“Plays Well With Others”
Entrepreneurs are pretty arrogant.
Sometimes the best of us are the most arrogant.
We think we are smarter than you. We aren’t afraid to call BULLSHIT if we think you’re doing it the “wrong” way, and we LIKE arguing with you. Most importantly, our world view assumes a mental foundation that WE are the Chosen One Prophesied to Lead the Faithful out of Slavery to the Promised Land. We are here to Save the Cheerleader / Change the World, and we will absolutely kill ourselves (and sometimes others) to get there. So you can choose to follow me or not, but you better get yer ass outta my damn way.
Now in truth: we aren’t always Special, and we aren’t always Right. Very few of us actually end up changing the world, getting rich, or disrupting an industry. Many of us fall far short of target aspirations and fail miserably.
Regardless, you might understand why the default setting for entrepreneurs who aim to change the world is to be insufferable assholes who don’t play well with others. Note that I am talking about myself here as much as anyone else, but hey I *AM* better than you, you know?
Because if we really want to bring change to the world, we can’t just be nerds who make lots of money. It’s imperative we do our best to connect with everyone, bring the entire community WITH us, and make society better for ALL, not just for an elite few of us who went to the right schools, who dress and talk the right way, or look the right color or gender. Otherwise life is really going to suck when you disrupt those people out of jobs, & they come looking for someone to hold responsible.
Which brings me to Sam Altman’s recent post Getting Into Y Combinator.
I think Sam is damn smart, and usually gives great advice. But in this post, his advice is monochromatic, isolationist, and dogmatic. And it represents at least one very significant way in which 500 and YC differ considerably.
Specifically: we believe you should ignore and reject Sam’s advice to only apply to one accelerator, whether that is YC or 500 or any other … we think it’s arrogant, self-serving, narrow-minded and rather poor advice that does a disservice to founders.
(note: we are also fine if you don’t apply to 500 Startups but we hope you do)
500 Startups does NOT think everyone should live in one ivory tower, nor worship at the altar of one and only one true divinity. We believe the world has more diversity of thought and experience to offer entrepreneurs. We can be both Hackers AND Hustlers, listen to Country AND Western, like both Biggie AND Tupac, dress up as Star Wars AND Star Trek characters, and grok / rock / talk about lots of other cool shit too.
Note we still respect YC quite a bit, and we think highly of PG / Sam and [some of] their essays and advice. In fact, 500 Startups has invested in more than 100 YC companies over the past few years, and we hope to continue to do so (if Sam still lets me into YC DemoDay after this post ;)
However, we STRONGLY and FIRMLY disagree there is only ONE right or best way to help founders, or that our accelerator is that way.
And while we may criticize & challenge other methods, we certainly WELCOME the participation of the entire community of investors, founders and mentors who invest in and help startups get started.
Numbers aside, we don’t automatically think you suck if you’ve been through a previous accelerator program. And we aren’t so insecure or afraid of competition to try and scare you into *ONLY* applying to 500 Startups. Sam may have data (or perhaps other less holy reasons) to suggest why YC is the only mountain you should climb, but we think monocultures are a bad idea, and we don’t agree the only way to win is to go through our program, or to take only our money or advice. We think other people and programs do a good job too, even those we may not agree with, including YC (most of the time, anyway ;)
Many of our successful investments chose to go through other programs instead of, or in addition to 500: SendGrid was in TechStars, Wildfire was in Facebook fbFund, Vungle went through AngelPad, LeTote went through both 500 and YC (at the same time, altho YC didn’t like that), SilverPush was in GSF India, Yogome was in Mexican.VC, etc. In fact, some of our best investments that are now unicorns didn’t go through ANY accelerator program at all including Twilio, Credit Karma and GrabTaxi.
Regardless, we think you SHOULD apply to YC, TechStars, SeedCamp, AngelPad, and many other top accelerators, just like you might apply to many top colleges at the same time. We also think there are great regional programs all over the world, and we have worked with and co-invested in many of them like AngelPad in SF/NYC, StartX at Stanford, NFX here in the valley, DreamIt in Philly, Startmate in Australia, Startup Chile, GSF in India, Flat6Labs in Cairo, Hubba in Thailand, Savannah Fund in Nairobi, MEST in Ghana, Etohum in Turkey, or others in Mexico, Brazil, Russia, China, Japan, Korea, Israel, Germany, Indonesia, etc.
No program is perfect, but most of them are better than doing nothing, or waiting around for some knight in shining armor to arrive next year.
There are many paths to success, and lots of them don’t go through Silicon Valley. Two of our four managing partners spend most of their time in Asia and Latin America, and in the past 5 years we have invested in almost 500 companies outside the US in over 50 other countries. Some come to the valley, some don’t. Some stay here, some go back. Many times they don’t come to us, we have to go to them. This is why ⅓ of our team wasn’t born / doesn’t live in the USA, why we speak 25 languages, and live in 20 different countries, as well as NYC, LA, and Miami… NOT just Silicon Valley.
