childhood that it is very fragile for some reason that is hard to pinpoint or bring into focus very easily.
Really is about the same feeling as when you know something is hype or BS and for that reason more subject to collapse like a house of cards.
Hence the name of Nolan's movie.
And the word prestidigitation
YC benefits strongly from network effects; the value for each founder grows superlinearly with more founders. Grow faster!
A very straightforward way that this manifests: when a VC funds a developer tooling company, all their other portfolio companies are strongly encouraged to use it. Built in customers! The test is how much revenue you can actually bring in from outside the VC bubble.
That's true but there's also a countervailing dilution effect. Hard to know exactly where those two lines intersect.
The "something" that they see is that they have a 1% chance of success. YC is an investment strategy. They noticed that equity which is 99% sure to be worthless is heavily under priced and bought a ton of it. That bet paid off handsomely.
If your batchmates are seeing embarrassment from who else is at the top of such a funnel I don't think much of their judgment. Investors provide capital, not prestige.
We can keep going down here, the problem with society can also be that prestige in itself is valuable.
Instead of say prestige being the side effect of being good at something useful for the society.
What would YC 2.0 look like? How would you build it?
YC was a child of its time though, right? Are you asking what could YC have done differently in the context of its history, or are you asking what a new accelerator started today would look like?
I ask because I’m not sure that now is the time for a new startup accelerator to succeed, and we have no way to predict the circumstances that are required for success without couching it in some major changes to externalities.
Great question; the latter, because as you mention, YC was a product of a moment in time and that moment has passed, but during that time horizon, they were very successful (imho).
Edit: YC says "Build something people want." and so I'm going to riff off of that in a bit of a meta way: "Support experiments worth conducting." The accelerator bit comes in once you've reached product market fit and need fuel for the rocket ship, but until then, you're just running an economic science experiment.
AFAICT, as much as YC was a child of their time, they (and PG) were also one of the parents of our current time.
I'm guessing it was inevitable that Wall Street would take over the field, and turn it into a machine.
And therefore it was also inevitable that people who, in the past, would've gone to Wall Street, now would flow into the space, and take it over.
But YC did put their own spin on that, in which the traditional affluent-family, prestigious-school kids could also be computer nerds.
It's interesting to consider what the evolution YC 2.0 could be. I do think we're going to be seeing more innovative organizational models that can be facilitated by adept use of AI.
For example, a network organization that hires individuals and small teams. The organization works on various projects and product streams, which which can be spun out as new businesses.
This is a flexible model that allows for many different outcomes and journeys for the people. Less of a startup factory and more of an enterprise garden.
I like the idea of gateways as a system for managing ideas and new business developments. Regular gateways every 6 or 12 months that assess projects for continuation, funding and further development. People can be involved in several projects.
I see this type of organization structure as a kind of 'hyper network'. By using AI to monitor and report on network activity it should be possible to have effective management oversight, direction and communication ... beneficent controlled creative chaos.
completely data driven and pseudonymous. Everyone enters what they are building, traction, progress so far, team etc and internal team votes based on the data progress without looking at founder profile.
make it fair instead of funding the same golden-spoon cliquey gang over and over again.
For founders? I'd buy into the network and mentorship maybe, but not with equity. Maybe a subscription or cohort based fee schedule.
So like accelerators before YC? No thanks.
YC pretty openly and deliberately tries to convince prospective and actual Big Tech employees who are curious or on the fence to quit and do a startup already. There's a great Startup School video about this [0]. I think the critics are right about "doing a startup" and chasing an exit having become an equally normal, precedented, socially-supported path as joining a big company and chasing promotions. But I'd be surprised if YC itself would characterize that as failure.
[0] https://www.youtube.com/watch?v=sM2reZib2RY
HN is a lot more jaded towards startups and founders’ games these days. Back in late 2019 there was this thread about a pre-YC Garry Tan video where the tone of the discussion was fiercely against working for startups, saying it was better to join FAANG or start your own company instead:
https://news.ycombinator.com/item?id=21865065
I think you mean PearAI[0], not to be confused with Pair AI[1], which YC also funded.
[0] https://www.ycombinator.com/companies/pearai
[1] https://www.ycombinator.com/companies/pair-ai
oops, thanks, fixed.
There is a part in the Netflix culture doc where it talks about how sometimes people do bad things, and Netflix tries to not overcorrect by implementing burdensome policies on the company as a knee-jerk reaction to a single bad actor.
The conclusion (YC's brand has been tarnished because of the lower quality companies in their larger batches who do bad things) doesn't follow from the evidence of this ONE company doing something that people could view as a low integrity move.
This exact situation could have occurred even if they kept their acceptance rates, and cohorts, incredibly small. There can always be bad actors (not saying this company is a bad actor though). I think you wanted to share your conclusion, even if the available evidence didn't necessarily support your claim.
I think the bigger issue is that the main signal to YC (and other elite institutions) is the acceptance rate (<1%). That's probably the #1 thing people know about YC. A lot of people try to get in, and few do.
The main criticism I have of YC is their constants chants of "everyone should apply!". Here is what you commonly hear:
YC: You should apply to YC!
Person: But I don’t have a product
YC: You should still apply, we let in a lot of people with just an idea!
Person: But I don’t have a co-founder
YC: You should still apply, successful solo founders have made it into the program!
Person: But I [perfectly valid reason not to waste your time]
YC: You should still apply!
Person: Wow, you’re being very encouraging, does this means I have a chance to get in?
YC: Almost certainly not!
At a certain point, I can't really take the org's mission in good faith with this kind of messaging. They want a high application rate, a low acceptance rate (even with bigger batch sizes). Just infinite optionality and founders being strung along.
I wrote more about it in a blog post
https://mleverything.substack.com/p/dont-play-status-games
The reason they want you to apply is twofold -- the application itself is a good exercise in getting you to think about things you should be thinking about. Honestly even if you have no intention at all of applying to YC you should still fill out the application for yourself, it makes you think about important things.
And the second reason is that they get to see as many options as possible, because that's obviously better for them. If every startup in the world applied and they could choose, of course that would be better.
It has nothing to do with "juicing the numbers".
> If every startup in the world applied and they could choose, of course that would be better.
Would it? With numbers that large, how could anyone possibly do a meaningful comparison and pick out the twenty or thirty or fifty that would get in?
