Y Combinator's Future in the Software Slowdown
The startup accelerator launched a generation of software companies. As the rate of new internet giants slows down, the next technological revolution will need to be sought elsewhere.
Y Combinator (YC) invests in, educates, and promotes early-stage companies, especially in software. Since its founding in 2005, the startup accelerator’s educational program has helped birth companies including Airbnb, Reddit, DoorDash, Stripe, Twitch, Coinbase, Dropbox, Instacart, and FlexPort, and over a thousand others. YC estimates the total valuation of these companies at over $600 billion, meaning the organization’s profits on these investments are likely in the tens of billions of dollars. Through its mentoring and prestige, the accelerator has set much of the professional culture and institutional practices of software startups. Through the essays of YC founder Paul Graham, as well as through its influential online discussion forum Hacker News, it has also exerted and continues to exert a wider cultural and intellectual influence on Silicon Valley, which is the core driver of U.S. economic growth and technological dynamism in the present day.
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The core of Y Combinator is a three-month semistructured program for the founders of young companies. Entrepreneurs work intensively on their companies while immersed in a social environment that instills the explicit lessons and illegible norms of YC’s tradition of knowledge.1 Entrepreneurs are sorted into “groups” and smaller “sections” to form deeper bonds. The instructors, themselves former entrepreneurs and alumni, provide mentorship and advice during “office hours.” Participants attend talks by founders of successful companies. This experience inducts participants into being “YC alumni,” serving as a vetted network of people with similar outlook, skills, and shared experiences, much like a 20th century American college fraternity.
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A company finishes the program with its sales pitch to investors at “Demo Day,” where the graduate is all but guaranteed offers of large investments at favorable terms. Software culture interprets acceptance into Y Combinator as a strong credential, so YC companies have a much easier time wooing investors, hiring employees, and sometimes even acquiring customers on the basis of this endorsement. There are now other “startup incubators” and “startup accelerators,” but none have even a fraction of YC’s prestige, nor of its track record of successful graduates.
Venture Capital and the Valuation Game
Y Combinator is a combination of a venture capital fund on the one hand and an education and accreditation program on the other. As an early-stage venture fund, its business is investing money into young and untested companies in return for a substantial ownership share. The theory is that most of an early-stage venture capital firm’s portfolio companies will go bankrupt and return nothing, some will do reasonably well, while a tiny fraction will become wildly successful and return most of the investor’s profits.
Startups normally take investment in a series of “rounds.” Unlike publicly-traded companies whose stock is bought and sold on exchanges like the New York Stock Exchange, ownership of startups is privately held and is traded only rarely. In a given round of financing, a startup’s owners and potential investors will negotiate to determine what fraction of the company ownership to sell in return for how much money, and this will be used to calculate the company’s valuation i.e. the implied worth of the entire company in dollars.
Currently, Y Combinator invests $125,000 in return for 7% ownership in the companies that go through its program, sets aside $375,000 to automatically invest in the next round of financing, and also “gets a right to continue to invest in subsequent rounds” at the same price as other investors.2 For most of its history YC has bought 7% of the companies that go through its program, although the amount of money it offers in return for this share has grown massively over time.
Like any investor, Y Combinator’s ownership percentage will drop in later financing rounds as it is “diluted” by the creation of new stock, and also if it sells off its ownership in its portfolio companies before they reach their peaks, but its ownership may also rise if it invests more in later rounds, as it regularly does. The total value of YC’s investments is not publicly known, but if the 7% figure is taken as a very rough starting point, it would suggest that its stake in the companies it graduated—which are valued at over $600 billion in total, according to the organization itself—is worth somewhere around $40 billion. Such investments take a long time to mature, and the eventual value of YC’s portfolio may well grow further. Its future depends on whether it can continue picking or creating the founders who will go on to create unicorn companies and earn outsized returns for their early investors.
The goal is to eventually “exit,” which comes in two forms. The first is to hold an initial public offering (IPO) and be listed on a public stock exchange so that investors ranging from individual households to giant asset managers like BlackRock can buy the company’s stock. The other is to be acquired by a large company such as Meta or Google, which buys all the stock at once. In either case, the early investors—and other stockholders like the founders and early employees—can sell their ownership for a profit.
