What is Y Combinator Like?

A lot of people ask me about Y Combinator, so I’m going to write about it. The most common questions I get are:

• Is Y Combinator worth it?
• What’s it like?
• What value did you get out of it?
• Would you do it again?
• Is Y Combinator right for me?

Is Y Combinator worth it?

Yes absolutely. If you manage to get into Y Combinator, 99% of the time you should go. Sure, there may be a handful of exceptions but you’re probably not one of them. They’re unlikely to accept you if it wouldn’t be worth it for your company anyway (like if you run a coffee shop), so if you’re even considering it, just apply and see if you get in.

Some people complain about the amount of equity they take (7% of your startup) for the amount of money they give ($120,000). This effectively values your startup at something like $1.7M, which may be a step down depending on what you’re previously raised money at. That’s okay.

As Paul Graham has mentioned before, you should accept the deal if you think it will increase the value of your startup by more than 7% in the long run. I think it’s pretty safe to say that Y Combinator will almost always improve the expected value of your startup by more than 7%. If you’re even close to doubting this, then you shouldn’t be applying.

What’s it like?

It’s super hands off. That was the most surprising thing for me when we actually got there. We expected startups to work out of their space and to go to lectures and meet with each other all the time, and basically none of that happens. Y Combinator really only consists of three formal things:

1) A weekly dinner

2) Office hours

3) Demo day

The weekly dinners make up most of the formal Y Combinator experience. Every Tuesday they’ll get all the startups together, cram you into a bright orange room that looks like a cafeteria with a stage in the middle, and feed you something pretty edible out of a crockpot.

They manage to get some really great speakers, which in my batch included Mark Zuckerberg, Michael Bloomberg, Drew Houston, Andrew Mason, Ben Silbermann, Ron Conway, Jerry Yang, and others.

Paul Graham likes to say that these guys will share secrets and things they wouldn’t normally say publicly, but that’s only somewhat true. While there were definitely a few very interesting and controversial tidbits that wouldn’t ever have been said publicly, the size of the audience at these events (150 people or so) makes it feel a little less than intimate.

Instead, the biggest thing we got from the dinners was motivation. You get to hear a fantastic storyteller tell you about their trials and tribulations, and it ends up being exactly what you need after a week of working hard to motivate you to go home and keep cranking for another week. The dinners are the fuel that keeps you going during Y Combinator, and it also ends up being the time when you socialize with and meet the other startups in your batch.

Most of the rest of the time is spent in your own house (that you have to find and rent), working by yourself with your team. They don’t really recommend co-working with other startups because it leads to a lot of not getting work done and doesn’t give you as much of an opportunity to build your own unique culture.

The office hours system is a cool way to connect with the partners at Y Combinator. You can go in through an online system and request office hours with any one of their 10+ full-time and part-time partners (http://ycombinator.com/people.html). They do office hours in 2–4 hour chunks of 20–30 minutes each and so you get the opportunity to sit with amazing people like Andrew Mason or Paul Buchheit and ask them directly about your business.

For us there was also a biweekly group office hours where you and a handful of other startups in the batch met with the same 2 or 3 partners and updated everyone else on where you were at.

The cool thing about office hours is that you can keep doing them even after demo day, although they occasionally restrict office hours to only the current batch.

Finally there’s Demo Day, which is that big day where you get to speak for two and a half minutes in front of a room full of investors and convince them to invest in your company. It’s kind of a misnomer because you don’t actually have time to demo your product. There’s a system they use to match up investors who are interested in meeting with you after seeing your presentation, and some lucky startups are able to close investments right then and there.

(There’s also a less formal Alumni Demo Day, which is a rehearsal Demo Day that Y Combinator alumni are allowed to attend. In the past few years this has started becoming a bigger deal since the alumni network is so big now and many of them have moved on to become investors themselves.)

