> YC startups don’t have to be unique. Far from it.
Slow news day. YC has made it clear over the years it's almost all about the founders not the idea. It's almost impossible to know if an idea is good at the early stages, and ideas change, startups pivot, often the timing is wrong, and the market unproven etc. More often than not most of what startups do is not unique, otherwise there's no market for it. A new take on an old idea has a much higher chance of success than something totally new that ends up being too early.
> More often than not most of what startups do is not unique
The message is also that if your start-up is based on deep tech moats choose another seed. (Think of YC's home runs. None had an industry secret/IP secret sauce.)
YC's roots are definitely the software hacker/painter/kill FAANG from a coffee shop type founders, although they've shown that deep tech teams can make interesting progress without years of R&D. Finding investors that get your idea and can help with their network is paramount. YC might not be the best fit in all cases.
I think there's something missing from this analysis - YC companies might duplicate one another's products but that doesn't say anything at all about their target markets, route to market, product focus, etc.
As an example, my first startup was a requirements management app that, on paper at least, was a copy of IBM DOORS. Except DOORS is a massive enterprise app targeted at companies who are building a new airplane that has 250,000 technical requirements that need fully traceability, and my app was aimed at small businesses doing software projects with 1000 requirements. I was not competing with IBM; I was trying to apply the value of that app to much smaller projects (the end goal might have been to become a competitor one day but we failed long before then.)
You can't just say "These two products do the same thing so the companies are dupes." It's far more complicated than that.
The great suspicion with YC is what proportion of YC companies have all their customers being a mix of other YC companies and those with shared investors?
There is a real danger with current era Bay Area tech that it is just a game of musical chairs played with money, with remarkably little external value being generated.
> There is a real danger with current era Bay Area tech that it is just a game of musical chairs played with money, with remarkably little external value being generated.
It was nothing like as bad as this 10 years ago, no.
Just look at the state of successful exits - it is awful. This is not the same as an ecosystem producing Sun, HP, Apple or even Google, which all had enormous positive externalities.
If nothing else, having competition helps validate the market.
Which is often an advantage to all companies involved - a lot of the time, you're only notionally competing with each other, your main enemy is "people not using a product in that space at all."
e.g. for a lot of business SaaS the only enemy worth caring about is Excel.
(I've more than once been involved with companies where the "competitors" were all on friendly terms because convincing people that using *some* product in that space was a good idea expanded everybody's addressable market)
Yes, this can happen. How often and under what conditions I’m not sure.
I’ll give some other lenses:
1. From the point of view of an individual person, growth in the overall market is often an advantage. If one company doesn’t survive, there will be probably be others. Your skills and connections can help in a similar organization with a slightly different angle on the problem.
2. From the point of view of memetics, good business ideas are likely to appear and survive and take many forms in many niches. If you find yourself with competition, this can suggest that the underlying ideas are suited to the current environment. (Warning: this tendency can be distorted by irrational herd behavior and intentional gaming.)
It makes sense. If you are an investor and have a strong belief that a specific product or idea is a good one - you might want to decouple your odds of success from the people/team/company executing that idea.
Exactly. I think this is a brilliant strategy by YC. They know that some ideas have great potential. They just back multiple teams and hope that one of them will win with their execution.
What's interesting is that the people who are able to predict and come up with the idea (e.g. a researcher using AI in 2021) are often not the best ones to execute on it (typically, lack of experience or capacity to handle the pain of growth while marketing).
What's most interesting is that most people aren't just "one type". In your life you go through multiple roles. Just like how most people, regardless of their income at age 20 will be earning top 35% income by age 35, people move up in their roles (and struggle at a young age to understand that this will happen to them). It's all about timing and age.