Before an exit, these companies often operate at a loss for a decade or more, meaning they have to raise more rounds of money from investors to pay their growing bills. A successful company will have a larger valuation in each round of financing, as its customer base grows and it shows greater promise. A drop in valuation is referred to as a “down round,” and is generally considered very negative. In principle these valuations are based on expectations of future profits. In practice, as in many other forms of contemporary finance, the link can often be tenuous.
Valuations are prone to large swings for opaque reasons, such as when payment processing company Stripe, once YC’s highest-valued portfolio company at $95 billion in 2021, cut its valuation down to $50 billion at a stroke in 2023. Stripe cofounders Patrick and John Collison attended YC in 2009. DoorDash, the largest food delivery company in the U.S., went through YC in 2013. Today DoorDash has a valuation of over $30 billion but still operated at a loss of over $1 billion in 2022.3 It remains to be seen whether DoorDash will become profitable, but this is only incidentally related to whether investors themselves profit. SoftBank invested $680 million into DoorDash starting in 2018, then sold much of its stake for $5 billion within a year after DoorDash’s 2020 IPO.4
Charismatic startup founders like WeWork’s Adam Neumann or FTX’s Sam Bankman-Fried have infamously conjured vast but ultimately fleeting valuations. No major YC company has suffered such a total collapse, although it is possible that OpenSea, a non-fungible token (NFT) marketplace valued at $13 billion in 2022, might. OpenSea’s trading volumes have dropped 99% as the recent NFT craze has faded, reportedly prompting one investor to internally mark down its investment by 90% so far.5 Such extreme cases are rare, but nevertheless demonstrate that the wider market for startup equity is in large part a “Keynesian beauty contest”—market speculation where choosing the same company to invest in as other investors can outweigh company fundamentals, since most investors lack special knowledge of the company’s circumstances.6
Because the core staff of Y Combinator are mostly former software entrepreneurs themselves, and therefore have at least some special knowledge of the companies they are investing in, they are somewhat insulated from the dynamics of such a Keynesian beauty contest. However, Paul Graham has argued that most major buyers and sellers of equity in software companies are “making big decisions about things they don't understand,” and it is these decisions which set the prices in the market YC relies on.7
Graham further writes elsewhere that “valuations are made up” on the basis of strategic considerations, custom, and outright collusion, and so are “far [...] from reflecting any kind of value of the company.”8 Even if YC is better able to evaluate substance, they can in practice make money simply by reselling their investment to less grounded investors at an eventual IPO, or to large foreign investors like SoftBank or Saudi Arabia’s Public Investment Fund.
The Power of the Alumni Network
In 2005, Paul Graham cofounded YC with Trevor Blackwell and Robert Morris, two of his core colleagues at his earlier startup Viaweb, as well as Jessica Livingston, his now-wife. It began with a summer fellowship in Cambridge, Massachusetts, pitched to college students as an alternative to summer jobs, with YC’s investment consisting of about $6000 per person for living expenses, unless “you've told us about specific hardware you need.”9
When Y Combinator’s staff speak of “graduates,” “alumni,” and “office hours,” it is not just turns of phrase. Like the elite universities of Graham’s youth, YC is meant to provide an education appropriate for top businesspeople, socialization into an upwardly-mobile class, an induction into a high-trust professional network, and a strong credential of generalist competence. As universities have declined over the decades, YC now ironically achieves these goals better than the elite universities themselves.
This success was partially built on the reputation of the dozen or so young entrepreneurs of the now legendary “first batch,” including later OpenAI CEO Sam Altman; Steve Huffman and Alexis Ohanian, the founders of social media giant Reddit; Justin Kan and Emmett Shear, who would later found the streaming video platform Twitch; and the internet activist Aaron Swartz, widely perceived as a martyr for his cause. While it would take time before these companies earned high valuations, Graham and his colleagues were encouraged and began scaling up YC. They ran the program twice per year, alternating between Cambridge and Mountain View, California, until permanently settling in the San Francisco Bay Area in 2008.
Afterwards, applicants were drawn by Graham’s personal charisma and the worldview he articulated in his essays. At this stage, Y Combinator attracted people willing to eschew the traditional paths to success in order to take a chance on an unproven career track. By the early 2010s, the widespread usage and high valuation of early YC companies like Reddit and Dropbox also drew in people motivated to follow the trail blazed by those early alumni. As the startup founder became a more familiar cultural archetype and no longer appeared like a deviation that could end in ruin, ambitious strivers arrived in growing numbers. The twice-annual batches grew from about ten companies each in the early years, to 74 in the winter 2014 batch before Graham stepped down.10
With an intake process that emphasizes past accomplishments and interviews rather than bureaucratic credentials, and with an ethos of taking chances on those who show promise rather than weeding out those who might fail, YC has been able to select charismatic and energetic candidates for its program. The three-month program serves as the foundation of the alumni’s later bond. YC provides some mentorship and guidance, but the company founders are mostly self-taught on the job rather than in classes, and spend the vast bulk of their time in the program working on their companies.
