by deqian | 2025-10-13 05:58:18+00:00
The YC Problem

Today’s YC is no longer the pirate. They are the navy.

When Mr. Graham started the incubator 20 years ago, his mission was simple: he wanted to help hackers “make something people want.” Back then, starting a company wasn’t cool — it was almost an alternative movement. In all fairness, I’m not sure starting a company is cool even now, but in today’s context, it’s certainly turning into a status signal for college grads.

Back then, Mr. Graham’s essays struck like lightning bolts, stripping away the mystery and bloat in business literature and revealing a far more lethal way of building companies. Together with the lean startup movement, it was a nascent force rewriting business textbooks. When I first came across them as a college student, I found them genuinely impressive — simply having access to them felt like an unfair advantage because so few people outside that circle were aware of them. But today, they’re the canon. Not knowing them puts you a step behind your peers.

All is to say: times have changed. A lot. So has YC. (The tech world itself has changed dramatically, but I’ll leave that for another post.)

What started off as a supportive group around a kitchen table is now a massive institution running a portfolio worth billions of dollars.

YC has gone through two major phases of scaling. Mr. Sam Altman’s YC felt eerily similar to OpenAI’s trajectory — a lot of brute force and open fire on all fronts. It felt like a race, a test to see how big this could get. During this period, YC batches ballooned to record sizes and YC launched countless new programs. It grew rapidly, but the pace felt unsteady. One couldn’t help but wonder whether the overstretched organization might one day collapse.

Interestingly, that’s when Mr. Garry Tan stepped in. Mr. Tan’s YC feels a lot more like Mr. Cook’s Apple. It brought discipline and focus to the table, and in my opinion, marked the beginning of the true institutionalization of YC. Turning YC into four batches was a stroke of genius. Horizontal scaling makes much more sense than vertical scaling in YC’s case. So does its recent early-decision program. It allows YC to firmly establish itself as an alternative to joining big companies for new grads by guaranteeing income after graduation. The shift to reduce solo founders and the pivot toward B2B SaaS are also part of this broader pattern:

YC is ruthlessly prioritizing what’s worked and formalizing a playbook to produce winners en masse — in other words, institutionalizing company building.

But that’s also today’s YC’s biggest problem.

Don’t get me wrong — I have absolutely zero doubt YC will continue to produce successful companies, probably more capable than ever. But in doing so, it’s gradually losing the advantage that made it famous: picking the mavericks. Just like how Tim made Apple more valuable than Steve’s wildest dreams, Apple under Tim is also far less innovative and has yet to launch a category-defining product. Mr. Tan’s YC faces the same dilemma. It will keep minting hugely successful companies, but will it produce the household names that originally made YC famous?

Structurally, that’s not in YC’s favor.

As Mr. Graham is keenly aware, the mavericks who go on to build breakout companies have a natural aversion to institutions. When YC stopped being a hacker’s hideout and became an institution tasked with minting unicorns, the mavericks naturally put up their defenses and kept their distance. And we’re seeing signs of that...

I'm hitting the character limit. Full post continued here: https://x.com/MrrrBaiii/status/1977613463393550403

by @mrrrbaiii https://peony.ink 12th October in San Francisco