Hard Tech Startups

Some people think YC only funds straightforward software startups. That’s definitely not the case — YC’s largest exit to date is a self-driving car company, Cruise Automation, and we’ve funded many other hard technology companies like Gingko Bioworks, Oklo, Helion, Rigetti Computing, OpenAI, Perlara, uBiome, Verge Genomics, X-Zell, Athelas, Auro Robotics, Bagaveev, Boom, Gecko Robotics, Multiply Labs, OpenTrons, Varden Labs, Atomwise, Transcriptic, IronOx, 20n, Bikanta, Industrial Microbes, Cofactor Genomics and many more

We’d like to fund a lot more hard tech companies [1], and I’d like to explain how YC most helps hard tech founders.

At the earliest stages, there’s actually a lot more in common between a self-driving car company and a file sharing company than people think–all kinds of startups usually work best when initial costs are low and iteration cycles are fast. It’s relatively easy for a software startup to take short cycle times and low-costs to an extreme, but hard tech founders are often surprised by how effectively they can do this, too.

Many hard tech founders come from academia or big company backgrounds, where projects can be expensive and slow. We help these founders shift into a much more iterative mindset so they can move faster.

Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. This project is often the smallest subset of their technology that still matters to some user or customer. It may at first look like a detour, but it’s a starting point that lets founders build measurable momentum–for themselves, for recruiting employees, and for attracting investors.

And while we encourage hard tech startups to start small, we love when founders think very big.  When needed, we help founders think through a long-term plan of how they can develop their technology to build companies of massive impact.

It’s not a YC company, but Tesla is my favorite example of how powerful this small project + long-term planning mentality can be. Their vision has always been to bring an affordable electric car to the masses, but they first built the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. The Model S then generated the revenue to start the Model 3.

And Oklo, which is building next generation nuclear reactors, is a promising example from YC. When they first came to YC, they were considering going after several very different markets simultaneously. We encouraged them to focus on one market they could enter quickly and not try to do too many things at once, but we also encouraged them to open up to thinking through their most impactful possible future.

In terms of cost, we help hard tech startups operate as efficiently as possible. One factor that lead to the explosion of internet startups was that web hosting became a couple of orders of magnitude cheaper and easier to do. This is happening now for hard tech: there are many more standard components and services at much lower costs for startups in biotech, energy, robotics, and everything in between. We help founders think about how to build their first version and source components as quickly as possible, and we have deals with suppliers and service providers that you can use based on your needs.

We also help hard tech startups balance the need to move quickly with complex regulatory environments. Hard tech startups often operate in heavily regulated markets, and the activation energy required to get over regulatory hurdles kills many of them. Even the most regulated industries have paths to quickly test your assumptions though, and we help you find the best plan of attack without getting into trouble.

When appropriate, we help hard tech founders find customers. For some startups this doesn’t make sense—there are some ideas that people will obviously want if the technology can be figured out, and there are obvious other things to focus on. But for others, it can be a useful way to find that smallest useful project and/or build more momentum.

Gingko Bioworks, which biologically engineers custom microbes, is a good example of this— before YC they had done a few large deals, with long ~6 month sales cycles. But when they went through YC, we encouraged them to figure out how to do minimal sized engagements that they could sell more quickly. During YC, they took this strategy and closed 3 new Fortune-1000 sized customers. They say this strategy gave them a lot of momentum to keep building on to where they are now.

Hard tech companies go through the same 3-month batch format as all of the startups we fund. No matter what people are working on, it ends up being very motivating to be around other founders for this short, intense period of time. And during the batch, hard tech founders have hardware and biotech days, where companies come together to hear from successful founders on how to best tackle their specific problems.

Hard tech companies also join the same 3,000-person-plus YC alumni network as all of our startups. The network is just as useful for a hard tech company as any other startup—alumni are resources for advice, recruiting, and serve as first customers. For example, Transcriptic, which operates a robotic laboratory for outsourced science experiments, offers $20k in credits to every YC biotech company that wants to use their service. This both helps other YC companies, and turns them into customers that Transcriptic can grow with as their customers' businesses scale.

