Exclusive: Y Combinator beefs up with a string of new lieutenants

Y Combinator continues to change shape under CEO Garry Tan, a founder-turned-investor and online influencer. While Tan and his colleagues have attracted media attention lately for quarrelsome social media posts that take on rivals and San Francisco city officials, Tan has more quietly been turning the dials inside the popular accelerator program since taking it over in January. Some of the moves saw Tan close down Y Combinator’s late-stage Continuity Fund. He also shed staff, including laying off a small admissions team in summer.

Now, Tan is bringing aboard some new lieutenants to help him run the sprawling organization. Earlier this week, Luther Lowe, a Washington, D.C.-based, 15-year veteran of Yelp who spent his last five years with the company focused on public policy, announced on the platform X that he has just joined Y Combinator in a newly created, similar policy role. Now, Y Combinator is gearing up to announce three other recruits, all of them YC alums: Tyler Bosmeny, Nate Smith and Pete Koomen. Bosmeny and Smith — whose respective startups, Clever and Lever, passed through the program in 2012 and were later acquired — just signed on as so-called Visiting Group Partners. That means they’ll be advising YC startups on a batch-by-batch basis. Koomen, who co-founded the optimization platform Optimizely (it was part of YC’s winter 2010 batch and sold in 2020), is meanwhile becoming a permanent Group Partner after his own tour as a Visiting Group Partner.

To get a better understanding of what the roles mean, and how Y Combinator looks these days in terms of its evolving structure, we talked a bit with Koomen earlier this week. We also wound up talking about some of his now-prominent batchmates and what he makes of the knock against modern Y Combinator — that aggressively scaling under its previous leadership hurt its brand. Our chat has been edited lightly for length and clarity.

TechCrunch: How big was your batch in 2010, and who were some of the founders who went through the program with you?

Pete Koomen: I think we were 30 companies or maybe just a hair under 30 companies. It’s kind of funny, because at the time, everybody was talking about how YC had gotten too big. So that’s been a common refrain over the years. But, yeah, we had a bunch of founders that have gone on to play big roles. Aaron Epstein, who founded Creative Market, is now a Group Partner at YC. We also had several founders who went on to found large companies: Eric Wu, who founded Opendoor; Daniel Gross, who [sold his startup, Cue, to Apple], was at YC for a while and has done a lot since then. Howie Liu, who started Airtable, was in that batch. Airtable was after YC. Howie was doing a company called Etacts during YC. But yeah, it was an amazing batch and obviously changed the course of my life.

And how does your new role work at YC?

Group Partners are responsible for taking companies all the way from admissions — we read applications, we interview founders — to shepherding them through the batch. So we advise them closely for about 12 weeks, leading up to Demo Day, then continue to advise them while they’re active YC alums as well. Group Partners are, for the most part, former founders. A lot of them are former YC founders. They’re the engine that makes YC work.

How many of you are there?

There are 14 Group Partners, I believe, and four Visiting Group Partners. Though I’m not sure I’m the best person to go through the ins and outs of how the team is structured.

And sometimes group partners become managing directors over time? I’m guessing there are levels of seniority there . . .

Honestly, I don’t know I’m the best person to talk with about YC’s structure.

You interview founders. What does that process look like today? How long does each team have to present?

In this most recent batch, the summer 2023 batch, we had north of 24,000 applications and of those 24,000, we ended up funding around 230 companies, so that’s less than a 1% acceptance rate, which as I understand is the lowest that we’ve ever had at YC. So it’s an extremely competitive program. Group Partners spend a lot of time reading applications, then we’ll do a series of mostly back-to-back interviews over several weeks shortly before the batch begins, and each interview is about 10 minutes long right now.

What does your hiring signal specifically? Is there anything to extrapolate here about YC’s interest in enterprise software?

The only thing I can say here is that we are extremely optimistic about tech, especially right now. This is probably the best time in many, many years to build a startup, and we’re going to see a lot of generational companies emerge from — I hope — YC but in general as well.

The stock market tanked again this week. How are entrepreneurs’ expectations changing in this market compared with when you began working with batches, and how are VCs’ expectations changing?

You’re right that the markets have definitely changed. It’s not clear yet what impact that will have on the early-stage financing market. Many of our companies coming out of our summer 2023 batch raised great rounds of funding, but we’ve been careful to try and make sure that founders are focused on important metrics that maybe haven’t gotten as much attention as they should have over the last few years, like gross margins and revenue per employee.

In these recent batches, are you seeing companies that are farther along and coming to Y Combinator to retool their operations?

In fact, we’ve seen the opposite. Of course, YC regularly funds companies that have raised money before. But in the last batch, a substantial percentage — more than 50%, I believe — was pre-revenue.

Sorry to ask the annoying question, but what do you say to those who question whether, because so many companies now pass through YC, it’s as relevant and can push the needle as much as it once did?

YC was pretty different when we went through it back in 2010. I honestly didn’t really know what to expect when I came back. And I was really pleasantly surprised when I discovered how much YC has actually improved, and that YC size works in founders’ favor. When we went through YC, almost nobody else was building SaaS software. We didn’t have any batch mates who were going through the same challenges of, you know, putting together enterprise contracts. We kind of had to figure out a lot of that on our own. Today YC has a huge network. There are so many other founders who’ve gone through the same thing that you’re about to go through that it’s like a cheat code for founders. In many cases, you also get to sell to other companies in the network. And that’s like another cheat code that didn’t really exist earlier that I would have killed for.

It’s great that there are many more SaaS companies in each batch, but what of the obvious concern that so many startups in one batch also makes it likelier they’ll directly bump into each other?

We do fund companies that sometimes end up competing with each other, but when we are interviewing founders and deciding who to fund, we really try to focus on the founding team instead of looking at the idea. There are a lot of reasons for that, but probably the biggest one is just that founders change ideas all the time. Dan [Siroker] and I actually applied to YC with a totally different idea that ended up being terrible, and we pivoted to Optimizely midway through the batch. And this happens all the time. So it’s really hard to prevent startups from occasionally competing, but it doesn’t end up being that big of a deal. At that stage, when you’re brand new, you are so much more likely to suffer from internal problems rather than from another startup competing with you.

When is the next application deadline?

The next application deadline is Friday, October 13.