That's hilarious, because I'm the one who wrote all the summaries of the startups that she's judging them by. I deliberately express startup ideas as x for y whenever possible because that's the most efficient way to describe a startup in a few words. Airbnb, for example, was in its day "eBay for space."
On Demo Day we accompany each startup's name with a brief summary of what they're doing. The goal of these summaries is not to convey the full breadth of a startup's eventual ambitions, or even what they're currently doing, but just to help investors watching 65 presentations remember which company is doing what. TechCrunch reused these descriptions, as reporters often do. And now this woman has read the summaries printed in TechCrunch and is treating them as if that were all there was to know about the startup. It's like a game of Telephone (http://en.wikipedia.org/wiki/Chinese_whispers).
My standard advice to startups presenting to investors is that it's better to start with an overly narrow description of what you do, so that investors at least know what you're talking about, and then expand from there.
See http://paulgraham.com/investors.html, particularly items 1 and 14.
It's surprising to me that someone who wasn't even at Demo Day would feel confident enough to judge the startups' originality based on the 3-5 word summaries we use on the schedule to help investors keep them straight in their heads.
I was about to say that it's also surprising that people would upvote such a post. But on reflection it's not that surprising.
For example, I was hoping to see something like Word Lens on iPhone: I can see how they can rule the world. That is something frighteningly ambitious.
When Facebook started off people just said it was MySpace for college students. Those with imagination that joined early now reap the benefits of vision.
It seems like it could be a very exciting playground for an engineer.
X for the masses.
X for people who don't like computeres.
X for people who don't speak much English.
X in the cloud (way overplayed).
X for free (but good luck getting a low enough cost of customer acquisition!).
X for people who are locked into Y.
X for large businesses (requires connections).
X for businesses which aren't great at tech (X better be something they really really want).
If you want to take on a problem as big as the ones I've discussed, don't make a direct frontal attack on it. Don't say, for example, that you're going to replace email. If you do that you raise too many expectations. Empirically, the way to do really big things seems to be to start with deceptively small things. Want to dominate microcomputer software? Start by writing a Basic interpreter for a machine with a few thousand users.
So for all we know, there are a bunch of YC companies aiming to take over the world, but we just don't know about them since they start off by tackling a very specific, narrow niche. Take greplin for example. I could envision the founders aiming to eat Google's lunch one day, but they certainly didn't launch by announcing that to the public.
Yet, the middlemen who run the shops make many times more than the sum of the cost of labor and parts.
Are you saying that trying to fix this for the 250M+ car owners in America is a problem that doesn't really matter?
Like humans, startup ideas all look similarly small at first.
My point being, this type of disruption would be a very big deal for your average joe.
I'm not saying this is where it is going, and as an investor you can not value a business based on these far-out ideas. But as a hacker/entrepreneur I imagine the founders are having dreams every bit as lofty as the one I just presented.
I mean this in the best way possible, but if the descriptions don't sell the vision of the company, maybe that's something that needs some attention?
As I said, those descriptions aren't meant to sell the vision of the company. They're just so one can remember which is which.
That was covered in a previous HN discussion about a similar article questioning YC startup ideas in practice.
But something like Dropbox seems to have a hard time scaling out, exploring other ideas, and that's with a founder who wants to build a big company like Apple.
Even if you start with a beachhead, it should be one that can grow. Apple started with a PC, to grow they made more and better PCs. Microsoft/Gates started with BASIC then pivoted drastically to an idea that could grow, an OS for PCs. What will Dropbox grow or pivot to in order to be an Apple size company? Hard to imagine backups for teams or iCloud but OS independent will be the ticket.
Are they really, though? It seems to me that many successful startups are simply bought over by another big company and their "beachhead" is eventually lost in the acquiring behemoth.
It worked out for Microsoft. But somewhat contradictory to this scenario Paul Graham also said to start chipping at the ambitious idea because starting companies is hard anyway.
So looking at seemingly dull ideas of YC, is there some way for them to scale without pivoting as far as Microsoft did?
If ever someone wants to know why hellbanning is stupid, you can point them here...
