Ask HN: Why aren't you applying to Y Combinator?

https://news.ycombinator.com/item?id=1689600

by dstein • 16 years ago

38 50 16 years ago

news.ycombinator.com

There are far too many one-sided "here's why you should apply to YC" articles on HN. I'd be interested in hearing why other startups (particularly bootstrapped ones) have chosen not to apply to Y-Combinator.

As for me, angel investing (call YC what you will) just has a creepy "bank strategy" feel to it - to make the most amount of money off those who have the least.

robwgibbons• 16 years ago

Bootstrapping has some inherent disadvantages: you're working to pay the rent at the same time you're trying to build a successful product, so you have less time to accomplish what you really want to do, and less financial resources overall.

But if you can overcome these obstacles using proper time management, project scheduling and keeping fixed costs to a minimum, you'll end up with significantly greater equity and fewer fingers in your proverbial pie, in contrast to giving up equity and answering to your investors, however useful their input may be.

Bootstrapping a startup requires you have a real-world business model which actually generates revenue, which is more than many investor-backed companies can say. However, a profitable model is not necessarily a sustainable one. You could fill your schedule with client-contracted work and pay the monthly overhead and maybe yourselves too, but it's not the most sustainable long-term business strategy (unless you really want to be doing this forever.)

So you contract/consult to pay the bills, at the same time devoting a reasonable portion of your time to building your own products and looking for your "homerun."

lzw4• 16 years ago

Maybe you wouldn't call it bootstrapping, but someone whose in their mid 20s, who has been working as an engineer for startups for the past 5 years, could easily have saved $25,000-$75,000. IF you live cheaply and "bootstrap" by focusing on your startup %100 of the time and funding it from these savings you could easily have a 2 year runway there... assuming also that your co-founders have similar savings.

This is pretty much what I did, I saved money and now don't have to worry about contracts or client work, I can focus solely on the company and keep costs down as if I had taken outside investment.

nletourneau• 16 years ago

I'm in this boat. Me and my co-founder had enough to live on while we worked on the product for the last 6 months. I did do some consulting one day a week for spending cash, but it was limited to that and never really caused a huge time-suck.

YC never really entered the conversation for us, I view YC as a place for people that fall into a "I have this idea I want to try, but if I quit my job I can't pay rent" type category, which wasn't me or the people I'm working with.

(edit to say that I'm not knocking the stated category, I'm really happy that YC exists)

thibaut_barrere2• 16 years ago

> you're working to pay the rent at the same time

I gave more thinking to this last year, and asked myself what I could do to change this.

So we moved to a cheap place with the whole family, here we're able to buy a house without mortage (before the move it would have required 25/30 years mortgage + 2 high-paying jobs, to get something that wasn't even close in term of quality/space).

Here goes the rent :)

jordo• 16 years ago

I don't live in the US.

patio112• 16 years ago

Never say never, but I won't be applying to YC this time, either. I don't think my plans for my life or my company coincide with the trajectory their successes take, and could not in good conscience take their money without being able to guarantee that I would try my level best to arrive at a positive outcome for them. For example, I couldn't justify to YC or subsequent angel investors that I optimize my work habits for QOL rather than for growth, or that I am happy with 30% ~ 70% YOY growth, or that I prefer living in small town Japan to living someplace where there are plenty of top-notch engineers to hire and financiers to woo.

Plus, there is a wide range of probable outcomes where I feel on top of the world at age thirty and YC would count me in the fail column. (Say, a few hundred thousand in revenue, organic growth, a schedule close to mine today, and minimal desire to sell.)

If my plans change, I would probably apply.

lzw4• 16 years ago

Not disagreeing with you, but I think it is kind of amazing that a "few hundred thousand in revenue" would be considered a failure. It is a shame that it might be in some circles.

Say, $300,000 in revenue, and a %80 operating margin, would mean you're operating profit is $240,000. IF you're growing at %50 a year, and the company sells for 50 times earnings, then you've got a business worth $12M.

That's a success in my book!

patio112• 16 years ago

I think you are greatly overestimating the revenue multiple there. Try 2 or 3, not 50, and I'd be lucky to get either. (We'll set aside the case where the acquisition is an outsized signing bonus.)

Adjusting for the reasonable valuations, selling does not move the needle for YC, and all time spent on me would be time wasted relative to mentoring one marginal try to build the next Zynga, GroupOn, Mint, etc.

That is neither regrettable or joyous. We merely have goals not in alignment at present.

il4• 16 years ago

Unfortunately companies only exit for 50 times earnings in Web 2.0 fantasy land. In the real world, it's closer to 2 or 3 times EBITDA(not revenue).

