It is not YC’s job to support the company. That is the founders job. I’d suggest money supporting the company at seed diverts from a focus on monetary fit asap. $25k is enough to scrap by for enough months which should be the initial goal
No, it just diverts focus from building a successful company to figuring out how to eat.
Forcing entrepreneurs to risk devastating personal bankruptcy just isn’t kosher, and there’s zero evidence that it creates healthy companies. It just encourages founders to take even more risks, which aren’t always ethical (i.e. Instacart’s predatory pricing and tipping model).
While this strikes me as possibly true, maybe even probably true, I would prefer to see actual simple data about this. Sure it would be hard to get but here's the schema I imagine would be needed.
Founder ID,
Founder bank account balance average during company's first year,
Founder health metrics array [acute visits to hospital or clinic for diet/mental health issues],
Outcome of company
---
If we notice that founders with low bank balances, lots of health events in their life, and unsuccessful business outcomes are popping up in the data, and then conversely founders with 100k in their personal bank on day 1 are never visiting the hospital and their companies are doing fine, then I think we could call check size a definitive contributing factor. This would fly in the face of "ramen profitability" as a virtue.
EDIT: and i think there are enougg startups out there (40,000 probably??? ask crunchbase) to have a meaningful sample size
The problem is there are many brilliant people that can't just scrap by - with a mortgage and family. But I respect the VC's right to choose the kind of people they sponsor.
Yeah, the idea of creating an environment that only favors young, privileged, unattached folks has always been pretty off-putting for me.
Larger checks certainly attract the 'free sabbatical' folks that the author seems to dislike so much, but it also enables entire classes of potential founders to have access to capital that enables them to focus on their business rather than their kids' stomachs.
It's why we've had a glut of startups doing lifestyle products that appeal to mid/late 20's bros with lots of disposable income. These... haven't been great startups as a generalization.
Counterpoint. As a father of a baby, I have significantly less energy and time for work. With starting a company you tend to have to plow a ton of hours and energy into the endeavor, especially if you want to move at bottleneck speed. With the baby there are many weeks where I have a difficulty working a mere 40 hours.
That being said, I have significantly more insight (due to experience) than I did when I was more free and willing to work 60+ hours a week and was willing to live off of 20k a year.
But that's the thing -- most successful businesses (as opposed to youthful adventures that paint one as 'innovative' on a resume) are started by older founders who have a depth of experience in their field. As parent of a 3-yr old, babyhood goes fast. You'll be sleeping & able to put in extra hours, if you wish, at some point. You'll also notice that your patience for bullshit has decreased, your patience with actual important shit has increased, and by the time the kids in their teens you might be ready to be a founder who doesn't do the hustle-grind-performative-dance and actually... creates a business.
As a father of a 4 year old I don't think it is my job (or yours) to vet who gets the help they need when they decide they need it. You may not have felt you had the time and ability to commit, but why should you be able to speak for anyone but yourself?
Yep - that's life. It's called 'the choices we make close doors'. Responsibilities we take on, have repercussions. Founders with such obligations can work at home after their job like every other person starting a small business that is not tech. That way they have infinite runaway, and personal life stress, but not 'monetary stress'.
It's not about "who's job it is", it's about supply and demand.
The founder could probably get a 300k salary at Google or a six-figure stipend with another investor. If Y-Combinator wants to compete they have to provide something that outweighs that.
How is it YC's problem? The founder is choosing to start a company and asking YC for money. Clearly they're not short of startups on the supply side of their equation.
You're not thinking about it the right way. It doesn't matter if they have "enough" applicants. They're trying to fill the positions with the best candidates out there - who they will just have to compete for. The more barriers they put up, the shittier the candidates they will get.
Why would Y comb need to compete with someone who is considering an offer to G? In that case, the founder would leave for the better deal anyways - so it's best to leave before it gets REALLY hard.
Disagree. If someone's choice either is to work for G, or start the company, it is the founders risk to take and give up that job for the outsized risk and return of starting up. It is not YC's need to compensate a founder for their alternative.
If you think about these things in terms of "should" and "who's responsibility" you will never understand how it works.
What are the founder's other alternatives? What are there other early stage & incubation options? YC simply does have to compete with that.
I mean, look. Take your idea to the extreme - why do they pay a stipend at all? Why not force the founders to sleep in tubes above the office/outside on the street and supply just enough soylent, huel & low-dosage amphetamines to keep their brain working?
Yes. They invest seed money. They help you turn an idea into a series A. Maybe it has lost it's soul because the round structures are so much looser, or the greater availability of angel money.
Seed money used to be a godsend because you had a good idea that wasn't at a scale enough to interest traditional VC and you didn't know an angel. YC was particularly great because it had the emphasis on the network and the larger number of investments allowed it to distribute risk across the class.
They purpose was not to build a company or make a good living, it allowed you to create a company you wouldn't have been able to, otherwise. I agree with the gp post, the goal is not to fund a sustainable company, it's to get one off the ground.
This is absolutely terrible advice. There are a few professional services that can have a dramatic impact on the early success of a startup. You need the best PR firm you can get to return your calls. That ain't cheap, but it has a rather huge impact if used properly.
