He lost me with the whole "make founders take on massive personal debt to survive" tweet. Removing that particular stressor, particularly from people from poorer backgrounds who lack the access to that kind of credit is how we get a better sampling of ideas.
Not a filtering function - I know of a few founders who scrapped by on Medicaid and food stamps for years to build a successful business by they had no savings
yeah a lot people can't do that. Specifically anyone caring for someone, so like 50% of adult population. A huge proportion of adults are caring for a parent or child.
Its also impossible if you have any health problems, or need to save for retirement or have student loan debt.
Its really only possible if you're young and healthy, so this would filter out probably 80% of adult population
You could but it gets much harder that way and the likelihood of you failing goes up significantly. It is more risk averse to the VCs to cut a decent size check which ensures founders are not struggling for basic needs and can actually focus on the startup.
It is a filtering function and it's the wrong filtering function. Like others have said, it filters out anyone with a great idea who is unwilling to put their lives in danger, or more importantly the lives of people dependent on them.
They don’t know at onset if a company deserves that much money. $25k is enough to see what people can accomplish in 3 months - maybe they take less equity. Most companies either have wrong leaders, wrong market, wrong skills, wrong business ideas but big dreams. That amount is enough to filter through the above.
Performance under pressure can be better at times, but there's diminishing returns. Applying pressure is good, but if the pressure is too great, then you start to get the reverse effect. When the pressure leads to anxiety rather than focus, then you've lost any possible improvement that stress can lead to.
A deadline is useful to help ensure work gets done. If the deadline is set to 3 hours from now, however, and realistically you need 4 or so to get it done, the pressure is going to have the inverse effect. It would likely just demoralize the team.
I’d suggest the opposite. One who is used to living off $1k a month for 1-2 years have an upper hand on founders used to a more cushy lifestyle. Or even having no income and almost broke for years like many successful founders I know of.
Just because someone is broke does not mean they don’t have Safety net. It’s easy to make no money when you can always move back home or get support from family. But if you have no safety net (financial family support), then not making money is a really difficult thing to try.
It’s not really possible to live in $1k a month as a single adult in the Bay Area unless you are somehow living rent free. Even if you rent a room in a terrible area out in the boonies, the cost of getting to/from the parts of the Bay Area with the tech industry will push you over.
I agree nobody needs a cushy lifestyle when starting a company but as a single adult in the Bay Area you need at least $2k/month after taxes to live. And somehow you need to get someone to rent to you with an income that low. Not everybody is lucky in having a nearby relative they can live with for free.
There’s a significant trade-off here – it can result in overvaluing money in comparison to time / effort. If you’ve been scraping by for a while, you train yourself to always pick the cheapest option, which often isn’t the best option. I’ve seen several founders waste time and effort trying to work around shortcomings in cheap / free tools or implementing something themselves when spending an insignificant amount of money would make the problem go away immediately.
I'd be willing to bet that a clear majority of the most successful startups from the past 20 years were founded by people who were otherwise independently financially stable.
It's very hard to focus on building a successful business when the cost of failure is potentially life-ruining.
Then don't start one if you can't consume the risk.
I'm not sure what your point is -- that people who have kids should be given special exemption where they make more money from sales and inventment oportunties to compensate for choices they made?
> Then don't start one if you can't consume the risk.
Corollary: startups can only be started by people in a position to consume [sic] the risk.
Do we, as a society, or even just an economy, really want that?
And the point was not a "special exemption for people with kids". It was that "consuming the risk" when you have no safety net (e.g. move back in with family etc.) is a much bigger issue than if you do.
> It was that "consuming the risk" when you have no safety net (e.g. move back in with family etc.) is a much bigger issue than if you do.
My point is these are the same. One individual has a different risk profile because (s)he made different choices and thats fine. If you have kids -- it will negatively affect your capacity to start a company.
>Corollary: startups can only be started by people in a position to consume [sic] the risk.
>Do we, as a society, or even just an economy, really want that?
That Corollary is fine with me. Startups are inherently risky.
There are many people (the vast majority of people, in fact) who could not deal with risk for reasons entirely unrelated to having kids. A person's risk profile (particularly if they are young) has much more to with their family background than choices they made (or didn't make).
I'd rather not have new ideas for businesses filtered through "can afford zero income for N months".
This all makes sense, but at some point you have to consider that startups are a privilege, not a right. Those that tailor their lives to be able to consume risk make tradeoffs like moving to a remote location, living single, minimizing expenses, forgoing healthcare, choosing to spend less time with friends, not getting that dog you always wanted, not having children, not getting married, not buying a house, etc. Narrowing your life for success takes tremendous sacrifices. It sounds like you want the benefits of having made those sacrifices without incurring any of their costs.
There's nothing wrong with choosing to have a family and raising kids, but that is a choice. No matter what conditions are set, the person who makes the necessary tradeoffs is going to be in a better position to succeed and YC as a business entity can do nothing to level the field for people who are willing to go all-in versus people who prioritize a comfortable home life.
Again, startups are privilege that form out of the security of societal infrastructure and excess of wealth. Nowhere in society is it prescribed that everyone should be able to forego having a job and drain their savings to gamble at a chance at massive wealth. How is it reasonable that we've come to expect this as some sort of entitlement?