I believe some investors go for multiple teams purely because the ratio of those types is different - like a different risk profile. They invest in one with 80% AI boffins, and one with 80% business folks, and one will likely win in the circumstance of the moment (in the ChatGPT era - mostly the business folks. In the data driven AI era - mostly the AI boffins)
Human beings are the only creatures capable of self-evolution, using our minds to analyse the world around us and the world we have nurtured within us. Over time, we can stagnate into ossified animalistic patterns of selfishness, or we can expand our curiosity, consciousness, and, hopefully, our realization that compassion for others is the source of our own happiness. We can either find ways to better integrate ourselves into a better future for those around us, or wall ourselves off from the world around us. We would do well to remember that carpenters don't make hammers, nor computer scientists their own food, soil, packaging, tractors, or trains.
The use of the vast sums available to successful tech investors gives them a greater point of leverage than the rest of us not so endowed. And the more power is given, the responsibility is required, though few acknowledge or heed such wisdom.
At the end of the day, no matter how confident many folks are, who really has the humility and intelligence to know if a person is a genius? Very few, I guess. Very, very few, indeed.
The general is that income, like wealth, is correlated with age, not ransom. Most workers under 18 will be making near minimum wage. Workers in their 20s are probably still starting their careers. People fall off again when they are older, as they either retire early or in some professions just become less capable.
So when you put it all together, a lot of people with an under average career will have an over average income at 35: Just not an over average income within the cadre of 35 year olds.
The lack of correlation with income at 20 comes from how many careers require training that doesn't give good early income. A future doctor, barista or AI programmer are not likely to have. a great income at 20, but their incomes and wealth diverge rapidly as some have longer training with different outcomes. The doctor will hit the 1% after residency. The AI expert might start making money earlier. The barista is probably ahead in his 20s, but it's unlikely their income grew quite as much, although many a barista is working on doing something else. So again, looking just at percentile of income at different ages is going to lead to mistakes as different life curves are being aggregated together.
If that were true, there'd be no point in ever applying a second time to YC.
Anecdotally, people do get accepted after 2-4 failures. Maybe YC was on the fence about those founders and their willingness to slam themselves against a wall repeatedly tipped the scales, or maybe they invest in a certain kind of founder and when they run out of those they invest in "promising" ideas.
We need to define conflict of interest. Question: is an investor who gives money to one organization, but is not involved in the decision-making, conflicted if they give money to another organization? Are they self-conflicted (undermining their own likelihood of success)? Are they contractually or legally conflicted? Have they breached the trust of people they invested in? Are they ethically conflicted?
Answers to these questions are non-obvious. Attempts to simplify the set of relevant questions means imposing a worldview.
On the ethical question, a consequentialist would say it depends on the outcomes. Like many consequentialist analyses, this is complicated. Consider this: Investing in a similar company might validate the market and make it more likely for the company and/or its people to reach viability.
The conflict of interest is simply dead and forgotten in an era where the president-elect has his own cryptocoin, his own social media company, and appoints his billionaire supporters to improve efficiency in the parts of government that directly oversee those billionaires’ own businesses.
Yes, political corruption is a drag/loss on everyone except the corrupt ones. Worse, it can shift a system out of its viable operating zone. Corrupt individuals in a market can destroy the market.
But what is the connection to the parent comment? No matter how corrupt one part of government or a market becomes, it doesn’t excuse further corruption. If anything, more corruption makes additional corruption more likely to break the whole system.
> YC commonly accepts startups that are building similar or nearly identical products to previous YC grads. Some of them are direct competitors; others differ slightly by targeting a new geography (Asia or Latin America), or are a subset of a larger market (point-of-sale software for bars versus coffee shops).
It seems like a wise strategy to, if an investment does well (or otherwise proves a market) in one niche, to invest in another niche. It certainly increases the odds that you've invested in whoever will become the dominant player.
I think this is actually okay. Execution matters, not the idea. Also if YC was trying to do coordination between its portfolio companies, it would be against the interests of the founders themselves because the founders do not care if another company in the YC batch succeeds or fails - they don't have a stake in that other company.