So do your own due diligence, talk to founders who went through other accelerator programs, and find out what they have to offer. You may decide a big globally-recognized accelerator is the best option, or that a small, regional, or specialty-focused program in the middle of nowhere is just perfect — because you get more attention, or the person running that program is awesome, or maybe because it’s the right place for you at that time (or, the only available option in some cases).
You may also decide that going to just one angel investor or one big VC is the right choice, or that you should raise a party round from lots of folks, or that you’ll never take any money from those stupid accelerators or foolish / vicious VCs, and bootstrapping from customers or KickStarter or IndieGogo is the way to go. Or you may find plenty of investors on AngelList and get mentorship from other sources, and/or you don’t need to do an accelerator.
Any and all of these options are JUST FINE with 500 STARTUPS.
And if it so happens you’ve been through one of those “other” accelerators and now want to apply to 500, you should feel confident we will never ding you for it, and it might even help your chances. About 20% of our companies have gone through another accelerator program.
Now it IS TRUE some of those other programs and investors suck, and some of them suck so bad they just aren’t worth it. Just like business schools or community colleges, many of them may not be that amazing. Many will fail within a few years if not immediately. Some folks running these programs may not have founded a company, or may come from government, corporate, or academic backgrounds with less direct experience or exposure to entrepreneurship (which doesn’t mean they don’t have anything to offer).
Some provide little or no capital, or take equity stakes too large in exchange for the money and/or services they provide. They may give questionable or wrong advice. They may have little or no access to investors or mentors who can provide useful advice or money. And some of them are doing it for the wrong reasons, to inflate their resume or gain prestige from “innovation” or “disruption” goals that sound impressive. In short, many accelerators aren’t helping very much, and some may even be doing harm.
But with all their flaws and limitations, we like to think MOST of them (or at least many?) help founders move forward. MOST are trying to help entrepreneurs. MOST are useful, if only in a few limited ways. And even if flawed in concept or construction, the entrepreneur community likely still benefits from them, or at least learns from their mistakes and gets better. And it’s certainly not the case that the only place where great startups start is at YC or 500, Sequoia or A16Z, First Round or USV, or any other amazing accelerator or VC.
Great talent comes from, and ends up, in many strange places.
Of course I’m biased: 500 Startups competes with YC in some areas, and most definitely we are both trying to recruit the brightest and smartest entrepreneurs from all over the world. And sometimes we are just as arrogant and confident that OUR way is how founders should learn about entrepreneurship. Christine and I are co-founder/nerds who worked at Google and PayPal, and we do think we’re pretty smart (and sometimes we think we ARE better than you). But we aren’t always right, and we are far from perfect.
500 Startups values both boldness and humility, we root for underdogs, we aren’t all the same color or gender, & connecting with others in our community is a HUGE part of what 500 is all about. DIVERSITY is our STRENGTH.
We have a very different perspective from other investors & accelerators — and are quite comfortable being contrarian, thank you — but we still work closely with existing incumbents as well as new young lions and disruptors. We welcome startups from other accelerators around the world, from other VCs and angel investors, as well as those just getting started and/or who bootstrapped themselves.
Our playbook is wide open for anyone to see, and we teach an investor education course at Stanford we hope will create a whole new generation of investors and funds to help grow the market. With luck, we won’t screw them up too much or teach them too many wrong things… but you know Stanford isn’t perfect either ;)
Going further, we welcome competition from both YC and others, and we readily admit we can all learn a lot from how other programs operate.
Competition keeps us on our toes, and makes us all better. And even though 500 is by far the most active investor / accelerator in the world — we made over 500 investments in 2015, more than twice as many as YC — we know we can’t invest in everyone, and we will also make mistakes and/or miss great and talented founders that end up in other programs.
Much as we want to be #1, we don’t believe other programs have to die or fail in order for us to win — we can all win together by helping founders, not by beating each other to a pulp in zero-sum games. We believe in a world of Abundance, not Scarcity.
In closing let me clearly state: 500 Startups wants to work WITH other investors and accelerator programs, including YC. We hope Sam and YC feel the same, but regardless our goal isn’t to “beat” YC, rather it’s to do everything we can to help founders win. We believe that goal is best served working hand in hand with many friends around the world under a very big tent.
So kum-ba-yah, motherfuckers… now, get back to work.
(many thanks to my co-founder and partner Christine Tsai, along with many other colleagues at 500 Startups who reviewed this post, and who gave me advice to “geez, tone it down a bit, dave!” that I completely ignored… sigh)