Alumni and batchmates also give moral support—more so than with others, we hear from hard tech founders how isolating a startup can be; problems are difficult and payout can be very long-term. Having a group of other founders going through the same things can help a lot.

Finally, we are particularly good at helping hard tech companies raise money. Fundraising can often be harder for hard tech founders, as the things being worked on often fall outside investors' comfort zones. But at this point a lot of investors take YC's judgement as an encouraging sign. Being backed by YC can help legitimize daunting ideas.

We hope to fund a lot more hard tech companies in the future, and if you’re tinkering on something or even just toying with an idea, we hope you’ll apply now, even if that means you have to turn in your application late. There will be many $10 billion+ hard tech companies in the future, and we hope to help a lot more of them get started.



[1] I use ‘hard tech’ to mean a startup where there is doubt that the technology can be built at all.

Requests for Startups Refreshed

We’ve refreshed the Requests for Startups. Here are the additions:

Food and Farming
An estimated 40% of the world’s workforce works in agriculture.

Better food and farming could increase the world’s health, unlock the potential of numerous workers, and improve living conditions for billions of animals.

We believe economics will dominate - reducing cost while preserving or improving flavor will win the day.

Mass Media
What can we do to bring up the baseline and make the vast majority of our mass media better?

Media outlets that rely on polarization, misinformation, passivity, and fear, are not improving society. We’re looking for ways to bring the average back up and improve mass media.

Updated: Underserved Communities and Social Services
Tens of millions of working poor in America don’t see a path to the middle class.

This population has to navigate a world with substandard services, low quality housing, overcrowded schools, and crime in their neighborhoods. They are often unbanked and living paycheck to paycheck.

The US government alone spends hundreds of billions of dollars per year on social services and safety net programs for these underserved communities.

We believe great non-profits and for-profits can bring technology and strong metrics-driven approaches to this largely ignored, massive market.

---
You shouldn’t start a company just because it’s on this list. It’s mostly here to help stimulate you to think about ideas.

Apply to YC


YC and Founders Pledge

Many of our founders ask us about how they can donate part of their equity or post exit proceeds, and now we have an answer: Founders Pledge.  

With Founders Pledge, founders can sign a pledge to donate some portion of their personal equity and then figure out the recipients for the donation later. Founders Pledge handles all the legwork. As a charity itself, pledges are eligible for tax relief at time of exit and funds can be deployed globally.

Founders Pledge (1) allows founders to decide now that charitable giving is important to them, (2) doesn't impact other stockholders of their company and (3) requires only about 5 minutes of time and no participation costs. Founders Pledge also provides substantive post-exit support including cause area analysis, charity sourcing, deep due diligence, and impact reporting.

More than 500 founders have already pledged with Founders Pledge, including those from Jawbone, Shazam, SwiftKey, AvantCredit, Deepmind, Huddle, Farfetch, Hampton Creek, FundingCircle, Blockchain, Zesty, Vicarious, and Unruly, as well as 10+ YC companies. 

If you want to learn more, visit https://founderspledge.com/. If you have questions, you can reach out to Ben Clifford (ben@founderspledge.com).

YC Changes

TL;DR:
*Michael Seibel will be the new CEO of YC Core, which we are now just going to call "YC".
*Ali Rowghani is now the CEO of the YC Continuity Fund.
*I’m going to be the President of YC Group, which includes YC, YC Continuity, YC Research, and our new online class. We’ll add more organizational units over time.
*We’re going to replace the Fellowship with a much larger MOOC launching next year.

YC continues to expand and we have several changes to announce:

YC

Michael Seibel is going to become CEO of what we called YC Core and are now again going to refer to as just “YC”. Making a distinction between YC Core and the Fellowship was simply too confusing for everyone. Michael will be responsible for the administration and success of the program.