I guess I am saying that ideas are a dime a dozen. Every idea will likely get executed by multiple teams - it is incredibly rare for an idea to only get explored by a single team. Those teams that succeed did so because of execution.
> This is the core ethos driving Chinese manufacturers to rip off anything and everything they can
I think everyone does this. We just like to focus only on Chinese companies when they do it, because many times when Chinese companies do it, they do it so well that it is a threat.
It makes sense as an investor, doesn't it, you identify markets you see an opening, you check which companies are in that domain, pick the ones where they can execute and have good people on their team.
It would worry me as a startup company, who knows where the information I share with them will end up...
A more interesting question is, do you as a startup company have any information worth sharing? Ideas are dime a dozen and like you just said, the differentiator is the capabilities of those people. And that is not something that can be shared, and no other startup can benefit of it.
This isn't really a big deal. Usually, obvious market opportunities have multiple organizations, trying to enter, and it makes sense for an investor to diversify.
That's different, from Amazon and Microsoft, who used the data they gathered during their work with smaller orgs, to then actively compete with those orgs.
Useful here-say from some investors at the last few demo days: not all of the companies that are "copiers" apply + are accepted with the "copying" idea. Many founding teams end up pivoting during the batch and scramble to get proof points on the board before demo day. They're most likely to end up pivoting to well-known problems, therefore the clustering around a few common themes. It doesn't explain all of the data, but it's a big part of it. When you have to come up with a fundable new idea in a week and prove it out in a month this can happen...
Stirs up competition within a cohort and there’s bound to be idea sharing between teams. YC claims to bet on people not ideas, so as another commenter pointed out, if a team pivots there’s no longer a competition.
My guess is YC also believes in simultaneous invention: the same idea coming from multiple places at once implies said idea’s time has come, while any team wanting to work on it must have already done the work to hit that forefront, making them great people to bet on.
> Yet, a deep dive into the data from all of the nearly 5,000 companies YC has backed to date [...]
The answer is in that number. YC is a startup accelerator. These days they back 500-1000 companies every year. There is no intention of having only one horse in every race. At that volume that is impossible. Their funding model allows them to bet on as many horses as possible to increase their own chances of success.
Of course YC backs multiple companies in the same spaces, they have for quite some time if not from the start.
The controversy with pearai was not because it competed the market space of another YC company, but that it had the appearance of being a direct clone of the exact product of another YC company.
Just because you have similar or the same idea doesn’t mean at the end you have a sustainable one. Also, companies get bought out but while ideas are the same execution and scope can change given the level of technology available .
I don’t mean this in a bad way, but like, at this point YC’s business model is spray and pray right? They weed out obvious losers, and then use vibes to pick a section of the rest, push them through a standard accelerator program, and demo day at the end, and this works because having been accepted into YC is like being able to say you went to a fancy university: no guarantees on future performance, but you’re probably not an idiot.
They should be (and are — YC Fall Batch!) trying to maximise the number of companies they take on while not diminishing returns below their cost of capital and brand dilution.
It's interesting how many of the commenters are starting from the assumption that this is both intentional and desirable (or in some other way smart on the part of YC) and then reasoning only on that basis.
(Or maybe it's not interesting, since this is on YC's own site... :-P)
There's an enormous amount of evidence that almost no VC knows what they're doing (almost none beat index funds in the long run).
YC seems to have a spray-and-pray approach, and it used to be run by Sam Altman who has repeatedly failed upward, so I think it's very reasonable to assume this is either not a conscious strategy or it's just a bad strategy.
Either way, the VC's value is to be able to predict whether Dropbox or Zumodrive deserves their bet, and they clearly couldn't.
> Either way, the VC's value is to be able to predict whether Dropbox or Zumodrive deserves their bet, and they clearly couldn't.
This is an extremely wrong-headed view of what VCs do, and one thing investors do _in general_ is to have a strong idea of what they know and don't know, and in particular, what _nobody_ knows is which companies or products in particular will succeed or fail. If they knew that, they'd put all their eggs in one basket.
