How YC Was Created With Jessica Livingston
10 Sep 2024 (9 days ago)
Intro
- The first batch of YC was a special time because of the people involved and the outcomes they achieved.
- Y Combinator has grown and evolved, but its core principles have remained the same.
- The hosts of the show, Gary, Jared Harge, and Diana, have collectively funded hundreds of billions of dollars worth of startups.
The social radar
- Jessica Livingston is a co-founder of Y Combinator and the host of a podcast called "The Social Radar".
- Paul Graham, Jessica Livingston's husband and co-founder of Y Combinator, coined the nickname "The Social Radar" for her because she was interested in the personal sides of founders.
- While Paul Graham was more interested in the technical aspects of founders, Jessica Livingston was interested in their personalities.
YC was unique from the beginning
- Y Combinator (YC) was created because there were no other funding options for very early-stage companies.
- YC was initially conceived as an asynchronous investor with an office in Harvard Square.
- The name "Cambridge Seed" was briefly considered but was quickly replaced with "Y Combinator" to avoid limiting the applicant pool geographically.
Why events are so important to YC
- Y Combinator (YC) considers events to be a fundamental aspect of their organization, viewing themselves as an events company that successfully monetized their approach.
- YC emphasizes events as a means to foster a sense of community among its portfolio companies, recognizing the value of bringing people together to connect, exchange ideas, and build relationships.
- YC distinguishes itself from traditional venture capitalists by actively engaging with founders at all stages, particularly during challenging periods, offering support and guidance to help them navigate difficulties.
The DNA of YC
- The DNA of Y Combinator (YC) originated from the idea of applying mass production techniques to startups, making it easier for young technical individuals to establish their own companies.
- YC aimed to simplify the startup process by standardizing legal paperwork, including incorporation and investment documents, making it more accessible and efficient for founders.
- The batch system employed by YC was designed to facilitate a learning experience for the founders, enabling them to gain insights into angel investing while providing support and guidance to a group of startups simultaneously.
The first batch
- The first batch of Y Combinator applicants were primarily followers of Paul Graham who had discovered the program through platforms like Slashdot.
- The first batch included notable founders such as Sam Altman, Steve Huffman, Alexis Ohanian (Reddit), Justin Kan, Emmett Shear (Twitch), and Aaron Swartz.
- The first Y Combinator dinner was a low-stakes event with a focus on creating a welcoming and enjoyable atmosphere for the founders.
YC dinners were strong motivators to work hard
- Founders would bring their laptops to dinners and show each other their progress, creating a motivating but stressful environment.
- Unlike other startup events with attendees focused on business plans, Y Combinator dinners were attended by intense and serious individuals determined to build their startups.
- The first Y Combinator dinner in 2007 included notable alumni like Sam Altman, Steve Huffman, and Justin Kan, who were eager to provide advice and support to the new batch of founders.
Why YC alumni help new founders
- Y Combinator realized early on that they needed to leverage their alumni network to help new founders, as their alumni were their best contacts.
- The size of Y Combinator's batches has increased significantly over time, with early batches having around 9-15 companies compared to much larger cohorts in recent times.
- Despite the growth and changes over the years, the core structure of Y Combinator's program has remained largely unchanged since its inception in 2005.
YC going from underdog to serious + desired
- Y Combinator's reputation changed around 2011 as the companies they funded, such as Dropbox, Reddit, and Airbnb, became successful.
- The increased attention led to more press coverage and word-of-mouth marketing, further enhancing Y Combinator's legitimacy.
- The growing popularity also brought challenges, including unwanted scrutiny, negative attention, and a surge in requests for meetings and collaborations, which distracted from the core focus on supporting founders.
Harj’s legendary meeting with Yuri Milner
- Yuri Milner, a Russian billionaire investor, proposed funding all the startups in a Y Combinator batch.
- Milner's offer was initially met with skepticism, but he was persistent and ultimately invested $150,000 in each startup in the batch.
- This investment had a significant impact on the startups, providing them with confidence, runway, and the ability to continue building their businesses.
The first YC startup school
- The first Startup School was inexpensive, held at Harvard University, and open to anyone who applied.
- The event was free to attend, had no sponsors, and was run by a small team.
- The event had a casual atmosphere, focused on providing valuable information from speakers to an audience of serious attendees.
Diana’s experience going through YC
- Diana learned about Y Combinator through Paul Graham's essays while studying engineering in the US after growing up in Chile.
- Diana found the events at Y Combinator to be genuine and focused on content, unlike other events she had attended that felt pretentious.
- Diana felt a sense of belonging at Y Combinator, a feeling she hadn't experienced before, and appreciated the community of like-minded individuals.
Lessons from interviewing so many founders
- Successful founders are typically intelligent, curious, independent, determined, and willing to work hard.
- As founders become more successful, they tend to gain confidence.
- Many successful founders were not remarkably different as young adults compared to their peers, but they possessed unique qualities and a drive to create something new.