Entrepreneurs often describe building a company as a harrowing experience and doing this alongside a peer group serves as an emotionally powerful initiation for many founders, similar in some ways to the initiation and bonding rituals for groups ranging from college fraternities to military recruits. Graham has said that bringing cohorts of entrepreneurs together like this is YC’s “most important idea.”11 The process has been further standardized as the organization’s early investments became successes and it became a respected institution itself.
In 2010, YC began adding more staff to accommodate its larger class sizes, hiring alumni and veteran startup founders to teach.12 These staff are compensated partly in “deal flow,” as many of them—including all of Graham’s successors as President—also take the opportunity to invest their personal fortunes in promising companies. Over time, the growing accelerator was reorganized to rely more and more on these second-generation instructors rather than the original founders.13
Meanwhile, investors began to perceive graduates as pre-vetted winners, and in 2011, investors Yuri Milner and Ron Conway offered an automatic $150,000 investment to every YC graduate.14 Since then, an ecosystem of other venture capital funds has grown which invest mainly or entirely in YC companies.15 As YC’s reputation and its financial ecosystem have grown, founders have been able to raise more money on better terms.
The alumni network kicks in to offer connections, private information, and other assistance to founders, a practice which was largely started by Sam Altman during YC’s infancy and has since become ingrained.16 Fellow founders may take a meeting, make an introduction, offer a discount, or buy an untested product out of solidarity. They are also given access to a private social network, Bookface, which they retain as alumni. YC maintains a private blacklist of investors who have unethically screwed over its companies and ensures its portfolio companies are forewarned. Many staff also use the program as an opportunity to scout promising companies and make investments, either in their personal capacity or on behalf of funds which they manage. This level of access and support by no means assures that a company will succeed, but it undoubtedly provides a very useful advantage.
Paul Graham’s Theory of Economic Growth
Paul Graham is the live player who designed the Y Combinator program and built its economic engine. He is also an influential intellectual who, more than anyone else, created and popularized the idea of what a “startup founder” is. Graham constructed a legitimizing ideology that cast startup founders as economic heroes responsible for society’s prosperity. As he thought through “all the things they should change about the [venture capital] business,” Graham was inspired to start YC and transform venture capital in line with his vision.17
Paul Graham was born in 1964 in England and moved to the U.S. at the age of four, growing up in Pennsylvania. He graduated from Cornell University and then acquired a PhD in computer science from Harvard University. After briefly pursuing a career as a painter, in 1995 he cofounded Viaweb, a software company that let clients build online storefronts, which was then a cutting-edge business. The company proved successful and in 1998 it was bought by Yahoo, at the time the world’s most formidable internet software conglomerate, for $49 million worth of stock.18 Soon after, Graham left Yahoo and used his newfound leisure to work on personal projects like designing a new programming language and publishing essays on his blog. In these essays, Graham thought through an economic theory which would serve as the basis for YC’s strategy.
Software and computer entrepreneurs predate Y Combinator. Microsoft’s Bill Gates, Apple’s Steve Jobs, and Amazon’s Jeff Bezos had built highly successful companies in the decades before Graham’s influential essays, as did Graham himself. However, at the time, the public perception of Gates, Jobs, and other such tech entrepreneurs was not of visionary businessmen, but of nerds and engineers whose obsession with computers had allowed them to strike it rich.19
Software entrepreneurs who instead marketed themselves as businessmen, like the Bloomberg Terminal’s Michael Bloomberg, were not perceived as software entrepreneurs at all. For their part, the culture of programmers—or “hackers,” as Graham called them—generally viewed business as exploitative at best and dishonest at worst, and denigrated the practices of salesmen, MBAs, and other “suits” in favor of the purity of writing code.