What VCs do is allocate capital in a way that mitigates risk for themselves.
There's actually a _really_ interesting way to think about what VCs do, which is that they _offload_ their own risk onto founders and early hires of startups. VCs invest their money across a broad basket of investments, founders invest all their time and money into _one_. VCs and early hires are taking a massive amount of personal risk. Almost all of the profits of VCs come from what is essentially a risk arbitrage -- they get more profits than they should be from the smaller risk they're taking by investing in a startup, and founders and early hires get less profits than they should be from the personal risk they're taking by starting a company.
The structure of investment deals is often setup in such a way that even events that "feel" like they should be a payday for the founders, such as a funding round or even a sale, could end up with them getting nothing because their shares get diluted, because they have lower priority ownership stakes than the VCs do.
This is reads as if that is negative an unusual. One might think supporting copycats is bad but obviously a company cannot simply be copied and is more than just its product. While a product might be, you can still outclass your competitors with better engineering, or sourcing of materials or marketing.
You wonder if this is a telling story about YC or just one about the startup space in general.
Possible outcomes include:
1. There is little unique ideas going around. YC is truely and knowingly funding blatant copycats.
2. There is little unique ideas going around. Due to the large amount of duplicates, all accelerators invariably invest in mostly copycats.
3. There is unique ideas going around, they are just not popular with YC. This could have various reasons. I wonder what they might be
This isn't anything new. Heck, the first season of Silicon Valley called this out with Peter Gregory backing a number of compression startups.
Interestingly for the OP, that same season featured Tech Crunch Disrupt. It's a bit ironic to see TC publishing this concept now as though it is a new revelation.
It makes sense to scatter a bunch of seeds on fertile ground, and then pick the strongest plant that shows the most growth. There are many kinds of smart, ambitious people; some will form teams that succeed, others will fall prey to unforeseen impediments, and not.
In executing on an idea, the end result is often very different from where you started. They might look similar now, but in 5 years one went enterprise on feature set and the other consumer etc etc.
One of the reasons that YC is so great is that they back founders, not ideas. YC has never backed the same founder twice in a batch to my knowledge, and doing so is antithetical to its values.
That approach is perfectly valid and could even be smarter than other VCs that avoid funding competing projects. I also think that, since YC operates at an earlier stage than major funds like Sequoia, different heuristics could apply. Ultimately, it's about balancing risk and reward—duplicating efforts can increase the chances of success while mitigating risks. Of course, it's not easy to establish processes that help competing companies in the same space without inadvertently favoring one over the other.
> YC startups don’t have to be unique. Far from it.
Slow news day. YC has made it clear over the years it's almost all about the founders not the idea. It's almost impossible to know if an idea is good at the early stages, and ideas change, startups pivot, often the timing is wrong, and the market unproven etc. More often than not most of what startups do is not unique, otherwise there's no market for it. A new take on an old idea has a much higher chance of success than something totally new that ends up being too early.
> More often than not most of what startups do is not unique
The message is also that if your start-up is based on deep tech moats choose another seed. (Think of YC's home runs. None had an industry secret/IP secret sauce.)
YC's roots are definitely the software hacker/painter/kill FAANG from a coffee shop type founders, although they've shown that deep tech teams can make interesting progress without years of R&D. Finding investors that get your idea and can help with their network is paramount. YC might not be the best fit in all cases.
I think there's something missing from this analysis - YC companies might duplicate one another's products but that doesn't say anything at all about their target markets, route to market, product focus, etc.
As an example, my first startup was a requirements management app that, on paper at least, was a copy of IBM DOORS. Except DOORS is a massive enterprise app targeted at companies who are building a new airplane that has 250,000 technical requirements that need fully traceability, and my app was aimed at small businesses doing software projects with 1000 requirements. I was not competing with IBM; I was trying to apply the value of that app to much smaller projects (the end goal might have been to become a competitor one day but we failed long before then.)
