Tuesday, October 26, 2010

Paul Graham: Disrupt

Forbes: The Disruptor In The Valley: Graham is the father of Y Combinator, a startup-rearing juggernaut that's part incubator, part drill sergeant and part liaison to the investor class. ..... has fired up 200 companies since 2005, jarred the balance of power between entrepreneurs and Silicon Valley's elite money, and chiseled a new paradigm fo
Ashton KutcherImage via Wikipediar launching technology companies. Graham's formula: Get up and running (bugs and all), gather feedback, tweak and grow. ..... YC puts up $11,000, plus $3,000 per founder, for each company in return for a piece of pure equity of around 5%. ..... Of the 36 startups in YC's recent class, ended in August, 30 have raised fresh capital, many of them over $1 million. ..... Viaweb, a maker of software that built storefronts online, and sold it to Yahoo for $50 million in 1998. ..... Some refer to its growing network of graduates as the YC mafia. They protect their own, collaborate and, to a person, regard Graham as their sensei. Some go on to be investors and mentors in their own right. ..... He jammed into a tiny New York apartment to start his art career and was often broke. "I decided to go out and solve my money problem for good" ..... "Beating the Averages," which praised Lisp, a programming language that helped Graham build Viaweb, snared 50,000 page views. "All of the sudden, I was writing for a lot of people, and that made me want to write more," he remembers. ....... (Graham was dating Livingston when YC began; they're now married.) ...... The partners recently added Harjeet Taggar, who sold his startup after being part of YC's winter 2007 class. ..... "We realized early on that the founders matter more than the idea" ..... "You're getting prescreened deal flow," says Ron Conway, a prominent Valley angel who invested in Google, PayPal and Twitter. Conway has put capital into 20 YC companies ..... A home-cooked meal follows office hours. A re
Demi MooreImage via Wikipediacent dinner featured 60 pounds of chili, made in seven Crock-Pots, served over rice. Cookies followed. A guest speaker--often plucked from technology's A-list, such as Facebook's Mark Zuckerberg and Groupon founder Andrew Mason--spins tales as people eat. .... Each startup gets two and a half minutes .... Demi Moore and Ashton Kutcher, who has invested in several YC companies, showed up for the most recent gathering in August. Kutcher is just one of a growing group of 32,000 U.S. angel investors (so-called accredited individuals with more than $1 million in assets) who last year wrote checks totaling $12.4 billion ...... Jessica Mah. .... One useful tool: convertible notes that turn into equity upon a startup's next valuation. The notes often come with valuation caps to protect early investors from being diluted should a company hit it big. ..... Chicagoan Eric Lefkofsky, the cofounder of Groupon who's flirting with billionaire status, is planning something in his city soon.
Y Combinator is the startups' startup. It is good to see such new age incubators spring up across the landscape. Paul Graham and team have it down to a process. If you think about it, Y Combinator is but a glorified factory. And I don't mean that in a pejorative way. I have utmost respect for what they do. Incubators like Y Combinator had to happen before Super Angels could emerge. There are now too many credible startups floating around threatening to go big and do well for traditional VCs to keep track of from their comfy chairs. Startups getting better valuations than they used to is a happy outcome.

My gripe is why only web tech? Other emerging sectors and many old sectors also need Y Combinator like incubators. I would go so far as to say all small businesses regardless of location and industry could benefit from such an outfit as the Y Combinator.

And also there is need for much better social media coverage of the Y Combinator action.

Paul Graham, Brad Feld, Me, BBC
Paul Graham: Y Combinator
Big Churns In The VC Industry

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