YC Annual Letter 2017

&gt; In future years, we also hope to explore how something like ‘financial aid’ might work for people that need a small amount of capital to help get their startup going.<p>Sounds interesting. I always kinda hated how people fresh out of high school with zero credit can have so much money handed to them for going to school. While if they wanted to get a business loan or buy a house they would be much more scrutinized.<p>I wonder with that money instead and right mentorship if they could come out ahead of their peers who used that money for college instead.<p>I know some people who just go to college because they feel like they have to, and get degrees they don&#x27;t even use. Imagine one spending 4 years going into debt, the other coming out a head with a real world profitable startup. One thing I always hate about school work is I feel like I&#x27;m just doing stuff for the sake of being graded or being busy. I rather spend my time creating stuff that&#x27;s more real instead, learn as I go. There&#x27;s a bunch of free and even paid training on-demand on the internet to fill in your skill gap.

<i>Companies like Amazon, Facebook, Google, Apple, and Microsoft have powerful advantages that are still not fully understood by most founders and investors....This trend is unlikely to reverse without antitrust action, and I suggest people carefully consider its implications for startups.</i><p>I think the &quot;startup community&quot; needs to have a serious conversation about this [2]. If we agree that machine learning is going to be a major underlying technology moving forward and that as a result, data is the new Oil [1], then the top 5 technology companies serve as the new Oil Barons.<p>It goes further than that actually in my mind, as these firms are disrupting themselves and innovating as fast if not faster in many areas than small startups can. They are in every industry and if they can&#x27;t move as fast, then they buy the talent or the whole team. Granted, a small team will always move faster, but I think that these mega corps know enough now to know that they can pivot on trends if needed.<p>I do worry about the likelihood of a startup that could beat google, facebook, microsoft etc... with humble roots. Maybe if a &quot;startup&quot; came in with 100M+ in funding, but more than likely at this point those companies would be funding that startup, if only for the intelligence value.<p>So while &quot;we&#x27;ve seen this before - someone always comes out of nowhere&quot; which gave rise to the current crop of major companies, it would have to be pretty left field at this point for a company to compete with the major players without investment from an arm of theirs. Considering Snapchat is the biggest IPO in the coming year, I don&#x27;t have a lot of hope that there will be something coming through.<p>[1]<a href="http:&#x2F;&#x2F;fortune.com&#x2F;2016&#x2F;07&#x2F;11&#x2F;data-oil-brainstorm-tech&#x2F;" rel="nofollow">http:&#x2F;&#x2F;fortune.com&#x2F;2016&#x2F;07&#x2F;11&#x2F;data-oil-brainstorm-tech&#x2F;</a><p>[2] <a href="https:&#x2F;&#x2F;medium.com&#x2F;@andrewkemendo&#x2F;the-ai-revolution-will-be-different-from-the-microprocessor-revolution-cb417d324203" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;@andrewkemendo&#x2F;the-ai-revolution-will-be-...</a>

&quot;Hacker News has 3.4 million users per month and 350,000 users per day, with 4 million pageviews a day. There are just under 1 million registered accounts, with several hundred added each day. Users post around 1,000 articles and 6,000 comments to the site per day.&quot;<p>First time I have seen those numbers, very impressive. I thought there were a lot less users.

Hi sama, great letter. The only thing I would suggest for the next round is to identify some misses. What are some RFPs that you tried to solve and didn&#x27;t and what are your insights on this? The two annual letters I like the most are Bill Gates and Warren Buffet. From Bill Gates, I don&#x27;t mind the endless optimism since it is a foundation. From Warren Buffet, I expect the ole hoe hum, we&#x27;d be trillionaires if we had seen this trend or we were totally wrong about this ...

&quot;Our mission is to enable the most innovation of any company in the world in order to make the future great for everyone.&quot; I know many people will read that and roll their eyes back and believe it is just a marketing gimmick for the gullible and like most investors YC just cares about the money. The thing is that they <i>do</i> deeply care about founders and making things better in the world, as naive as that may sound to outsiders.