You can't just say "These two products do the same thing so the companies are dupes." It's far more complicated than that.
That's not the case for most dev tools YC startup, they are targeting the same HN users/ other YC startups (trying to sell shovels)
The great suspicion with YC is what proportion of YC companies have all their customers being a mix of other YC companies and those with shared investors?
There is a real danger with current era Bay Area tech that it is just a game of musical chairs played with money, with remarkably little external value being generated.
> There is a real danger with current era Bay Area tech that it is just a game of musical chairs played with money, with remarkably little external value being generated.
So, you don’t think that is already the case?
It was nothing like as bad as this 10 years ago, no.
Just look at the state of successful exits - it is awful. This is not the same as an ecosystem producing Sun, HP, Apple or even Google, which all had enormous positive externalities.
If nothing else, having competition helps validate the market.
Which is often an advantage to all companies involved - a lot of the time, you're only notionally competing with each other, your main enemy is "people not using a product in that space at all."
e.g. for a lot of business SaaS the only enemy worth caring about is Excel.
(I've more than once been involved with companies where the "competitors" were all on friendly terms because convincing people that using *some* product in that space was a good idea expanded everybody's addressable market)
Yes, this can happen. How often and under what conditions I’m not sure.
I’ll give some other lenses:
1. From the point of view of an individual person, growth in the overall market is often an advantage. If one company doesn’t survive, there will be probably be others. Your skills and connections can help in a similar organization with a slightly different angle on the problem.
2. From the point of view of memetics, good business ideas are likely to appear and survive and take many forms in many niches. If you find yourself with competition, this can suggest that the underlying ideas are suited to the current environment. (Warning: this tendency can be distorted by irrational herd behavior and intentional gaming.)
It makes sense. If you are an investor and have a strong belief that a specific product or idea is a good one - you might want to decouple your odds of success from the people/team/company executing that idea.
Exactly. I think this is a brilliant strategy by YC. They know that some ideas have great potential. They just back multiple teams and hope that one of them will win with their execution.
What's interesting is that the people who are able to predict and come up with the idea (e.g. a researcher using AI in 2021) are often not the best ones to execute on it (typically, lack of experience or capacity to handle the pain of growth while marketing).
What's most interesting is that most people aren't just "one type". In your life you go through multiple roles. Just like how most people, regardless of their income at age 20 will be earning top 35% income by age 35, people move up in their roles (and struggle at a young age to understand that this will happen to them). It's all about timing and age.
I believe some investors go for multiple teams purely because the ratio of those types is different - like a different risk profile. They invest in one with 80% AI boffins, and one with 80% business folks, and one will likely win in the circumstance of the moment (in the ChatGPT era - mostly the business folks. In the data driven AI era - mostly the AI boffins)
Human beings are the only creatures capable of self-evolution, using our minds to analyse the world around us and the world we have nurtured within us. Over time, we can stagnate into ossified animalistic patterns of selfishness, or we can expand our curiosity, consciousness, and, hopefully, our realization that compassion for others is the source of our own happiness. We can either find ways to better integrate ourselves into a better future for those around us, or wall ourselves off from the world around us. We would do well to remember that carpenters don't make hammers, nor computer scientists their own food, soil, packaging, tractors, or trains.
The use of the vast sums available to successful tech investors gives them a greater point of leverage than the rest of us not so endowed. And the more power is given, the responsibility is required, though few acknowledge or heed such wisdom.
At the end of the day, no matter how confident many folks are, who really has the humility and intelligence to know if a person is a genius? Very few, I guess. Very, very few, indeed.
"Just like how most people, regardless of their income at age 20 will be earning top 35% income by age 35"
Could you say more about this, or perhaps provide a link where we can read more?
