Going by my memory, when YC started they invested 5K per founder. It was, either by accident or design, focused on 20-somethings eating ramen and dreaming big. You could not do much else on 5K.
There may have been many (myself included) who thought "give up a cushty job, and even if I get in, don't get back much more than the cost of flights to Boston"
Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating?
I would be fascinated to see a demographic breakdown of YC / SV founders ...
Edit: the thing is it breaks my clever idea of A Million Startups. So i had a clever idea a while back, (I think when Softbank wrote off 10BN?). 10BN is about the right amount to fund a million startups. 100K in India, 100K in SE Asia etc etc. You could assume a 50% fail rate at each "stage" and put in 5K to each of a million startups, and then 2.5BN, then 1.5BN etc etc. I am not sure what kicking off a million bright young things would do to the world, but I think it is a worthwhile way to waste 10BN
> Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating?
It’s much, much easier to get a high paying tech job now than it was back then. Assuming you’re ambitious and willing to relocate, you can now go to Silicon Valley, make all of the right moves, and amass millions of dollars in a decade of working for the right companies.
Making that kind of money with that kind of point-and-shoot career process (not easy, but doable for kinds of ambitious engineers considering startup life) wasn’t nearly as easy a couple decades ago. If you wanted to really accomplish something and make it big, it felt like a startup was the right kind of gamble.
Products were also easier to ship back then. 37Signals (now Basecamp) built a highly profitable empire on top of software that was basically a bunch of web forms. A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized without polished UX, flawless features, and a significant customer acquisition budget. It’s easy to forget just how much technology and the industry have changed in recent years.
> Assuming you’re ambitious and willing to relocate, you can now go to Silicon Valley, make all of the right moves, and amass millions of dollars in a decade of working for the right companies
It's quite easy to do it in 4 years or less now.
At current pay rates and stock growth rates, you have to be VERY optimistic to turn down a FAANG job.
Yep and you also can learn to deliver products at scale.
For me the main reason I took a FAANG job was to get enough money that I can chill for a couple years and build a failed startup ;). (And hopefully meet many smart people work with on it.)
That's very much true, even though I had an exit, if I could turn back the wheels of time, I would have spent a few years in a FAANG job. Way less stressful and you (can) have exposure to startup culture anyway there.
I'm an L6 at Amazon and I'm not sure if millions are possible in 4 years, but the replies are right in that you get close to a million. RSUs, investing back into the socket market etc etc gets you there.
Yeah, looking back to the mid-aughts you could probably "launch" a "product" in a few weeks. You could stretch that 5K into a few months of runway as your expenses are rent, food, internet, and maybe $150/month tops in SaaS stuff.
Like you said, it was also easier to find people who wanted to work on that stuff. Tech jobs were less kushy and highly paid. Working at that kind of startup was a dream compared to slogging through crufty code at some company where software was viewed as a cost - rather than profit - center. But I think back then market rate for a mid-level dev was something like 70K.
> A couple founders eating ramen could very easily launch a new web product back then. Now it’s tough to get recognized
The competition was signficantly lower back then as well. Not only is all of the low hanging fruit gone, but those start ups who made it are now the current behemoth incumbents and are trying to clean up the whole orchard (so to speak).
The overall value of a software engineer is higher now than in the past. I think companies recognize this and are paying for it. An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage, and is worth paying an extra few hundred grand.
> An engineer that builds a system that controls 1000 machines in some distributed system, that serves content to 100 million people has massive leverage
The idea of individual engineers shipping services on their own is long gone, though. Big companies have an almost unthinkably large army of engineers working on everything these days. It’s never just one person doing the magic that makes a service go. OTOH, decades ago it wasn’t too uncommon to find just a couple key engineers at the helm of key services.
I think the real driver is the amount of money pouring into the tech space. Companies have to pay more to compete with each other for talent because there are so many tech companies trying to do tech things now. It’s as simple as that.
Right, but the market caps have gone up so much. If you run some basic metric like market cap/number of engineers, places like facebook have an insane incentive to pay huge money for talent. The relative scope may have gone down (many people on one project/api), but the wide ranging impact on PnL/Profitability/Money generated by those individual engineers changes have gone up
Yup, nowadays I see most MVPs and at first glance I am amazed at the quality. Back in the day, a well put together MVP was probably enough to make your product go viral
That depends heavily on the product, but yeah it's true. Also what I see is teams are getting better at focusing on their core value and stripping away unnecessary things at the beginning.
