Problem: On March 30, Greg Isenberg posted an interesting and thought-provoking Tweet: What would Y-Combinator look like if it was created today? This post is an exploration of potential answers.
Subscribe here to get access to the first 500 ideas from our blog. For just one coffee a month, you can have access to more than $500 billion dollars of ideas. What's not to love?
Solution: This business would attempt to build the next power-house of funding for startup founders looking for guidance and a network while building the next big thing.
Let’s first start by defining what Y Combinator is. Y Combinator provides seed funding for startups and benefits like an alumni network with more than 3,000 companies and 6,000 founders; an annual alumni gathering; introductions to first customers; category-specific founder communities; alumni demo days; a YC founder slack; and more intangible benefits through it’s network. Their “Why YC” page and “What Happens at Y Combinator” page both provide fascinating insights into the details of their program.
Greg argues that the next generation of Y-Combinator would include the following:
Remote-first
A tokenized community for founder support
Partnered with creators
Cohort-based courses for learning
DAO
Beautiful spaces all over the world to collaborate
In this post I’ll run through each of these things to explain a few reasons why it might be valuable (and even why it may not be).
Remote-first: Innovation has no borders; however, for the most part Y-combinator only recently reached an international majority. The last batch of Y-combinator, for instance, had 50% of its audience as international. As posted by Michael Seibel on September 10, 2020,
YC W21 batch will be remote…
Going remote gave us the opportunity to build a lot of software over the past six months. We’ve improved YC founder onboarding, alumni directories, our internal wiki, our catalogue of startup advice, and the Demo Day website. We also integrated Slack and Zoom for chat and video conferencing. At its heart, YC is a software company and going remote has given us the opportunity to double down on what we do best.
As a result of these improvements, YC partners were able to work with companies in over 15 time zones, complete 50% more individual and group office hours than in previous batches (3600 hours in total), and chat with all of the teams in realtime (over 250,000 Slack messages were sent during the batch). Finally, YC Virtual Demo Day was extremely successful and out performed many in person Demo Days from years past (over 28,000 introductions were made between investors and founders). We expect W21 to be just as successful.
Despite their adaption to being remote, YC was built as an in-person experience, not a remote experience. This, Greg argues, is one major area of improvement.
Tokenize Community for Founders: A great community grows as the community grows: the more individuals are using the communities networks, the better of the community members are. This was the idea behind Friends With Benefits, “a private discord server and group chat full of our favorite thinkers and creators.” As described by FWB,
It means that everyone who is a part of the community is literally invested in the community's success. As the community becomes more appealing, and more people want to join Friends With Benefits there will be more demand for $FWB tokens which will drive the price of $FWB up and make the existing $FWB holders (community members) wealthier. The simple idea is that if we all participate in the upside of the community we'll collectively work to make it a better place. In short, we can be friends the same way we are in our group chats, on twitter, and in other forums but in this case, it comes with some real benefits.
A financial incentive to make the community better literally creates a more fruitful community: what’s not to love? You can learn more about the concept and idea behind FWB in their $ESSAY piece.
Partnered with Creators: Founders, Inc is a company with a mission to empower technology entrepreneurs to build a better world. One of their values is to build “a diverse community of people who bring a variety of perspectives to the table [to make] the best environment for founders to create.” As a venture fund, their team has invested in companies like Gather.Town, GymClassVR, and more. They strike a partnership with their founders and, rather than treating them like “portfolio companies.”
Broadly, partnering with creators could also help grow the brand of this business and the portfolio companies that they fund and/or support. Imagine if you had Mr. Beast (or another large creator/influencer) profiling your companies with insights! The opportunity is nearly endless.
Cohort-based Courses for Learning: One of the best examples of cohort-based learning that I’ve seen is through On Deck (beondeck.com). They constantly release new cohorts of programming: see below for their full structure and a few tweets about their business model:
DAO (Decentralized Autonomous Organization): As a quick summary
Decentralized autonomous organizations are entities that operate through smart contracts. Its financial transactions and rules are encoded on a blockchain, effectively removing the need for a central governing authority — hence the descriptors “decentralized” and “autonomous.”
…
In essence, the platform would allow anyone with a project to pitch their idea to the community and potentially receive funding from The DAO. Anyone with DAO tokens could vote on plans, and would then receive rewards if the projects turned a profit. With the financing in place, things were looking up.
Unfortunately, the DAO experiment did not work as designed, but it still has the potential for traction and immense opportunity.For those interested in learning more about DAOs, I’d recommend the blog post that I made last month about DAOs (you can find it in our archive).
Beautiful spaces all over the world to collaborate: This sounds a bit like WeWork or SoHo house, right? The idea behind this aspect of the business would be to create physical spaces that are conducive to the spontaneous interactions that just can’t be scheduled through Zoom, on Discord channels, or via Slack.
If a business were to merge all 6 of these aspects as Greg suggests, perhaps there is the potential to make the “next” Y-Combinator that will thrive in 2030.
Monetization: Varies per monetization model.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)