If I could build a business to $20K in revenue and flip it for a million I, and many, many others making a living online, would be a millionaire many times over.

thibaut_barrere2• 16 years ago

Roughly the same points: we're happy with our current development and lifestyle, we have "enough" money and connections and advisors, although I'd never say never.

To some extent, I like to think about us as some kind of tiny, minuscule Y Combinator: multiple projects that have interconnections between them as time goes, interesting encounters.

Like grandma would say: I would not put all my eggs in the same basket either :)

lzw4• 16 years ago

1) History of working for startups, and in every case, the VCs seriously damaged the startup with bad advice or strings tied to the money, which has left me wary of VCs. Further, I have been to a couple events in the bay area, including a YC sponsored one where I mingled with investors and talked to them about various business ideas. I've not gotten the impression that these people have the first clue. Not talking about PG or the other YC people, but just my general impression of people who represented themselves as working for venture capital firms. (and not angels, angels are a different breed I believe and I've had less contact with them.)

2) There simply is not much need for outside capital, as we have a large angel round worth of our own capital in the bank.

3) Strong impression that there is no chance that YC would take us. My co-founder has zero interest

4) YC is predicated on a certain set of assumptions about the type of business, and the priorities of that business. We don't share some key premises there. Namely, it appears that YC believes in betting it all on a short term, big reward, while we believe that a very quickly growing, profitable business will produce a better return for us, at lower risk.

5) As I mentioned we don't really have a need for outside capital, and the contacts YC would get us would primarily serve the purpose of doing additional rounds. Thus, in my opinion the increased risk of having to adopt a specific outside investors timetable, and operational style, along with the risk of having to follow bad advice, does not seem to be worth it, for money we don't need. While YC doesn't subject us to that risk directly, joining the YC program would be getting on that track....

rantfoil• 16 years ago

1) Angels and YC can't really even be mentioned in the same sentence as VC's. Totally different goals and alignments.

4) Not true, many counterexamples, most notably Wufoo.

Sounds like you're doing just fine on your own, though.

lzw4• 16 years ago

In an attempt to not be so vague as to be meaningless, it appeared like I was putting words into YCs mouth, which is not what I was intending. It is more simply stated that we have different priorities.

As a result of my experience with VCs, I structured our business so as not to need them, and ended up not needing Angels or YC either. No question the market for tech investment has shifted and YC lead the way, and I would say that I like a lot of what I've seen about the way it is going.

The lean startup is the way to go for web/software startups these days, and YC is a contributor to that trend.

fookyong• 16 years ago

re: (4) - an anecdotal example does not imply intent.

Wufoo is a good PR case for YC in that it has contributed to the startup ecosystem a sustainable, profitable company that creates value. It's good to see.

However, YC cannot survive on happy thoughts. The fund and LPs need to see big returns for the wheel to keep turning, and growing happy sustainable businesses doesn't move the needle enough.

Realistically, YC probably needs to push out a mix of sustainable companies for good ecosystem PR, and a handful of home-runs that keep the LPs happy and the fund financially viable. To say that Wufoo is an "example" of YC's backing of neat sustainable businesses is to see half the picture.

adrianwaj• 16 years ago

strings tied to the money, which has left me wary of VCs

I am very interested in hearing about those strings, whether in private or public. Impressive karma rate you've got there!

dangrossman• 16 years ago

I bootstrapped my business from nothing to paying myself six figures a year while in college. I have enough saved that I don't need outside investors. While the experience, advice and connections would be useful, I'm more on track for growing a lifestyle business than something that would return multiples on an investment in a short time.

il4• 16 years ago

I'm in the exact same situation, bootstrapped a business from nothing to low six figures in the first year. My company is growing steadily and profitable, but it's not really YC material and will never be a multimillion dollar breakout hit.

I've got a couple high-growth startup worthy projects I might pursue but even then, I don't think I would apply to something like YC. Honestly, I think I'm at a later stage in terms of growth than YC requires.

I'm already more than ramen profitable, and if I step it up and invest aggressively in growth for a webapp, I could probably raise an angel round fairly easily.

YC is good if you only have an idea/prototype. If you have a product with paying customers, a proven business model, and established customer acquisition channels, the value of YC is significantly less compared to the growing value of the share you would be giving up.

I would rather take the amount of equity YC asks for and divide it among my founding team/first employees.

j_baker• 16 years ago

...because I don't have a startup.

onwardly• 16 years ago

As a response to angel investing being a "bank strategy", it seems obvious to me that most of the benefit of participating goes to the founders.

