Ask HN: Is YC turning into the next Google, Microsoft, and IBM?

[uionmf]

Saw some awesome companies with passionate founders rejected from admission to YC. Wondering as YC becomes more successful, if it is leaving it's original roots. Or was this the actual goal of YC?

Could Reddit and Dropbox still be accepted with the way YC works today? Is the days of rogue startups being accepted into YC over as its pool of more "qualified" applicants keep growing?

[OmarIsmail]

The other thing to keep in mind is that YC has an upper bound on the number of companies they accept. Just because a team doesn't get in doesn't mean they're bad, it just means that YC partners saw other teams they felt were even better.

You can see the evidence of this by the fact that companies going through YC are getting better and better. They're better at the start of YC, and they're better at the end of YC (than previous batches).

Is this a good thing or bad thing? For YC - definitely a good thing.

[man_bear_pig]

It's definitely not a straight-line good thing if you think about long-term game theory.

they are already hitting the limits of getting startups who shouldn't need their services... i.e. already proven traction and can probably go raise funding themselves.

at some point, it's like akin to business school for techies. hbs class i'm sure gets better and better every year; nevertheless, more and more top notch business people skip hbs b/c the roi (opportunity cost) is not worth it.

similarly, yc's main benefits are it's network, brand, and access to capital. if they only seek to reduce risk profile by taking premium companies that have already proven themselves, the roi to subsequent classes may not be worthwhile for that x% because top notch vc's have their own contacts and branding and yc is purely a bridge.

think about pg's own statement about yc: to help companies build a prototype to get funding... at this point, i'd say it's very few exceptional guys getting in with a mere prototype. but tis the way markets evolve naturally.

yc is probably going through its own product-market fit as they try to take on more groups per class, additional competitors are entering its space, and all the meanwhile trying to maximize its profit/minimize risk. the hard part is realizing that some of the biggest success to date are randomn at best b/c it was so early stage and pre-traction and the market steers toward reducing arbitrage scenario more and more everyday.

would reddit or airbnb make this year's class (if airbnb didn't have that election year thing to help their application)? and if not, how many of those can they miss before someone starts raising the eyebrow?

[bmelton]

I can't think of a single season in which they haven't "left money on the table" by denying one group or another that ultimately proved to be successful. Similarly, there hasn't been a single season in which there wasn't at least one failure.

Venture Capital is, at its very best, a gamble, and it's a gamble in which there are a near infinite amount of variables. Product, team, market, vision, future, government regulations, etc.

I don't really know how this would equate them to Google, Microsoft or IBM, especially as except at a very surface level, those companies aren't really all that alike. If the accusation is just that they're slow moving giants incapable of innovating, I'd warn that 1) that accusation isn't fairly applied to the references, and 2) that even if that were the case, isn't really a critique, except where it might be applied in the context of failing to make money.

Seeing the recent batches, it appears that the money-making focus has definitely been more B2B than in earlier batches, but that's likely as a result of B2B proving more profitable over the long run than it is to be attributed to a lack of innovation. As a money-making endeavor, I'd wager that betting for more companies to make less profit than in the hopes of finding one Facebook amongst a bunch of flops is the more humanitarian path of funding as well, but that's another topic altogether.

[jmau5]

Just because someone is passionate doesn't mean they will do a good job. It is much more likely that you don't understand what makes a startup successful and thats why you don't understand why certain companies are rejected.

[seivan]

I was wondering if there were any actual specific examples of 'awesome' and 'successful' companies.

[stevenameyer]

They need to keep the number of companies to a reasonable amount in order to give the companies that do get significant value out of the program. So until they manage to figure out a way to scale the YC program to be able to accommodate more companies (which I'm not necessarily sure is possible) some good companies that could have been very good fits with YC will be passed on.

They will inevitably miss some awesome companies as well as select some companies which wont amount to much. This is just part of doing something that is speculative. But they need to limit the number of companies in order to actually help the ones they do accept.

YC is a good program that certainly helps a lot of companies, but by no means is it the be all end all. There are many very successful startups that didn't go through YC and many not very successful startups that do go through YC. So if a company doesn't get into YC it's not the end of the world. There are plenty of paths to success that don't go through YC.

[mathattack]

A few thoughts as an outside observer...

- You won't know until 10 years from now. Even still, it won't be enough to say they missed a lot of firms. Of course they will. They can't possibly have 100% market share. A sign of the them turning into a large boring behemoth is if they miss all of them.

- If they are too worried about missing a Dropbox, then that risk taking will cause them to miss the next big thing.

- As long as it's entrepreneurs making the decision on who gets into YC, they have a big shot of taking risks. My sense is most of the YC crew is independently wealthy, and are keeping score by "great companies" rather than "minimizing variance of returns".

- All this said, the amount of YC firms acquired by larger tech companies suggest that they are filling an important niche of being the R&D investment arm of large firms who aren't structured to chase ideas that seem too crazy.

[davidgerard]

The goal of YC is to make money. It's possible they now know a bit more about what they're doing.

[kangaroo5383]

It's possible that because YC is now a recognized brand, it has access to lower-risk companies - i.e. those that have pretty much everything figured out. As such, that will increase their success because a. self-fulfilling prophesy of more leverage in the future by being associated with YC, b. they are already low risk to start with. IMO, they are the next Sequoia, not so much Google/Microsoft/IMB.

Contradictory, however, is these lower risk, already figured out, companies are not really in need of an incubator as much as some younger companies. Anyways, I'm really interested in seeing the next batch of YC companies and where they are going with that.

[man_bear_pig]

completely agree with your statement. long term zero economic profit theory should state though as they move up the spectrum / take less risk (new entrants in their own space will enter to fill the space they can't fill anymore and they will have a new type of brand (e.g. fb was exclusive for college kids and now it's to connect everyone. so naturally college kids want something their age bracket want to use and fb is struggling to get those kids to continue to think it's cool. but for fb it works bc they created the industry they expand into). problem with incubators as they move up the spectrum is do they think they're as good as the guys that have been doing it for a long time / are they going to be perceived as threats and no longer synergistic alliances.