> Going by my memory, when YC started they invested 5K per founder.
It was originally 5k plus 5k per founder. The first time it changed was summer 2011, with the guaranteed additional 150k funding from Yuri Milner and Ron Conway.
I think its a common misconception that YC primarily invests in 20-somethings eating ramen and dreaming big. Lots of YC founders have kids and stuff. This was true when I went through in YC in 2011 (interestingly first batch that got $250k from Yuri Milner) and doubly true when I just went through in 2021.
I'm skeptical the goal of this is to encourage high salaried people to start companies though, it's probably just to give people extended runway.
The industry has changed. In 2005 the hot growth industry was the web, particular the social and sharing economy parts of it. These favor changes in consumer behavior, which young 20-somethings are particularly tapped into because their peers are often the ones driving the change. You could found a $100B company as a pair of early 20-somethings learning brand new tech and riding the beginning of some social wave.
Now - outside of crypto - most of the exciting untapped markets in tech are in:
a.) hardware, where you have bill-of-materials and contract manufacturing cost and everything takes longer to get off the ground
b.) hard sciences like fusion or satellites or aerospace, where you need a Ph.D and often some research experience to make progress (plus you have super high manufacturing costs)
c.) SaaS, where it helps to have deep knowledge of an industry so you've got those connections, understand all the internal processes of your customers, and can penetrate those sales processes.
All of these select for older founders and more capital requirements. I think the spray-and-pray approach for funding low-capital web startups isn't really viable in 2022, because consumers aren't just visiting any website or downloading any app that becomes hot.
In my mind, it’s a signal that we’ve solved all the problems capable of being solved by a hungry person with little experience in the problem space. The problem space that’s left is in places that require a significant amount of expertise to be able to even spot an opportunity, and the cost of developing products to address those spaces is much higher since there are ample opportunities to become a millionaire through just working for a big tech company.
The tech product world is just more mature, and more mature leaders and developers are required as a result.
Salary prospects, for the people they want to fund. Competition from other investors. The follow on ecosystem of investors.
Also the startup opportunities of 2022 Vs 2007.... both "real" differences and differences in belief about said opportunities.
Airbnb, Reddit and such were websites that a clever, motivated 19 year old could build and launch in short time. There are fewer of these opportunities now, and mor opportunities at heavier scale.
in addition to what you said, there is also more global competition for startups. YC has to compete with other cities top incubators on a CoL adjusted opportunity cost. and the bay area is one of (or the) most expensive spot.
I'm also really curious about their bets and the data. I thought the market was starting to cater to older, more experienced founders?
That's been adjusted up so that YC invests $125,000 for 7%. It still feels really low these days.
I've heard of VC firms investing 3-5 million for 10-20% in seed/series A with no seed [1, 2], which seems like a much better deal. Lots of room for growth before giving up more equity.
Which VC firms are investing like this, and how do you connect with them if you're outside the bay area but already have a product with significant growth?
Or, contrary to this, does YC offer value beyond monetary that makes the investment worth more than the alternatives?
The short article clearly states that YC is now wealthy enough to pay founders more of what they need to survive, and to edge out other investors offering this critical funding.
From what I see around me, people with little to no 'real-life' experience rarely make it in startup world.
On the contrary, people with proven track record in an industry have a jolly great time fundraising and building companies.
That's just my experience, also I am a good few years older when I was doing the 'ramen and think big' thing.
There may have been many (myself included) who thought "give up a cushty job, and even if I get in, don't get back much more than the cost of flights to Boston"
Does this signal that its harder to find those young hungry geniuses? Or that other stages of life are now predominating?
I would be fascinated to see a demographic breakdown of YC / SV founders ...
Edit: the thing is it breaks my clever idea of A Million Startups. So i had a clever idea a while back, (I think when Softbank wrote off 10BN?). 10BN is about the right amount to fund a million startups. 100K in India, 100K in SE Asia etc etc. You could assume a 50% fail rate at each "stage" and put in 5K to each of a million startups, and then 2.5BN, then 1.5BN etc etc. I am not sure what kicking off a million bright young things would do to the world, but I think it is a worthwhile way to waste 10BN