In other words, if it's obvious to everybody that you are getting too many applications to meaningfully evaluate all of them, they everybody knows that you are not meaningfully evaluating all of them. You're applying some kind of mindless algorithmic filter to narrow down the possibilities. But that's not YC's brand. YC's brand is providing meaningful evaluation of startups. Once that brand is undermined, it's gone.
This is true of all top universities too. We get so many applications for grad school that we could admit several classes and not lose any quality.
But I would never discourage anyone from applying. Even if the quality is high, having many applicants gives you good 2nd order choices. This depends on what mix of things you care about from DEI, to looking at specific ideas like the YC calls, to hedging across different markets, to building a portfolio that balances short term wins vs. long term hard tech, maybe some fraction you optimize for publicity, or legacies, etc.
So yes, encouraging applications is the smart move even if by your primary metric you can't distinguish between the top folks anymore.
> encouraging applications is the smart move
Only if you can actually do the due diligence required to maintain the quality of the student body, which is what you say the objective is. But if the number of applications is large enough, it's simply not feasible to do that due diligence for every application, and no amount of spin will prevent people from realizing that. So no, I don't agree that it's always the smart move to encourage more applicants.
> even if by your primary metric you can't distinguish between the top folks anymore
It's not a matter of distinguishing between "the top folks". It's a matter of whether or not you can plausibly defend the position that you are taking enough of an in depth look at every applicant, not just "the top folks", to maintain your quality metrics.
I'm convinced those that say "I think its a good exercise filling out an application" have never actually read the application
Here are a few questions:
"How far along are you?"
"What tech stack are you using, or planning to use, to build this product?"
"Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you're making?"
"Who are your competitors? What do you understand about your business that they don't?"
"How do or will you make money? How much could you make?"
It's really not that deep or thought provoking. Its fine, you should have answers for these questions, but its hardly worth a founders time going over this as closely as many do.
> And the second reason is that they get to see as many options as possible, because that's obviously better for them
Yes, that's the infinite optionality for them. If I was running YC, I would obv promote the same strategy. As a founder, I think their incentives don't necessarily align with mine.
I've read the application. In fact I've filled it out three times, once successfully and twice not. It is indeed an excellent exercise. Among many other things: if you're a first-time founder then it teaches you what's important, and if you're a second-time founder then it reminds you. (Many second-timers do sometimes need to be reminded, myself included.)
Ah youth. That's how I used to think too.
Then I started to interact with founders and listen to pitches. Oh boy. I used to think that then VCs are just exaggerating when they say they're like 15 minutes into a conversation and have no idea what the founders are saying. Wow. That's so not true.
The whole ecosystem would be better if every founder at last filled out that sheet.
> they get to see as many options as possible, because that's obviously better for them.
That assumes that evaluating a candidate is zero-cost, which surely isn't true.
i realised this too late. and then noticed -- the type of founder they let me. for us the unwashed masses, who are blue collar coders who went to state school. we're just filling up rejection numbers.
yet the arbiter of what determines who succeeds is not YC but the market.
I don't think the main issue here is that a YC company acted with questionable ethics. As you say, people are people and that can happen with even the strictest due diligence.
The problem for YC's prestige stems from funding a company with an unoriginal idea and not even the beginnings of a prototype. I'm aware that YC funds founders more than it funds specific ideas or projects. Nonetheless, you'd expect an impressive group of founders to do more than just fork an existing open source project.
In short, cases like this show that YC is getting (non-illegally) scammed by some of its applicants. That makes YC look foolish.
Even the evidence listed (the retweeted tweet in the article) doesn't support the claim of the author to me. If you open source software and give it a license that permits commercial use on top of it, then you are okay with that use. If I was a cohort of a team that built an open sourced AI editor I would think they would WANT me to build on top of it. Otherwise, why permit that use? They may have a bad business model, where their business does not work if they open source their tech and other companies build competitors on top of it. But that's a questions for them and their decision to open source. But it doesn't seem shady to use open source software from another company that permits commercial use.
The point of my comment is that the alleged shadiness is largely irrelevant, so I'm not sure what you response is directed at.
“It takes two points to establish a line, and three for a curve.”
"The issue isn't that PearAI did something illegal—it's that they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies."
This shows a fundamental misunderstanding on how YC functions. YCombinator was never a test of how good (or unique) your code was. At its core it was a filter of people, people who can work well together and people who can build something useful. That's it. You can read more about this straight from one of the founders [1]. The fact that you used open-source code (within legal bounds) to get their quicker just shows your resourcefulness, something YC actually optimizes for.
More often than not, "good people" tend to be domain experts sometimes really good and unique coders but that, to me, was always a byproduct of the search pattern.
You can obviously disagree with this methodology, but it has worked pretty well.
[1]: https://foundersatwork.posthaven.com/the-social-radar-what-i...
I think something people might be missing is the context around this post, which is that the founders are being dragged on twitter, essentially.
Since a lot of you hate the site, I'll summarise briefly: one of the founders did a thread starting with the following post:
"
I just quit my 270 000$ job at Coinbase to join the first YCombinator fall batch with my cofounder @not_nang
We're building PearAI, an open source AI code editor. Think a better Copilot, or open source Cursor. But you've heard this spiel already...
"
One thing not conveyed here is the first line is in unicode bold and the end is littered with emoji spam. Essentially, the post ticked a few rage inducing boxes for a certain kind of tech twitter user. It was rather cringe, reading like a thread from get-rich-quick influencer types while also likely imbueing some readers and quote tweets with a little jealousy they wouldn't openly admit. This was probably the impetus that pushed one or two angry people to poke around their product and find out about the open source code cloning and the fact the founders were overselling (which founder doesn't, I guess...) which lead to a rout of publicly mocking them and YC in general, resulting in blog posts like the OP, I guess.
I personally don't really think one company amongst the whole batch is enough to judge the start of a trend for YC "trading prestige for growth" or whatever. I think the discussion of prestige is in general is an interesting one, I just don't think PearAI is indicative of it more than they themselves just being hucksters which happens in tech in general.
The founders showed hustle, as every founder must. nothing wrong with that in my book.
But they need adult-guidance on communication. You dont go around twitter boasting about your 270K job etc. They need to show grown up hustle (grit, perseverence, etc). Not high-school (mine is bigger than yours) hustle.
I feel like that "270K job" comment was some sort of cultural signal to Zoomer devs on the FAANG leetcode job grind. I'm in my 40s so it just seems both tacky and unimpressive but maybe for folks half my age it's a meaningful signal towards competency?