The top comment makes a dismissive remark about "rich white men," and YC being against inclusivity and diversity. The natural response to this is that YC is not racially exclusive, but that they exclude based on those who can assume risk. Yes, but white people are rich so they can consume risk and black people are poor, therefore YC is in reality discriminative against blacks. The simplification of this kind of argument and its decontextualization from reality should be self-evident. Unfortunately, it's emblematic of the kind of emotionally reflexive and broadly appealing arguments we see thrown around instead of practicing any form of intellectual sophistication or nuance. It's far easier to make a glib side-remark suggestive of racial privilege. It's even easier when this is politically and socially trendy, even expected, and the individual making the remarks is protected from backlash by the insulation of a particular ideology.
This is not (for me) about having kids+family vs startup.
It's about number of people who can take risk of having zero income for N months. That is such a small group of people, and this narrows the pool of people who might found a startup that could change the world (or part of it). It means that all the ideas for startups are coming from people who have (at least) one thing in common. Maybe it's not the optimal thing to have in common?
ps. I did the startup thing with a wife and a daughter. These days you know it as Amazon.
I didn't state it strongly enough. Startups are for the rich and privileged, by the very nature of their mechanism of success. Lottery tickets, playing blackjack, rolling dice, are things which should only be done with what you have in excess. I don't think it's YC's responsibility to even societal odds. They are downstream from that position and simply consume and profit off those who have more than they need.
YC is a business entity not a non-profit organization dedicated to wealth distribution. You're asking it to do a job outside its core responsibility (profit, survival). If you want to make the argument that YC should up it's funding, that argument has to establish itself as being strongly in the interest of YC, otherwise it doesn't make much sense.
Well then I guess I didn't state it strongly enough: society does worse when the startup process is only accessible by the rich and priviledged.
YC isn't under an obligation to do the best it can for society. But if it wants to do that, or even to approximate it, the filter functions it uses implicitly and explicitly need to be considered carefully. YC has said a variety of things that indicate that it does have some desire to trend in this direction, at least in the past.
It seems like YC has grown large and successful enough that it can shed some monetary value for the sake of greater social benefit. It has zero effect on me if they grant 25k, 50k, 100k, 200k to groups. My argument and position is not that participating companies shouldn't receive more money. That I don't care about at all. My concern is that it's being expressed that YC should be acting in accordance to perceived social justice rather than as what it is and always has been, a startup incubator. The argument is that an amount of money like 25k is equivocal to YC practicing racial exclusivity because it's not enough money to cover the needs, expenses, and risk calculations of a financially and socially impaired person. In that case, what amount of seed money is not considered to fall under the practice of racial exclusivity? I think the accusation is flimsy in the first place, and no defined amount of money would allay those kinds of allegations.
This comment assumes a.) we're talking exclusively about parents and b.) about forces within a person's control. There are a lot of late-teens / early-20 year olds out there who have familial obligations to their parents, siblings, etc.
I think the point is that the amount of support does impact the amount of success after. If you offered $1 dollar of support, you'd have fewer % of startups succeed. If you offered a million dollars, you'd have more succeed.
I think it is worth pointing out that the lower levels of support mean there will be fewer successful startups, and those startups will be founded and started by people that have a safety net of some kind. If the goal is efficiency of investment, this is fine, if there are other goals, it's worth noting how this policy impacts the other goals.
Maybe not life-ruining risk, but YC offers a measly 120k in funding for your entire startup and G/FB/NFLX will pay you 350k per person per year for a senior engineer. Founding and joining startups entails a massive opportunity cost from what you can make at the top paying public companies.
This is about YC as an investor. If you've got a profitable startup in you, they want you to start it. Lowering the risk gets them more founders and makes them more money.
Depends on what stage of life you're in. Ramen profitable works for a 20-something just out of college. It does not work for a married middle-aged person potentially with kids.
It's a lot harder to start a startup once you get to that stage of life because of this and other reasons.
Those 20 somethings as potential founders was what other investment companies overlooked and partly made YC new and different. That was one of their innovations. Before YC investment companies were always looking at uni professors and execs dropping out of corporations.
Changing this focus -- to focus on older more experienced invidividuals is changing YC imo. Less social justice more hackery/building stuff people might like would be a positive move for YC and the audience. I don't think we're in such a climate to discuss this though.
Is making it easier for a middle-aged person to start a startup something that YC has to care about? There could be a separate organization that focused on that.
It's far easier to live off of ramen when the worst that can happen is that you fall back on your savings, or your family (for a home), or your MBA network (for a job), etc, when your business bottoms out.
This means that it's naturally a filtering function for people who have such safety nets already. It means that there are people who would be putting their lives and the lives of their dependents at risk in order to make the YC gamble.
It might be a filter that "works," but it will inherently be an uneven filter, doing very little to filter founders who already have the means, while effectively barring many potential founders from being able to participate at all, at least not without dire personal consequences.
It's the right idea but the wrong tool. Debt is actually the enemy of the founder/entrepreneur IMO...but building equity in yourself through moonlighting, side hustle, etc - is a better pathway. This is known as hard work = 60-80 hrs/week combined type of stuff.
Debt will creep up and crush you eventually, do not go into debt to "fund" your startup.
