the number of imitators that YC quickly spawned seems to indicate that this won't just tank (even if YC does itself). It solves a real market inefficiency.
It does solve a market inefficiency. To me, that highlights a different inefficiency - imagine what a couple of bright YC founders could do in the rechargeable battery market, or the solar cell market - if they only had enough money to enter industries with higher barriers to entry.
I can hold out the hope that successful founders will enter other industries with their next startup.
As it says in our FAQ, we're happy to fund companies working on stuff that's too expensive to build on just our money. The goal of YC is to build a convincing case for later stage investors. That doesn't have to be a complete, launched product.
Though I've thought YC is a great idea (and implementation), it struck me as being focused on funding the creation of software, to the exclusion of hacks which are not primarily composed of code. As my joy and expertise come from being a sysadmin, this tends to exclude me (as I suspect it also excludes, perhaps by design, EEs).
I was pleased to see that the RFS series included ideas for software-hardware combos, but I was disappointed that the example was Meraki, since they're still, AFAIK, mostly software.
Although the new funding formula is a step in the right direction, it remains exclusive of ventures needing more than just the living expenses of the founders.
Specifically, I perceive a tremendous market inefficiency in RDBMS implementations, which, even at modest scale, end up costing too much for (often "hosted) hardware and/or don't perform. However, because the point is to do a better implementation of something that is otherwise costly, even the proof of concept is likely to require upwards of $15k in hardware.
Granted, it could be leased, but, if that means buying brand name, the amount financed could easily double, perhaps even triple, which would be $5k-$8k over 4 months and a subsequent excessive drain for the remaining 20, if they occur.
The $100k LoC BootUpLabs offers is almost enough to overcome their unfortunate location and incubator model, since it may well result in a complete, launched product, with no debt baggage.
Of course, this is still an order of magnitude below where VCs would come into play.
YC is great. But I would think with all the smart people here, if the market was efficient in fields with high barriers to entry, Tesla Motors would have a few more competitors.
Tesla and the car industry is a whole other beast. I think with software and internet companies, you can have many more clever hacks for barriers that competitors have set up.
YC is in a position to manage other people's money now, tanking hasn't happened and wont for a very long time. Just look at how fast they have been able to push their startups, like FlightCaster, into the mainstream of tech industry. They have some very influential people listening to them.
My bet is on YC branching out of tech startups and perhaps getting into seeding businesses in traditional industries. I would go as far as to say that they're due for a presidential meeting; if the economy doesn't improve, they might even be called in to testify before congress (remember how easy it was for the l0pht to appear in congress?) a government appearance will put them on the spot.
I think it solves an ego inefficiency more than a market one. If it solved a market one, we wouldn't know until well and truly after a market had been established and true scales of economy observed. So far that hasn't happened yet.
Comments
the number of imitators that YC quickly spawned seems to indicate that this won't just tank (even if YC does itself). It solves a real market inefficiency.
It does solve a market inefficiency. To me, that highlights a different inefficiency - imagine what a couple of bright YC founders could do in the rechargeable battery market, or the solar cell market - if they only had enough money to enter industries with higher barriers to entry.
I can hold out the hope that successful founders will enter other industries with their next startup.
As it says in our FAQ, we're happy to fund companies working on stuff that's too expensive to build on just our money. The goal of YC is to build a convincing case for later stage investors. That doesn't have to be a complete, launched product.
Though I've thought YC is a great idea (and implementation), it struck me as being focused on funding the creation of software, to the exclusion of hacks which are not primarily composed of code. As my joy and expertise come from being a sysadmin, this tends to exclude me (as I suspect it also excludes, perhaps by design, EEs).
I was pleased to see that the RFS series included ideas for software-hardware combos, but I was disappointed that the example was Meraki, since they're still, AFAIK, mostly software.
Although the new funding formula is a step in the right direction, it remains exclusive of ventures needing more than just the living expenses of the founders.
Specifically, I perceive a tremendous market inefficiency in RDBMS implementations, which, even at modest scale, end up costing too much for (often "hosted) hardware and/or don't perform. However, because the point is to do a better implementation of something that is otherwise costly, even the proof of concept is likely to require upwards of $15k in hardware.
Granted, it could be leased, but, if that means buying brand name, the amount financed could easily double, perhaps even triple, which would be $5k-$8k over 4 months and a subsequent excessive drain for the remaining 20, if they occur.
The $100k LoC BootUpLabs offers is almost enough to overcome their unfortunate location and incubator model, since it may well result in a complete, launched product, with no debt baggage.
Of course, this is still an order of magnitude below where VCs would come into play.
YC is great. But I would think with all the smart people here, if the market was efficient in fields with high barriers to entry, Tesla Motors would have a few more competitors.
Tesla and the car industry is a whole other beast. I think with software and internet companies, you can have many more clever hacks for barriers that competitors have set up.
Car companies to start require many orders of magnitude of investment greater than any YC startup. Sort of puts it into a different class.
YC is in a position to manage other people's money now, tanking hasn't happened and wont for a very long time. Just look at how fast they have been able to push their startups, like FlightCaster, into the mainstream of tech industry. They have some very influential people listening to them.
My bet is on YC branching out of tech startups and perhaps getting into seeding businesses in traditional industries. I would go as far as to say that they're due for a presidential meeting; if the economy doesn't improve, they might even be called in to testify before congress (remember how easy it was for the l0pht to appear in congress?) a government appearance will put them on the spot.
The thing that the imitators lack is Paul, his vision, and the intent that he describes in this article.
The closer of a mirror to YC an imitator gets, the further they get from the intent that makes YC possible and successful.
I also want to say this might be the first PG essay that I not only liked, but agreed with. Usually I enjoy, but disagree with him.
I think it solves an ego inefficiency more than a market one. If it solved a market one, we wouldn't know until well and truly after a market had been established and true scales of economy observed. So far that hasn't happened yet.