{"id":1197922,"date":"2022-09-03T18:03:07","date_gmt":"2022-09-03T18:03:07","guid":{"rendered":"https:\/\/www.ghanamma.com\/2022\/09\/03\/y-creator-y-competition\/"},"modified":"2022-09-03T18:03:07","modified_gmt":"2022-09-03T18:03:07","slug":"y-creator-y-competition","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2022\/09\/03\/y-creator-y-competition\/","title":{"rendered":"Y Creator, Y Competition \u2013"},"content":{"rendered":"

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Welcome to Startups Weekly, a fresh human-first take on this week\u2019s startup news and trends. To get this in your inbox, <\/em>subscribe here.<\/em><\/p>\n

YC had its biggest news in years this week: Garry Tan will be the new president and CEO of the organization, starting January 2023. Tan co-founded and helped scale Initialized Capital to a venture firm that now manages over $3.2 billion in assets. All the while, he\u2019s always had roots in YC, both as a former partner at the organization.<\/p>\n

One detail that didn\u2019t make my story this week is how Tan is bringing a content creator vibe back to @ycombinator\u2019s leadership ranks. He\u2019s succeeding Geoff Ralston, who wasn\u2019t too public about his work at the accelerator. Tan, however, has amassed over 220,000 YouTube subscribers for his tech videos. Topics on Tan\u2019s youtube channel range from how to lead like a champion to how dev teams can build like Google, and, yes, how to apply to YC in 2022. It\u2019s reminiscent of YC co-founder Paul Graham\u2019s essays, many of which inspired entrepreneurs to jump into startups to begin with.<\/p>\n

YC\u2019s choice to put a creator at the helm is in line 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 \u201cto help them climb up the leaderboard, try out product demos and learn about the founding team.\u201d<\/p>\n

As standing out inside of YC has become more difficult, and given how important distribution is for early-stage startups, YC offering a way for startups to make a bit more noise might make the implied equity cost of its program more attractive. Tan continues that same focus, both as a well-known personality within tech and a creator who has spent years building up a brand focused on early-stage startups.<\/p>\n

Creator news aside, the Y Combinator executive shuffle brings up another question: competition. Tan didn\u2019t say how his new role at Y Combinator and his future role at Initialized, which is venture adviser, will overlap when asked about competitive or complementary dynamics. He offered Strictly VC a similar sentiment:<\/p>\n

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When I left YC, I was always careful to never ask YC partners \u201cWho was hot?\u201d Initialized did their own work. That doesn\u2019t change with me on the inside. Initialized was built to be the ideal firm founders would choose because of the ethos, approach to founders (soft advisership, not your boss) and what makes it extra unique is the large emphasis on team and services from that team. Few firms focused on pre-product-market fit seed do this. The very best ones do, and Initialized is one of them \u2026 The community has an investor database that helps them choose, and Initialized is top ranked there and will be as long as it continues to do no harm and help. That doesn\u2019t change either.<\/p>\n<\/blockquote>\n

These are just the first questions around creators and competition that we have for Y Combinator\u2019s future. Good thing Demo Day, happening next week, is going to continue the conversation.<\/p>\n

For my full interview with Tan, check out my story: \u201cGarry Tan\u2019s return is a full circle moment for Y Combinator.\u201d And, to thank you for being a Startups Weekly subscriber, here\u2019s a little TC+ discount for you: Enter \u201cSTARTUPS\u201d at check-out for 15% off of your subscription.\u00a0<\/strong><\/p>\n

In the rest of this newsletter, we\u2019ll get into one app\u2019s surprising closure, the latest and greatest on party rounds and a follow up on a data-driven fund. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter<\/a>. <\/strong>Appreciate your support, as always!<\/p>\n

The ending of Zenly<\/h2>\n

Earlier this week, Snap laid off 20% of its global staff in an attempt to restructure its business. The cut comes after CEO Evan Spiegel\u2019s May memo, in which he wrote that the company would miss revenue goals in the second quarter.<\/p>\n

And layoffs aren\u2019t the end of the story. Snap is slowing the production of Snap-funded originals, minis and games, hardware, the Pixy Drone, as well as standalone apps that include Voisey and Zenly. Beyond the fact that Snap says it is still developing its augmented reality glasses, called Spectacles, the surprising tidbit in that refocus is the shutdown of Zenly, a hugely popular app that was acquired five years ago.<\/p>\n

