Paul Graham of Y Combinator success has released an insightful essay about traits he’s studied with the early stage entrepreneurs he deals with each day that are part of his program up in Boston.
The essay didn’t just strike me about founders, but it struck me about Y Combinators success rate as well:
We’ve now been doing Y Combinator long enough to have some data about success rates. Our first batch, in the summer of 2005, had eight startups in it. Of those eight, it now looks as if at least four succeeded. Three have been acquired: Reddit was a merger of two, Reddit and Infogami, and a third was acquired that we can’t talk about yet. Another from that batch was Loopt, which is doing so well they could probably be acquired in about ten minutes if they wanted to.
That’s pretty darn solid if you ask me. I do not know anyone personally who has been through the Y Combinator, but based on the essay that Paul has written and the statistics, the numbers certainly look positive.
In the essay that Paul has written, he talks about many reasons why people do not become entrepreneurial and talks about why those reasons should be ignored. The topics covered are:
- Too young
- Too inexperienced
- Not determined enough
- Not smart enough
- Know nothing about business
- No Cofounder
- No idea
- No room for more startups
- Family to support
- Independently wealthy
- Not ready for committment
- Need for structure
- Fear of uncertainty
- Don’t realize what you’re avoiding
- Parents want you to become a doctor
- A job is the default
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April 4th, 2007 at 1:43 pm
[...] Founders, founders, and more founders. [...]
April 7th, 2007 at 11:27 am
Darren, thanks for digging up this article. At times, I felt like the man was in my mind.
April 8th, 2007 at 1:40 am
Paul Graham might want to look into this tiny little concept known as statistical significance. Two merged into one so 3 / 7 are successes by his metrics. I don’t think the sample size is big enough to make any sort of inference.
Also, he might want to address the issue of whether his start-ups are relevant to anyone outside of the Bay Area. Is that a big enough addressable market?
April 8th, 2007 at 8:13 am
Jay- you’re correct about statistical significance. I think Paul is doing well though - and with that, he’s got a 3/7 track record which is good and he’s using the philosophy he’s built up with the Y Combinator to work with more projects. Is this significant to qualify other startups and incubators? No - you’re correct about sample size… but it’s a starting point.
As for startups outside of the Bay Area - some are relevant, others not so.
April 9th, 2007 at 3:29 am
Darren - I really appreciate you responding to me.
Don’t get me wrong, I think Paul is a very smart guy. I just fear that the Y-Combinator model is forcing young entrepreneurs to sell their souls for really low valuations and a lot of these companies are deluding themselves into believing they are the next Reddit. Even Reddit has a very small audience.
The Y-Combinator model is not to build business but to build products. They basically create “features” and sometimes those evolve into a full product that can then be sold to another tech company. That’s not sustainable or healthy for entrepreneurs. I think the whole “entrepreneurs are product development for big firms” is a terrible approach. I fear there are only so many Googles, Yahoos, and Microsofts in the world and even they have great in-house developers. At most, if all of them were to buy 10 start-ups per year, that’d be 30 start-ups. VCs and Y-Combinator are funding these businesses by the dozen. That’s a bubble and that’s bad for all of us.
April 11th, 2007 at 2:54 pm
hi nice site.