Y Combinator Gets an Historian: Inside YC’s Summer 2011 Session
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professional experience. And when they hired, they looked to other software engineers with impressive professional resumes.
At Y Combinator, you have founders who are coming straight out of college and have spent time not at recognized technology companies but at other startups. You have other founders who haven’t finished college—one of the two founders of Codecademy had not finished college, and they would end up being one of the companies that was most successful at raising funds at the end of the summer batch. This is something that Paul Graham has advocated for years—that the age boundary for founders could be pushed lower than it had been, and that what matters is what you can do, not where you went to school or where you worked.
X: Alongside that, you have the fact that the technologies and the skills that young people need to become good programmers are more within reach today.
RS: I think you’ve put your finger on one of the differences, which is the dramatic drop in the cost of very sophisticated computer resources. It allows teenagers and adults to use state-of-the-art technology. Back in the late 1990s, you needed a $20 million Series A round to cover the $5 million that you were going to pay Oracle and the $5 million that you were going to pay Cisco. There were four big checks you were going to write just to get started. Obviously that’s not the case today. You just sign up with Heroku and you are off and running.
There is another characteristic of Y Combinator, and I’m not sure to what degree other accelerators across the country share this, but that is the hacker culture, where many of the teams are composed entirely of hackers. If there is going to be anyone who doesn’t fit that, it’s a designer. But certainly there are no junior VPs of marketing on these founding teams.
Back in the late 1990s you needed a sales guy, or at least it was felt that you needed business skills on the founding team. And what you see among the YC founders is a belief that whatever they don’t already know, whatever would be needed on the business side, they can pick up as they go. The very concept of an MBA is so foreign to them that I didn’t hear a single discussion of whether there would be any need to hire someone with an MBA.
X: Even if there aren’t any MBAs, isn’t there usually at least one founder on each team who has the “sales guy” personality—the fast talker, the extrovert?
RS: I would say what’s surprising is the absence of that person on so many of these teams. I was fortunate to be able to listen to not just the interviews [of the companies applying to the summer 2011 batch] but the discussions that followed as the YC partners would decide how they were going to rate the finalist teams. And one of the things that would put off the partners was if they saw one personality dominating. That set off alarms. The YC model is of coequals working very closely together without any hint of a hierarchy. So if there was one who was more articulate, that would be acceptable, but there couldn’t be any suggestion that that person had more authority than the others.
There is a passage in the book where I talk about the two members of the Snapjoy team. They did an interview at TechStars where they were asked “Who is the CEO?” They hated that question. The answer was that they were both writing code. That is a question that would never have come up at YC.
X: What else jumped out at you as major differences between the startup world of 1998 and the startup world of 2012?
RS: Ideas are going to be tested in a much more accelerated way now. The Internet allows ideas to be cast out and put to the test and then discarded much more quickly than was the case. Of course, many of the investments back in the 1990s involved hardware, and that’s for the most part not something YC has invested in. But also, beginning with the winter 2011 batch, the first batch that enjoyed the $150,000 in debt financing that every member of the batch received, the companies know that they’ve got more time beyond Demo Day to come up with an idea that’s going to work. So not only do they in many cases discard the idea that they started out with during the session, but they are also trying out new ideas even after Demo Day. They have the means now to experiment in a way that would be unimaginable back in 1999 if they’d been given $20 million and spent it all, only to discover that the original idea isn’t going to fly.
X: You mentioned a minute ago that there’s a general disdain for MBAs at Y Combinator. Do you think that’s entirely a good thing? Even if business schools aren’t teaching it, there really is a set of theories and ideas about building startups that people like Steve Blank and Eric Ries are trying to spread. It seems to me that a lot of these accelerator-stage startups make mistakes they could have avoided if somebody on the team had had a little more business training.
RS: There is this YC ethos of learning from trying. There is no substitute for putting the idea out there. I suppose there is room for a kind of hybrid. I don’t know—maybe it would be studying [business theory] by day and doing side projects by night or on the weekends. But in the groups I followed, the primary source of advice seemed to be the YC partners and the fellow batch-mates.
X: So, in the big picture, having spent a year on this project and getting to know more than 120 startup founders in this batch, did you come away feeling optimistic about the state of innovation? Do you think tech startups can help to pull the country out of its economic doldrums?
RS: I would hate to put the hopes for an entire country on the shoulders of this one group. But there is no question that part of the appeal of startup culture is that it’s a bright spot in a landscape greatly in need of some encouraging stories. And by its nature, startup culture is perennially regenerating. So it’s always a collection of beginnings. And what is more hopeful than beginnings? It’s like hanging out in a nursery with nothing but cute newborns.