Graham changed all this by painting a picture where software entrepreneurs were virtuous pioneers responsible for creating tremendous value and wealth for the world. Going into business was no longer an abandonment of the higher principles of the craft for mere worldly concerns, but was now nobly taking up a burden on behalf of society, and being justly rewarded for hard work and courage if the work should succeed. He articulated paths to professional and social success for startup founders and later engineered the software industry’s culture and institutions to be more favorable to founders. Graham laid out these ideas in essays on his blog, and later the Hacker News forum catalyzed an influential community which popularized his views throughout programmer culture. Notably, all this also guarantees deal flow for YC, since those compelled by Graham’s writing will possibly decide to apply to YC.20
The core of Graham’s economic analysis that underwrote his archetype is the productivity of individuals, as he wrote the year before he started YC.21 Graham argues that some people produce far more than their peers, or can in the right circumstances, but this does not happen in large companies because people who work harder and better see relatively little reward. In his words, “I think the single biggest problem afflicting large companies is the difficulty of assigning a value to each person's work. [...] You can't go to your boss and say, I'd like to start working ten times as hard, so will you please pay me ten times as much?”
The only way to incentivize such productivity, and the great personal sacrifices that go with it, is by starting a small company where the benefits accrue directly to the owner-operators, the founders. This belief in the outsized value produced by the best people is also the reason for YC’s obsessive focus on funding the most promising individuals even if their company seems bad. In Graham’s words “If we want to get the most out of [the most productive individuals], we need to understand these especially productive people.”22
In Graham’s view, the advent of software since the 1990s means that these people can now start major companies with no capital investment beyond their own living expenses, changing the balance of negotiating leverage from investors to founders and releasing a flood of untapped entrepreneurial energy.23 If these founders can set aside office politics and complex plans as secondary in order to simply “make something people want,” then the rest will fall into place.
Graham further argues that wealth acquired through business is the most moral and legitimate type of wealth.24 “There are plenty of other ways to get money, including chance, speculation, marriage, inheritance, theft, extortion, fraud, monopoly, graft, lobbying, counterfeiting, and prospecting. [...] For most of the world's history, if you did somehow accumulate a fortune, the ruler or his henchmen would find a way to steal it. But in medieval Europe something new happened. A new class of merchants and manufacturers began to collect in towns. Together they were able to withstand the local feudal lord. So for the first time in our history, the bullies stopped stealing the nerds' lunch money. This was naturally a great incentive, and possibly indeed the main cause of the second big change, industrialization.”
Through his writing and creating the institution which educated so many prominent startup founders, Paul Graham has influenced the ideal of what a startup founder should be more than any other individual. The second-most influential individual is fellow investor-intellectual Peter Thiel, who achieved comparable impact through his bestseller book Zero to One and the Thiel Fellowship, which gives young people $100,000 to drop out of college and work on their own more impactful projects. The popularity of Graham’s writings also contributed to books such as Eric Ries’ The Lean Startup that further developed the software entrepreneurs’ tradition of knowledge and as well as the heroic self-image of founders.
In 2007, Y Combinator launched Hacker News, a discussion forum Graham coded in his homebrew programming language Arc.25 Hacker News was largely inspired by Reddit, itself a YC graduate, and was intended to “recreate the way Reddit felt back in 2006.”26 This soon became a major hub for the growing startup culture, centered around YC alumni, and for hacker culture more generally. The forum is designed to preserve its niche culture, with active and aggressive moderation, limited privileges for new users, and algorithmic tweaks to discourage unwanted posts. Graham has continued publishing essays—albeit more slowly—developing and popularizing his thoughts on software startups, and making the case that ambitious young people should found companies.27
Sam Altman’s Leadership
As a company made up largely of startup founders, YC also began organizing and advocating for the interests of startup founders as a distinct social class. By example and by advocacy, it played a role in raising the investment amounts early funders receive, and in marginalizing the once-common practice of early investors receiving a seat on the board of their portfolio companies. For example, in late 2013 YC released the SAFE (Simple Agreement for Future Equity) and eventually established it as the industry standard for investment agreements.28
Graham retired a few months later in early 2014, succeeded in his role as President by his protege Sam Altman, a live player with a very different skillset and character than Graham. Whereas Graham is an intellectual first and foremost, who uses analysis and theory to understand the economic landscape and deduce the correct moves, Altman is mainly a dealmaker, networker, and marketer. Today Altman is best known as the CEO of OpenAI.
