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Start-up funder: come to us without an idea

Experts debate Y Combinator’s plans to look for talent, not concepts

Y Combinator has announced Apply to Y Combinator without an Idea. The thinking is that a lack of an idea shouldn't stop talented people from starting a start-up. The press release states: "If you apply [and] seem like you'd make good founders, we'll accept you with no idea and then help you come up with one". It added that start-ups often change ideas completely and go on to great success: "Reddit was originally going to be a way to order food on your cellphone. Scribd was originally going to be a ridesharing service."

We asked Harj Taggar, a partner at Y Combinator, if investors these days therefore care more about the team than the idea. "It depends on the stage of investment. If it's a late-stage investment, investors care most about metrics like revenue and growth, though the team is still an important piece. But the earlier the stage, the more important the team becomes because that's essentially all the data there is about the company," he said. "At the stage Y Combinator invests at – often before a company has even been incorporated – we've no real data on the 'company', and so the only thing we have to judge is the team. And ideas are generally more malleable than people."

Ideas are cheap and plentiful

We spoke to Pascal Finette, Director Open Innovation Group and WebFWD at Mozilla, who largely sided with Taggar on the subject of investors caring more about teams than ideas: "I believe they do, for multiple reasons. Ideas are literally cheap and plentiful, and anything 'new' has been done before, in some other combination. Even Apple didn't originally invent the GUI, but it executed on the idea. Hint: it's about the team!"

The second reason, said Finette, is that executing on a good idea is very hard, and very few people have the talent, experience and everything else it takes to create a success. He added that there are also people who can execute but that don't have the right idea: "I even built a business around this concept – FoundersLink – where we match amazing people who have strong 'founder genes' with great ideas, which we systematically scouted."

We asked Finette if part of the problem with ideas also stemmed from people in the industry being inflexible and precious, rather than ditching something that's not working, or rapidly iterating to something new. "Yes – as I said, ideas are cheap, and everyone has at least one business idea per day, but we don't or can't execute on them," he replied. "Because of this, I'll never understand why people are so coy about sharing their ideas. As if someone would 'steal' the idea. It doesn't really happen, and if it does, it's only because other people are better at executing than you are."

Kevin Mann, founder of graphic.ly, told .net that when working through the TechStars process, the team was constantly reminded it was selected because of the team rather than the idea. Once in the process, ideas were then refined and shaped, and while graphic.ly didn't hugely change direction, Mann said teams from his year are now working on very different things to what they were at the time.

Beyond the team

However, Mann told us he's a little worried about Y Combinator's plans. "It goes beyond the team. Dropbox co-founder Drew Houston summed it up by saying he thought of 'idea, team, and market as multipliers for success', and I myself would add the passion of the team to that equation," he said. "That's where I worry about the 'no idea' idea. Paul Graham is really smart, and teams that join Y Combinator without an Idea will end up with something viable and investable by the time they graduate the programme. The idea and the market will be strong and the team will have all of the qualities to execute. But the team will need to be passionate about the market and idea."

Mann said that running a start-up is tough, draining, exciting, challenging and all-consuming, and so if you're not passionate about an idea, it will not mean enough to you to succeed – the motivation and the drive will not be there. "Having no idea would worry me because the team is then dependant on external sources for vision and direction. Would such a team be able to pivot if it wasn't working out?," he asked. "From talking to investors and mentors, it's that ability to execute that makes a team investable. Without that, the risk is too high, and so the team is the most important factor for success – but it's not the only factor."

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