If you’ve got ever wanted to apply to Y Combinator, here’s some insight into how the iconic accelerator selects corporations from someone who knows best: Garry Tan, president and CEO of Y Combinator.
The Economics Club of Washington hosted Tan Wednesday for a one-on-one interview with General Catalyst board member Teresa Carlson.
It is widely known that Y Combinator accepts lower than 1% of the applications it receives — the latest batch was reduced from 27,000 applications, Tan said. Currently, cohorts typically include around 250 corporations. So Carlson wanted to discover, among other things, what is the “secret sauce,” if any, to getting accepted into Y Combinator?
First, it might be one of the few places you do not need to know anyone to get into, Tan said. Anyone can go to the website, apply and upload a one-minute video. 14 YC partners read applications to understand a few things: Who is the applicant’s potential customer and what have the founders built in the past? The best candidates then answer a few questions from the partners.
“A lot of venture capitalists have weekly meetings and say ‘no, no, no, no,’ and then maybe a few times a year they say ‘yes,'” Tan said. “YC turns it on its head.”
“One of the things YC is looking for is founders who can create a market and see technology that no one has ever imagined,” he said.
Tan used Brian Armstrong of Coinbase as an example of somebody who created a market. When Tan first met Armstrong, he was still working as an anti-fraud engineer at Airbnb. Armstrong read it White Paper by Satoshi Nakamotoand I had an idea.
“He said, ‘Nobody believes it yet, but I believe it and I want to work on software that will make this crazy idea that you can have a sovereign cryptocurrency come true,’” Tan said. “It was a very fringe idea at the moment, but that’s what we’re looking for – a fringe thing.”
He went on to explain that a “marginal thing” is a recent technology “that people have technical knowledge about” and that “affects society as a whole.”
After YC Partners interviewed and accepted Armstrong into the program, Tan recalls working with him weekly. During these conversations, he realized that if there was something like Coinbase, “it would be really big.” Then got here the discussion about how to build it.
“The coolest thing about what he was doing was that it was really hard to even get Bitcoin,” Tan said. “I have experienced this personally. These marginal things can actually turn into something very big.
He also said Armstrong exemplifies one other thing YC partners look for in candidates: “He was a principled person above all else.” What Tan meant was that Armstrong not only believed in what no one else believed, but began to think about what it might take to build, whether it’s software or a distribution, to create something no one else had seen. It’s not enough to simply recognize a recent thing, you would like to understand some of the steps to building it and have a plan to confirm that what you’ve got built solves the problem you originally set out to solve, Tan said.
Last week, YC conducted a series of interviews and Tan said that every one the founders he selected to fund “came in with some new discovery that they discovered by interacting with the technology itself.”
“It’s like sitting on a workbench and realizing, ‘Hey, did you know there’s a robotics manufacturer that is making a $16,000 humanoid robot straight away?’ It can be on my desk on Monday and we are going to try to be the first to bring it to market,” Tan said. “It’s an example of first-principles insight, and that’s a very interesting area.”