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.
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.
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 :)
I'm actually gauging interests. Crowding for immediate return -> Lowering return eventually. Case in point the OG geeks in the valley or quant funds doing those for hobby vs now people go straight to career. Same as Bitcoin was dope in 2012 and lame in 2020. New comers get in mostly for greed not passion.
But feels like LP are holding their $$$ for the fed rate to stabilize a bit.
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.
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.
>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.
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.
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.
"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).
> 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.
> 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.
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.
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.
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.
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.
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...
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.
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.
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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 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.
Definitely, it's called ZIRP and QE.
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.
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.
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 known big company spaces are heavily oversubscribed so nothing can be predicted.
The unknown big company spaces are unknown by definition.
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.
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 ?
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I don't have anything to add re: YC over the years, just that my anecdotal experience differs.
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".
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.
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.
https://cartwheelcomputer.com/
amal@cartwheelcomputer.com
But feels like LP are holding their $$$ for the fed rate to stabilize a bit.
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.
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
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.
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
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.
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.
How many here have that (unironically) on their linkedin profile ...?
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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.
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.
(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 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).
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.
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.
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.
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.
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.
Instead of say prestige being the side effect of being good at something useful for the society.
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.
make it fair instead of funding the same golden-spoon cliquey gang over and over again.
[0] https://www.youtube.com/watch?v=sM2reZib2RY
https://news.ycombinator.com/item?id=21865065
[0] https://www.ycombinator.com/companies/pearai
[1] https://www.ycombinator.com/companies/pair-ai
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.
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
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".
yet the arbiter of what determines who succeeds is not YC but the market.
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.
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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...
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.
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.
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.
Despite our collective desire, Tech is not a guaranteed meritocracy either.
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.
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.
I think you mean “marshaled,” correct?
Hn claims to be largely independent of the YC fund. But we will never know the full truth.
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...
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
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