Does anyone else see that this offer will drastically change the tone and success rate of YC startups?
Constraints (in the form of funding and time) were a large part of YC. Entrants got a low (but livable) amount of money and 3 months to come up with something great. That something would either sink or swim on demo day.(for more on how constraints help creativity: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1530) Within those constraints, past YC classes did pretty well, and came up with amazing companies. Those that didn't failed quickly, and could go on to bigger and better things. But YC is now throwing those constraints away.
Because the $150k offer is guaranteed runway, it fundamentally changes the behavioral economics behind startups participating in YC. Products no longer have to be demoable by demo day, and startups won't have to think about profitability/funding, in the short term. This means that we should expect YC startups to dream -and fail- bigger in the future.
I was thinking this as well, but for a different reason. I, for one, would never enter the YC program. $15,000 (especially for that much equity) just doesn't work for most people. The only demographic that can really make that work are 20ish year olds coming right out of school. They haven't started real life yet, and have minimal obligations. Anyone else competent/qualified is probably quitting a job and has various bills and debts, and if they made the decision to do a startup, they already have some bootstrap money or a bit of revenue from a side gig, so that $15k isn't going to make or break them. For 150k however, this changes things entirely. YC can now attract a far more diverse pool of aspiring startups.
Constraints (in the form of funding and time) were a large part of YC. Entrants got a low (but livable) amount of money and 3 months to come up with something great. That something would either sink or swim on demo day.(for more on how constraints help creativity: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1530) Within those constraints, past YC classes did pretty well, and came up with amazing companies. Those that didn't failed quickly, and could go on to bigger and better things. But YC is now throwing those constraints away.
Because the $150k offer is guaranteed runway, it fundamentally changes the behavioral economics behind startups participating in YC. Products no longer have to be demoable by demo day, and startups won't have to think about profitability/funding, in the short term. This means that we should expect YC startups to dream -and fail- bigger in the future.