YCombinator gets 6%? That is peanuts compared the benefits you already know about, hardly exploitative.

I'm applying because the "bank strategy" seems to be on the other side of the table.

nopassrecover• 16 years ago

I can't anyone else who would make the overseas (aus) + life leap.

frisco• 16 years ago

I think YC is an amazing value for the talented hacker in the Midwest looking to break into the Valley. On the other hand, if you're already here and connected into SV, it's really expensive equity.

adora• 16 years ago

Being "well-connected" will only get you so far. YC helps you develop as an entrepreneur, among many other things unrelated to having the right connections. Even if you previously worked at a startup, that's still very different from founding your own company.

Also, I think a lot of people overestimate the value of their current network, and underestimate the value of the YC network.

ziadbc2• 16 years ago

People get caught up on this "I don't need 20k." YC is like the best university in the world paying you to go to it.

Secondly, people make all kinds of assumptions about "I don't fit their model." The best way to determine if you fit their model is to apply.

If you have an inkling to apply, do it.

Finally, saying there are far too many one sided arguments in favor of YC is like saying "There are far too many people who are happy with their lives."

dotBen2• 16 years ago

"I don't fit their model." The best way to determine if you fit their model is to apply.

I don't belong in the army. I don't need to apply to determine if that is true.

I don't think taking drugs would be good for me. I don't need to try it to see if that is true.

etc

Give people the room to be able to make an informed decision based on prior knowledge without having to actually go test it out in reality to confirm it is correct.

ziadbc2• 16 years ago

I agree with your premise that one does not need to try something to know it is not for them.

However, you are making an apples and oranges comparison here. You don't apply to the military. You volunteer for service, and it is compulsory from there on out. You can't apply to take drugs, the act is self contained.

I am speaking to those people who have a desire or interest in applying to YC, but don't because they assume they don't fit the model. If you have an interest, apply, and find out definitively. If you don't have an interest, don't (much like your military example)

JeffL• 16 years ago

I would love to, but I really don't feel like they would take me seriously. I've been working on my indie MMO for over 5 years now. Not like that is exactly a new groundbreaking idea, though I do think it's an amazing game and so do my users judging by the consistently low and ever lowering churn rate.

BerislavLopac• 16 years ago

One of the comments state "I don't live in the US", which is my reason too, but let me elaborate a little.

Simply put, while YC seems great, it's just too expensive for me and my co-founders. There is three of us, and if only two of us engage actively in the process we would have to spend over $1200 just for getting to the interview (based on a quick Expedia search, and not including any car rentals, visa fees and the like); and if we get accepted, just getting us over there would spend at least 10% of the supposed YC investment.

It would be great if YC would open a European counterpart, but that don't seem likely as they have closed off even the East Coast one.

patd• 16 years ago

YC reimburses up to $600 according to their point 2 in the apply: http://ycombinator.com/apply.html

As another European, I would also love a European counterpart. But to me, applying to YC is not really about the money, it's about the advices, the networking and the press coverage that is hard to get when bootstrapping.

dazzla• 16 years ago

I would love to learn from YC and work full time on my startup but I have made life choices that mean it would not work for me. Mainly I spent too much money on a house and have a wife and child to support. So that means I need to keep my stable (as much as any really is) corporate job and work on my bootstrapped startup in my spare time.

Would have been nice to be more enlightened earlier in my life but now that hindsight just fuels my motivation.

dotBen2• 16 years ago

For me at least, here is why I don't think I'll ever be applying to YC

a) I don't need the $20k (and certainly not for the %age YC want to take - 6% for $20k = valuation of $333,000). In fact I don't even want to price a deal so early in the company lifetime.

b) I find myself introducing so many fellow entrepreneurs to contacts in my network that after 4 years in SF I probably have a large overlap of contacts (which seems to be a big draw).

c) YC seems designed to let a bunch of smart young guys(/girls) hack around in cheap accommodation eating ramen until they come up with something cool. I guess cos I'm almost 30, live with my partner and business minded I'd rather be clear with the problem I'm trying to solve and the business model to achieve success before I write much code. Pivoting is to be expected but it should be a 'get out of jail' card, not a standard MO.

d) I think it's hard to break out of the mould of being "a YC company" and stand on your own feet. A few have managed it but not many.

tl;dr: Perhaps ultimately I don't fit the mould of recent college grad with little money, low personal burn, probably not living in SF yet and little-to-no startup experience -- which seems to be the type of founder YC likes.

math• 16 years ago

Going out on your own for many is about breaking out of systems and processes.. but joining YC can be perceived as becoming a cog in "the startup factory". I know in reality it's far from that! Just noting a slightly negative opinion I have observed from some entrepreneurial type people.

nickpp• 16 years ago

My business, bootstrapped from nothing, has multimilion dollar revenue. It is not in a hot, web 2.0 area, yet growing all the time.