The general is that income, like wealth, is correlated with age, not ransom. Most workers under 18 will be making near minimum wage. Workers in their 20s are probably still starting their careers. People fall off again when they are older, as they either retire early or in some professions just become less capable.
So when you put it all together, a lot of people with an under average career will have an over average income at 35: Just not an over average income within the cadre of 35 year olds.
The lack of correlation with income at 20 comes from how many careers require training that doesn't give good early income. A future doctor, barista or AI programmer are not likely to have. a great income at 20, but their incomes and wealth diverge rapidly as some have longer training with different outcomes. The doctor will hit the 1% after residency. The AI expert might start making money earlier. The barista is probably ahead in his 20s, but it's unlikely their income grew quite as much, although many a barista is working on doing something else. So again, looking just at percentile of income at different ages is going to lead to mistakes as different life curves are being aggregated together.
YC also says that they don't believe in the idea, but the founders ¯\_(ツ)_/¯
If that were true, there'd be no point in ever applying a second time to YC.
Anecdotally, people do get accepted after 2-4 failures. Maybe YC was on the fence about those founders and their willingness to slam themselves against a wall repeatedly tipped the scales, or maybe they invest in a certain kind of founder and when they run out of those they invest in "promising" ideas.
Seems reasonable to pick two horses in a race you believe is worth running
This creates an extremely obvious conflict of interest.
We need to define conflict of interest. Question: is an investor who gives money to one organization, but is not involved in the decision-making, conflicted if they give money to another organization? Are they self-conflicted (undermining their own likelihood of success)? Are they contractually or legally conflicted? Have they breached the trust of people they invested in? Are they ethically conflicted?
Answers to these questions are non-obvious. Attempts to simplify the set of relevant questions means imposing a worldview.
On the ethical question, a consequentialist would say it depends on the outcomes. Like many consequentialist analyses, this is complicated. Consider this: Investing in a similar company might validate the market and make it more likely for the company and/or its people to reach viability.
The conflict of interest is simply dead and forgotten in an era where the president-elect has his own cryptocoin, his own social media company, and appoints his billionaire supporters to improve efficiency in the parts of government that directly oversee those billionaires’ own businesses.
Yes, political corruption is a drag/loss on everyone except the corrupt ones. Worse, it can shift a system out of its viable operating zone. Corrupt individuals in a market can destroy the market.
But what is the connection to the parent comment? No matter how corrupt one part of government or a market becomes, it doesn’t excuse further corruption. If anything, more corruption makes additional corruption more likely to break the whole system.
> YC also says that they don't believe in the idea, but the founders ¯\_(ツ)_/¯
That still doesn't preclude them backing two founder groups that have similar ideas.
> YC commonly accepts startups that are building similar or nearly identical products to previous YC grads. Some of them are direct competitors; others differ slightly by targeting a new geography (Asia or Latin America), or are a subset of a larger market (point-of-sale software for bars versus coffee shops).
If you're going "by the book" with Crossing The Chasm, (https://en.wikipedia.org/wiki/Crossing_the_Chasm), all startups need to conquer a niche before they can own an entire market.
It seems like a wise strategy to, if an investment does well (or otherwise proves a market) in one niche, to invest in another niche. It certainly increases the odds that you've invested in whoever will become the dominant player.
I think this is actually okay. Execution matters, not the idea. Also if YC was trying to do coordination between its portfolio companies, it would be against the interests of the founders themselves because the founders do not care if another company in the YC batch succeeds or fails - they don't have a stake in that other company.
> Execution matters, not the idea.
Execution matters _as much as_ the idea.
A good idea executed poorly produces bad results.
A bad idea executed well produces bad results.
This is what YC is hedging (was it the execution or idea) by investing in duplicative startups.
I guess I am saying that ideas are a dime a dozen. Every idea will likely get executed by multiple teams - it is incredibly rare for an idea to only get explored by a single team. Those teams that succeed did so because of execution.
> Execution matters, not the idea.