It\u2019s common for companies to shutter apps, especially acquisitions, years into the works during restructuring efforts. Plus, Zenly doesn\u2019t generate a ton of direct revenue and still works as a standalone app. Still, as my colleagues Paul Sawers and Romain Dillet point out, there was quite a bit of shock when Snap snuck in the shutdown.<\/p>\n

Here\u2019s why it\u2019s important:<\/strong> Sawers and Dillet point out that \u201cZenly was showing no signs of stagnating, and if anything, it looked like it had the potential to be one of Snap\u2019s prized possessions if it could only figure out how to turn it into a money-making machine.\u201d As you\u2019ll see in their story, it turns out that the shutdown may be Snap playing defense, not just offense.<\/p>\n

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I still have so many (maybe simple!) q\u2019s, but here are two:<\/p>\n

why was it so hard for snap to just combine zenly & snap map? best of both worlds?<\/p>\n

is there no competitive tensions between now ousted zenly and snap\u2019s future snap map plans?<\/p>\n

\u2014 natasha (@nmasc_) September 1, 2022<\/a><\/p>\n<\/blockquote>\n<\/div>\n

Let\u2019s talk about party rounds<\/h2>\n

I dug into a debate as old as time this week on Equity Wednesday and +: party rounds! The positives are obvious: With more investors on their cap table, startups have more avenues for distribution, introductions and advice throughout their lifecycle.<\/p>\n

The cons are more complicated. Is the party-round investment as helpful as capital from fewer, more commitment sources? Are there too many cooks in the kitchen? Is it a negative signal that this startup had to raise from dozens of people instead of one high-conviction partner?<\/p>\n

In my story, I interviewed three people from all different seats at the venture table, from the engineer leading products to unbundle these processes, to the party round startup that raised a party round, to an investor whose job it is to collaborate with (and sometimes compete with) the flurry of angels interested in these rounds.<\/p>\n

Here\u2019s what\u2019s important: <\/strong>I love when debates actually make a difference, and in this case, they do. It seems like the definition of a party round has changed over the years, partially in response to many of the dynamics that appear when there\u2019s no specific lead investor in a financing round.<\/p>\n

\"Celebration<\/p>\n

Image Credits:<\/strong> dehooks<\/p>\n<\/div>\n

The follow-up<\/h2>\n

I\u2019m experimenting with a new section in Startups Weekly, where each week we follow up with an old story or trend to see what\u2019s changed since our first look. This week, I checked in with Abe Othman, the brains behind data science at AngelList Venture \u2014 including its $25 million Quant Fund. In December 2021, I broke the news of the startup\u2019s fresh new fund, which is an investment vehicle that hopes to plant $250,000 checks into over 100 companies.<\/p>\n

The big twist of the fund is its approach in using quantitative factors to decide which startups to invest in. I then reported that his team tracks the velocity of hiring demand for a startup, looking at how many job applications a single company gets within a specific period of time. The signal strips out factors like investor bias, the founder\u2019s networks and even buzzy valuations.<\/p>\n

Here\u2019s what\u2019s new: <\/strong>The fund has deployed about $6 million, about a third of the fund, across 530 startups since December, with over 35 larger checks into high-signal startups. Othman says that the fund\u2019s larger checks have been going toward women and minority founders at a higher percentage of total portfolio composition than venture at large. Othman estimates that their portfolio is nearly 20% women.<\/p>\n

\u201cAs you know, we intentionally practice venture investing in a distinct way \u2026 our largest portfolio allocations are toward founders who write back to a cold outreach email, which requires quite a bit of faith on their part,\u201d he added. It lines up with what he said last year, when he described the firm\u2019s cut-and-dry cold email approach as \u201cless adversarial\u201d than other funds out there.<\/p>\n

\"Yellow<\/p>\n

Image Credits:<\/strong> Javier Zayas Photography (opens in a new window)<\/span> \/ Getty Images<\/p>\n<\/div>\n

Wait for it. See it? Yep, I\u2019m excited too. And while we\u2019re on the topic of housekeeping, some more notes:<\/p>\n