Given that YC is essentially the "Harvard" of startup accelerators, I think that by analyzing how Harvard got to where it is today, we can gain a lot of insight into YC's success as well.<p>Not unlike YC, Harvard was also the first of its kind (oldest college in the US), which gives them a first mover advantage right off the bat. And then somewhere along the way, just like YC with Airbnb and Dropbox, Harvard too probably got "lucky" early on with several alums who became super rich and successful, who then started giving back to the Harvard community via generous donations of their money and time, which coupled with their first-mover advantage resulted in a virtuous cycle of success that no other university has been able to replicate since.<p>Smash cut to the present, and Harvard has a $32 BILLION war chest (endowment) and a network of alumni who go out of their way to ensure that the next generation of Harvard students can succeed as well.<p>Lastly, I think YC's small size has been essential to its success. I myself went to a very small liberal arts college (total student body of only ~2,000), and the small size allows for a level of intimacy and personal care that larger universities could never dream of. It also causes us to feel like underdogs and war buddies, and thus that much more willing to help other alums in order to keep growing and sustaining our small but precious community.<p>Oh and btw, it just so happens that pg got his Masters and PhD from Harvard. Coincidence? You tell me :P
<i>YC has invested $8 million [...] the value of YC’s portfolio is approaching $10 billion, largely due to Dropbox and AirBnB</i><p>If I understand this correctly, the $10B is the <i>total valuation of all companies YC has invested in</i>, not actually the valuation of <i>YC's portfolio</i> (which starts at 2-10% and decreases as other investors buy in).<p>Which isn't to say that YC hasn't been achieving great returns -- but it's not fair to paint it as turning $8M into $10B.
I will suggest that HN is part of the secret sauce. It gives a place for people to get started on learning, making contacts, etc from nothing, long before they ever decide to found a company. It gives fertile soil for seeds to be planted and grow into something ready for an incubator. And gives a lot of opportunity to do some weeding and pruning well before applying to the program.
The problem with analysis done by pony tail management guys is they take successful story of which largely- a successful team with a amazing leader is involved, identify some patterns and try to a make a process out of it, while totally neglecting the human aspects of it.<p>How long are we going to pretend that its the people who are the center of success and not the process.<p>If someone is saying if you do Step X, Step Y and Step Z you will become like <insert a successful leader> they just lost the whole point. A leader is not successful because of steps X, Y and Z. Some other leader would execute step A, B and C exactly opposite to X, Y and Z and be equally successful.
Oh I know! It's fundamental attribution error! (<a href="http://en.wikipedia.org/wiki/Fundamental_attribution_error" rel="nofollow">http://en.wikipedia.org/wiki/Fundamental_attribution_error</a>)<p>Oh wait - that's not right, that's actually the gross error that all "What's the X behind Y?" questions make - when in reality, it's probably about 100+ different things all coming together at the same time.<p>For YC it's the falling cost of bandwidth, the falling cost of storage, the falling cost of computation, an increase in the number of internet users by nearly 1 billion over the last decade, a doubling in the global economy over the last 2 decades - quite frankly the list leading up to the creation of a Y Combinator is almost endless - and I haven't even dealt with the actual people who help make YC the success that it has become today.<p>Single factor explanations of complex phenomena are stupid.
If the network is the biggest 'secret' to YCs success, then is there any reason why YC has been more successful than 500 startups or techstars?<p>These incubators should have an equally impressive group of founders.<p>I think their is something special about YC, though I don't know exactly what that is.<p>At the same time, you have to suspect that some of the cache comes from AirBnB and DropBox hitting bases loaded home runs.<p>What are the most successful start-ups from 500Startups and TechStars? Did YC just get lucky with these two, and luck begets luck because now the best and brightest will apply to YC because it has had the early success?<p>----update------<p>I also hadn't realized how many companies have been through more than one incubator program. For example, sendgrid was both 500Startups and TechStars, Webmynd,Chirply and GazeHawk were all part of 500Startups and YC.<p>I'm sure there are many more.
I see several major factors behind Y Combinator's success:<p>- to organize applications in classes that are solidly oversubscribed<p>This allows YC to select the cream of a batch of applicants rather than to have to judge each proposal at some point in time on its merits on an individual basis. Having a background against which to judge is a huge benefit.<p>- Hacker News<p>Having a place that is a breeding ground that already works <i>before</i> joining/applying gives another way to look at applicants and creates a way for applicants to join up.<p>After YC had run for a while a third ingredient came to represent an ever growing factor in the success, the YC alumni, as the article rightly points out. Like any network there are second order effects at work here, effectively YC has a very large multiple of the number of eyes, ears and brains compared to other entities.
The secret is that YC is not run like an incubator, but like a startup .. because it is a startup .. that generates other startups.<p>They iterate on their own successes and mistakes .. don't follow the latest trend, but genuinely think for themselves.
It came up in a time when raising money without connections was hard-to-impossible and there was a lot of young talent eager to take a swing at the startup game.<p>Y Combinator had the reputation and credibility instantly (as opposed to other, mostly undistinguished, incubators) so it could take equity at extremely advantageous valuations-- justifiably, because just being able to say you're YC improves the value of your company by <i>at least</i> 1.1x (probably 1.5-2x).<p>The problem right now is that it seems to be a "feeder school" for traditional investment, and it won't be able to replace VC outright. YC is an impressive and commendable project, but its value is prestige and it's hard to scale without losing it.