270k is on the low end and would indicate incompetency if anything if you're older than mid-20s, esp since it's not like he's taking a pay cut to work in a cool or interesting field (coinbase lmao)
Assuming that this isn't sarcasm, this is what happens when you permit social media to distort your sense of reality.
270k is on the low end?
Depends on the equity
The simpler break-down here is that they are crappy con artists and need to be be better at con-artisting. Which is fine, but please let's not pretend it's very different.
This is an indictment of Twitter tbh. Not YC. A lot (most?) YC founders aren't even on Twitter.
the founders were status-signaling on twitter.
it is clear they are in it for the "status" of being YC. and they dont care a whit about solving anybody's problem.
they do this for a while, get it on the resume and go back to their 270K jobs after a few months.
this in and of itself is a hustle, lol. they hustled YC.
Honestly, I hate X/Twitter specifically for this - the click/rage bait cesspool that it has become in the past year after content engagement became monetized.
Every other day, or at least every week, there is a new topic that everyone piles-on rage and hate to - even accounts that have nothing to do with the topic. This is because eyeballs make users money from X - so getting any audience possible, and getting them inflamed enough to engage is the point.
Even worse, the algorithm is gamed such that the latest rage is pushed to every other users eyeballs, resulting in a constant stream of hate in your feed.
I think the real pain point you're hitting on there is that people feel like they don't get selected when they deserve to be. While there are those who don't deserve it but get selected anyway.
While I often feel this sadness/jealousy myself, and most probably a lot of the rage bait X replies do too (despite not admitting it) - someday they have to wake up and realize that life is/has always been that way.
Despite our collective desire, Tech is not a guaranteed meritocracy either.
VC firms are betting on the people. Most early startups are still looking for their market fit. The VC firm is betting that the people are able to identify that market which they'll be able to scale.
yc is a club looking for members. A lot of the members share similar traits/backgrounds which is why there's sorta this "populist" backlash. It's not meritocracy for ideas or viability.
I don’t see how any of the evidence martialed in this article proves the conclusion.
There’s a tendency in contemporary online culture to want to condemn the whole person. It’s not enough, it seems, to condemn Altman’s self-serving decisions with OpenAI. We also have to pretend he’s a bungling businessman, whose self-inflicted downfall is imminent. The same pattern can be observed with other public figures. It just doesn’t seem to me to beget a workable understanding of reality.
I don’t have a dog in this fight, except that I like reading HN, and I’d like it if this place didn’t descend into the kind of friend-enemy thinking so prevalent on much of the internet.
> I don’t see how any of the evidence martialed in this article proves the conclusion.
Agreed. Making this level clam requires a lot more evidence. It would have been better if the author presented this idea as something like 'YC better watch out, quality does matter' or something like that. Even then they would need to bring in more evidence and outside examples of industries where this trend took hold.
https://news.ycombinator.com/item?id=41697929
Only punishment and court judgement requires that level of evidence.
Corruption often never gets exposed at all and at best is only revealed through weaker anecdotal evidence or even rumors.
A blurry picture is often better than no picture at all. Form your own opinion about my link above. If it’s actually true, then that post I made is likely the only thing you’ll ever read about it.
To make my comment clearer, the article made many statements like:
> If the main appeal of joining YC isn’t the mentorship but the prestige of being able to write "YC W22" in your Twitter bio and on your company’s landing page
and
> Take Harvard, for instance: the reason they don’t accept a higher percentage of applicants isn’t because they can’t scale—they have the resources to build more facilities or could even switch to remote like YC—but because they choose not to.
These statements are made with no backing evidence for them. They could be right, but without any evidence that they are I just have to take it on faith that they are, which I won't. At least link to another article making the case for these statements.
This is just bad writing and it is a problem with modern journalism and blogging. The author may, or may not, have a great point, but they did nothing to actually argue their point except point out one tweet at the end. Even that was predicated on the many statements before being true. Take away all the unsubstantiated claims in this article and you are left with, at best, a re-tweet and an argument that Dorai is being a little overly defensive and that may indicate something worth looking into.
The solution to a low volume of information isn't to place extra emphasis on weak data.
A blurry picture is better than none, but this behavior seems like taking a blurry picture, creatively extrapolating it to crystal clarity, and then fervently claiming it is reality.
Confidence and conviction in an arbitrary belief can help an idea compete in an information poor environment, but that doesnt mean it isn't delusional.
Yep, ideally OP should formalize their theory into a bet and accept people to bet against them. Say, $5k on OpenAI <insert some horrible outcome> in 10 years. Money could be kept in escrow with a trusted third party.
> martialed
I think you mean “marshaled,” correct?
It's used as an attack, so both.
https://news.ycombinator.com/item?id=41697929
Hn claims to be largely independent of the YC fund. But we will never know the full truth.
I love the posts about how YC was better back in the day. It was the same, it's the same. It's just bigger and there's more timeline now to reflect.
If you think the partners (the core of which have been there since day 1) have really changed their outlook that much then you've not been paying attention.
YC has always been a smorgasbord of status seekers, dreamers, ruthless pragmatists, creators and artists. It's a big community that keeps growing, the good parts and the bad parts.
There were scandals then, there are scandals now. They pick some teams perfectly and others totally wrong. The most important thing is that they keep doing it every year and more people get access and a shot at doing their thing.
FWIW I was YC W14 and yes it was totally better back then and we were all geniuses and pure lovers of startups only with no ego...
Note that when YCombinator first started in 2005 (the batch that Sam Altman was part of, as a college dropout), they were not prestigious. They largely funded college students that nobody else would invest in. But part of Paul Graham's philosophy for it is that "If you do anything well enough, you'll make it prestigious" [1].
Rather, I think that what's happened with YCombinator is that it's followed the growth arc common to all institutions. You start with somebody who has a good idea and a passion for making things better for some subset of humanity. That attracts other people in a virtuous cycle. But eventually you hit a growth limit and saturate your market. At that point, the focus of the people in charge turns to wealth extraction, leveraging your brand, reputation, and market position to make ever increasing profits. Eventually you squeeze everything there is out of your market, your product is shit, your employees don't care about you anymore, and you get replaced by a younger more beautiful que^H^H^Hstartup.
I wouldn't bother applying to YC now - I don't feel like they give enough for the equity they take, their advice has become formulaic and well-known, and I'd rather go do what I love. But in 2005, when nobody was funding college students and the popular wisdom was that the Internet was a dead fad, they were revolutionary.