At the age of 19, Altman attended YC’s first-ever cohort and left school to continue building his company. His startup, Loopt, began as a phone app that let users share their location with friends, and over time added more and more “social” features in an ultimately unsuccessful attempt to achieve massive user growth. Altman nevertheless made a strong impression on Graham, who in 2006 wrote “Loopt is probably the most promising of all the startups we've funded so far. But Sam Altman is a very unusual guy. Within about three minutes of meeting him, I remember thinking ‘Ah, so this is what Bill Gates must have been like when he was 19.’”29
Graham took Altman under his wing and Altman began aggressively networking on behalf of Y Combinator and its companies. Graham later recalled that Altman “set the standard for how much the alumni help one another” and “did most of the initial intros in Silicon Valley for YC itself.”30 In 2011, Altman officially joined as a part-time partner instructing new companies.31 In 2012, he sold Loopt for $43 million to Green Dot, a prepaid debit card company. This was an apparent “acquihire,” a term for when an established company buys a startup in order to acquire its employees. Shortly after, Altman started Hydrazine Capital, a venture fund which invested in early-stage companies, including many YC companies.
As President, Altman oversaw the continued steady growth of the core startup accelerator program, which soon had well over one hundred companies going through each batch. Altman increased the size of initial investments about sevenfold, to $120,000, in return for the same 7% of the company.32 He also launched a number of initiatives that later petered out, including a Chinese branch of the organization and a fellowship for companies not yet ready for the core program. But most significantly, in hindsight, was what would later become OpenAI. In October 2015, Altman launched YC Research, a nonprofit lab, with $10 million of his own money.33 YC Research’s first program was on artificial intelligence, and within months it also began its second program, a basic income experiment, which has since spun off into a separate organization and changed its name to Open Research.34
In December 2015, YC Research’s AI project joined forces with Elon Musk and leading AI researchers, who were interested in—and ostensibly concerned about threats from—artificial general intelligence (AGI). Together they formed OpenAI, a nonprofit research organization. Musk drifted away and formally left in 2018, shortly before OpenAI released GPT. In March 2019, Altman stepped down as President of Y Combinator to focus on OpenAI, and simultaneously reorganized OpenAI from a nonprofit to a for-profit company, which has since grown tremendously and developed GPT further.
Altman believes technological progress driven primarily by Artificial Intelligence will create material abundance that will upend modern civilization.35 He wants to build and steer this technological revolution, and redistribute the material gains of technology to society at large through policies like universal basic income (UBI). Some of Altman’s recent efforts are aimed at both bringing this transition about and smoothing over the expected socio-economic crisis. An example is a company he co-founded: Worldcoin, launched in 2019, which seeks to create a global cryptocurrency based on biometric identification—this would allow global verification of who is and isn’t human online in an era where the internet might become dominated by artificial intelligence. Altman further states he hopes this infrastructure might help lead to UBI to address expected disempowerment of labor compared to capital driven by technological advances.36
Partly to this end, partly following a renewed mid-2010s Silicon Valley interest in “hard tech,” he pushed YC to accept more companies building physical technology rather than just software.37 These included the fusion energy research company Helion Energy and supersonic airplane designer Boom Supersonic. Altman co-founds, invests in, and promotes companies that explicitly aim to solve global problems of historic consequence that are in vogue in tech circles. This strategy may have influenced other YC alumni, such as John and Patrick Collison, who have used their online payments company Stripe to fund the development and rollout of carbon-capture technology to address climate change.38
After Altman’s departure in 2019, he was replaced as President of Y Combinator by Geoff Ralston, a longtime software executive who had been a YC partner since 2012. Ralston led the organization through the turbulent years of the COVID-19 pandemic, making few changes to the organization itself. Ralston made the second-round investments automatic rather than discretionary.39 In 2023, Ralston stepped down and was replaced by Garry Tan.
