Y Combinator and 500 Startups — A founders comparison

My experience and perspective having gone through both accelerators in 2014.

In the last year I have had the privilege of going through both Y Combinator’s and 500 Startups’ accelerator programs — the veritable bootcamps for a generation of young and hungry entrepreneurs. While a huge amount has been written about YC, even from a few super cool friends (here, here, and here) — and to a lesser extent, but still some out there, about 500 Startups (here and here) — I haven’t read about any other founders that have gone through both programs, and certainly not with the same company in the same year, so I thought I’d shed some light from an insiders perspective.

From 10,000 feet, the two look quite similar: both are investment funds that run accelerator programs where startup companies can apply to be part of a 3 month program, receive roughly $100,000 investment for 5–7% of their company and get access to a network of partners and alumni. This all culminates in a Demo Day — a pitch frenzy of their companies progress to date in a room full of vaguely-interested investors. However, there are some fundamental differences, especially in the qualities they value in companies and founders and the value they provide them. These differences reflect their individual ideologies, and help explain the types of companies that go through each — and hopefully what I’ve seen will provide some better context for those exploring either or both.

500 Startups (B8–Jan 2014)

I’ll start with 500 Startups as we did this program first, starting in January of 2014.

The most valuable parts of 500 Startups for me:

  • Distribution — This was arguably the most valuable part of 500 Startups for me and the company. The primary emphasis of the program is on “distribution” — getting to your customers by any means necessary. Once you build a basic product, you need to get it out in the world and in users hands. Figuring out ways to do so, and do so quickly and efficiently, is one of the biggest separators between winners and losers. Outside of just the emphasis on distribution, 500S assigns every team a distribution mentor who works in an individual, 1-on-1 capacity to help you up your distribution and growth game. Our mentor was the talented and humble Matthew Berman (now founder of Sonar) and for the first time the program peeled away generic, high-level advice, and Matt got his hands dirty, diving straight into our FB ads account and started ripping things apart — this helped us set aggressive and actionable goals and experiments that yielded our strongest paid acquisition vehicle.
  • COMMUNITY — Read: “Family”. If there is one thing 500 Startups does better than anyone is engender (err, pound in) the importance of community in building a startup, and indoctrinate you in their unique brand of it. The 500S Family is real, and quite active. They value and directly selects for founders that will be active in the community. This starts with your batch but extends to the far reaches of the community. During our batch we gained everything from emotional support, to technical expertise, fundraising advice, distribution help and more. Also, the late night drinking sessions and frequent meals with other teams doesn’t hurt.
  • Physical Co-working with Batchmates — Your batch is your immediate set of tired-eyed and generally unkempt allies in traversing the entrepreneurial journey. Getting to work side by side with some incredibly bright founders with a wealth of deep and diverse experience is awesome. Being in the trenches together lets you share more openly in triumph and defeat, and helps to level out some of otherwise sinusoidal swings you and your company will go through. We would have quick, random conversations in the kitchen or hallway daily about which investors we had just pitched, how we pulled off a certain deal, or if we could get an intro to x or y person.
  • Hustla’s Mentality — Hustlin’ is a part of the start-up game whether you want it to be or not. Hustling for customers, users, investors, partnerships, team members, or deals on your already-cheap office furniture. This hustlers mentality comes straight from the top — grandmaster Dave McClure shouting about it endlessly. Getting this in your head as a founder, technical or non, will help you realize that you can’t just build your product and sit idly by, but need to go fight for what you want, and a bit of slyness isn’t going to hurt. 500 screens for this from the get-go by weighting references you are able to collect from alumni very highly. Knowing this ahead of time we were able to get around 5 high-quality alumni recs.

Y Combinator (S14 — June 2014)

If you’ve been anywhere close to a startup, San Francisco, or a news outlet that covers technology, you’ve heard of Y Combinator.