[1] https://paulgraham.com/love.html
We were in YC S22 and it definitely has become a status seeker magnet. However, entrepreneurship is itself a status seeker magnet.
The point the author misses is that you need to think of YC not as an organization but as a segment of time for personal and team reflection. It can help you develop a coherent narrative for your path and goals. Others may deride this characterization and say it’s too expensive. But the only way to enforce that kind of reflection is to raise the stakes and give it a real opportunity cost.
YC did not have prestige in their early years (Jessica mentions they had to beg their friends to come to demo days). Yet people were dropping out of Harvard to join. So it seems prestige is not necessary for success and in fact may be a negative signal.
It was very prestigious by ~2007, but only within a much smaller niche of programmers nerds.
So it was prestigious, but it wasn't seen as a profitable investment before it made its first dollar.
It wasn't. If you told someone you dropped out of Harvard back then they would think you were making an odd choice. That said, it was never very risky since Harvard will take you back if you drop out, but it was at least unusual.
> (1) YC is willing to fund just about anything, (2) they’re not doing any real due diligence, and (3) they don't particularly care about their existing portfolio companies.
YC never said they were anything else, though? YC's strategy is simple.
Vet for y intercept, do little due diligence, and make it up through investing in enough people.
They never claim to be perfect. In fact, there's a number of YC founders who have had scandals:
- Bitfinex $4.5 B hack was a YC founder
- uBiome (wire fraud) was a YC co: https://news.ycombinator.com/item?id=30899352
- Stablegain ($44M crypto fraud) was a YC co https://news.ycombinator.com/item?id=31461634
- DreamWorld is a YC co: https://news.ycombinator.com/item?id=26898266
I guess hucksters are inevitable?
Something that I think is a bit misguided about this is that YC, at founding, was pretty unfashionable itself. The "accelerator" model wasn't particularly proven, and the thesis was that there was an untapped talent pool of "hackers" who just needed to figure out how to run a business and get connected to the right people/resources in order to be successful founders. Compared to other accelerator-type opportunities at the time (and some that still exist), YC was extremely founder friendly.
YC 1.0 made good on that vision — the success rate in the early batches is indicative of that. Once PG stepped back and handed the reigns over to Sam Altman, YC focused more on scaling up, while the startup ecosystem grew significantly as well, specifically around "Web 2.0". At the time, it wasn't particularly difficult to create a venture-backable web business if you had the technical skills and the right resources to achieve distribution. Along the same lines, being a startup founder became a viable alternative to becoming a banker or management consultant for high-achieving individuals. So naturally YC, as a backer of hyper-successful startups that generally have an easier time fundraising, became a magnet for the status-seeking subset of high-achieving individuals, leading to it becoming more of a stamp of prestige.
Since Sam Altman's tenure, it seems like a lot of the initial edge that YC had at founding is significantly diluted. There are a lot of aspiring founders seeking funding, but the Web 2.0 opportunity doesn't really exist anymore (at least not at the same scale). So today, YC looks much more like a large seed fund that funds more specialized businesses rather than the types of founders of the initial cohorts (i.e. hackers that want to build Web 2.0 businesses), and I think people are overly critical of that scale up. 2005 was a very specific point in time for the startup industry, and the YC thesis was not only well-timed, but extremely effective through ~2014 — but it's been difficult for them to figure out how to continue the momentum given changes in the ecosystem.
Well said. Things change
I don't agree at all with this post. YC's mission is to help founders start companies and help them build sustainable businesses. Towards that they've made it super simple to get started and funded, and provide guiding principles and support in the form of advice and a strong network to help the startups survive. They were never about prestige -- that came as a byproduct.
Scaling this model is hard, however, and I think they may be running into scaling limits. There just may not be that many fast growing businesses (startups) every year. We won't know until years from now.
Everyone is missing the reason they got accepted: they are some kind of tech influencers have 300k subs on YouTube.
You have 10 mins to pitch your idea, so they went in and said ”look, we work for coinbase, we're competent. Look, we have 300k subs on YouTube, we know how to sell shit and get attention. Look we have <some random AI thing>, we got it all" and that's all it takes. The problem is, they want to sell dev tools and those tend to be more grounded in reality than <some random social media thing> where their attitude and skills might be a better fit. Lots of devs like calling out bullshit as a hobby and making fun of shoddily built stuff, so it's a tough audience.
YC doesn't do "due diligence" and never has, not worth it for the $125k they put in. The real danger is they become known as the place for bullshit peddlers, influencers, etc.
Edit: 344k subs: https://youtube.com/@fryingpan?si=QIPTDvJATXFNYBPM
What happened is adverse selection due to a stubbornly low valuation that doesn't even try to keep up, in the midst of a growing number of alternatives, worsened by a formal and therefore somewhat gameable process of getting in. The kind of person who really has an idea they are going to pursue regardless that he's actually committed to isn't going to part with his equity at the low prices a YC would offer. Instead what you get is people creating companies explicitly with the intention of applying for VC, which removes an important filter reflecting founder buy-in, and therefore average quality; and there's no way you can really tell one from the other.
I don't know what YC thinks, but the mission is not about prestige, but to help startups succeed, so these startups can make something people want.
Also, YC is mostly back in person and so pretty hard to scale (also batch sizes have gone down in the last couple of years).
Surprised this doesn't mention meticulous.ai, who seem to spam HN with "we're hiring!" each month but i've never heard of anybody using them, nor do LI show any new employees. Hey Gabriel, what's going on?
HN is rife with these adds masquerading as legit hiring posts. One company was “hiring their 3rd engineer” for years.
I thought I was the only one who noticed, I'd much prefer the YC companies do a monthly "here's who's hiring" much like the "who's hiring" instead of individual ones.
I interviewed for Meticulous a few years ago, and I'm pretty sure I was almost hired, but it didn't go through because they decided they wanted to go fully in-person in London, and I didn't want that. Gabriel seemed like a good guy, I was given a very believable project demo, Quentin also seems legit, my understanding is the product is difficult currently to roll-out to smaller customers but they have a good number of larger paying customers.
I don't think the continuous hiring posts are anything other than a sign that it doesn't cost them anything and they get good leads every time they do it.
I don't think that's really connected to the topic here?
