Prestige Startups

I don’t know if the media ecosystem changed, or just my algorithm, but I’ve recently been getting deluged by information from Y Combinator.

Y-Combinator is a startup accelerator that aims to build successful companies, usually with a tech bent. YC has an eco-system of things that help to make startups successful including close by venture capital firms, media connections, and more. This creates a positive feedback loop for YC, where because YC is known to be the best and attract the best startups, YC continues to do so, allowing it to keep its reputation and growth intact.

Here’s the challenge! Those who are super creative and motivated to build an empire are few and far between. However, status hungry people with nice credentials see a pathway to stability and riches when getting involved. This creates an uncomfortable dynamic where startups over time will increasingly become professionalized and less risky without strong corrective tools in place.

How should you approach an environment in a sustainable way that structures the correct risk appetite. Broadly speaking, while you want to have people who are willing to challenge incumbents and put in countless hours at the prospect of something new, you want to avoid the Sam-Bankman Frieds of the world who seem almost risk-philic. You can’t build a company with infinitesimal or maximal tolerance for uncertainty.

This is made even more challenging when you consider that everyone is looking for diamonds in the rough, and that engineers who can build the future are likely to be sought after by many.

One thing that can help is building engineers when designing startups. If you teach an engineer how to engineer, you’re more likely to get what you need from them. Either deducting training from salary, noncompetes, company specific training, or ‘you must work for us for X years’ might be the different mechanisms that startups use to retain talent.

Another idea is in-house entrepreneurship. Companies that encourage start-up mindsets are more likely to continue producing excellent products. This combines the resources of the incumbent while creating space to develop something new.