Can The Y Combinator Idea Turn Into A Movement?

Most readers of this blog know what Y Combinator is. Hell, last month two of the top five referrers were affiliated with Y Combinator. But for those who don’t know, Y Combinator was started by Paul Graham and now runs two programs a year in which about twenty teams (each program) are funded with enough money to pay for food and rent for roughly three months while they build and launch a web application.

With the announcement last night of Google App Engine, it’s literally possible to build your entire web app on top of Google’s vaunted infrastructure. It’s already been possible to do that on top of Amazon’s for some time now.

So it’s not surprising to me that the Y Combinator model is being adopted and adapted by others. Last summer my friend Brad Feld helped sponsor TechStars in Boulder Colorado and a number of interesting startups have come out of that program.

I was at a meeting recently where a University was considering starting a venture fund to back companies coming out of their school. I encouraged them to look at the Y Combinator model for inspiration and suggested that they back 10 teams at $25k each instead of one team at $250k. Two reasons. First it’s hard to know who will get it right, by backing 10 opportunities instead of one, you vastly increase your chances of success. And second, you can get a lot done on $25k now, particularly if you back young software engineers right out of school (or even in school) who can live for at least six months on $25k.

This stuff is transformative. I’ll leave you with a part of a comment from phbradley in response to my recent post on the decline of the firm.

bioanalogy – (if) firms are breaking up into smaller, agile units, the
economy will resemble the human brain – dense, dispersed clusters of
small inter-related units (neurons!) forming transient, agile patterns,
constantly being remodelled.

There are 4 components to the
system you could copy: 1) be a neuron – basically small firms,
startups, road warrior consultants and creatives; 2) be a synapse
between neurons: the service that lets neurons talk to one another,
form temporary networks and memories; 3) be the extracellular matrix –
half incubator, half director, it’s the YCombinator of the brain on
which every neuron finds its position and develops under its occasional
signals. 4) be the blood supply – the main supply of resources
(multimillion VC?), but *not* directly involved with neurons. Often
aligned with the neurons via the extracellular matrix. 5) be the skull
(i think government’s already got that one figured out pretty good)