What you are describing here just sounds like one of their portfolio companies taking full advantage of one of the perks that comes with YC? I don't know what the limit on the "We're hiring" posts is for portfolio companies, and I also have a few on the top of my mind that showed up a lot, but having that as "ads" on this website isn't too bad.
With the recent drop of batch quality comes more lifestyle companies and less disruptors. I can't imagine the YC of even 10 years ago funding quite so many zombies 3+ years no product but still holding out for the fabled founding engineer...
A half-decent Schemer in found3rm0de would've built 5 failed MVPs and exactly one unicorn in that timeframe.
What about Imbue which has raised like 300mln, spams fake hiring ads all the time, and doesn’t have a product…
I briefly worked for Imbue, and got paid for it, and as far as I know they are still legitimately hiring -- their current team page shows a good number of people who have been hired since I was there -- so I don't think "spams fake hiring ads" is a fair thing to say; they are legitimately hiring people, and paying good money. My impression is that they make the top of the hiring funnel as wide as possible but end up hiring a tiny fraction of the people who start the process.
I've used meticulous.ai!
Join us as Founding Engineer #207 !
Article's assumption is that a totally incompetent set of startup founders were admitted to YC because it "loses quality in exchange for quantity" (not a direct quote but the gist). And this startup was nothing more than a copy of a different startup.
Maybe it is the prestige game that became a death knell for YC. Because it is "cool" to be accepted to YC, the "cool people" with a coolness factor started applying and tried to game through the evaluation process into acceptance. But these cool people aren't really cut out for doing sweaty, gross, sleeve-pulling work. So they likely fail.
What does Sam do? Refocus the company to drift away from the "cool" tech sector where cool people are looking to make their name cool. And start doing stuff in multiple sectors (that will seem cool in the future!).
What didn't he do? Make the grind of becoming a YC selectee even sweatier and harder. Or change the selection process entirely so that all previous books trying to get you through the system fall flat on their faces.
There was a discussion a few weeks ago about YC betting on essentially the same product of adding support for chatting with LLMs inside your IDE (Continue.dev, Void, double.bot), which is a great example of this. No differentiation between investments, just spray-and-pray technique hoping that at least one of the contenders will succeed.
I understand that in broader terms, VCs operate in this way - investing in many things hoping that one will stick. And if this is spread across different products, industries, ideas, then it is a good signal that your company was handpicked and got attention of one of the best VCs, among many many contenders.
With examples like this, this signal is basically gone and getting a YC investment means nothing.
Starting a startup is now a prestige game. Its a career path. Spend enough time with ivy league grads and youll realize this is true
In the VC arena, yes, it's always been. There are other types of startups that get funded differently, so let's not forget that.
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Counter point: there are so many more accelerators now. It was basically getting into MIT/Stanford in term of opening up big doors. Now you have schools with accelerators right out of undergrads. So, YC has to compete in the space (sort of). It’s still one of the highest prestige (as in validation) you can get EVEN IF YOU FAIL.
Just from public information my impression is that prestige was never a goal while scaling was in the plans from fairly early on.
Anecdotally, some of the best recent founders I know are opting not to apply, which I think is a bad sign. But their reasons have nothing to do with the scale, competitiveness, or prestige of the program.
I don't track these things, but as far back as I can remember, the appeal of YC was the tutelage of experienced founders, availability of office hours, and the atmosphere of being surrounded by like-minded, ambitious people.
When did that change?
That tight-knit environment couldn't last when they keep taking on a bigger volume of startups every year.
2005 - 8 startups
2010 - 63 startups
2015 - 216 startups
2020 - 435 startups
2024 - 509 startups so far (likely 600+ when the Fall batch is done)
https://www.ycombinator.com/companies
This reminds me of something that appeared on hacker news a couple days ago:
https://sohl-dickstein.github.io/2022/11/06/strong-Goodhart....
Basically, the proxy objective is "getting into YC" -- the real objective is producing value of course.
We've started optimizing for the proxy. Which produces outcomes like this, where YC is a Thing You Do, after Graduating From Stanford, and before Becoming a YC Alum.
> This decline will continue until cool, innovative companies no longer see any reason to apply.
I am the furthest thing from a business man / start-up news addict, but even I know that the point of starting a company is to make money (perhaps fulfilling a need or niche, sure) and "being cool" should have nothing to do with it. Hell, "cool" often doesn't really square with being "innovative" anyway.
Startups determine their ability to execute, and thus generate revenue (or promises of same) from appearing “cool” to prospective talent and future investors. Without it, they wither and die.
Eh yes, but half a million in income sure helps you avoid death too, and most of them are moments from death when they apply.
Please don't refer to an investment as "income". It hurts the ears of those of us who know a little accounting.
I have no objection to, "half a million in cash sure helps you . . "
I understand that.
However review my last month or so of post history for my views on earned/employment income, unearned income and asset income.
In essence I differentiate between revenue within income, but not income/investment. I don't think taxes should either. Specifically, I think capital gains/intermingling of asset taxes while requiring up to date taxed-upfront employment taxes is one of the worst decisions society ever made.
This is almost as embarrassing as data centers in space getting funded. lol.
They seemed to trade quality as well. Its now a net negative signal for a company's success if they are accepted into YC.
You’ll have to expand on this for us plebs. To whom is it a net negative signal?
To anyone with eyes? Job seekers looking for startups to join, investors looking for places to put money, etc.
I'm sorry if your company got accepted into YC, better luck next time. At least you can hang out with the founders of... 100 AI-assisted Code Editors, 'The first Travel Credit Card for Gen Z', 'Starbucks memberships for restaurants', 'a video first food delivery app, tiktok meets doordash', and 'the operating system for vacation rentals'. Truly a staggering group of talent.
Those are all real companies in W24 btw...
"100 AI assisted code editors" is not even an exaggeration.
I checked, and over 300 (of ~500) 2024 YC startups have some sort of AI tag. I'm quite curious how the current AI hype is gonna end...
have a look at this, it's hilarious
https://www.ycombinator.com/companies?batch=F24&batch=S24&ba...
I expect "AI Nip Alert" to show up any day now
Many of these are "Use AI For Something" startups. A few seemed meaningful but most seem destined to fail.
Not going to name names, but so far my favorite has been “AI for [somewhat arcane process]”.
I had no idea how “AI” could possibly be of use, so clicked through out of curiosity. Hilariously, it boiled down to “we occasionally use an LLM to email people for you.”