Tan had previously founded Posterous, a YC-backed blogging platform which was acquihired by Twitter in 2012, and he was the first outside angel investor in Coinbase.40 He joined YC as a partner in 2011. In 2013 he left the organization, though not the network, to pursue Initialized Capital, a venture capital fund he cofounded with other YC alumni to invest in YC companies.41 Initialized Capital raised and invested billions of dollars before Tan returned to Y Combinator as President. While it is still early in Tan’s tenure, he is notably pursuing local political reform in San Francisco; he is involved in multiple “moderate” organizations like GrowSF, frequently comments on the city online, and has donated at least $278,000 to political campaigns since 2021.42
The Next Google is Not a Web App
The household names among YC’s portfolio companies all come from Paul Graham’s tenure, and this is not purely a matter of age, since some of the early companies like Reddit and Airbnb became widely-used and well-known in well under a decade. In the nine years since Graham’s departure, YC’s portfolio has continued to perform extremely well if not better as measured by valuation.43
However, the value they provide to consumers does not seem to measure up. Early successes like Reddit, Dropbox, and Airbnb, which went through YC in 2005, 2007, and 2009 respectively, made genuinely new things possible for their users. Even the less flashy successes like payroll company Gusto, which went through YC in 2012 and is valued at $9.5 billion as of 2021, participated in the phenomenon of “software eating the world,” making it notably easier to automate administrative tasks which had formerly involved more human labor.44
In contrast, the successes from after Graham’s tenure are lesser known and less transformative for their users. For example Faire, an online wholesale marketplace using a model similar to Amazon, Alibaba, or Etsy, was valued at $12.5 billion in 2022, and has undergone two rounds of layoffs since then.45 Brex, which provides credit cards and other financial services to businesses, was valued at $12.3 billion in 2022.46 Both Faire and Brex were part of YC’s winter 2017 batch.
Early-stage venture capital investments take a long time to come to fruition. These or other YC companies from after Graham’s tenure may yet prove to be economically and culturally important like their forerunners. The evidence so far, however, suggests that their impact is well below that of earlier YC companies of similar age, in spite of their higher valuations. It might seem, then, that the golden age of the internet startup has passed. Decades ago, a handful of hackers in a dorm room could upend major parts of economic and civic infrastructure. Over time, however, the internet has centralized.47 Major internet companies have entrenched themselves politically, and upstarts have a far harder challenge.
Any new industry goes through an initial period where it is a wide-open field suitable for building new independent empires and power centers, but by the time this opportunity becomes widely known to ambitious strivers, it has usually been fully exploited and tapped out by the trailblazers who got there first.48 The raw economic opportunities for transformation may not be exhausted, but the political economy makes them far harder to exploit.
Many Silicon Valley technologists hope the recent boom in artificial intelligence startups will prove to be a continuation of the previous golden age of startups. Notably, this AI boom follows a quickly-forgotten boom in cryptocurrency and “Web3” startups that was also marketed as such. According to Paul Graham, “in the last batch [of YC] half the companies weren’t AI startups.”49 This implies YC is now betting a full half of its capacity on AI. Unlike previous waves of startups, even including cryptocurrency, the AI boom faces a clear and imminent threat of heavy regulation from governments that would prevent large new empires from forming. Silicon Valley may prevail nevertheless, but these are new and formidable challenges.
Some of YC’s more recent companies have been economically important, but are not internet software startups so much as hardware startups. For example, Cruise, a self-driving car company that in 2014 went through the final YC batch before Graham stepped down, operates its self-driving software in the physical world and will continue to do so assuming they can overcome the problems behind a 2023 safety recall.50 Flexport, from the same batch, has been “eating the world” of international freight logistics, requiring both digital and material expertise. These companies have not just achieved high valuations, but aim at transforming economic life. Altman’s attempt to diversify away from the internet and software may prove prescient.
While companies like Faire or Brex are unlikely to carve out empires comparable to earlier companies like Stripe or Twitch, let alone conglomerates like Google or Meta, YC’s pipeline is in little immediate danger. Venture capital is not necessarily quick to react to such changes, and it took over half a decade before venture capitalists fully realized the potential of YC’s approach in the first place. YC’s network and access means their companies will have preferential access to funding streams for some time to come. Even if successes at the level of Stripe or Airbnb peter out, then YC would lose out on the unprecedented profits it has enjoyed so far, but more modest software unicorns and acquihires would likely keep it profitable by any reasonable measure.
YC’s business model will very likely remain lucrative for as long as it remains the favored destination of the most ambitious software entrepreneurs, as long as the financial system continues investing in the software industry, and as long as the world continues to use software. None of these facts are likely to change any time soon. But as the contemporary political economy of the United States has changed, such software successes will be less likely to greatly grow the economy and less likely to result in new, independent personal empires run by live players that can make further transformative bets in business and technology.
Samo Burja, “On the Loss and Preservation of Knowledge,” Samo Burja, March 8, 2018, https://samoburja.com/on-the-loss-and-preservation-of-knowledge.
