Y Creator, Y Competition – TechCrunch
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YC got its biggest news in years this week: Garry Tan will be the organization’s new president and chief executive officer, starting January 2023. Tan has co-founded and helped expand initial capital. for a venture firm that currently manages more than $3.2 billion in assets. During that time, he has always been with YC, as a former partner at the organization.
One detail that didn’t make my story this week was how Tan is bringing the content creator vibe back into the leadership ranks of @ycombinator. He’s succeeding Geoff Ralston, who hasn’t been too public about his work at the accelerator. However, Tan has amassed more than 220,000 YouTube subscribers for his tech videos. Topics above Tan’s youtube channel covers how to lead like a champ to how development teams can build like Google and, yes, how to apply to YC in 2022. It’s reminiscent of essays by YC co-founder Paul Graham , many of which have inspired entrepreneurs to jump into startups to get started with.
YC’s choice to lead creators aligns with their product focus over the past year. In June, the accelerator announced Launch YC, a platform where people can sort accelerator startups by industry, batch, and launch date to discover new products. Launch YC invites users to vote for newly launched startups “to help them climb the leaderboards, try product demos, and learn about the founding team.”
As it is becoming more and more difficult to stand out inside YC and with the importance of distribution for early stage startups, YC offers a way for startups to make more noise a little can make the program’s cost of equity more attractive. Tan continues that focus, being both a celebrity in the tech world and an innovator who has spent years building a brand focused on early-stage startups.
Creator news aside, the Y Combinator executive raises another question: competition. Tan did not say how his new role at Y Combinator and his future role at Initialized, which is a venture advisor, would overlap when asked about competitive or complementary dynamics. He suggested to Nghiem VC a similar sentiment:
When I left YC, I was always careful never to ask YC’s partners, “Who’s hot?” Initialization did their own job. That hasn’t changed for me on the inside. Startups built to be ideal company founders would choose for their ethos, approach to founders (soft advisors, not your boss) and what makes it unique is the great emphasis on the team and the service from that team. Few companies focus on the right seed for the market before the product does. The best do, and Initialized is one of them… The community has an investor database to help them choose, and Initialized is ranked top there and will as long as it continues to do no harm and help. That hasn’t changed either.
These are just the first questions surrounding the creators and competition we have for the future of Y Combinator. The good thing is that Demo Day, taking place next week, will continue the conversation.
For my full interview with Tan, check out my TechCrunch story: “The return of Garry Tan is a complete moment for Y Combinator.” And, to thank you for being a Startups weekly subscriber, here’s a small TC+ discount for you: Enter “STARTUPS” at checkout to get 15% off your subscription.
In the rest of this newsletter, we’ll look at the surprising closure of an app, the latest and greatest in data-driven fund tracking and organizing rounds. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter. Appreciate your support, as always!
The end of Zenly
Earlier this week, Snap laid off 20% of its global staff in an effort to restructure its business. The cuts come after CEO Evan Spiegel’s May memo in which he wrote that the company would miss revenue targets for the second quarter.
And layoffs are not the end of the story. Snap is slowing production of Snap-funded originals, short films and games, hardware, Pixy Drone, as well as standalone apps including Voisey and Zenly. Aside from the fact that Snap says it’s still working on augmented reality glasses, called Spectacles, what’s surprising in that refocusing is that Zenly, a hugely popular app, was acquired a few years ago. 5 years.
Companies often shut down apps, especially acquisitions, after years of active restructuring efforts. Also, Zenly doesn’t generate much direct revenue and still operates as a standalone app. However, as my colleagues Paul Sawers and Romain Dillet have pointed out, it was a bit of a shock when Snap suddenly shut down.
Here’s why it’s important: Sawers and Dillet point out that “Zenly shows no signs of stagnation, and if it does, it looks like it has the potential to be one of Snap’s most valuable assets if it just knew how to turn it into a money machine. . ” As you will see in their story, it turns out the shutdown could be because Snap was playing defense, not just insulting.
Let’s talk about party rounds
I found out about an age-old debate this week on Equity Wednesday and TechCrunch +: party round! The upside is clear: With more investors on their cap, startups have more ways to distribute, introduce, and advise throughout their lifecycle.
Cons are more complicated. Are round-trip investments as useful as capital from less committed sources? Are there too many cooks in the kitchen? Is it a negative signal that this startup has to raise from dozens of people instead of a highly qualified partner?
In my storyI interviewed three people from all different seats at the venture table, from the lead product engineer to unbundle these processes, to the startup round in the party, to an investor that Their job is to cooperate (and sometimes compete with) the excitement of the angels interested in these rings.
Here’s what’s important: I love when debates really make a difference, and in this case, they did. It appears that the definition of a round has changed over the years, partly in response to the many dynamics that arise when there are no specific key investors in the funding round.
I’m testing a new section in Startups Weekly, where each week we follow an old story or trend to see what has changed since our first glance. This week, I worked with Abe Othman, the brains behind the data science at AngelList Venture — including its $25 million Quant Fund. In December 2021, I broke the news of the startup’s brand new fundThis is an investment vehicle with the hope of bringing in US$250,000 for over 100 companies.
The fund’s big twist is its approach to using quantitative factors to decide which startups to invest in. I then reported that his team tracks the pace of hiring demand for a startup, looking at the number of job applications a company receives in a particular company over a period of time. This signal eliminates factors such as investor bias, founders’ networks, and even mispricing.
Here’s what’s new: The fund has deployed about $6 million, about a third of the fund, across 530 startups since December, with more than 35 larger checks into high-signaling startups. Othman says that the fund’s larger outflows are going to women and minority founders as a higher percentage of the total portfolio structure than venture capital in general. Othman estimates that their portfolio is close to 20% women.
“As you know, we intentionally practice venture capital in a different way… our largest portfolio allocation is for founders who write in response to cold outreach emails, this requires quite a bit of trust on their part,” he added. It aligns with what he said last year, when he described the company’s cold, dry email approach as “less rival” than other funds out in the market.
Wait for it. See it? Yes, I’m happy too. And while we’re on the topic of home management, some other notes:
- Listen to TechCrunch podcasts, including crypto-focused program made by Chain Reactionand Founder-focused program run by Found. TechCrunch Podcast also continues to entertain me, so pay attention to all the good shows they are putting on.
- Remember that TechCrunch Live is a brand new platform, and we’ve made it even easier to sign up for pitching practices. Investors (and my inbox) can attest to the importance of brevity, tact, and clarity in pitches, so it’s great to see that. Startups can now apply any day, any time to Ultimate Practice by complete this form.
- TechCrunch Live is coming to Minneapolis. On September 7, come meet the TechCrunch team as we interview the best and brightest in the city. Minneapolis is among the top Midwest cities to start a company – and you’ll soon find out why!
- Keep mining for a chance at TC Session: Cryptocurrency, this November in Miami. Yes, you heard it right, we’re going to Miami.
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And just like that, another week will end. This is a strange thing. I met one of the most famous actors in the world, went viral on Twitter, and ate amazing pasta at Che Fico. This newsletter feels more and more like a weekly diary entry about the strange world we’re all in, the half-stream of consciousness and all. Thank you for reading along, and enjoy the long weekend.