"How far along are you? Do you have a beta yet? If not, when will you? Are you launched? If so, how many users do you have? Do you have revenue? If so, how much? If you're launched, what is your monthly growth rate (in users or revenue or both)?"
The above question popped out at me this year.
I don't know a lot about the groups that YC accepts, except what I read in the occasional press-release or HN post. But I have noticed a pattern: it seems that many (and perhaps most?) of the YC companies I've read about recently had already launched and found success prior to YC, sometimes years prior.
This pattern might only indicate that I'm reading about those kinds of YC startups, and that completely new companies that launched post-YC don't get as much of my attention.
Nonetheless, I've found this pattern to be at odds with what I thought YC was about — pre-launch investment and mentoring of brand new companies.
It makes sense to invest in people and companies that have already found success. Even if such companies pivot to something completely new, they have a track record and a user base to work from.
Has YC made an informal pivot itself, to funding companies that have already launched and found traction rather than in great teams of founders that probably aren't even incorporated yet?
There's a well known and clearly visible trend that more institutional (i.e. not friends and family) investment is moving later stage for "normal" software businesses.
The reasons are well known: the cost of developing software (at least the initial prototype) have dropped far enough that a great many people can afford to build a prototype themselves.
Further, the cost of market validation has also dropped enough such that a great many companies can achieve some market validation without outside capital.
Put together, it's a reasonable expectation that a dedicated entrepreneur will put in both the minimal time and money to both build a prototype and prove that real customers exist who view the solution as valuable.
However, the cost of building a big business is still high. Specifically, ramping up development, hosting, marketing (team and spend), sales, etc. still costs enough money that outside capital helps.
This last point is key and answers the question of "why would I raise capital if I did all of the work of building a prototype and getting my initial customers?".
Lastly, the ultimate goal is to succeed. There are a number of different paths to success, but one of the worst failures is not outright failure of a company.
If you think about the possible outcomes of a business, there are basically 3:
1. Complete failure...business shuts down
2. Moderate success...$2 million, $5 million up to maybe $25 million
3. Success... $25 million plus with the ultimate goal of doing 9 or 10 figures a year
#1 sucks. Maybe more without venture capital as its your money you lost, but it's good in no way.
#3 is great whether or not you get venture financing. Depending on your financing, you'll walk away with $5 million or more personally.
#2 can either be a wonderful success, or the worst failure (worse than #1). #2 is great if you bootstrapped. If you bootstrapped, you'll walk away with $5 million or more in your pocket. If you grow to $10M+ in revenue, then you're financially free.
However, #2 sucks if you raised significant capital. Most likely, you hate the company because you'll walk away will nothing even though the company has had some success. Investors will hate the company because the investment is sucking up time, focus and will never be a winner.
In this light, waiting to raise capital until a company is a little bit more mature is a boon for entrepreneurs. If you have a #1 then kill it and move onto the next opportunity. If you have a #3, then go raise (or don't).
But, if you have a #2 then you know you can get rich by bootstrapping, which will prevent you from making the mistake of raising capital for a non-venture fundable business.
We've had already launched companies applying almost since the beginning of YC. Airbnb, which was in the winter 2009 batch, had been launched for over a year.
We make a conscious effort not to be influenced by early progress though, because there is no correlation between how far along a company is when they apply to YC and how well they end up doing.
There's a longer blog post about this coming, but @zmitri and I applied to YC a total of six times before we got in.
Along the way we learned a lot about why YC is important, what it does for you (and what it doesn't) and why the application process is one of the best ways to think through creating your startup.
We've been really lucky to have great alumni help advise us and give us feedback on our applications (yes, all of six of them, thanks Jason Freedman!).
So hit me up if you want me to look over anything, it's the least I can do: [email protected]
EDIT - I may be slow on the reply until after demo day ;)
We (Lollipuff, W13) released our entire application along with the short video [1]. I personally think that looking at a few sample applications is/was super helpful.