Literally. Airbnb is a frighteningly ambitious company. It is explosively generating value and we don't know how it's going to play out long term. It could end up with us living in caves with dogs watching out for the Terminators.
It is hard for me to take the rest of the article seriously after it suggests that "Airbnbing" auto mechanics is unambitious. It's possible that most Americans have routine car service done at dealerships where they're being routinely fleeced, and that the current crappy system of servicing vehicles is driving talent either out of the businesses or to those giant dealership shops. Have you ever tried to find a reliable mechanic? I drive an old Audi. It's painful.
My definition would be more like: sending ordinary people into space; making a mass-production electric vehicle; cheap solar power; curing flu/the common cold; inventing a new type of computing device; replacing huge incumbent companies (telcos, oil); reducing home electricity usage by >50%; inventing a new human-computer interface. Etc.
So I look into it and I discover that one of the main reasons that people replace a broken device is because it's really easy to go buy a new piece of gear (everyone wants to sell you one!), and much more trouble to track down someone who will repair an old one (properly!) and go deal with whatever's involved in getting it done.
OK, that's an interesting problem to solve, right? But if people are throwing away devices, how do you get everyone to change their behavior? That's really hard, especially for a startup with limited resources.
So what's a minimum viable product to get started with? Well, what if you started with a way to let people get their cars repaired more easily? People already get their cars repaired, and the user experience is terrible. Solve the part of the problem that people know they need solved first (car repair), then move on to convincing them they want other things repaired too. That they don't need a new gadget every two years, they just need an easy way for someone to help them keep their old one in good repair.
And if it works, that's tons (as a measurement of weight) of working devices that don't go into landfills, and tons of natural resources that aren't used up making devices to replace them. Is that ambitious enough for you?
(Note: I have no idea if this is what the founders are actually thinking or not. I just know that you can't judge the ambition of a startup from their first product.)
This is a silly argument. It will always be possible to name something more ambitious for a startup to do. What, you're only taking tourists into suborbital space? A truly ambitious startup would build MOON BASES.
For example, Google Adwords has completely changed how customers are acquired for a lot of industries. This changes how companies are structured, which companies succeed and how they are built. That's a big change.
Lets stretch the mechanic example. If people got better, cheaper, easier mechanics this could make them hold on to cars for longer. This could in turn change the way cars are built and change the structure of this giant industry.
A few hundred dollars for a few million Americans is a billion dollars of economic impact per year.
As someone in the medical space who is 37, married with 2 kids - My salary is more than the funding of YC - and I would not be able to take ~150K and divide it among multiple founders -- let alone have that funding cover, you know, actual startup expenses.
I feel I am in this catch-22 limbo area -- too old and too ambitious of an idea to fit the YC mold.
Personally, I see YC as being fairly myopic in the type of people they fund, and it is frustrating because I think YC is incredible!
Sure, there are tons of opportunities for nifty apps that serve a silo of a need (even if that silo is infinitely deep) -- but the idea I have to revolutionize the hospital space can't feasibly be built on 150K - unless I take that funding whilst retaining my full time job to pay for me and have that 150K go directly to the product.
You'd make a more compelling point if it was "I think the small amount of funding is going to prevent YC from generating ambitious companies because it was easier for me to start $COMPANY_I_CURRENTLY_RUN without YC". But anecdotally, it's the opposite: people fully capable of funding their companies are going to YC for the network and for the automatic increase in valuation.
You can compare other startup creation vectors that you have knowledge of to YC, but it's awfully hard to make a valid comparison between YC and a salaried job. If you're going to stay in a salaried job in our current white-hot market, you probably weren't going to start a company no matter what.
(There's nothing wrong with not starting a company. Even if YC starts 10 hugely ambitious, Airbnb-scale successes this cycle, it will still wash out a huge number of other companies. Careers made in salaried jobs have a lot to recommend them, and financial outcome is definitely one of them.)
An earlier version of me used to make the same point. "$20k for 6 points! That's a CEO's equity grant and one consulting project's revenue!" I feel dumb about that critique now that YC companies all seem to be getting uncapped convertible notes with minimal drama, and now that the YC network includes so many successful companies. Obviously, the YC money isn't the big draw anymore.