<i>We are only about 30 years into the age of software, about 20 years into the age of the internet, and about 2 years into the age of artificial intelligence</i><p>Which innovations over the last 2 years most indicate a new age of artificial intelligence?<p>I undertook some research, and noticed:<p><pre><code> 3 Months Ago: Google Translate AI had a breakthrough 5 Months Ago: Amazon&#x2F;Facebook&#x2F;Google&#x2F;IBM&#x2F;Microsoft launch an AI Partnership 1 Year Ago: AlphaGo has a big win and OpenAI is founded 2 Years Ago: Google (now Waymo) performs its first public driverless ride 3 Years Ago: Google acquires DeepMind and interest in Deep Learning takes off 6 Years Ago: IBM Watson wins Jeopardy </code></pre> All indications suggest increased interest and investment in AI, but from an external perspective I&#x27;m interested to know whether quantitative changes (big data, cloud infrastructure, GPU processing speed etc.) and increased interest have genuinely spurred a qualitative new era of AI free of the pattern of &quot;AI Winters&quot; (<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;AI_winter" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;AI_winter</a>).

Re YC Research, please consider a project looking at the challenges surrounding climate change communications. To state the obvious, the science on climate change is settled, but many people are still skeptical&#x2F;resistant or in outright denial. Heated arguments and throwing around citations to journal articles really doesn&#x27;t change anyone&#x27;s mind. There is a deeper, nuanced communications challenge at play, and it&#x27;s the exact type of thing that YC would be great at addressing. There are some very interesting ways that technology (and the creativity of the YC community) could be used to tackle this issue.<p>Climate change may be the defining issue of the next century, and it would be a shame to be stymied by the communications challenges. I hope you&#x27;ll consider it.

<p><pre><code> &gt;&gt; funded over ... 1,470 companies &gt;&gt; more than 50 of our companies are worth more than $100 million each. </code></pre> 3.4% is a remarkable ratio.

&gt;I expect that people will talk about software as one of our secret weapons.<p>can you give a broad overview of what software YC creates? What does it do? is it internal tracking and stats, or exclusive libraries that YC-funded companies get to use to build their products?

Nice writeup sama, but the history is a bit revisionist:<p><i>&gt; We are only about 30 years into the age of software, about 20 years into the age of the internet, and about 2 years into the age of artificial intelligence.</i><p>Software has been around--and actively making bank!--for over 40 years. The internet has been around longer in the form of academic institutions, email, and BBS than you mention.<p>And AI has, of course, been around at least as long as software.<p>I appreciate you have a message to send, but maybe don&#x27;t ignore the path we took to get here.

On the HN front - I would like to see a discussion and then the implementation of measures to encourage meaningful discussion, discourage low-effort comments, but also to discourage &quot;negative lurking&quot;. Like other users noticed, there are a lot of lurkers -- some of which downvote and move along. Because frequently I do not understand why a post has been downvoted (my own or otherwise), I am discouraged from contributing. A byproduct of both negative lurking and the fact that HN has concluded itself to be an intelligent community is that some readers, including myself, feel judged by the score next to our comments. There is someone out there reasonably asking &quot;why do you care?&quot; but it is also important to acknowledge that this phenomenon exists. Part of the longevity of a user&#x27;s participation is the willingness of the community to accept it.

I&#x27;d love to know the 50 companies with &gt;$100mm valuations. Anyone know of a list or can start one? I saw this was 32 companies last year and really curious which were added.

Aside from a throwaway line about a possible &quot;macroeconomic meltdown&quot;, there seems to be little attention paid to big signs of an overall negative trend in tech jobs:<p>* &quot;Bay Area: Tech job growth has rapidly decelerated&quot; (from here: <a href="http:&#x2F;&#x2F;www.siliconvalley.com&#x2F;2017&#x2F;02&#x2F;10&#x2F;tech-job-growth-slows-in-bay-area&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.siliconvalley.com&#x2F;2017&#x2F;02&#x2F;10&#x2F;tech-job-growth-slow...</a>)<p>* &quot;Tech Jobs Took a Big Hit Last Year&quot; (from here: <a href="http:&#x2F;&#x2F;fortune.com&#x2F;2017&#x2F;02&#x2F;16&#x2F;tech-jobs-layoffs-microsoft-intel&#x2F;" rel="nofollow">http:&#x2F;&#x2F;fortune.com&#x2F;2017&#x2F;02&#x2F;16&#x2F;tech-jobs-layoffs-microsoft-in...</a>)<p>The first of those two articles has been submitted twice to HN with zero comments both times. The second has not been submitted at all as far as I can see.<p>Is it possible there is a bit of a collective head-in-the-sand phenomenon going on?

