People have weird ideas about what YC is and does. People apply to YC: you can go look at the application. They get gajillions of them. They downselect applications to interviews. The interviews are brief. They downselect interviews to offers to join a cohort. Every company in the cohort gets a group partner that they do regular "office hours" meetups with. There are internal events and talks and stuff. There's a standard investment, and demo day. That's it.
YC doesn't operate YC companies. They're investors. They aren't your boss. They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence. These are things that happen, to an extent, in priced rounds that happpen after your seed round (A-round technical due diligence is also a joke, but whatever, stipulate). The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year.
Tan is apparently apologizing because he spoke up on behalf of a batch company, or repeated some misinformation TechCrunch published. But it is very weird to ask them how their selection process would change to account for this happening.
YC also offers mentoring and coaching services, which goes beyond what a traditional investment firm does. That's part of their appeal, anyway.
> They're not looking at your code. They're almost certainly not doing any meaningful technical due diligence.
Maybe they should?
If their job is to find talented, and hopefully also ethical and honest, people, then doing a basic check like ensuring that the project they're being pitched was actually authored by the candidates should be part of the vetting process.
If, OTOH, their job is to bet on anyone who's likely to give them the highest ROI, regardless of their personal values, then they don't need to do any of this, and cases like PearAI should be acceptable. But that's not what YC claims to be about.
> The whole point of YC is that they're investing in big batches of startups, at a scale that is a big multiple of what an A-round VC does in a whole year.
Maybe that's part of the problem then. When you're trying to fund and mentor hundreds of companies in a few months, it's impractical to think you'll be able to successfully screen all of them. But the startups must grow...
Having seen/participated in it firsthand several times, I don't believe priced, institutional A-round technical due diligence would have turned any of this up. It is not realistic to think YC would have.
YC can never say enough that they invest in people, that only the people matter, etc. "Founders, Founders, Founders" is YC's answer to Balmer's "Developers, Developers, Developers".
That they decided to fund bros that simply copy-and-paste others' code (!) and are happy to declare publicly that they "chatgpt'd the licence" (!!) and "can't be bothered with legal" (!!!) is... alarming?
One thing that's happening here is that YC believes "sloppy copy-paste is Good, Actually" more than you do. Maybe more than is polite to say in public. I don't mean to defend PearAI, which seems to be doing dumb and unacceptable things. But in YC's circles, if you say "I can't be bothered with legal" about something, they would be more likely to say "yeah makes sense" than "!!!".
If YC rejected everyone who was offended by sloppy shortcuts, they would not be YC, and they would have rejected many of their unicorns.
Shortcuts are core to the professional practice of founding startups in the culture of YC. Even the sloppy kind that offend people, like Airbnb's launch-era marketing that violated Craigslist's TOS, or Reddit's founders posting under fake accounts. The message of YC during the program is that you have exactly one job: make your key metric (revenue, users, whatever) grow 5%-10% week-over-week. When founders internalize this, they often do work that contains shortcuts, including shortcuts which might offend people. It is a challenge for some people with a professional or personal aversion to sloppy shortcuts.
(This isn't to say that sloppy is the standard at YC. "Sweat the details until 100 users really love your product" is canonical YC wisdom. Time forces you to be sloppy on everything else. And if you tell a YC partner that you're just buying bot traffic to hit your numbers, they will tell you that is a dumb plan.)
Yes, you're right and I agree with you, but there's a difference between doing borderline things (and dealing with the consequences), and not giving a sh*t one way or the other. There's also a difference between "fake it until you make it" and trying to sell someone else's work as your own, that you didn't make and arguably don't even understand.
But in the end it's possible the only actual difference between a crook and a master of the universe is one got caught and the other didn't.
Yes, but it doesn't matter, because the point is not "what could have been discovered by a proper due diligence", it is: "is YC a good judge of character".
I'm skeptical. I don't think this "vetting" argument is a real thing. And, again: you're talking about a priced A round, where the legal costs alone are into the six figures. For YC? Come on.
Good technical due diligence from reputed organization costs something like $50-100k. Good legal/accounting due diligence costs the same amount. Which is >20% of what YC invests. Even if 20% are committing clear fraud, it is worth it to pay them. Actual numbers are likely lower.
Don, do you honestly think that's a lapse in the process, or are you just joining in to dunk on this random company? You think the YC interview involved licensing questions, and, if it did, that they "dawged" their way through it?
elicksaur: Why would you believe anything this person says after that? Default assumption #1 is any writing they output is an LLM product and insincere. Assumption #2 their actions are taken with little thought or intentionality.
JohnFen: ... This one line tells me that's an outfit that should be avoided entirely. It's either unfathomable incompetence, or a strong aversion to doing things properly. Either way, it says nothing good.
JumpCrisscross: ... The move that dials the dumbassery to eleven is using it as a defence. On Twitter. Like, Exhibit A for any lawsuit that company is ever in will be this tweet: it demonstrates a proud disrespect for law and contracts. That’s high-proof mens rea if I’ve ever seen any.
Alex Cohen
@anothercohen
It’s not just the actual legal issues but generally the dismissiveness and sloppiness towards real concerns but I guess good on you all for making the appropriate changes
More seriously than my joke about how they should have screened out companies whose names were anagrams of "Rape".
I personally think they shouldn't fund bullshitters, or sociopaths either, but if their spreadsheets tell them that startups run by bullshitters and sociopaths make them more money, then who am I to tell them how to invest?
If sociopathic behavior is worthy of investment, then maybe aspiring YC applicants could pre-emptively impress YC investors and signal their political alignment by sending death threats to the appropriate people, then demonstrating what flowery insincere non-apology apologies they can write, an extremely valuable skill in the industry!
(Extra credit for tweeting said non-apology apology as a garishly animated video with kinetic typography in Comic Sans!)
The "that's it" is the problem here. The lack of due diligence on YC's part caused a PR disaster and ideally that's something they would want to avoid.
YC's way of operating is globally optimal. The cost (in money and time) of adequately vetting every company they've ever invested in would dwarf the cost of this little brouhaha.
Even in later rounds due diligence skews non-technical. E.g. for Series A it mostly takes the form of "What licenses do your OSS dependencies use?", and (for B2B SaaS) "We want to talk to a half-dozen of your customers, preferably of different sizes and from different industries, and ideally one that's renewed".
YC cannot do a ton of due diligence. Their strategy is to back many companies with small amounts of money, basically in the hope that a few companies in the batch end up as unicorns. This means they want to select founders capable of getting those outcomes, which will also select many liars/psychopaths due to the need for variance/risk taking behaviors in these founders.
Now is there a problem where YC and many other VCs basically advise founders to commit fraud and lie to customers/stakeholders? Yes but that has nothing to do with YC admissions strategy. I’ve seen many VCs (including YC) advocate for lying and unethical behavior by their founders. It’s a big problem in the startup industry, and often the biggest brunt of this is taken by unsuspecting employees. One reason I would never advise someone to join a startup is the massive prevalence of unethical and dishonest founders.
