YC: From Incubator to a) Biz Franchise? b) VC ? c) Biz practical Education ?'

is going to help get a sense of how the YC change affects its culture.

-------------------------

OK before starting, I want to clarify that I really like and respect what PG and his team does with YC.

What I would like to mention is that after the latest development of funding every YC team (http://www.businessweek.com/magazine/content/11_10/b4218038672660.htm), YC has changed the business model that is following. I do not know if this is planned change or a result of trust and appreciation from Ron Conway. As a matter of fact I really like the vote of confidence from Mr Conway to all these prominent entrepreneurs. Now lets break it down a bit.

-------------------------- Period A What it used to be. A home grown set of teams (8 teams), after a selection from relatively narrow sample (startups primarily focused to software ventures, with founders that can hack their way to prototype and which address a relatively big market). The above was nurtured with close relationships, that beyond common interest had a sense of common dream (according to PG a team can change their initial model, based on advice given). What is the new identity of YC? (is YC pivoting?)

-------------------------- Period B A batch of 43 teams. I am sure that the networking logistics are a big advantage (http://ycombinator.com/atyc.html ==> paragraph about size), but the intimacy level will probably change (I do not want to be pessimistic but this is a probable outcome of the growth). Now is this good of bad? Positive 1) Bigger network 2) More traction 3) Even with same chances of succeeding, the financial outcome better. e.g. with 2 (10 % chance) good exits in 20 teams(in a year), maybe a 5-10 million exit after 2-3 years, but with 8 (10%) good exits from 86 teams, the prospective outcome is 40-80 million exit. Now if you can achieve this with the same structure (people-resources), then this is an amazing productivity boost. However the differentiator of Period A was the close relationship with PG and teams. This is not going to be the main rule for Period B. Now if the skills-mentorship of PG are transferable or shared by new instructors in YC, then maybe we are talking about a franchise style mentoring. This is possible, but surely there will be imitators with probably similar success rates. This model seems a bit more like a “practical business MBA”. Maybe Universities will try this model as well. What about the 150.000 for each team? This is actually a tricky point. VCs or even Angel Investors work with the 1/10 rule. If you want to fund 10/10 then to keep the same rate of success you need to fund another 90 startups outside YC(I don't know if Mr Conway funds so many startups). Moreover we have another shift. The YC looks no longer like an incubator, but rather like an Angel VC which has already invested from day-1 to all teams. Quite a bet to take, considering that most teams don't have the working prototype beforehand. Hope that all goes well for YC, because we definitely want to see more success stories.

So, what do you think? How will YC evolve after the latest changes?