This sort of became an anti-VC rant, definitely, and also a little unfair to the product YC offers. It's a legitimate product in the market, not a scam, and the 22-year-olds who do it are not getting duped.
My biggest issue with YC is that the deal isn't very good. Giving up 7-10% for $500k is pretty crappy for any company that has a decent shot at becoming anything good. That is why I have only ever applied to YC when my company ideas were very speculative. If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
If you already have the ability to go talk to a VC and an idea/product/company that is good enough to make it into YC, you don't need YC for your company. If you can sell YC on investing in you, you can sell your product.
However, it does make sense to do YC right out of college to get the networking benefits and the credibility signal. That's why so many 22 year olds do it. It sacrifices your stake in your first company in exchange for helping you as an individual later in your career.
I did YC when I was 27 after trying to do a tiny bit of fundraising, and kinda agree with you, but I think you can replace "22 year old" in your comment with "anyone not super-well-networked in the startup scene".
The truth is, even if you have pedigree (top-tier college, worked at FAANG and startups), the very first time fundraising is going to be pretty hard and annoying unless you've already been going to a lot of founder meetups, want to start something in a hot field, or have VC's in your personal network. This is especially true after the money wave from pre-2022 receded.
I do feel like I probably could've raised on better terms, but I'm not sure it would've improved the trajectory of my life or expected value. YC taught me a lot about fundraising that I didn't know I didn't know. Compared to other VC's we've worked with (who have all been pretty great), YC has provided more specific advice to our stage, better technology, and a slightly better network.
For me, definitely! It helped us raise our first round of funding, without which we may have failed during the pandemic. I also learned a lot and found the online platform useful.
> If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
But that's literally the point. You suddenly get a huge network that would help you get through the early stages.
It's certainly true that many founders would find better terms elsewhere. However, it's also true that most companies fail. So negotiating better terms usually doesn't matter nearly as much as making the company more successful. (The same rationale applies to employee equity grants)
Like you said, for people with no connections, whether just out of school or not, it's valuable.
Agreed. YC from my POV is attractive not for the money but the motivation. The peer influence (encouragement, competition, accountability) is what I feel would improve my chances of building something amazing.
But I can’t disagree with the Tweet’s argument that what’s good for YC (swinging for home runs) isn’t good for the vast majority of founders (but it is what those founders want, and why the lottery is a thing).
The biggest thing that sours me on YC is the exclusivity. They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different? As peter theil would say, competition is for losers.
You shouldn’t participate in games that are zero sum and they shouldn’t pretend they have some kind of carefully thought out scientific method to determine who should get in. Half the companies I see in the batch are dog shit. A third of the companies are “ideas only” which is basically now an Opaque beauty contest. Just opt out and boycott these stupid status games
My view to YC is more similar with yours than the OP’s actually.
The red flag I saw is: they basically encourage every one to apply, no matter the stages, areas, backgrounds, etc. Their PR seems saying everyone could have a chance as long as you dream big. But TBH I doubt it would the reality.
The lack of a thesis and target audience feels like more an exclusive club game. The selectiveness is part the product, leading to better chances to get following funding and talents. Ofc nothing wrong with it, but I think people should have a realistic view to it.
I have seen successful YC founders not get in with their next companies. There's a lot of competing applications. Getting in is not easy. But I don't believe it's a club. I have evidence that suggests the opposite.
People need to stop conjuring up evil YC processes just to reassure themselves about not applying. It's fine not to apply! But if you're rationalizing it, consider that maybe you really do want to, and are just scared of rejection? That's normal too.
> They gets tens of thousands of apps for something like 300 spots. For all the criticism of artificial scarcity of places like Harvard, why is this different?
How is Harvard artificial scarcity? How could YC do this any other way, when they have a limited number of staff and a quality bar to meet?
> Just opt out and boycott these stupid status games
Sorry - I'm struggling to follow. Do you think YC membership is a status game? I thought it was a real program.
Harvard could easily expand their student body. They haven't kept up with population growth. They could easily double or triple their size But it would reduce the prestige. Plus they're sitting on 50bn endowment. In general people look at admittance rate as a proxy for worth. Doubling the size means doubling the acceptance rate. The one thing many people know about harvard is that it's hard to get into, and by design. InI'm imagine yc is similar.
I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.
> I'm saying their bar is BS. You're not going to convince me they can meaningfully evaluate tens of thousands of apps.
That just depends on how you define "meaningfully evaluate". That definition makes it feasible or not, I think. Companies perform some level of evaluation at scale on hiring, and it's not perfect, but it's not bad, I think.
It doesn't matter. YC isn't some not for profit BS. They're not handing out free money. If its a beauty contest, it's because they think the start ups are beautiful.
Expect them to take a half a million dollar bet on you based on their own metrics; as scientific or gut as they allow. Just because you think they're dog shit doesn't mean they are. And some partner at YC saw something in them and _that's_ what matters, no?
There are a lot of ideas (virtually all of them) for which I’d give up 2-3% for $0 to go through the YC process and network even if I intended to bootstrap or think of the $500K as getting them the “other” 5% (or an ~$10M valuation).
My biggest issue with YC is that the deal isn't very good. Giving up 7-10% for $500k is pretty crappy for any company that has a decent shot at becoming anything good. That is why I have only ever applied to YC when my company ideas were very speculative. If you already have a network and a decent platform to communicate with people, as well as the motivation to go at it for yourself, you're giving up a huge chunk of the company for a pittance.
If you already have the ability to go talk to a VC and an idea/product/company that is good enough to make it into YC, you don't need YC for your company. If you can sell YC on investing in you, you can sell your product.
However, it does make sense to do YC right out of college to get the networking benefits and the credibility signal. That's why so many 22 year olds do it. It sacrifices your stake in your first company in exchange for helping you as an individual later in your career.