Michael has been an informal leader within the organization for a long time, as well as a close advisor to many, many startups we’ve funded.  He began his relationship with YC as co-founder of Justin.tv (which became Twitch) along with Emmett Shear, Justin Kan, and Kyle Vogt in the W2007 batch.  He was also the CEO of Socialcam (YC W12, sold to Autodesk) and an early advisor to Airbnb.

Paul Buchheit (known to everyone in YC as PB) is going to take on a role similar to the provost of a university.  He will drive improvement of the program and help advise startups on their hardest problems and biggest opportunities (which, again, he’s been doing for a long time).  PB is one of the most consistently brilliant out-of-the-box thinkers I’ve met.

YC Continuity Fund

Ali Rowghani is now the CEO of the YC Continuity Fund, which has already become a thriving unit within the YC Group. The Continuity Fund has grown from just Ali 18 months ago to a team of 6, and has already led a number of investments in growth stage YC companies.

In addition to becoming the first phone call of the founders he’s worked with, Ali has become an invaluable part of the YC partnership as we operate and scale our own organization.  

My role; other groups

I’m going to change my title from “President of YC” to “President of YC Group”.  In addition to the 4 we already have, I expect that we will add another two large units to YC in the next couple of years, although that number could easily be 1 or 3.  I’ll be responsible for getting new units started.

Fellowship

We’ve run the Fellowship 3 times.  We’ve learned a lot about how to help remote startups (and found a few things that didn’t work).  

The goal of the Fellowship was to make YC more inclusive and increase the number and range of companies we can help get started. Now, we're taking the lessons we learned from Fellowship and we're expanding it into a MOOC, so that anyone can participate. The online course will teach content similar to that of the Fellowship, and it will follow a similar structure.

We’re going to call the MOOC “Startup School” as an homage to YC’s Startup School (the conference YC has hosted since 2005). We plan to offer it in 2017 and we’ll share more information on it soon.

I’m going to teach the class.

YC Research

We’re currently supporting 4 groups—OpenAI, Basic Income, HARC, and Cities.  This is a little ahead of our planned pace, and we expect to add just a couple more over the next couple of years.

We’ve also mostly figured out what our unifying theme for YC Research is and will share more soon.

Jessica Livingston on HTBTF

Our second guest on How To Build The Future is Jessica Livingston, Co-Founder of Y Combinator!

You can watch it here: http://www.ycombinator.com/future/jessica/.


Jessica has been instrumental in the creation and continued success of YC.  She talks here about what founders of very successful companies do in their early days, and also what she did in the early days to make YC into what it's become.

Also, we've moved the site for these interviews to http://www.ycombinator.com/future/.

Welcome Dominika, John, Domonique, Ben and Harj!

We're excited to welcome a few new people to YC: 

Dominika Blackappl is joining YC as a part-time partner. She is an industrial and user experience designer who cofounded and led 5 startups, two of which had successful exits. Prior to that, Dominika ran her own design firm and spent time at IDEO.

John Collison is joining YC as a part-time partner. John is the cofounder of Stripe (YC S10), which he started while he was studying physics at Harvard. 

Domonique Fines is joining YC as Head of Events. Domonique comes to us from frog Design where she did office management and events. Domonique is a native of Oakland, CA and got her bachelor's from Clark Atlanta University.   

Ben Holzman is joining the YC Continuity team as a part-time partner. Ben has expertise in enterprise and infrastructure software companies. Most recently, Ben was a Managing Director at Bain Capital Ventures, where he spent over 8 years investing in and building software companies. 

And finally, we're happy to welcome Harjeet Taggar to YC's Board of Overseers. He'll be taking over Adora's spot, since she joined us as a full-time partner. Harj was a partner at YC until he left to start Triplebyte (YC S15). And before that he founded Auctomatic (YC W7). 

Welcome to YC!

Welcome Adora, Nicole, Elizabeth, Case and Robby!

We're excited to announce a few new additions to the YC team. 

Adora Cheung is joining YC as a Partner. Previously, she was co-founder and CEO at Homejoy and a product manager at Slide. Adora has a masters in economics from University of Rochester and a bachelors in computer science from Clemson. 

