"The Realities of Y Combinator and the Dangers of Big Project Syndrome"

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Sep 11, 20235 min read

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"The Realities of Y Combinator and the Dangers of Big Project Syndrome"

Introduction:

Y Combinator, one of the most renowned startup accelerators, has garnered both praise and criticism over the years. In this article, we will provide a brutally honest review of the Y Combinator W22 batch experience, discussing its advantages, drawbacks, and whether it is truly worth the equity investment. Additionally, we will delve into the concept of "big project syndrome" and how it can hinder a company's growth and success.

Y Combinator: A Remote and Independent Program

One of the major drawbacks of the Y Combinator program is its remote nature, especially during the W22 batch. With founders scattered at different stages and no dependency on each other, a lack of relationship and sense of community is formed. Furthermore, the sheer number of companies, which now totals 400, makes it challenging to stand out and sell within the batch. YC does not have industrial partners, and while the partners may occasionally provide introductions to investors, it is not a guarantee. However, despite these limitations, the program offers a groundbreaking resource that founders can tap into even months after completion.

The Value of Demo Day and YC Branding

Undoubtedly, Demo Day is the pinnacle event of the Y Combinator program. It offers YC companies extra attention from investors and enhances their valuation due to the pre-selection by YC. However, recent trends have shown that the valuations of YC startups do not deviate significantly from those of external companies. The large number of companies in each batch and dilution of the YC brand contribute to this shift. Nonetheless, YC still provides benefits such as publicity, inbound opportunities from small funds, and increased chances of securing introductions.

Actionable Advice:

  • 1. Focus on building your product and talking to customers. YC teaches that startups thrive on growth, and founders should prioritize these core aspects. Remember the mantra: "Do things that don't scale." By honing in on product development and customer interaction, you can lay a solid foundation for success.

2. Understand the value of YC lies beyond Demo Day. While Demo Day may appear to be the main attraction, it is important not to solely rely on big players reaching out to you afterward. Instead, leverage the YC network, seek introductions, and explore the opportunities for publicity and connections that the program offers.

3. Evaluate whether YC aligns with your unique situation. Y Combinator can be particularly beneficial for young teams lacking experience and resources but possessing a revolutionary idea. Additionally, if your target market consists of startups, the access to the YC network can prove highly advantageous. However, always remember that equity is a permanent investment, so carefully weigh the benefits against the potential long-term implications.

The Dangers of Big Project Syndrome

In a separate discussion, we explore the concept of "big project syndrome" as highlighted by Itamar Gilad. This syndrome occurs when leadership falls in love with a grand idea and turns it into a massive project that becomes the top priority for the company. Unfortunately, these projects often result in underwhelming outcomes, with customers showing little interest and key metrics remaining unaffected. Despite this, leaders often rally their teams for a rescue operation, believing they are just one feature or campaign away from success.

The Culture of Output-Focus and Its Pitfalls

The prevalence of big project syndrome can be attributed to an output-focused culture within companies. When goals and incentives prioritize execution and production, the act of doing becomes more important than achieving tangible outcomes. This culture inadvertently breeds managers who use big projects as springboards for promotion, leading to what Gilad describes as "Success Theater." Consequently, valuable time and resources are wasted on ideas that create little value.

Embracing Outcome-Based Goals and Distributed Expertise

To combat the pitfalls of big project syndrome, companies should shift their focus towards outcome-based goals and tapping into the knowledge and expertise residing at the edges of their organization. Setting goals based on benefits delivered to customers and the business, rather than launching one unproven big idea, minimizes waste and maximizes impact. Additionally, companies must recognize that hierarchal, top-down approaches to strategy are no longer effective in modern organizations. Leaders should define goals and provide context while empowering their teams to discover the right solutions collaboratively.

Actionable Advice:

  • 1. Embrace outcome-based goals: Instead of fixating on launching one big, unproven idea, set goals that focus on delivering tangible benefits to customers and the business. This approach minimizes waste and increases the chances of success.
  • 2. Tap into distributed expertise: Recognize that valuable knowledge and creativity often reside at the edges of your organization. Encourage collaboration and empower employees to contribute their insights and ideas, rather than constantly chasing top-down directives.
  • 3. Start small and iterate: Avoid the sunk cost fallacy by starting with smaller projects that can be improved upon or abandoned based on new information. Dividing work among multiple teams can help tackle larger opportunities while maintaining alignment and flexibility.

In conclusion, Y Combinator can provide valuable resources, networking opportunities, and publicity for startups, particularly those in need of a kickstart or targeting startup markets. However, founders must carefully evaluate the long-term implications of giving away equity. Additionally, the dangers of big project syndrome highlight the importance of outcome-based goals, distributed expertise, and iterative approaches to maximize success and minimize waste. By embracing these insights, founders can navigate the challenges of startup growth more effectively and increase their chances of long-term success.

Resource:

  1. "Is Y Combinator worth the money (equity)? Brutally honest review of W22 batch experience", https://acecreamu.substack.com/p/is-y-combinator-worth-the-money (Glasp)
  2. "The Big Project Syndrome - Itamar Gilad", https://itamargilad.com/big-projects/ (Glasp)

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