This is the core ethos driving Chinese manufacturers to rip off anything and everything they can
> This is the core ethos driving Chinese manufacturers to rip off anything and everything they can
I think everyone does this. We just like to focus only on Chinese companies when they do it, because many times when Chinese companies do it, they do it so well that it is a threat.
It makes sense as an investor, doesn't it, you identify markets you see an opening, you check which companies are in that domain, pick the ones where they can execute and have good people on their team.
It would worry me as a startup company, who knows where the information I share with them will end up...
A more interesting question is, do you as a startup company have any information worth sharing? Ideas are dime a dozen and like you just said, the differentiator is the capabilities of those people. And that is not something that can be shared, and no other startup can benefit of it.
It's not always about ideas. Growing startups often have proprietary information they can't share with competitors.
Hedge funds that use a "pod" structure (Chinese walled groups of traders) will hire one pod to mimic another pods strategy. Not hard to guess why.
This isn't really a big deal. Usually, obvious market opportunities have multiple organizations, trying to enter, and it makes sense for an investor to diversify.
That's different, from Amazon and Microsoft, who used the data they gathered during their work with smaller orgs, to then actively compete with those orgs.
A classic Microsoft joke (hope you like Comic Sans): https://www.davar.net/HUMOR/STORIES/MS-CUISN.HTM
Useful here-say from some investors at the last few demo days: not all of the companies that are "copiers" apply + are accepted with the "copying" idea. Many founding teams end up pivoting during the batch and scramble to get proof points on the board before demo day. They're most likely to end up pivoting to well-known problems, therefore the clustering around a few common themes. It doesn't explain all of the data, but it's a big part of it. When you have to come up with a fundable new idea in a week and prove it out in a month this can happen...
Seems like a great idea!
Stirs up competition within a cohort and there’s bound to be idea sharing between teams. YC claims to bet on people not ideas, so as another commenter pointed out, if a team pivots there’s no longer a competition.
My guess is YC also believes in simultaneous invention: the same idea coming from multiple places at once implies said idea’s time has come, while any team wanting to work on it must have already done the work to hit that forefront, making them great people to bet on.
> Yet, a deep dive into the data from all of the nearly 5,000 companies YC has backed to date [...]
The answer is in that number. YC is a startup accelerator. These days they back 500-1000 companies every year. There is no intention of having only one horse in every race. At that volume that is impossible. Their funding model allows them to bet on as many horses as possible to increase their own chances of success.
VC sees buzzword in pitch and throws money at it, data shows.
This! Other comments imply some kind of strategy from YC, but it's likely a VC bias and/or a lack of communication inside YC.
Of course YC backs multiple companies in the same spaces, they have for quite some time if not from the start.
The controversy with pearai was not because it competed the market space of another YC company, but that it had the appearance of being a direct clone of the exact product of another YC company.
Reminds me of some German guys who specialise in copying successful companies and have made billions in the process .
https://en.m.wikipedia.org/wiki/Rocket_Internet
And Garry apologized for being wrong shortly after, but that’s not mentioned?
Just because you have similar or the same idea doesn’t mean at the end you have a sustainable one. Also, companies get bought out but while ideas are the same execution and scope can change given the level of technology available .
I don’t mean this in a bad way, but like, at this point YC’s business model is spray and pray right? They weed out obvious losers, and then use vibes to pick a section of the rest, push them through a standard accelerator program, and demo day at the end, and this works because having been accepted into YC is like being able to say you went to a fancy university: no guarantees on future performance, but you’re probably not an idiot.
They should be (and are — YC Fall Batch!) trying to maximise the number of companies they take on while not diminishing returns below their cost of capital and brand dilution.
This is not a boutique investment shop.
this was true 17 years back too. dropbox and zumodrive were both in same batch and were tackling the same problem with different approaches.
P.S. Not saying its a bad thing. Early stage startups evolve and like YC has shared a lot of the early bet is on the founders.