I also share SandersAK's opinion: just writing a YC application will force you to think about the "right things" for your business. It's a worthy exercise in its own right.
Our 14% acceptance rate makes the most appropriate title "How not to get into Y Combinator."
But yeah, if you get an interview (you're already doing pretty well!), the 42Floors founders practice interview is the best training you can get for it.
Sanders, that is quite an inspiring story. I wonder if all your six tries are for the same startup, or do you actually changed your ideas during these six times.
So stoked for you guys. I watched you guys apply and get rejected each time. And then emerge more determined. It felt obvious to me not only that you would get in, but that you would be one of the startups most likely to succeed.
Six times? Really? At some point it becomes pathetic, you know. Though portrayed as, yc isn't some sort of holy grail you have to touch before death. But six times, man, that must have been three years at least? Props for not giving up. Still pathetic though.
iPad Applications definitely are. In the non-gaming world, Plangrid, drchrono, and Paper by Fiftythree have all been really successful, and that's just off the top of my head.
I'm in a similar position--plenty of technical experience (~15K hours of programming, founded 2 startups and built the teams, sold 1), but I'm not quite sure what I want to build next. I've been offered early positions at a lot of startups, but nothing has really grabbed me yet.
If you think you have an awesome idea (eg, customer validation in a reasonably large market for something that is 4x better than existing solutions and yet not impossible to build), send me an email ([email protected]), especially if it's in an area that I have lots of experience in (finance, manufacturing, or machine learning)
If anyone's curious, no, I didn't lose all hope and give up when YC rejected me. Third time being rejected, and it hurts less every time :) Still going strong on this idea, refuse to quit.
When I applied for YC, the application itself was very valuable because it asked focused and aspirational questions which forced me to think about what I was trying to create and why it was important to other people. I also went into the process telling myself that while it would be great to get in, it was not the end of the world if it didn't work out.
Remember that the success of your product/company ultimately comes down to you and the market you are in and not necessarily the money that is invested or the often nebulous social status that might come with getting into such programs. What matters is creating something which is of service to and valuable to other people.
When we interviewed for the current cohort, we were asked to show up early for the interview, so I travelled to Mountain View each of the 6 interview days to talk to other startups. As a canuck in the valley for the first time, it was an eye-opening experience.
It's really interesting to hear what everyone is working on, and it's a rare look at the YC investment thesis. Also interesting to see what these companies have gone on to achieve, YC or not. I was most inspired by the stories of everyone who had travelled from foreign countries to pitch.
We don't recommend applicants do this. Though we don't say anything when it happens, we do notice, and it makes us slightly less likely to accept such groups.
No African countries have applied or been accepted, but we've accepted several people from them. IIRC none were making things for specifically African markets though.
We're certainly willing to fund companies building stuff for their home country and that will return to it after YC. GoCardless is probably the most prominent.
Practical question: Are we supposed to submit only one form per group or multiple? Because the introductory explanation talks about a group submission, but on the form itself there are fields that are explicitly personal: e.g. "Please tell us about the time you, fedor91, most successfully hacked..."
Addendum: If there are any noob mistakes you want to point out, I'd very much appreciate it because it's the first time we're applying.
[+] [-] wildermuthn|12 years ago|reply
The above question popped out at me this year.
I don't know a lot about the groups that YC accepts, except what I read in the occasional press-release or HN post. But I have noticed a pattern: it seems that many (and perhaps most?) of the YC companies I've read about recently had already launched and found success prior to YC, sometimes years prior.
This pattern might only indicate that I'm reading about those kinds of YC startups, and that completely new companies that launched post-YC don't get as much of my attention.
Nonetheless, I've found this pattern to be at odds with what I thought YC was about — pre-launch investment and mentoring of brand new companies.
It makes sense to invest in people and companies that have already found success. Even if such companies pivot to something completely new, they have a track record and a user base to work from.