@sama : Great write up. Regarding the admission process you had mentioned on Dalton Caldwell that he took &quot;a process that used to be stressful and deeply imperfect and improved it by a huge amount.&quot;<p>Can you please elaborate on that?

Hi sama,<p>I know you wrote that YC Research will likely not expand in the near future. If you do I think the most interesting topic would be the destruction of the journal industry and freeing information. At least in my opinion it would make a lot of sense for YC to try and free as much research as possible which entrepreneurs could build upon. I can only wonder how many more interesting startups we&#x27;d get if a random hacker in India or Ethiopia had access to the latest journals on medicine, biology etc. That would take a lot of commitment and being in active position to some powerful interests. This should be attacked from a legal, political and technological angle.

&gt; 4) Does this company have a clear and important mission?<p>&gt; Without this, I usually get bored. More importantly, companies that don’t have this usually have a hard time recruiting enough great people to work with them, and thus struggle to become very large.<p>I find this one interesting. When Google started, there were many incumbent search engines. Their mission was to provide better results than what existed, i.e. improve on an existing product.<p>Uber&#x27;s &quot;mission&quot; was to get privileged people with smart phones and disposable income a sexy&#x2F;cool ride home from the bar.<p>Facebook was a social networking site targeted at college students...what was it&#x27;s mission? To allow people to see what that cute person in their Psych class was up to this weekend?<p>Snapchat...the clear and important mission to allow for safely sending risqué pictures?<p>While I believe Sam&#x27;s belief that they WANT to work with companies with clear important missions, that doesn&#x27;t seem to be a&#x2F;the deciding factor in becoming &quot;very large&quot;, or attracting great people. If anything, it seems like the &quot;spaghetti at the wall&quot; approach is what happens - some startups gain momentum, and then it&#x27;s the high growth trajectory that attracts a ton of talent.

Hey Sam,<p>Here&#x27;s a question for you (or other YC folks) on YC recommendations.<p>Give that I&#x27;m planning to apply for the next cycle, would it benefit me to ask for recommendations from 7 or 8 folks who I&#x27;ve worked with in the past and have strong relationships with?<p>It&#x27;s not totally clear to me whether it would be kosher to ask for those or if it&#x27;s something you&#x27;d rather that people do spontaneously. I&#x27;m also wondering if 7 or 8 is too many given how little time I know you have to spend on each applicant. Thanks!

I think it&#x27;s a mistake to conceive of Reddit as a place to &quot;waste time.&quot;<p>It&#x27;s also the new platform for lots of important online communities to discuss and disseminate information.

Is there a reason why this is published on Sam&#x27;s blog and not on YC&#x27;s blog?<p>Oh and a remark on the letter&#x27;s typography: the double spaces after periods should be single spaces.

I appreciate the letter. The following caught my eye, because I was sure we had all learned that the ends do not justify the means. Surely the Zenefits debacle was a lesson in ethics and not one about avoiding getting caught doing the wrong thing.<p>&gt; we have to work harder to find people doing a startup for the right reason: to bring an idea they’re obsessed with to life, and willing to do something unreasonable to see it happen

Minor nitpick: <i>n^2</i> isn&#x27;t the correct factor to describe hyperscale networks. It&#x27;s much slower, probably <i>n x log n</i>.

So Sama is a 9gagger.

&quot;The percentage of women who apply to YC is roughly the same as the percentage of women who get funded. The same is true for Black and Latino founders.&quot;<p>I&#x27;m guessing what he means to say here is that if x% of the applicant pool is woman&#x2F;black&#x2F;latino, then x% of the accepted pool is woman&#x2F;black&#x2F;latino, right? The way it&#x27;s phrased it sounds like every woman&#x2F;black&#x2F;latino who applies is accepted

&gt; the fact that one of their &quot;partners&quot; is such an obviously destructive force within society.<p>Can you expand on the &quot;obvious&quot; and &quot;destructive&quot; force? What exactly did Thiel do that is obviously destructive to our whole society? You mean Palantir? Wasn&#x27;t that there for a while?