Myself and my cofounder have families, kids and enjoy healthy life/work balances.

Finally, I have no plans of living in SV. I love Cali but I hated living in the Valley.

fauigerzigerk• 16 years ago

For three reasons:

* We don't make the kind of software YC is interested in

* We don't need the money

* We're not in the US

jonah• 16 years ago

Reasons we're not: a) My cofounder has a family and can't move to SF for the season. b) We have more than a YC amount of cash on hand already.

Reasons we should anyway: a) Connections. b) Exposure. c) Connections.

nmaio2• 16 years ago

I don't think those two reasons should keep you from applying. We have the same "issues" - but we still applied.

waitingforgodel• 16 years ago

After visiting a YC dinner and meeting several YC founders, the biggest turn off for me is the cult of personality around PG.

Mc_Big_G• 16 years ago

Kinda off topic but it's odd to see this post this morning.

Last night I had a dream where I spontaneously got on a plane to SF bay and loitered outside the YC offices where I social engineered my way in and pretended to be a founder.

PG was there just kind of hanging around and giving advice to whoever approached. I sat and listened for a long time and now I can't remember a thing he said. I'm sure my subconscious stored it all since that's probably where it came from anyway. Then I was suddenly in a gondola near the YC offices, over-looking the ocean and some mountains with a really majestic blue sky. My wife and a female YC founder were there with me and we were talking about how beautiful it is in California.

When I woke up, I had the feeling like maybe I should apply again and the first thing I see when I log on this morning is this post. I had firmly decided not to apply and told myself to just focus on the business.

Ignore the synchronicity or give it a shot...

jrussbowman• 16 years ago

I'm too far along in my life to do the incubator thing. I have a wife and 2 kids and make about as much or a little more than YC funding would provide for me to live off of. I also have a ton of debt because of financial mistakes I made in my 20's that I'm paying for now in my 30's.

Fortunately unscatter.com is something I can bootstrap and build slowly. Also, by not being a part of an incubator I can work at my own pace, which means I have that time to spend with my girls, one of whom is only 3 months old.

Different strokes for different folks.

AmberShah• 16 years ago

All that support and knowledge is tempting, but I won't be applying. I'm currently in private beta and making very good progress with my product on my own by bootstrapping. It would also be incredibly difficult for me to move to another city and work there full time for a few months when

I have a full time job that pays my bills (which are MORE than what YN would give me as an investment AND I'd be giving up equity for it).

Plus, I have a 2-year old who still nurses (not open for debate, sorry). Basically he'd HAVE to come with me and assuming they'd even allow that, I'd also have to move my childcare with me (my dad) and he'd have to be away from his family too.

Plus, I have no immediate desire to find a co-founder and no plans to exit. All of these things may change and I'm open to that, but that's how it is right now.

nmaio2• 16 years ago

I think the answer falls into two categories:

#1) Startups that don't apply 'cause they just don't want to

#2) Startups that don't think YC would accept them

#1 is fine - if you don't want to do something, don't do it

#2 is silly - let YC reject you; don't reject yourself (regardless of location, stage you're at, one co-founder can't make it, idea, etc.)

ericb• 16 years ago

YC has the beauty pageant problem. After the 1st round the judges are left with a room full of 10's, and the criteria becomes "so... do you have any other talents?" It's a nice problem for them to have and they deserve their success for a million reasons, but I'm not applying because I'm sure they could find applicants who are just as appealing that can sing (MIT degree, prior startup success, already profitable, cofounder who's an identical twin, etc.)

There are other simpler reasons I wouldn't apply now--wife, 2 kids, and the Boston sessions are gone.

bjoernlasseh• 16 years ago

I have the feeling that Y-Combinator is a great fit young engineers who build a web consumer product/app that monetize quickly. If you or your idea doesn't fit into the brackets than another path is most likely much more promising :)

TheSmoke• 16 years ago

well, one of my reasons is reasonable and other is not.

- i'm very far away from the US.

- my brother didn't agree with me on appyling to YC.

Ask HN: Why aren't you applying to Y Combinator?

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