Has YC made an informal pivot itself, to funding companies that have already launched and found traction rather than in great teams of founders that probably aren't even incorporated yet?
[+] [-] akbar501|12 years ago|reply
The reasons are well known: the cost of developing software (at least the initial prototype) have dropped far enough that a great many people can afford to build a prototype themselves.
Further, the cost of market validation has also dropped enough such that a great many companies can achieve some market validation without outside capital.
Put together, it's a reasonable expectation that a dedicated entrepreneur will put in both the minimal time and money to both build a prototype and prove that real customers exist who view the solution as valuable.
However, the cost of building a big business is still high. Specifically, ramping up development, hosting, marketing (team and spend), sales, etc. still costs enough money that outside capital helps.
This last point is key and answers the question of "why would I raise capital if I did all of the work of building a prototype and getting my initial customers?".
Lastly, the ultimate goal is to succeed. There are a number of different paths to success, but one of the worst failures is not outright failure of a company.
If you think about the possible outcomes of a business, there are basically 3:
1. Complete failure...business shuts down
2. Moderate success...$2 million, $5 million up to maybe $25 million
3. Success... $25 million plus with the ultimate goal of doing 9 or 10 figures a year
#1 sucks. Maybe more without venture capital as its your money you lost, but it's good in no way.
#3 is great whether or not you get venture financing. Depending on your financing, you'll walk away with $5 million or more personally.
#2 can either be a wonderful success, or the worst failure (worse than #1). #2 is great if you bootstrapped. If you bootstrapped, you'll walk away with $5 million or more in your pocket. If you grow to $10M+ in revenue, then you're financially free.
However, #2 sucks if you raised significant capital. Most likely, you hate the company because you'll walk away will nothing even though the company has had some success. Investors will hate the company because the investment is sucking up time, focus and will never be a winner.
In this light, waiting to raise capital until a company is a little bit more mature is a boon for entrepreneurs. If you have a #1 then kill it and move onto the next opportunity. If you have a #3, then go raise (or don't).
But, if you have a #2 then you know you can get rich by bootstrapping, which will prevent you from making the mistake of raising capital for a non-venture fundable business.
[+] [-] pg|12 years ago|reply
We make a conscious effort not to be influenced by early progress though, because there is no correlation between how far along a company is when they apply to YC and how well they end up doing.
[+] [-] zeckalpha|12 years ago|reply
[+] [-] SandersAK|12 years ago|reply
Along the way we learned a lot about why YC is important, what it does for you (and what it doesn't) and why the application process is one of the best ways to think through creating your startup.
We've been really lucky to have great alumni help advise us and give us feedback on our applications (yes, all of six of them, thanks Jason Freedman!).
So hit me up if you want me to look over anything, it's the least I can do: [email protected]
EDIT - I may be slow on the reply until after demo day ;)
[+] [-] beambot|12 years ago|reply
I also share SandersAK's opinion: just writing a YC application will force you to think about the "right things" for your business. It's a worthy exercise in its own right.
[1] https://www.lollipuff.com/blog/102/lollipuffs-ycombinator-ex...
EDIT: Awww! I just saw our old MVP screenshots on that blog post. Lollipuff has come a long way since then...
[+] [-] zmitri|12 years ago|reply
But yeah, if you get an interview (you're already doing pretty well!), the 42Floors founders practice interview is the best training you can get for it.
[+] [-] jw2013|12 years ago|reply
[+] [-] derwiki|12 years ago|reply
[+] [-] tonyrice|12 years ago|reply
Although I haven't made it into YC yet I would definitely love to help anyone out even if it just means sharing my thoughts about your idea/startup :)
Shoot me an email @ [email protected] or [email protected]
[+] [-] jaf12duke|12 years ago|reply
And now you're proving me right. Which rocks.