The idea that YC can fund a web-app, mobile-app or completely web-based feature-as-a-service for 150K is well founded.
My point is that within the realm of "ridiculously ambitious ideas" are those that would require a shitload more seed capital to build out.
Do you think that SpaceX, which is obviously ridiculously ambitious, was seeded with simply 150K? Tesla? (obviously these are from the same ridiculously ambitious founder - but a well heeled founder with deep pockets.
I AM saying that there are certain dynamics which YC can't accommodate best.
YC is an absolutley stellar platform, but I would suggest that there should be a separate entry/avenue for projects which are not exactly suited for the traditional YC channel.
Maybe they could start out with "$150K to prove out the idea, consult with other experts in this space and connect with those who can help the idea along"
The point being that the initial 150K is not necessarily expected to going to the actual development of product as much as it is going to the furthering of the project.
EDIT:
I also wanted to point out that I failed in mentioning that the value that YC provides, with respect to exposure, network, connections, etc is immeasurable.
I am really just trying to say that for some groups/founders/cases/ideas -- You cannot look at the 150K funding and think that there will not be other struggles/issues.
I'd like a way to openly address/discuss this and find out what is best for each case.
PG: YC is the best thing to hit the valley since the transistor.
Even though your idea is ambitious, you might consider nights/weekends to work on it - you know the whole "a journey of a thousand miles begins with a single step" - get something together and see if you can raise some funding - you never know. There's a lot of money being throw around right now.
I think YC is setup so it attracts those who are willing to go out on a limb for an idea, since (and this is a guess) they might be the most likely to persevere through the rough patches and stick with their idea until it succeeds.
32, married. As of yet I have no offspring, but that's going to be corrected. Still, I lurked and commented here, always with the 'Ahhh.. If I'd be without ties and responsibilities once more' thought.
I cannot tell you how glad I am to read that someone with arguably more responsibilities in life and a bit older than me (another point that is rarely coming up here) gives a damn about conventions and prejudices and just joins the otherwise ramen-eating, single, < 27 crowd.
On the other hand, I'm working for a small non-startup software company as a salaried developer and love it. I get to focus on developing software and not running a company :)
You're right that its difficult for a mortgaged family breadwinner to give up the stable income. You're right that YC's contribution of $20k or even the $150k convertible note from Conway and Milner isn't going to cut it when spread amongst multiple founders. You're right that a typical startup salary is far below what a skilled person would get if they stayed in industry/academia.
Where you're wrong is in suggesting this means your idea won't fit the YC mould. It's clear from PG's essay that he and YC are definitely keen on helping people with radical, dangerous, or expensive ideas. However, they're not going to change the terms to make it easier for you - the terms aren't set because $20k is a lifeline, they're set because just-above-starvation is the impetus for you to work your arse off getting to profitability.
You're wrong in saying that your idea can't be bootstrapped on $150k. It can - either fake the prototype on less money and keep paying yourself, or take a pay cut and spend the money on the prototype. You even say you could build a prototype on $150k if only you could keep your salary too. The point of that $150k isn't to revolutionize the hospital space, it's to build up enough momentum to make it obvious that the revolution would arrive if only there was more money to finance it - and then to lure that extra money in.
I'm not trying to be hard on you. I'm in a very similar situation, wanting to build a consumer robotics company to put an autonomous robot in every home. Getting to the point where we can actually deliver products to customers will take years and millions. With a mortgage, now a baby, and thus just one income, it's a big stretch for me to give up that money. But, if you won't take that risk, no investor will either.
YC's level of funding is the entry requirement, not the lifeline.
Respectfully (I don't know you): this is bullshit. The terms are set this way because that's what the market will bear in this specific instance. The idea that the terms of VC deals are structured to align the incentives of founders with VCs is a negotiating tactic and little more.
Misaligned incentives might keep you from taking 6 figures off the table in an A round, but anybody who tells you that they're deliberately calibrating your funding to keep you at a below-market salary is feeding you a line.
There are plenty of founders, some of them first-time founders, who make at, near, or better than market salaries. Most of the difference between them and the people whose boards get them to live on ramen is simple negotiating skill.