The most valuable parts of YC for me:

  • Focus — On growth. And on making something people want. The most helpful part of the program for me was that YC has a very clear idea and focus of what makes startups successful, and they are the 2 statements above; Growth, and “make something people want.” Drilling this in makes your job as a founder very clear. The only expectations for founders in the program is that they come to dinners one night a week and participate in office hours with partners and small groups of companies in your class. The rest of the time you should be in your own office, focusing on your company and building the best company and product for your users/customers. Within days of joining partners made it abundantly clear that we should be spending every possible moment talking to customers, and knocking away at the 2/3 KPI’s we had set ourselves.
  • The Partners — The partners are all ballers. Almost all are startup founders themselves, and incredibly successful ones at that. Nothing parallels operational experience when advising companies. Above that, they don’t feel like hardcore investors, rather people who genuinely and truly want to help founders and startups, and to push the envelope of what companies are able to do in the world. Some of my best experiences were partners telling us exactly how they tackled a problem similar to what we were going through in their own company just years prior, with striking openness and honesty — including details about equity negotiations, litigation, and broken acquisition offers — there’s just no where else you’ll learn this shit.
  • Elite Network — Even with founders in my own class (S14) there was a sense of mutual admiration, awe, and wonder at how top-notch the other founders were in every possible way. This only seems to extend across the network — possibly one of the most elite in Silicon Valley. I have gotten help from YC alumni regarding fundraising, legal and company structure matters, emotional issues regarding team dynamics and so much more. The cool thing is, though, that even with the “elite-ness,” almost everyone I’ve interacted with has been incredibly nice and down to earth.
  • Brand / Access — While the “focus” YC provides was most helpful, the brand and access were the most valuable. Warranted or not, YC has a reverential place in the startup community, and carries an enormous amount of weight with almost all realms of the community; investors, other founders, potential employees, and partner/client communities alike. This access is nowhere better documented than during YC’s Demo Day, an exhilarating and exhausting day filled with pitches in front of an audience of hundreds of investors and hours of mingling — the result of which for us was having over 30 investors ask for introductions in-bound and another 25–30 business cards which we leveraged into a chalk-full calendar of meetings over the next 4+ weeks to raise our seed round.

If nothing else is clear from my above discussions of the two, though, would be the fact that YC and 500S are just different beasts. YC is elite. 500 is scrappy. Dave McClure would suggest 500S “grooms ugly ducklings” while YC “farms black swans.” 500S is for hustlers who want an in on startup world and are going to work their asses off to make their company solid. YC finds incredibly fast growing companies, especially with contrarian or novel concepts, or seasoned and brilliant people to help them accelerate their growth and multiply their already likely chances for growth and success.

YC is elite. 500 is scrappy. Dave McClure would suggest 500S “grooms ugly ducklings” while YC “farms black swans.”

500 Startups is a phenomenal place to enter silicon valley, learn the hard lessons of building a product, reaching users, and running a startup. They have incredible variance in the type of companies, founders backgrounds, and stages of companies in their programs, and they thrive on the diversity. This provides for an exciting network with a lot of breadth. They are making a big play on international companies and hammering away at tried and true business models. The support structure is core to their being, and the time you get to interface with partners and staff is unparalleled.

YC is where savvy and incredibly bright individuals as well as companies that have already proven they are on an interesting trajectory go to rocketship their growth and visibility. They are making plays on the brightest and most capable people, and are visibly expanding the scope of types of companies they are interested in. They have breached new sectors such as biotech, nuclear and healthcare and don’t look to be slowing down in these non-traditional Silicon Valley arenas under Sam Altman’s leadership. They are making bets on majorly different companies, or truly outstanding brainpower to find their next home-run. Their mega successes and high-caliber partner pool speaks for itself, and the brand power and benefits in the ecosystem are unrivaled.

Personally, I got more value as a person/founder from 500 Startups, but our company was undoubtedly better off for doing Y Combinator. 500 Startups helped me enter the founders mentality with stability and structure. Partners, alumni, and other batch mates were incredibly supportive of what we were working on, and people were constantly looking to help one another. They also created an environment where discussing mistakes and failures was an important and necessary part of the process. YC was the perfect place to take a just proven model and accelerate growth. As a founder I gained focus and was able to clearly set specific goals. The company was elevated in status and our ability to both hire and raise seed capital from awesome people improved dramatically. The communities of each are unbelievably strong and unique and I’m grateful to be a part of both.

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If you are considering applying for an accelerator with your startup, I would recommend applying to both. They are the best in the Bay Area, and if you can get into one of them it will be invaluable for you and your company. Feel free to reach out to me via email or on Clarity for further advice / discussion☺

P.S. Coincidentally, applications for the next class for both 500 Startups (here) and Y Combinator (here) are open… Apply!

Thanks to Tristan Pollock, Nate Mihalovich, Nick Bastone, Logan Randolph and Mitali Thakor for their helpful thoughts and edits.