Kirsty Nathoo, “The Y Combinator Standard Deal,” Y Combinator, 2023, https://www.ycombinator.com/deal.
“DoorDash, Inc. (DASH) Stock Price, News, Quote & History,” Yahoo Finance, https://finance.yahoo.com/quote/DASH; Tony Xu et al. “Form 10K: Doordash Inc,” United States Securities and Exchange Commission, February 24, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK-0001792789/6c80c6fa-ff0b-44e3-963b-a6c60669ff56.pdf.
Alex Sherman, “SoftBank Vision Fund Turns $680 Million Doordash Investment Into $11.5 Billion Based On Wednesday's Opening Price,” CNBC, December 9, 2020, https://www.cnbc.com/2020/12/09/softbank-vision-fund-turns-680-million-doordash-investment-into-11point5-billion.html; Pavel Alpeyev, “SoftBank's Vision Fund Sells $2 Billion of DoorDash Shares,” Bloomberg, November 1, 2021, https://www.bloomberg.com/news/articles/2021-11-01/softbank-s-vision-fund-sells-2-billion-of-doordash-shares.
Adele Ioana , “OpenSea Trading Volume Down 99% From All Time Highs,” NFT Evening, August 31, 2022, https://nftevening.com/opensea-trading-volume-down-99-from-all-time-highs; Gillian Tan, “Coatue's Latest Growth Equity Investors Eye a 30% Paper Loss,” Bloomberg, November 8, 2023, https://www.bloomberg.com/news/articles/2023-11-09/coatue-s-latest-growth-equity-investors-eye-a-30-paper-loss.
John Maynard Keynes, “The General Theory of Employment, Interest and Money,” Marxists Internet Archive, https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch12.htm.
Paul Graham, “A Fundraising Survival Guide,” Paul Graham, August 2008, http://www.paulgraham.com/fundraising.html.
“Summer Founders Program,” Y Combinator, 2005, WebArchive, https://web.archive.org/web/20050324101335/http:/ycombinator.com/sfp.html.
Paul Graham, “How Y Combinator Started,” Paul Graham, March 2012, http://www.paulgraham.com/ycstart.html.
Michael Arrington, “Reddit Cofounder Alexis Ohanian To Join Y Combinator,” TechCrunch, September 1, 2010, https://techcrunch.com/2010/09/01/reddit-cofounder-alexis-ohanian-to-join-y-combinator.
Michael Arrington, “Start Fund: Yuri Milner, SV Angel Offer EVERY New Y Combinator Startup $150k,” TechCrunch, January 29, 2011, https://techcrunch.com/2011/01/28/yuri-milner-sv-angel-offer-every-new-y-combinator-startup-150k.
See for example:
““Congratulations Sam...” Hacker News, March 9, 2012, https://news.ycombinator.com/item?id=3686090.
Paul Graham, “How Y Combinator Started,” Paul Graham, March 2012, http://www.paulgraham.com/ycstart.html.
Reuters, “Company News; Yahoo Buying Viaweb, A Web-Marketing Software Maker,” The New York Times, June 9, 1998, https://www.nytimes.com/1998/06/09/business/company-news-yahoo-buying-viaweb-a-web-marketing-software-maker.html.
See for example: alynglobal, “What They Said in 1999 About Amazon dot com,” Youtube, April 27, 2018, link.
See for example: Paul Graham, “A Student’s Guide to Startups,” Paul Graham, October 2006, http://www.paulgraham.com/mit.html; and Paul Graham, “You Weren't Meant to Have a Boss,” Paul Graham, March 2008, http://www.paulgraham.com/boss.html.
Paul Graham, “How to Make Wealth,” Paul Graham, May 2004, https://www.paulgraham.com/wealth.html.
Paul Graham, “Ramen Profitable,” Paul Graham, July 2009, http://www.paulgraham.com/ramenprofitable.html.
Paul Graham, “How to Make Wealth,” Paul Graham, May 2004, https://www.paulgraham.com/wealth.html.
Leena Rao, “The Evolution Of Hacker News,” TechCrunch, May 18, 2013, https://techcrunch.com/2013/05/18/the-evolution-of-hacker-news.
Paul Graham, “Startup News Becomes Hacker News,” Y Combinator, August 14, 2007, https://news.ycombinator.com/hackernews.html.