This isn't to say that there isn't some "hustle quotient" to be extracted from underpaying founders. Just that it isn't dispositive.
2) YC companies like DrChrono have very large ambitious in the healthcare industry. It can be done through YC.
That's not how it works.
The connection to old salary is simply family expectations/lifestyle. That's a real decision and I can imagine dissuades a lot of people. I would be more risk averse if my outcome affected other people I cared about.
80k/yr plus 30-80% equity in a company, given that YC boosts the valuation, increases odds of success, etc., seems like a decent tradeoff for a mid-career person. The exception might be someone who has a time-limited alternative income source. If I were making $10-20mm/yr as a starting quarterback, I'd probably wait until I got injured or too old to throw a ball to do YC.
To better understand how ambitious a startup is, assume that its adoption is 100%. If everyone is using it, does it change lives? If everyone chats on Twitter, does it impact politics? If everyone is on Facebook, do you reconnect with old friends? Etc. Dropbox is in that category too.
With used cars purchases, I can see how everyone would use the site, and still not have any meaningful impact. Cheaper cars. More efficient market. But still, in the end, cheaper cars. Am I missing something?
Then your OS would be a commodity, and Dropbox would be what provided the value. Seamless editing of documents across devices, no matter where you are or what sort of device you're working on.
That's a pretty good endgame for dropbox.
Of course one could say that's the same goal for just about any consumer-facing startup these days.
As for the criticism about "X for Y", the problem is not with them, but with the rest of us. Most people (smart or not) have a hard time grasping completely original ideas, and they don't have the time to dive deep into it. "X for Y" is simply a low bandwidth way of transferring a core idea. It's the MVP of communicating your vision. If you have to take more than a sentence to convey your idea/startup, you're going to have a hard hard uphill battle. But chances are, you don't have a clear understanding of what problem you're solving.
This is something I've seen several times, I don't believe anyone has shown that 'press coverage' was a causative agent in a successful exit. I believe 'delivering a useful product' (which happens to generate press coverage as a side effect) is the missing piece here.
You want a brain dead stupid IOs App I would buy that is derivative? Instapaper for Printers. Which is to say I would love an App where I could launch it on my iPad and then 'print' to it across the network from my Mac or Windows machine. I don't care if it dropped the printout into iBooks or created its own 'space' (I could imagine a designer would have fun with the old 20th century printout distribution bins). But basically there are times when I wish I could print something out and then read it on the road later. It was a capability discussed for the old Plastic Logic Reader that never saw the light of day.
And yes, I still do 'listings' when I'm studying old code or dumping a bunch of numbers and charts.
The problem is that so many of these startup ideas (that don't happily see an AcquiredException before monetize() is called) will fail at the monetize step because there is steep competition in many of these markets right now, and the burgeoning startup mentality means that someone else is probably doing exactly what you do, slightly better or worse, but they're at a point in their business cycle that they don't need to call monetize() just yet. Thus, you may have a mass exodus of users at precisely the point where you try and bring your ARPU above zero.
I guess I just don't get what the skepticism here brings to the table? I'm open to input about that.
With things like Dropbox and Reddit not only did my eyes light up, but the eyes of non-tech friends lit up. Same with Hipmunk. Hipmunk I didn't even have to show someone, I could just say "not shitty airline search" and they were intrigued.
I think the point to this submission and others like it are that a lot of people are scratching their heads over this current batch. Nobody expects every company to be "Wow!" but generally there are a few.
Um, maybe not, but Bill Gates definitely pitched Windows as like a Mac, but for IBM compatible PCs. Seems like a bad example.
In some cases the companies themselves use that line in their pitch. This isn't surprising, given that it's such a fast and powerful way to give people a rough idea of what you're doing and how short each presentation at YC demo day is.
But that doesn't change the fact that in either case, this is just shorthand and isn't reflective of the grand vision of any of these companies.
The same model is used in pitching screenplays and movies. Alien, famously, was pitched as "Jaws in space". It works because it sticks, but doesn't define the field (the plot etc) too much. Similarly, startups using the “we’re X for Y” are giving themselves a quick mental positioning in the mind of the listener, but without carving an exact niche. It is easier to work up or broaden from defining the idea ('the beachhead') that way.