It's interesting how many of the commenters are starting from the assumption that this is both intentional and desirable (or in some other way smart on the part of YC) and then reasoning only on that basis.
(Or maybe it's not interesting, since this is on YC's own site... :-P)
Concluding that it's not intentional depends on the premise that they don't know they're doing it, which seems unlikely.
There's an enormous amount of evidence that almost no VC knows what they're doing (almost none beat index funds in the long run).
YC seems to have a spray-and-pray approach, and it used to be run by Sam Altman who has repeatedly failed upward, so I think it's very reasonable to assume this is either not a conscious strategy or it's just a bad strategy.
Either way, the VC's value is to be able to predict whether Dropbox or Zumodrive deserves their bet, and they clearly couldn't.
> Either way, the VC's value is to be able to predict whether Dropbox or Zumodrive deserves their bet, and they clearly couldn't.
This is an extremely wrong-headed view of what VCs do, and one thing investors do _in general_ is to have a strong idea of what they know and don't know, and in particular, what _nobody_ knows is which companies or products in particular will succeed or fail. If they knew that, they'd put all their eggs in one basket.
What VCs do is allocate capital in a way that mitigates risk for themselves.
There's actually a _really_ interesting way to think about what VCs do, which is that they _offload_ their own risk onto founders and early hires of startups. VCs invest their money across a broad basket of investments, founders invest all their time and money into _one_. VCs and early hires are taking a massive amount of personal risk. Almost all of the profits of VCs come from what is essentially a risk arbitrage -- they get more profits than they should be from the smaller risk they're taking by investing in a startup, and founders and early hires get less profits than they should be from the personal risk they're taking by starting a company.
The structure of investment deals is often setup in such a way that even events that "feel" like they should be a payday for the founders, such as a funding round or even a sale, could end up with them getting nothing because their shares get diluted, because they have lower priority ownership stakes than the VCs do.
This is reads as if that is negative an unusual. One might think supporting copycats is bad but obviously a company cannot simply be copied and is more than just its product. While a product might be, you can still outclass your competitors with better engineering, or sourcing of materials or marketing.
You wonder if this is a telling story about YC or just one about the startup space in general.
Possible outcomes include:
1. There is little unique ideas going around. YC is truely and knowingly funding blatant copycats.
2. There is little unique ideas going around. Due to the large amount of duplicates, all accelerators invariably invest in mostly copycats.
3. There is unique ideas going around, they are just not popular with YC. This could have various reasons. I wonder what they might be
This isn't anything new. Heck, the first season of Silicon Valley called this out with Peter Gregory backing a number of compression startups.
Interestingly for the OP, that same season featured Tech Crunch Disrupt. It's a bit ironic to see TC publishing this concept now as though it is a new revelation.
It makes sense to scatter a bunch of seeds on fertile ground, and then pick the strongest plant that shows the most growth. There are many kinds of smart, ambitious people; some will form teams that succeed, others will fall prey to unforeseen impediments, and not.
In executing on an idea, the end result is often very different from where you started. They might look similar now, but in 5 years one went enterprise on feature set and the other consumer etc etc.
So true, all the Blockchain startups are now LLM startups.
You mean there is a trend in existing blockchain startups pivoting to LLMs? Is there a source / more details?
One of the reasons that YC is so great is that they back founders, not ideas. YC has never backed the same founder twice in a batch to my knowledge, and doing so is antithetical to its values.
Investing in a market opportunity rather than a company or person.
That approach is perfectly valid and could even be smarter than other VCs that avoid funding competing projects. I also think that, since YC operates at an earlier stage than major funds like Sequoia, different heuristics could apply. Ultimately, it's about balancing risk and reward—duplicating efforts can increase the chances of success while mitigating risks. Of course, it's not easy to establish processes that help competing companies in the same space without inadvertently favoring one over the other.
reinforcement learning done right, amirite?