Besides those three things, the rest of it is extremely informal. You don’t get a huge amount of help raising money. No one is there to make you do anything. And if you don’t reach out for help or to ask questions about stuff, you’re unlikely to get any.

What value did you get out of it?

There are a few other extremely valuable things you get out of Y Combinator that I didn’t mention above. (I think one could argue that they are even more valuable than the dinners, the office hours, and the demo day.)

One of the things that makes Y Combinator so valuable is that it has mechanisms in place for rebalancing the typical power imbalance between startups and investors. Usually startups are in a pretty bad position when it comes to investors, because they’re the ones looking for money, so they can sometimes be strung along for weeks, forced to take really bad terms, and prepare all sorts of meaningless slideshows and charts. Investors sometimes even commit to investing and then back out with basically no repercussions.

At Y Combinator, startups are able to share information about investors, including which investors have committed to investing and then backed out, which are hard to work with, and which will push for unreasonable terms. As a result, when investors find out that you’re a Y Combinator company, they take a radically different, more careful tone.

Then there’s the set of standard investment documents that are prepared by the legal team at Y Combinator. As a result, there’s not much room for discussion and bullshit terms. You can basically say, “These are the notes everyone else at Y Combinator is using, so this is what you’re going to use.” There’s not much that investors can say to that.

Speaking of which, access to the legal team and the financial team at Y Combinator is incredibly valuable. You basically don’t need to hire a lawyer or an accountant for a while. They help you get set up as a C-Corp and make sure everything is ironed out.

You also get access to other amazing Y Combinator companies and founders. Huge discounts and deals are often shared exclusively between the network, which includes companies like Heroku, Reddit, Stripe, Meldium, and others.

There’s a big mailing list where founders often post questions like “How do you do effective Facebook advertising?” or “What’s the best CRM?” Other founders then respond to that person individually and the original asker will then compile all the answers and send them out again to the group (this reduces email clutter). It’s a really elegant solution and ends up adding a lot of value.

The biggest value of Y Combinator is that they take a really simple approach to accelerating your company: focus on only one metric and then optimize the shit out of it. It’s all a big build up to demo day. In fact, they say that Y Combinator starts as soon as you get accepted, because that’s when you can start doing things that you’ll be able to use to impress investors on demo day.

The best thing you can have on demo day is a huge chart showing exponential growth (ideally in revenue but users is okay too). That’s the only thing that you need. As a result, everything is gets re-prioritized. Questions like Should I worry about X? become really obvious, because you just have to decide if it will help you grow or not.

We would not have grown even close to as much as we did if it weren’t for Y Combinator.

Would You Do It Again?

Absolutely. No question.

I even got a weird sadness being there that I wouldn’t be able to do it again until I exited and was able to start another company. It’s just an incredible experience, and I learned a lot about myself and building a company.

Is Y Combinator right for me?

Probably not. It’s an incredibly stressful experience in a way that’s hard to really explain to people who haven’t done it. Even fellow alumni try to get this point across in panels and talks at the beginning, and you sort of ignore their advice at first.

“Sure, it’s stressful. I get it,” you’ll say. But you really don’t.

And it’s not stressful because people are putting a lot of pressure on you to perform. In fact there’s almost no external pressure to do anything. Almost all of the pressure comes internally, which makes it that much harder.

You’ll stay awake at night thinking about questions like “Why aren’t we growing?” or “Who should we hire?” or “Are we even doing the right thing?”

It becomes all consuming in a way that would burn most people out way too quickly. It’s not right for a lot of people. And it’s a pretty horrible thing to do to yourself. But so is starting a company in the first place.

It’s like running a marathon. It’s not good for you. Do it anyway.

Edit: A lot of people have been reaching out asking me for advice with the Y Combinator application process. If you decide to email me, please read this first. Also, here’s a copy of One Month’s Y Combinator Application for those who have asked. If you’d like to read more about how to actually get into Y Combinator, check out my post on How to get into Y Combinator.