> The first Travel Credit Card for Gen Z
Huh. Is this just that Fyre Festival guy’s thing, only increment the generation by one?
More generally, most of these read as parody.
I was laughing thinking how you made up a list of the most stupid ideas. Just to be baffled they are really fucking there.
hahahaha, wow! I really thought this was a joke list. That’s stunning.
Yeah not a joke. Straight from the W24 batch page... I'm sure these weren't even the most absurd.
A) Security is always an afterthought at YC companies - I know from firsthand experience.
B) YC companies are risky to use, obviously we meme about people using IBM for "saftey", but there is an opposite side of that which is going with a seed stage company - it's very risky.
C) Even if you are a happy customer, if you are too niche they will typically abandon you. I've been on the decision making side for this, sometimes your early customers don't fit your new market, so you have to let them down slowly.
I'm bearish on the giant YC classes but (C) is an entirely necessary evil at any successful startup anywhere.
I mean I can't speak for that commenter, but I hold any VC backed startup in suspicion for a good amount of time because if they can't reach the size demanded by their investors, which runs the gamut from ambitious-but-achievable all the way to not-in-my-or-your-lifetime, a perfectly profitable modestly sized business is almost bound to be shut down and it's services terminated with little drama, leaving behind potentially useless products, or yet another fucking ZIP file to add to the pile of the things I have yet to open up and sort into other mediums.
> if they can't reach the size demanded by their investors
In this sense, how is YC any different from any other VC firm?
It's not, which is probably why I said VC not YC.
Folks always bring up the increasing number of startups in YC which I don't think is a problem. YC is a people business. There were several key changes:
- PG and Jessica 'retired' - they were the killer combo in terms of identifying talent in tech and culture.
- YC became massively successful - when it started YC was prestigious because of the startups it funded, now the startups are prestigious because of YC.
- Selection is much harder - tech & startups became mainstream unlike when the self-selection consisted of PG essay readers and niche programmers.
The blog post is dumb, in the extreme. Sven doesn’t know the PearAI founders, the key metric YC says they assess when they make a funding decision. Where they forked a codebase from is a deminimus consideration — as Gary says, if it’s in the license, it’s in the license. Maybe Sven thinks that’s unethical, although in this case it’s funny to complain on behalf of YC, “Hey, YC, your money went to an open source codebase, and then some more of your money got to use it! You guys suck!”
Comments here miss a lot as well, (although I agree that YC’s prestige days are over) — PG’s plan was ALWAYS to be able to do more. He lays out the reasoning in an essay maybe eight years ago — if your portfolio looks like 1-2 companies (now 3) out of 500 made 80% of the returns, what should you do?
There are basically three answers to this: Rejoice, Write 497 less checks next time, or write 1,000 more checks in the hope of getting a fourth.
PG’s head was at: write 1,000 more checks. I like this attitude a lot, and believe there are good social, macroeconomic and financial reasons to act this way. Of course you will put up with more failures in that mode — you already went and got the “good” ones — you are now picking ones you didn’t love that much in the sure knowledge that you’ll happily be wrong about one (or maybe even two) of them.
Especially when you’re considering what to do mid-ZIRP, this is I think the only rational strategy if you want to make more money and help the world see more cool things.
That said, one thing YC companies benefitted from immensely in the height of the prestige era was just that, prestige; it was a virtuous cycle in that getting in to YC guaranteed a quality seed and probably A round just on the name. In that way, it was like getting in to Stanford or MIT. Today, along with mentoring, one of the main benefits is the larger network internally, and this is a different thing. Possibly better, possibly not. I do think that if the prestige is needed for their model, they’re probably over scaled for today’s markets and venture money.
Of bigger concern, I would say should be the question: “what does pre-seed/seed even look like in five years?” — Much of what seed capital is for can be done with quality LLMs today — and I expect that trend to continue. We saw the rise of pre-seed firms in exactly this economic environment — through the middle of the dotcom one boom, a tech startup was EXPENSIVE — ten engineers, $30k sparcstations, long data center contracts — the cash was needed. YC started at an inflection point when open source tooling and availability was driving that cost down.
The next YC / early stage fund is going to look very, very different than the last one. And that’s okay! It will be fun to see what’s next.
YC gets such great terms (because they invest so early and have great deal flow) that it's hard to see them declining unless the current venture model stops working. It does seem that recent YC batches are less impressive, but IMO that's less due to the quality of person that YC attracts and more that there's less low-hanging fruit. The "software is eating the world" thesis still seems true but now it's a lot harder to compete just on software you often need domain expertise in a complicated field.
> they got funded by YC with nothing more than a codebase copied from another YC-backed company. This shows that (1) YC is willing to fund just about anything,
I don't see it that way. This is NOT the first time YC has funded startups that are in direct competition. It seems to me that having multiple companies with the same product makes your net larger for customer acquisition, and the startups can always merge later.
Not to mention that the code base is probably the easiest part of a business like this.
One of the biggest shocks to me was that YC now invests in war and killing people. Before their closest connecting to killing people was investing in companies that had severe negative effects for society, like Doordash or AirBnb. Now they're helping people make missiles.
https://www.ycombinator.com/companies/ares-industries
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There are 40,000 people killed in Gaza by US weapons, in what even Biden called "indiscriminate bombing". YC should not be making cheaper ways for our allies to commit genocide.
If you put it that way, lot of people have been killed by Russia’s weapons in Ukraine. US’s weapons are used to protect civilians there. Think of all the Russia’s missiles shot down, or artillery depots blown up.
Contemporary weapons are also much more precise. That means lower collateral damages. A lot of development efforts are to further enhance on that front.
Weapon development is essential. Of course we should condemn mis- or excessive use of force, especially against civilians.
Until we actually have controls to protect against excessive force, which we patently do not and have never had, building better weapons will always be used against civilians to commit attrocities.
Right now, we ignore the controls we do have. The US is not supposed to provide weapons to anyone violating human rights, which Israel is very obviously doing, as is agreed universally outside the US. But we still provide them with weapons as they are our "allies". While this is the case, de facto any better weapons we build are used to commit "better" crimes against humanity.
We can clearly see from how the US aids and abets genocide[0] in Gaza that they make no judgments based on international law, ethics or sound moral values but only based on the geopolitical interests of their ruling elite and their lobbyists regardless of what the majority of the population they rule over thinks in this regard. If you believe for a second that America is helping Ukraine out of the goodness of their hearts or because "it's the right thing to do" then I have a bridge to sell you. It's a proxy war for them and the US would let happen to Ukraine and Ukrainians that which it lets happen to Gaza and Gazans if it were aligned with their geopolitical interests. US politics couldn't be possibly more machiavellian than it already is.
