The only thing I really worry about is that competitors will use artificial deadlines to panic founders into taking offers from them before they've interviewed with us. 100% of the clones make decisions before we even do interviews, probably not by coincidence. Last year when they made offers to groups that had also been invited to interviews with us, they tried to pressure them into accepting before they'd heard from us. I assume they'll do that again. That makes me mad, I admit. It seems such a nasty thing to do to a group of young founders.
Paul, why do you call the firms clones? Aren't you a clone of a seed stage incubator? I absolutely love what you do but to say that there are clones in the investment world (where there is zero scale) is a weird way of looking at the world. You probably have enough money to fund every good idea in each intake but you certainly don't have the time to spread out across those ideas. So if you have inspired more capital to come into this stage then surely that is a good thing for founders?
If there is competition, then founders only win out in the end. If someone was 'pressured' into accepting before other options played out that should be a huge signal to the founder that the firm is less than desirable.
I was calling them clones because that's what other people were calling them.
They are, though. All we have in common with seed stage incubators is investing at the seed stage. What these guys have in common with us is a whole list of distinctive things: investing in multiple startups simultaneously, taking about 6%, using an application form instead of accepting business plans, making founders move to where we are, using a three month timeline, having weekly dinners, bringing in outside experts to speak to the founders as a group, having a Demo Day where they all present to investors. Often whole chunks of text on their sites are paraphrased from ours.
This question 12 was copied from YC application as well
>12. Why would your project be hard for someone else to duplicate?
It clearly illustrate the apparent problem YC will face in the future, I think you should think of something to avoid complete duplicate. From my view I think the value of YC is in its network and Knowhow, any founder will recognize that.
As it's getting harder and harder to even speak to you guys the temptation for founders to go the other way will even be stronger. I'm sure you can come up with something.
YC is a clone of Google's SOC project that occurred the prior summer. Taking on multiple projects simultaneously, providing about 5k, accepting applications, three month timeline, having frequent meetings between people and mentors, bringing in outside mentors, having a day at the end for people to present their accomplishments.
It is natural to be concerned about competitors, but everyone who is being abrasive to these other angels for copying a couple aspects is harming the angel investment community overall. YC is just a couple people with a couple MM, they can't fund everyone.
Bonus similarities: appealing to the young, first session occurred immediately after google's finished, setting up mailing list forum for those interested, primary announcement occurred on slashdot.
YC wasn't copied from the Summer of Code. We weren't really aware how that worked. What it was copied from, initially, was the classic college student summer job at a software co. The idea was basically to let people get a summer job starting a startup.
Later we tossed some aspects of that (going back to school in the fall doesn't work well with startups), but kept others, like the 3-month cycle.
midgets standing on the shoulders of giants, as even the mighty will admit. what matters is the evolution with each new generation. get the right mix of memes and you end up with something very powerful, which YC arguably is
That does seem nasty. Although from their perspective it makes a twisted sense that since they can't compete with YC on benefits to the startup groups, at least they can pressure them into accepting, and not lose out on the investment opportunity for themselves. But that just says that at the root of it, they have themselves and not the startup's best interests in mind.
Of course everyone has their own interests in mind, but what seems to make YC's self-interest compatible with a founder's self-interest is the degree of freedom afforded the founder. As you said in one of your essays, investors can often suffocate a startup by not allowing enough freedom, which isn't in either of their best interest.
Unless once someone 'accepts' an offer from one of these micro-VC firm they are entering in a binding contract that has some sort of penalty for breaking it, could you not simply allow candidates who have accepted elsewhere to still interview with you? If you like them and accept them, then they'd get to choose whether they'd like to stay with their existing micro VC or jump ship for YCombinator. Granted, filling one of your limited slots with people who have opportunities elsewhere may be a waste of your time. But that would at least mitigate the problem of people 'stealing' away your interviewees.
> Last year when they made offers to groups that had also been invited to interviews with us, they tried to pressure them into accepting before they'd heard from us. I assume they'll do that again. That makes me mad, I admit. It seems such a nasty thing to do to a group of young founders.
Wait a minute, aren't you the guy who gives them 5 minutes to accept once you make your offer?
If they did their interviews/acceptance AFTER you, it would be the same situation with YOU pressuring founders before they'd heard back from anyone else!
Pot. Kettle. If you really care about the founders then you all need to get your schedules together so founders have the option of choosing from multiple offers. Leave the window open longer. It's pretty easy. Give them the forms and have them mail them back once they decide. Like college acceptance; this is a solved problem.
If they did their interviews/acceptance AFTER you, it would be the same situation with YOU pressuring founders before they'd heard back from anyone else!
Sure. And if we stole their wallets we'd be robbers. But we don't, do we?
I'm going to propose to all the clones that in future we all have a common date for startups to make decisions by. But since we currently decide last, we're not pressuring anyone.
I would be surprised if that was the reason for the timing of the decisions, I suspect it was just convenient for them. AlphaLab is going after a decidedly different market than YC: people that live in Pittsburgh. AlphaLab is also consciously an incubator and not something that failed at copying YC and accidentally turned into an incubator.
I've never applied to YC, so maybe I'm not qualified to comment, but I'm not sure your remark fairly characterizes what's going on. It seems to me that if YC gets hundreds and hundreds of applications, and if most founders who are accepted say yes, and if people know the situation going in to the interview (which they clearly do), then it's just not worth YC's time to futz around dealing with the few people who can't decide immediately.
Now, if YC and all their clones could agree to a similar cycle, so that founders could pick between different offers, then I would say that YC were the bad guys. But that's not the case (yet).
> and if people know the situation going in to the interview (which they clearly do)
You do the interview. Then you get a phone call with a percentage mentioned and no negotiation allowed. You say yes or they claim you "failed an IQ test". 5 minutes to decide.
> then it's just not worth YC's time
Yeah, not when you do this stuff in bulk, assembly-line style, with most companies fizzling out if they don't fund them (so very little risk of "being proven wrong").
I'll give you that "failed an IQ test" seems a bit harsh. But when did all this occur? 2005, or later? If later, there's been so much written on the web about this that it seems amazing to me that you would have been shocked by the offer.
To the second point, I agree with you that an assembly line style makes individual negotiations impossible. But I'd say two things: (a) that's a feature, not a bug, and (b) if you're a young founder with no track record, exactly what are your other options?
I think the point of the 5 minute thing is that you know going in what the terms will be if you are accepted, so you have plenty of time to think about it beforehand. Furthermore, YC has a good reputation so you can be sure that you're not going to get screwed over by verbally agreeing to an ambiguous deal.