Nicole Imhof is joining YC as my Executive Assistant. Prior to YC, Nicole was an Operations Associate at the Berkeley Endowment Management Company and previously, she was at ICONIQ Capital. Imhof earned her B.A. in Politics from the University of San Francisco.

Elizabeth Proehl is joining YC Research to manage the office and general operations. Most recently, Elizabeth worked as a public radio producer and reporter at KPFA in Berkeley, California. She has a BA in Near Eastern Studies and Psychology from Cornell.

Case Sandberg is joining YC's software team. Previously, he was an early employee at both Respondly and Borrowlenses (with exits at Buffer and Shutterfly, respectively). Case is a high-school dropout.

Robby Walker is joining YC as a part-time partner and will lead YC's non-profit program. Robby previously founded two companies funded by Y Combinator: Zenter (W2007) and Cue (W2010). He now works on Siri at Apple.

Welcome to YC! 

Moving Forward on Basic Income

We have a few updates we want to share on our Basic Income Project:

Our Research Director

Elizabeth Rhodes is joining Basic Income Project as our Research Director.

She recently completed a joint PhD in Social Work and Political Science at the University of Michigan, where her research focused on health and education provision in slum communities in Nairobi.

We received over 1000 applications for this position (including tenured professors from Oxford, Columbia, and Harvard), and Elizabeth stood out as the right candidate based on her aptitude and her ambition. We’re very excited to work with her.

Pilot Study in Oakland

We want to run a large, long-term study to answer a few key questions: how people’s happiness, well-being, and financial health are affected by basic income, as well as how people might spend their time.

But before we do that, we’re going to start with a short-term pilot in Oakland. Our goal will be to prepare for the longer-term study by working on our methods--how to pay people, how to collect data, how to randomly choose a sample, etc.

Oakland is a city of great social and economic diversity, and it has both concentrated wealth and considerable inequality. We think these traits make it a very good place to explore how basic income could work for our pilot.

It’s also close to where we live, which means we’ll be closer to the people involved.  We think our local resources and relationships will help us design and run this study effectively, and we hope that will enable us to produce the best research possible.

In our pilot, the income will be unconditional; we’re going to give it to participants for the duration of the study, no matter what. People will be able to volunteer, work, not work, move to another country—anything. We hope basic income promotes freedom, and we want to see how people experience that freedom.

If the pilot goes well, we plan to follow up with the main study. If the pilot doesn’t go well, we’ll consider different approaches.

And Some Thoughts on how We’re Thinking About Basic Income

We think everyone should have enough money to meet their basic needs—no matter what, especially if there are enough resources to make it possible. We don’t yet know how it should look or how to pay for it, but basic income seems a promising way to do this.

One reason we think it may work is that technological improvements should generate an abundance of resources. Although basic income seems fiscally challenging today, in a world where technology replaces existing jobs and basic income becomes necessary, technological improvements should generate an abundance of resources and the cost of living should fall dramatically.

And to be clear: we think of basic income as providing a floor, and we believe people should be able to work and earn as much as they want.  We hope a minimum level of economic security will give people the freedom to pursue further education or training, find or create a better job, and plan for the future.

We’ll be spending the next few months designing the pilot, and we welcome any input to help us do the best job possible—especially from the Oakland community [1]. And again, we hope to follow-up with a long-term study on how people’s happiness, well-being, financial health, and time are affected.

If you have thoughts on either, please get in touch at basicincome@ycr.org.

-Elizabeth Rhodes, Matt Krisiloff, and Sam Altman

[1] We’ve already been connecting with Oakland city officials and community groups for feedback, but we’re planning to host some public events in Oakland to get more voices involved. Details to come.

HARC

We’re excited to announce YC Research’s newest project: the Human Advancement Research Community (HARC).

This came out of a conversation that started between Alan Kay and me more than a year ago about how to invent future computing technologies; I’m delighted to finally be officially working with him and his group.  He is one of the smartest people I’ve ever met.

HARC’s mission is to ensure human wisdom exceeds human power, by inventing and freely sharing ideas and technology that allow all humans to see further and understand more deeply.