The way to misunderstand it is think that they mean to do exactly that. "What, they're taking a giant shark onto a spaceship?"
http://techcrunch.com/2011/12/30/startups-give-us-your-best-...
I thought that most of them did quite well even if some ideas were unambitious even when presented in this manner.
The reason why I bring the medical example up is because there is a team here that has a frighteningly ambitious start up (not idea yet). Medigram is a stacked team that is going after the medical industry in a way that no one else wants to. Starting with a messaging app that complies with regulators, they are planting the seed of trust with the medical industry. When they move up to records, they get data. When they get data, they use that math heavy team to solve the ambitious idea of making diagnosis more accurate. Then who knows? A tiny pill that you can swallow that transmits blood test data back to a central server and diagnose your issues instantly? I don't know, but they had to start somewhere.
Disclaimer: I work for a struggling startup in the food/tech realm.
Is there something about the YC model that makes companies that go on to turn modest profits not generate returns for the investor?
A business like Wal-Mart wouldn't satisfy you as an investor? I wouldn't have any problems taking 8% of Wal-Mart. Wal-Mart didn't invent anything new, they just did it a little bit better than their competitors. Techcrunch 1969: "Wal-Mart: Sears for people who like to pay less"
Impressive algorithms don't make money, businesses that satisfy customers do. You're not going to 'change the world' unless your customers are happy.
Walmart is one of those things that is just so effective and so pervasive that we forget how important its original ideas are. It's like learning to like music in 2003 and hearing the Pixies for the first time and not getting it; you don't realize that virtually all of pop/rock music for the last 20 years is built on stuff they popularized.
But unlike the Pixies, Walmart has ruthlessly refined and improved their systems instead of breaking up the band with a faxed message from Black Francis.
Point being: innovation isn't always easy to spot in a simple paragraph on a message board.
Whoa! Wal-Mart revolutionized the supply chain. And Wal-Mart also started with a revolutionary idea: We can make stores in rural areas so people don't have to drive to the big city to shop. Every other chain considered those same rural areas unprofitable. It turned out to be a gold mine.
There are several books out there about how revolutionary Wal-Mart has been. I suggest you read one before assuming that Wal-Mart "didn't invent anything new"!
Fundamentally though Wal-Mart's business model is "big truck - small truck" it's just a specialization of Sears business model, similar to how all the businesses on TC are X for Y.
All ideas seem small and narrow at the start. It is true that you should recognize the possible direction the startup could go, but as PG said before, it is important to first make something that a group of users really really love. From there, you start growing into something bigger. The main point is that you may not know what it will grow and evolve to when you first start the company.
What once seemed like a niche, unambitious company now is frighteningly ambitious.
There's a difference in investing in companies expecting some kind of a return and throwing money at really ambitious ideas in the hope that one of those gets really successful. I cannot see how investing carefully and getting returns (ie. making money) is not satisfying.
Also, what does OP expect founders to do? Declare their complete vision beforehand to impress the audience. The purpose of a vision is not to get popular with the tech press, but to guide the founders.
While I agree that saying "My Product X is like Y on steroids" is somewhat unoriginal and maybe even uninspiring, the simple fact is that every idea is pretty much an evolution of a previous idea.
That being said, I'm not to sure what the point of the article was :)
True, although Windows was originally pitched as "it's like the Macintosh OS for IBM PC-compatibles."
The ideas he backs are basically about the team.
That's probably a picture only big daddies like Apple can show to the world. For example on another thread you can already see DuckDuckGo revealing their ambitious face after a perceivable unambitious journey of two years!
Also another thing that probably we all miss is that the next big thing might not necessarily be anything from the ones ever listed - ambitious or unambitious. None of the big names like Facebook or Google or Apple were frighteningly ambitious ideas to the world until they kicked butts of everyone.
On second part: Suggestions on choosing a worthwhile domain name is really nice, but looking at how much has been squatted out there, there doesn't seem much of a choice or harm with the current trend of choosing twin word names.
There are fewer cheap options at disposal of entrepreneurs and so it is for the rest of the world.