[0] https://www.jewishvoiceforlabour.org.uk/article/prof-amos-go...
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Nitpick:
> People don’t attend Harvard for the lectures, which are all on YouTube anyway
This is very much NOT true. Only a few introductory lectures are on YouTube.
This entire article is premised on the idea that YC accepts more startups now than before, but if I'm not mistaken, their acceptance rate has gone down every batch.
And since the OP specifically called out Harvard as a paragon of prestige institution, it should be noted that YC acceptance rate is lower than Harvard's too.
Part of the earlier appeal of YC was that it was a batch of approval that, at least imo, was a strong signal to VCs to take a good look at the company and more-likely-than-not invest in.
With larger batches and more lax selection that signal is so weak that YC comapnies are mostly like other companies with some traction.
I always thought YC growth was to fuel it's portco's initial traction. My understanding is that they solved each other's problems and then raised on traction largely within their own ecosystem. Having a wide breadth of companies would better enable this
It's pretty clear that many VCs are starting to play the carry-game, it's much easier to scale up and make money on carry than it is picking winners or even pricing the 'winners' correctly as we saw during ZIRP. Tax advantaged too.
Oof just watched a video from the Pear.ai guys and was happy to hear they made it into YC. I don't know much about the project, but they seem like good people.
"What we're doing isn't technically illegal so stop talking about it" isn't generally a phrase used by what I'd call good people, but we'll agree to disagree.
I don't get the objection here.
Forking is part of how open source is supposed to work.
The beauty of forking/open source is the ability to contribute back to the original project or take over an abandoned project. In this case, the original project Continue.dev isn't abandoned and actually has more traction/commits than the PearAI fork. But what PearAI did not do is a traditional fork. They took the commit history, re-branded everything to PearAI, pushed it up to their own repo, and claimed that the contributors of VSCode & Continue were their own contributors on Twitter.
That's not the spirit of open source. I'm sure the authors of Continue.dev did not intend for their work to be used this way, even if the license is permissive of it.
The license is literally a statement of intent.
If they wanted to police use, they could choose a different license, like one of the GPL or CC variants.
I'm not sure how to parse this, and one possibility is worse than the other.
Did they go through and alter each commit in the history, making it look as if the committer was talking about brand B instead of brand A at the time they made the commit?
Or did they clone the commit history, and add commits to rebrand, while keeping the historical commits intact?
Well, VS code isn't abandoned either. Shall we raise the pitchforks against Continue too?
No, because Continue actually added value on top of VS Code. PearAI has not added value on top of Continue -- yet.
> That's not the spirit of open source.
That's because there's literally no such thing. It's a licensing choice, not a seance. If you don't want people to use your code, license it correctly.
There's a difference between forking to make a OSS project better and forking to create a clone just for the sake of VC funding that doesn't trickle down back to the original code.
Even if it's allowable by the permissive license of the original code, it's not a net positive for OSS.
That's your opinion. Maybe the original authors of this project don't care and are just happy that their invention is helping people.
I'll take the authors' published intent over your speculation.
Great take.
I think the assumption people are making is that the YC selection team are dumb idiots, and don't understand that all the founders of that project did was fork an open source project and ask them for some money.
(I'm not saying this is what happened; I know nothing about this project. I am saying this seems like the assumption the author of the article and some people in this thread are making. I bet that's not what happened, but if YC is actually full of dumb idiots who do zero due diligence whatsoever, then I guess I have to agree with the article's thesis.)
The objection is it’s extremely unlikely licenses are being followed and they seek to profit from good will of free software.
Weird that his example of YC's decline is a company putting together a hacky MVP based on open source code, which is an absolutely classic YC thing to do.
At some point, you have to turn reputational capital into real capital. The hope, then, is that you only spend the interest on that capital.
Do you have to? Doesn't YC have enough capital to spend it on meaningful endeavors instead of silly "moonshots"? How much would be enough before this happens? Genuine questions, no snark.
YC went downhill during Sam Altman and then Garry Tan pushed it off a cliff. There’s no point in joining YC anymore.
What's the most successful yc company started in the last 5 years ?
Is there a tracker or all YC companies and their outcomes?
https://www.ycombinator.com/companies/
Zepto, W21, raised last month at $5B valuation. So, in 4 years.
Probably Deel (W19)
Replit and Vanta stand out
PG should return and go 'founder mode' on YC and clean house.
I was part of the W12 batch of YC (which was a lot smaller, ~60 companies, back when Paul Graham was still leading YC).
YC funds a lot of companies and has always had super high variance in the companies it funds. Entrepreneurs are a wild bunch of people. There have always been companies where the founders turned out to be BS artists or sociopaths. Companies that folded immediately after the program started. Companies with messy cofounder breakups already brewing at the beginning of the batch. Companies that turned out to be slightly scammy. Some of the founders that were in those companies pivoted and became successful.
Picking on Pear AI (which I don't know anything about) as evidence of YC failing is silly. It's also a super early stage company and you really have no idea what they will do.
The test of YC to me is, can they keep attracting and picking some of the best founders (which you can't really tell for years). And providing the inspiring, warm, but pushy environment that best sets up founders for success, and in turn keeps them coming to YC. I'd apply to YC again in a heartbeat if I were ever starting another company.
Agree completely. That entire PeerAI BS put a really bad taste in my mouth w.r.t YC. It is fine to fund Companies that might create products with their own sweat/labor which might compete with their existing portfolio companies. That is healthy competition. But what happened here is not that!
If I fork a popular repository on GitHub, say Plausible, change the name of the product and then apply to YC, you are telling me I have a non-zero chance of getting selected if I just come up with a better business plan than the Plausible team? WTAF? That is horrible! Where are the standards here?
And no YC cannot hide behind the "You choose a wrong License" argument. That is legal BS and does not apply to TRUST built between Investors and Founders.
This is serious credibility damage to YC.
Disgusted.
YC used to select only top-tier startups, but now it seems more like a numbers game. As Brian Chesky mentioned, Silicon Valley has implicitly assumed that scaling a startup means shifting into 'manager mode.' It appears that YC is now operating in this 'manager mode.'
Meh.