[+] [-] ggreenbe|12 years ago|reply
[+] [-] adamzerner|12 years ago|reply
[+] [-] pearjuice|12 years ago|reply
[+] [-] pshin45|12 years ago|reply
For example, are "Things Built on Twitter"[2] and "iPad Applications"[3] still a valid way to build a $XX billion company in today's world?
[1] http://ycombinator.com/rfs.html
[2] http://ycombinator.com/rfs3.html
[3] http://ycombinator.com/rfs6.html
[+] [-] sskates|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] thejash|12 years ago|reply
If you think you have an awesome idea (eg, customer validation in a reasonably large market for something that is 4x better than existing solutions and yet not impossible to build), send me an email ([email protected]), especially if it's in an area that I have lots of experience in (finance, manufacturing, or machine learning)
[+] [-] koko775|12 years ago|reply
I was on the Paper team, but besides iOS, I am very handy when it comes to backend or system administration tasks.
(email: [email protected])
[+] [-] stevenspasbo|12 years ago|reply
[+] [-] guynamedloren|12 years ago|reply
https://www.penflip.com/loren/yc-application
Wasn't accepted, but it might help anyway.
If anyone's curious, no, I didn't lose all hope and give up when YC rejected me. Third time being rejected, and it hurts less every time :) Still going strong on this idea, refuse to quit.
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] danielrhodes|12 years ago|reply
Remember that the success of your product/company ultimately comes down to you and the market you are in and not necessarily the money that is invested or the often nebulous social status that might come with getting into such programs. What matters is creating something which is of service to and valuable to other people.
[+] [-] fudged71|12 years ago|reply
It's really interesting to hear what everyone is working on, and it's a rare look at the YC investment thesis. Also interesting to see what these companies have gone on to achieve, YC or not. I was most inspired by the stories of everyone who had travelled from foreign countries to pitch.
[+] [-] pg|12 years ago|reply
[+] [-] ggreenbe|12 years ago|reply
[+] [-] benatkin|12 years ago|reply
[+] [-] ggreenbe|12 years ago|reply
"become president of Y Combinator starting next batch"
[+] [-] pg|12 years ago|reply
[+] [-] toeknee123|12 years ago|reply
[+] [-] jzig|12 years ago|reply
[+] [-] pg|12 years ago|reply
[+] [-] OoTheNigerian|12 years ago|reply
Will people that plan to move back home or have home (non American) markets as their primary markets be considered?
It would be interesting to see how Sama's batch differs from PG's
[+] [-] pg|12 years ago|reply
We're certainly willing to fund companies building stuff for their home country and that will return to it after YC. GoCardless is probably the most prominent.
[+] [-] namenotrequired|12 years ago|reply
Many have done this, whether planned or not I don't know in all cases, but I know that Glio has Brazil as their primary market.
[+] [-] infoseckid|12 years ago|reply
-- This is too less time for companies based outside of the US to arrange cheap tickets, visas etc.
[+] [-] fedor91|12 years ago|reply
Addendum: If there are any noob mistakes you want to point out, I'd very much appreciate it because it's the first time we're applying.
[+] [-] Bootvis|12 years ago|reply
[+] [-] TheMakeA|12 years ago|reply
[+] [-] enduser|12 years ago|reply
[+] [-] pg|12 years ago|reply
[+] [-] foobarqux|12 years ago|reply
Do you accept them? Do you have conflict of interest or confidentiality policies?
Do you ever have conversations with existing YC companies along the lines of "We had an application recently for product X, you should do that."?
[+] [-] pg|12 years ago|reply
As for the fourth, of course not.
[+] [-] sanswork|12 years ago|reply
[+] [-] namenotrequired|12 years ago|reply
[+] [-] akshxy|12 years ago|reply
[+] [-] pg|12 years ago|reply
[+] [-] thomson|12 years ago|reply
[+] [-] nl|12 years ago|reply
[+] [-] kevin|12 years ago|reply
Also, we don't set quotas at YC. If we think your non-profit would be a good fit for YC, we'll accept you.