A recent article in the Times (27.7.2013) about YCombinator – as an archetypal Accelerator, emphasises some of its seemingly nuttier aspects; so what do they tell us?
Twice a year YC selects a new cohort of entrepreneurs who have agreed to move to silicon Valley for three months, for which they get $20k from YC in return for 6-7% equity and $80k seed funding from other outside investors. So while most serial Accelerators produce perhaps two dozen new businesses a year, it is fair to ask if YC is indeed the world’s most successful attempt to mass produce technology companies.
Its boss. Paul Graham, is said to be looking for someone who takes their work a little too seriously; someone who goes beyond professionalism and crosses over into the obsessive; and is into hacking or breaking rules, who combines gall with intellectual flair and an ability to get s*** done. He is said to value ‘determination’ and ‘earnestness’. None of the British founders he has known have been ‘pure unworldly nerds’ – of the kind he favours.
He comments that “the biggest mistake people make is working on made-up ideas. The most successful start-ups were all made by people solving their own problems, as opposed to making up some plausible sounding bull***. An unsolved problem is the world’s rarest commodity”.
“But once you have one, then launch fast – within weeks, even days, before you run out of funding and in order to get critical feed-back from the wider world.” Reid Hoffman, the LinkedIn co-founder is quoted as saying ‘If you’re not embarrassed of the first version of the product you’ve launched, you’ve launched too late.’
YC’s regime is focused round the weekly dinners, where you would not want to have too little progress to report to your peers. ‘But old-fashioned networking also plays a part. YC’s founders can rub shoulders with the world’s most powerful investors and innovators. They’ll also inherit a formidable old-boy network.’
Other Accelerators have insisted, unlike YC, on their participants also working together and in close proximity. And unlike the UK’s current Accelerators, where Demo Day is more like an end-of-term presentation, at YC it is a genuine market place, with generations of nerds investing in nerds!