Short interview (Aug 25, 2010) with Paul Graham explaining Y Combinator: they fund large cohorts of startups twice a year with small checks (average ~$17.5k), mentor founders on what to build and how to pitch, and culminate each batch with a demo day that introduces startups to investors. Graham emphasizes YC's learning-by-volume (hundreds of funded startups), a strong alumni network (trust reinforced by a deliberate "no asshole" selection preference), and practical tips for applicants (be succinct; state your strongest point up front). Logistics noted: this was batch 36; YC had funded ~208 startups to date and an alumni network of ~450; applications are via ycombinator.com.
Questions this video answers
Approximately $17,500.
Twice a year.
Batch 36.
About 208 startups.
About 450 people.
Foreign.
Who are you? All right. Paul Graham, pleased to meet you.
And you're the guy who runs my commentary. You just had, you just helped launch 36 or 39?
36.
36.
39, man. 36 is hard enough.
And it was.
Yeah, yeah.
I couldn't get a seat.
I'm pretty full. You gotta get here earlier. Yeah.
Tell me for people who don't know what Y Combinator is, I mean people in Valley know what Y Combinator is. What is Y Combinator?
We fund a large number of startups with a small amount of money all at once, twice a year.
There's less than $20,000.
Yeah, less than 20. Average is 17 and a half. And we sort of figure out what to do, right? If they've got some sort of small idea, we figure out what the larger implications of it are. If they've got some big vague idea, we try and figure out what to do first. Right? Get something done and launched. If they're already launched, maybe launch the next thing. And then at the end of it all we introduce them to a whole bunch of investors. The event you just came to demo.
Day, it was a lot of fun. Great, great companies. I got a whole bunch on my iPhone that I'm trying out.
This sort.
Of like asking a parent to ask, you know, what's your favorite kid?
Oh, no, I can't answer that one.
So do you have three or four that we can talk about? Because if we talked about 36, we'd be here for.
Well, I can tell you who all the investors are jumping up and down about because that's common knowledge. I mean, it's hipmunk, right? Yeah.
And what do they do?
They do much better flight search and boy, is there a problem where there's room for improvement, right. Like, I actually buy fewer plane tickets because it is so painful to buy them. Right.
What makes it better than kayak or Expedia or whatnot?
There's a bunch of things. One is the UI is a lot more natural. You can just, you just sort of see the results, Right. Usually you get a pile of text back and you as a human have to like look at all the text and try and figure out what the good flights are. If you have a more visual display, it just jumps out at you, you know, using your like reptilian vision. Right. The other thing is they're smarter about how they sort them so they, they don't show you flights that no sane person would take. You wouldn't think that would be a big feature. The state of Flight search is so backward that that actually is a big feature.
What do you do with these companies? I sort of see behind the scenes, you're guiding them, giving them feedback.
The two big things we do is figure out what they should build, right. And talk to them about dealing with investors. So what we did for the past week is work on the presentations that you just saw here, right? And in some cases I would sit there with the guys rehearsing over and over and over again, getting it down to the sent exactly what to say.
There's lots of different places for startups to go to get this kind of mentoring.
Now more and more, more and more.
Competitors for Y Combinator. What makes you different and what should a startup who's going to consider joining your class next year or next whatever, what should they think about when they start into a program like this or techstars or whatever?
One thing that makes us different is how much we know. One of the reasons we funded such a large of startups is that that's the only way to learn a lot, right? So having funded 208 startups as of this last batch, I now have 208 startups worth of data in one head, right? So when people are thinking of doing something, I know maybe 10 previous cases where people have done similar things and I can say, well, nine out of those 10 cases it turned out badly, so don't do that. So I have a lot of data in one head. Another big difference because we funded so many is the alumni network is huge. A lot of the reason to do something like this is to get to become part of the alumni network that goes with it. And our alumni network is now about 450 people, some of them very formidable. Actually since we've been doing it for.
Five years at boot camp we were talking and I found it interesting that you try not to fund assets or people not nice.
It started out as a purely self indulgent choice, right? Because like we have to have dinner with these guys every week during the three months. Like, you know, you don't want to like be hanging out with an asshole. So originally we just did it because we didn't want to deal with people like that. But it turned out to have an unforeseen benefit because we're producing by accepting these batches of startups every six months. We're creating the alumni network, right? So we ended up producing an alumni network and very small number of assholes, you know, for such a large number of ambitious people. And that means the alumni can really Trust one another. They can just tell one another their secrets. And with a few exceptions, I think.
They got the back row seats right. What else would you like the world to know about Y Combinator?
You can apply. We have applications open for the next batch. It's. It's kind of scary. Like, while we're still working with these guys on this batch, applications are already open for the next one. Piling up, right? So they can just go to ycombinator.com and apply online.
Give me two tips on how to get noticed in that pile.
Be succinct, right? Like, don't just blather on ad infinitum.
Rocky tells me that every day.
If you just see a wallow text, like, you know, we sometimes don't read it. All right? So be succinct and if there's something really great about you, like, give it to us right at the beginning. Don't give us a lot of build up. Just tell us what's great about you. Because we don't look for any particular thing. We just look for people who have a habit of being great, right? They don't ever have to have done a startup before, you know, just so long as when they do things, they tend to do them well.
Where do we find you in the world?
Y combinator.com Is that what you mean? Yeah. Ycombinator.com Hacker News. Yeah, Hacker News. There's links to each on the other.
You're not on Twitter, are you?
No.
You're like one of the few holdouts in Silicon Valley.
You know what it was, all versions of my name are taken. I can't get a username, right? So.
But Y Combinators on.
Yeah, Y Combinators on Twitter. So there's a bunch of us who tweet YC stuff, like I write longer.
Stuff anyway, and I love your essays.
Oh, thank you, thank you.
Thanks for all you do for the Valley startups around the world, Sam.