>The issue, however, is that they never truly grasped the factors behind their success, which is why YC's peak is already behind them—it’s likely all downhill from here.
I haven't been to YC but I read Paul Graham and get the impression he has a pretty good idea of the factors behind their succcess and this guy who I think hasn't been and does not live in the US does not.
YC wasn't pesitigious at the start but went out of the way to help startups and encourage them to 'build something people want' and I think that goes on.
I don't think this is the story. The story is that YC created a cult around a startup which convinced founders to give them equity in return for nothing. Now the good founders wised up to the sweatshop/meat market/factory that YC is, they get better terms from real VCs, or they self fund.
YC appears to be spending all it's time marketing itself on Twitter and pretty much all the partners, including the lead have companies that were acquihired i.e. failures
Class size of 7 = quality, class size of 300 or whatever = noise filter
But they again only need that 1 company to be the 1000x and return LP capital at a decent multiple. Any pool of their batch size is likely to produce that and allow them to self platitude after the fact.
Meh. Maybe a bit.
Being a YC company is still prestigious.
The vast majority of people familiar with the YC name don’t follow it close enough to know it’s volume of investments is higher.
It’s true. With 40k applications and roughly only 100s accepted… they likely only chose pearai because of nepotism. It would be self sabotage if they regularly do this so likely only a few companies are selected this way with pearai being one.
The above is a very educated guess on pearai, but whether or not YC engages in nepotism or not is unmistakable to me. They do and there is real corruption in the selection process. It’s not just gross incompetence.
Not only is there actual evidence that can be sourced but I can offer anecdotal evidence from inside sources from within the family involved with a company that passed via nepotism.
the company is called dreamworld. See here: https://www.pcgamer.com/dreamworld-infinite-world-mmo-kickst...
There’s whole YouTube videos about them including a post from one of the founders ex girlfriend. It’s all very shady the articles around them.
I encountered this company by being close friends with someone that is within the family related to the founders of dreamworld. I was literally told that the company succeeded because of family connections from dreamworlds ceo:
https://www.linkedin.com/in/garrisonbellack
Garrison is the ceo of dreamworld. And he’s from a rich family headed by his dad:
https://www.linkedin.com/in/john-r-bellack
who is part of some super rich real estate fund.
The bellacks regularly have big family gatherings in Tahoe and one of the attendees is Geoff ralston the previous president of YC.
Source not only confirmed dreamworld got selected via favors from Geoff but that Geoff was telling stories at this family retreat about how he had to fire Sam Altman from YC after getting a call from Paul graham. Yes pg fired Sam Altman from YC.
Dreamworld as it is right now got additional seed funding from VCs via connections as well and they are sitting on a pot of assets which is generating net positive income while that company can just stay afloat indefinitely. They don’t go through the hardships and risks other startup do thanks to nepotism.
There are other people in the bellack family creating startups and looking to Geoff to funnel them through YC via nepotism so Geoff is primed to make it happen again for sure.
So yeah. I’m sure Geoff isn’t the only person from within YC who does that.
Hacker news is pretty pristine, but the fund itself does shady stuff.
At least I think hacker news is pristine. Let’s see what happens to my post and my account. Maybe the moderators will be more strict with me? And use that to ban me? I am a bit rough with my opinions. But who knows?
"Yes pg fired Sam Altman from YC."
How can you be so certain?
https://techcrunch.com/2024/05/30/paul-graham-claims-altman-...
I saw that too.
Pg is lying according to my source. I mean my whole post is about corruption. It fits the story that pg is capable of lying.
Keep in mind. I’m a random guy on the internet and my source isn’t 100 percent solid from my pov either. So keep that in mind when judging this whole thing.
Overall this is what happened: some person at the family retreat listened to Geoff tell the story about how pg made the decision to fire Altman and that person relayed the story to me.
Overall from the fuzzy evidence I’m thinking he was actually fired but I’m not 100 percent on that either.
You’ll have to be your own judge for this. This is one of those things that people will never know for sure.
Same with the nepotism. Nothing will ever be proven here. The best info an average layman can get is rumors from someone willing to relay this gossip anonymously on a forum and you can’t even be sure if this guy (me) is making all this stuff up. You’ll have to form your own opinion and take a leap of faith in either direction or leave it as an unknown.
Indeed. Maybe the next successful incubator will learn to find hidden talent from more diverse sources. Woman. Certain underrepresented ethnicities and economic backgrounds.
Saved this post.
How many times did the author apply and get rejected from YC?
I have heard this sentiment before, from a less successful VC. After comparing them based on track record, it was clear YC is in a league of its own. I want to get advice from people who have built startups before. Looks at YC advisors on YouTube and you'll find they're all very successful.
Look at the partners and advisors at most VCs or accelerator programs, and you won't find that level of experience. You'll get mismanaged and start thinking like an investor instead.
> How many times did the author apply and get rejected from YC?
Author is not wrong.
This “YC is actually a negative signal” sentiment started back in 2018-2019.
The “actual” good entrepreneurs (e.g., the folks you expect from Harvard, MIT, Stanford, Berkeley) stopped applying to YC a while back.
There are different signaling mechanisms in 2024, which I won’t reveal here, because the “plebs” will turn it into shit, just like they did to YC, leetcode interviews, and FANG ML jobs.
You posting "better" signalling mechanisms (in your opinion) will not be the end of them... People don't do things because you think they're good. They'll find them by looking and copying existing companies' approaches.
You have failed to mention anything except to say approximately "YC sucks and I have something better but I don't want to share"
> You posting "better" signalling mechanisms (in your opinion) will not be the end of them...
Of course it will be the end. You think leetcode mediums are enough to land a FANG job in 2024? No. But in 2015, they were.
The top-tier are always adapting. Always one step ahead of the rest. Formula 1, top 5% dating profiles, mega churches, olympic athletes, cartel drug smugglers, private elementary schools, and elite entrepreneurs, all the same.
Me posting the “secrets” of 2024 make my life more difficult, because I actively use them. Sure, I’ll adapt once the game changes. But I’ll “rest and vest” until then, right?
> You have failed to mention anything except to say approximately "YC sucks and I have something better but I don't want to share"
I am not obligated to help others. Don’t like my attitude? Well then, you’re not going to like the top-tier culture.
Programmer/hacker culture used to have the positive, helpful camaraderie you are looking for. But that shit is long gone. Like I said, adapt.
You have a good hart
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