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YC Continuity

by dshankar on 10/15/15, 7:57 PM with 70 comments

• by BinaryIdiot on 10/15/15, 8:14 PM

  So this announcement got me thinking and while this is slightly off topic and it may seem like a dumb question but I'm going to ask it anyway because I'm curious: where does YC get the money to do everything it does (seed and later stage investment, research, running hacker news, employees, startup school, etc)?

  I mean I know roughly how it works from the standpoint of taking investment money and funneling it into companies but unless I missed it I have yet to see them "cash out" on any existing investments so are they bringing in any money from those investments or is it just more and more funding to do further investments that powers everything?

• by ChuckMcM on 10/15/15, 8:05 PM

  While I think its great to participate pro-rata in later rounds, it feels a lot like YC is backing into becoming yet-another-VC like Sequoia or any other firm in the valley, granted with their 'incubator arm'.

  I'd be interested in hearing how being more like a regular VC firm helps YC be better at what it is currently.

• by not_that_noob on 10/15/15, 10:02 PM

  Awesome! I'm a natural born cynic, but even I have to say that YC has reshaped the entrepreneurial financing ecosystem in the Valley. All these new funds falling all over themselves to be founder friendly, while the old legacy vultures slowly slip into irrelevance - this is the world that pg, sama and team have wrought. As an entrepreneur, thank you for existing.

• by rdl on 10/15/15, 8:11 PM

  Curious if in 5 years YC figures out a way to OpenIPO YC companies, solving the private/public market impedance mismatch which seems to be happening now.

• by rdl on 10/15/15, 8:25 PM

  I wonder how long until YC goes upstream of fellowship/startup school: consolidated remote/mini internships for high school students, or some other "get involved with YC companies early" kind of thing.

  Especially likely to happen once the first cohort of YC founders has kids of age 12-18.

• by DanielDent on 10/16/15, 6:44 AM

  The previous firm policy of not making follow-on investments had two interesting side effects: signalling risk, and the nature of the relationship with the founders.

  You've addressed signalling risk in another response, but I'm curious to hear your thinking about the impact this will have on your ability to have an authentic advisory relationship with founders.

  Do you have any concerns that this could make founders dial back their level of authenticity with you? I think there's tremendous value in having founders who are comfortable being completely transparent about the concerns they have.

  In the back of founders minds, there could now be a small voice saying "Should I discuss possible future issue X with YC? If we haven't come up with a good answer to X, it could impact the next round. We'd be better off dealing with X after our series C rather than after our series B." But in not having the conversation, tremendous value is lost - good advice might turn it into a non-issue.

• by calgaryeng on 10/15/15, 9:22 PM

  > Capital -- especially long-term capital willing to invest outside of the current trends -- is an important ingredient in that mission.

  Does anyone else read this and take away "[investors/VCs/other equity funds who don't group-think and blindly follow each other based on FOMO] are an important ingredient in that mission."

• by samstave on 10/15/15, 10:12 PM

  It would really be wonderful, if, when you announce some new person, you could at least provide a link to their linkedin or some other page telling me who the heck this person is.

  Most of us are not that connected in SV that we know every name you do... so please provide context.

  Thanks

• by geofft on 10/15/15, 8:14 PM

  Previous post on the pro rata thing seems to be https://blog.ycombinator.com/pro-rata -- AFAICT, the change there is that it's now <$300MM instead of <=$250MM.

• by marcamillion on 10/16/15, 9:39 AM

  I would just like to say that when PG announced he was handing over YC to sama I was a bit nervous. Not because I didn't have faith in sama, but because handing over the reins hardly ever goes according to how the departing CEO/President/founder says it will go.

  I must say Sama...I am truly impressed. I honestly wasn't sure how much better YC could have become when PG stepped down, but looking back...just from the outside looking in...it seems to have gotten at least 5X better if not more.

  So keep up the good work you (guys) do. I suspect though that it is also testament to the team you have around you as well.

  PG used to say you were one of the smartest people he knows, but many people are smart. It is quite a different thing to be effective and you have been remarkably effective at doubling down and significantly improving the value that YC truly creates.

  It is wonderful to witness, as much as watching Musk do his thing.

• by mattty on 10/15/15, 9:55 PM

  It will be interesting to see YC manage the tension of being founder-friendly at later stage companies. Statistically[0], the later stage the company, the likelier it is the founder isn't running the show.

  Is founder ceo succession inherently less likely at YC startups due to YC selection process?

  [0]: The Founder's Dilemmas, Wasserman, p.299

• by jkurnia on 10/15/15, 11:32 PM

  Does this affect YC nonprofits - will they be eligible for follow-on funding, as well?

• by jpeg_hero on 10/15/15, 10:45 PM

  sama, of 1,000 co's how many have exited to date?

  Exit as in: cash or public stock readily convertible to cash

  Know there is a timing issue, but would be interested in just total actual exits?

• by sova on 10/15/15, 10:50 PM

  what does full partnership entail? -- thanks, newbie me

• by larrys on 10/15/15, 9:55 PM

  These comments I've reproduced below make me wonder again at what point will YC have their hands in to many pots and risk straying from the original formula which has worked so well. There is of course a need to evolve, change and add products. However in a small organization you also have to be able to manage all of that without having existing or new employees (or management) choke on the added complexity. Sama only has so many hours in a day. Even if there are more partners there is still glue that holds everything together. People at the top.

  sama: "In the same way YC was able to make the early-stage ecosystem better for founders, we think we can do the same for the late-stage ecosystem."

  rdl: "Curious if in 5 years YC figures out a way to OpenIPO YC companies, solving the private/public market impedance mismatch which seems to be happening now."

  dshankar: "Instead, I wonder if YC can formalize & self-regulate a secondary market as an intermediate step before IPOs. "

  rdl: "I wonder how long until YC goes upstream of fellowship/startup school: consolidated remote/mini internships for high school students, or some other "get involved with YC companies early" kind of thing."

  Many things going on. No way of knowing all of this could work out fine. Just to me, from my observation of business over many years (not specific to startups) I say "DWR" [1]

  [1] Danger Will Robinson.