The PIs at HARC wrote the following:

In our increasingly interconnected world, every individual’s actions can affect billions of others in complex and invisible ways. We believe every individual must have access to technologies that allow them to build their own understanding of the world and its systems in order to act conscientiously, responsibly, and effectively, both as individuals and in collaboration with others.

HARC researches technology in its broadest context, which includes: technology for communication (from the invention of spoken language to modern data graphics), intellectual tools (such as the scientific method and computer simulation), media (from cave painting to video games), and social systems (including democracy and public education). We are focusing on areas where we believe the structures created today will have the most impact on the future, and that can most benefit from having dedicated resources outside the for-profit world. At the moment, these areas include programming languages, interfaces, education, and virtual reality.

Our shared vision of technology combines an expansive long-term view with a strong moral sense. We look to the distant past as well as the far future. We reject the artificial boundaries created between the humanities, arts, and sciences. We don’t always agree on what is good or evil, right or wrong, but we use these words seriously and are driven by them. We seek to guide human technologies in thoughtful and ethical directions, with a deep sensitivity to the relationship between technology and the human condition, and the difference between what a piece of technology is intended to be and how it impacts humanity in reality.

In partnership with Infosys and SAP, HARC is starting with 20 of the top researchers in fields related to human learning and understanding, many of whom previously worked in SAP’s Communications Design Group. They include Principal Investigators (in alphabetical order): Vi Hart, Dan Ingalls, John Maloney, Yoshiki Ohshima, Bret Victor, and Alex Warth.  

We will share more detail about each PI’s current projects once we settle into our new roles and establish a web presence.

HARC will be chaired by Patrick Scaglia, who has spent his career leading similar long-term research initiatives. Alan Kay and Patrick will jointly contribute to the group’s strategic vision. Chris Clark will run the group operationally (along with YCR’s other groups).

The Advisory Board includes Patrick Collison, Adele Goldberg, Alan Kay, Vishal Sikka, and Tanja Rueckert.

Special thanks to Infosys, SAP, Sam, Alan, and Patrick for their generous support and hard work creating HARC, and we look forward to sharing more about our research in a few weeks.

Y Sequoia Combination

Today, Y Combinator announced its intent to acquire Sequoia Capital. This deal is still pending regulatory review and a successful pitch by Sequoia managing partner Doug Leone on YC Summer 2016 Demo Day. We’re not disclosing the financial terms, but Sequoia's ownership of YC-backed companies will pass to us, so I’ll just say we're once again the largest outside shareholders in Airbnb, Dropbox, and Stripe.

Sequoia Capital has had an Incredible Journey being the leader in venture capital investing in Silicon Valley for most of the last 40 years.  They have partnered with iconic companies like Apple, Google, Yahoo, PayPal, YouTube, LinkedIn, and WhatsApp.

The acquisition will enable our firms to realize a number of operational synergies. We have a blog and Sequoia doesn’t. Sequoia’s day-long Monday partner meetings will be replaced with Tuesday night dinners. And now YC companies will automatically receive a Sequoia term sheet to negotiate better terms from other firms. Sequoia will become the new YCVC group*, where they will take a hands-on role of turning YC’s best companies into enduring franchises, which they have been doing anyway.

The combined entity will officially be called “Sequoia Combinator”, but will do business as “YC”, as brevity is very important to both organizations. The new YC logo will be changed from orange to green as it is the color of sequoia leaves and money. Sir Michael Moritz will become chairman and also return to his journalistic roots as editor of Hacker News. Sequoia will help launch YC China, YC India, and YC Israel, and YC Forestry, which will be focused on preservation of sequoia trees worldwide.

Alfred Lin from Sequoia adds “YC is a perfect match for Sequoia because YC has been such a great source of deal flow for us. We don’t have to beg to invest in them anymore.”

Justin Kan from YC adds “Sequoia has so many partners on the Midas List and we’re really looking forward to learning from real investors.”

We are so excited for the future!

 

*Sequoia LPs will have 30 days to export their data.