Investment firm Y Combinator is the most sought-after home
for startups in Silicon Valley. Twice a year, it funds dozens of just-founded
startups and provides three months of guidance from Paul Graham, YC’s
impresario, and his partners, also entrepreneurs and mostly YC alumni. The list
of YC-funded success stories includes Dropbox (now valued at $5 billion) and
Airbnb ($1.3 billion).
Receiving an offer from YC creates the opportunity of a
lifetime. It’s like American Idol for budding entrepreneurs.
Acclaimed journalist Randall Stross was granted unprecedented
access to Y Combinator’s summer 2011 batch of young companies, offering a
unique inside tour of the world of software startups. Most of the founders were
male programmers in their mid-twenties or younger. Over the course of the
summer, they scrambled to heed Graham’s seemingly simple advice: make something
We watch the founders work round-the-clock, developing and
retooling products as diverse as a website that can teach anyone programming,
to a Wikipedia-like site for rap lyrics, to software written by a pair of
attorneys who seek to “make attorneys obsolete.”
Founders are guided by Graham’s notoriously direct form of
tough-love feedback. “Here, we don’t fire you,” he says. “The market fires you.
If you’re sucking, I’m not going to run along behind you, saying, ‘You’re
sucking, you’re sucking, c’mon, stop sucking.’” Some teams would even abandon
their initial idea midsummer and scramble to begin anew.
The program culminated in “Demo Day,” when founders pitched
their startup to several hundred top angel investors and venture capitalists. A
lucky few attracted capital that gave their startup a valuation of multiple
millions of dollars. Others went back to the drawing board.
This is the definitive story of a seismic shift that’s
occurred in the business world, in which coding skill trumps employment experience,
pairs of undergraduates confidently take on Goliaths, tiny startups working out
of an apartment scale fast, and investors fall in love.
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