Stephanie Zeppa et al., “SAFEs and KISSes Poised to Be the Next Generation of Startup Financing,” National Law Review, May 6, 2015, https://www.natlawreview.com/article/safes-and-kisses-poised-to-be-next-generation-startup-financing.
Paul Graham, “A Student’s Guide to Startups,” Paul Graham, October 2006, http://www.paulgraham.com/mit.htm.
““Congratulations Sam...” Hacker News, March 9, 2012, https://news.ycombinator.com/item?id=3686090.
Alexis Ohanian, “Welcome Sam, Garry, Emmett, and Justin, Y Combinator, June 13, 2011, https://www.ycombinator.com/blog/welcome-sam-garry-emmett-and-justin.
Sam Altman, “The New Deal,” Y Combinator, April 22, 2014, https://www.ycombinator.com/blog/the-new-deal.
Sam Altman, “YC Research,” Y Combinator, October 7, 2015, https://www.ycombinator.com/blog/yc-research.
Elizabeth Proehl, “We're Changing Our Name,” OpenResearch, May 26, 2020, https://www.openresearchlab.org/blog/we-are-changing-our-name.
See for example: Sam Altman, “Moore's Law for Everything,” Sam Altman, March 16, 2021,
Andrew Chow, “What to Know About Worldcoin and the Controversy Around It,” Time, August 3, 2023, https://time.com/6300522/worldcoin-sam-altman.
See here: Sam Altman, “Hard Tech is Back,” Sam Altman Blog, https://blog.samaltman.com/hard-tech-is-back.
Christian Anderson, “Decrement Carbon: Stripe's Negative Emissions Commitment,” Stripe, August 15, 2019, https://stripe.com/blog/negative-emissions-commitment.
Peter Judge, “Stripe Leads Group Stumping Up $925m To Kickstart Carbon Capture,” April 26, 2022, DatacenterDynamics, https://www.datacenterdynamics.com/en/news/stripe-leads-group-stumping-up-925m-to-kickstart-carbon-capture.
Geoff Ralston, “YC’s $500,000 Standard Deal,” Y Combinator, January 10, 2022, https://www.ycombinator.com/blog/ycs-500-000-standard-deal.
Alex Konrad, “At Initialized Capital, Odd Couple Alexis Ohanian And Garry Tan Look To Do VC Differently,” Forbes, July 9, 2018, https://www.forbes.com/sites/alexkonrad/2018/07/09/at-initialized-capital-odd-couple-alexis-ohanian-and-garry-tan-look-to-do-vc-differently.
Josh Koehn, “Y Combinator CEO Garry Tan’s War on San Francisco Politics Has Only Just Begun,” The San Francisco Standard, September 27, 2023, https://sfstandard.com/2023/09/27/garry-tan-y-combinator-declares-war-san-francisco-politics-progressives-elon-musk/
Jared Heyman, “On Y Combinator Batch Quality At Scale,” Medium, June 24, 2022, https://jaredheyman.medium.com/on-y-combinator-batch-quality-at-scale-866072b242b5.
Marc Andreessen, “Why Software Is Eating the World.” Andreessen Horowitz, 20 August 2011, https://a16z.com/why-software-is-eating-the-world; David Jeans, “Gusto Secures A $10 Billion Valuation Tailwind As Its HR Software Sails Toward IPO,” Forbes, August 10, 2021,
Mary Ann Azevedo, “Wholesale Marketplace Faire, Which Raised at a $12.6b Valuation Last Year, Lays Off 20% Of Its Staff,” TechCrunch, November 3, 2023, https://techcrunch.com/2023/11/03/faire-layoffs-20-staff.
Karandeep Anand, “Fintech Brex Confirms $12.3b Valuation, Snaps Up Meta Exec To Serve As Its Head Of Product,” TechCrunch, January 11, 2022, https://techcrunch.com/2022/01/11/brex-confirms-12-3b-valuation-hires-meta-exec-to-serve-as-its-chief-product-officer.
Samo Burja, “The Centralized Internet Is Inevitable,” Palladium Magazine, October 19, 2020, https://www.palladiummag.com/2020/10/19/the-centralized-internet-is-inevitable.
Peter Valdes, “Cruise Recalls All Of Its Self Driving Cars To Fix Their Programming,” CNN, November 8, 2023, https://www.cnn.com/2023/11/08/business/cruise-recalls-self-driving-cars/index.html.