News from the Front

September 2007

A few weeks ago I had a thought so heretical that it really surprised
me. It may not matter all that much where you go to college.

For me, as for a lot of middle class kids, getting into a good
college was more or less the meaning of life when I was growing up.
What was I? A student. To do that well meant to get good grades.
Why did one have to get good grades? To get into a good college.
And why did one want to do that? There seemed to be several reasons:
you'd learn more, get better jobs, make more money. But it didn't
matter exactly what the benefits would be. College was a bottleneck
through which all your future prospects passed; everything would
be better if you went to a better college.

A few weeks ago I realized that somewhere along the line I had
stopped believing that.

What first set me thinking about this was the new trend of worrying
obsessively about what
kindergarten
your kids go to. It seemed to
me this couldn't possibly matter. Either it won't help your kid
get into Harvard, or if it does, getting into Harvard won't mean
much anymore. And then I thought: how much does it mean even now?

It turns out I have a lot of data about that. My three partners
and I run a seed stage investment firm called
Y Combinator. We
invest when the company is just a couple guys and an idea. The
idea doesn't matter much; it will change anyway. Most of our
decision is based on the founders. The average founder is three
years out of college. Many have just graduated; a few are still
in school. So we're in much the same position as a graduate program,
or a company hiring people right out of college. Except our choices
are immediately and visibly tested. There are two possible outcomes
for a startup: success or failure—and usually you know within a
year which it will be.

The test applied to a startup is among the purest of real world
tests. A startup succeeds or fails depending almost entirely on
the efforts of the founders. Success is decided by the market: you
only succeed if users like what you've built. And users don't care
where you went to college.

As well as having precisely measurable results, we have a lot of
them. Instead of doing a small number of large deals like a
traditional venture capital fund, we do a large number of small
ones. We currently fund about 40 companies a year, selected from
about 900 applications representing a total of about 2000 people.
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