# Dalton & Michael: Y Combinator is back in person

**Author:** Dalton Caldwell, Michael Seibel
**Type:** Video
**URL:** https://www.ycombinator.com/library/IS-dalton-michael-y-combinator-is-back-in-person
**YouTube ID:** GiuxXzmvolU

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Dalton Caldwell and Michael Seibel provide an update on the upcoming Summer 2022 batch along with the changes and trends
they've noticed in the startup world today.

## Transcript

we have a grand nefarious strategy of giving founders what we wish we had when we were a founder yeah it's like what would i have wanted yeah like that's certainly how i think about this this is michael seibel with dalton caldwell today we actually have some news to announce um for the first time since winter 2020 this new batch the summer 22 batch will be in person um and we are all excited

dalton we're gonna get to see founders in person again what do you think it's a a breath of fresh air um i've been spending a lot of time in this little room much as probably you have to so yeah this is it's it's really fun i'm excited me too me too so let's talk about what this means so um the founders of this batch are going to have an in-person retreat in sonoma to kick the batch off they're going to be able to go to weekly meetups in san francisco

we're actually going to help organize weekly meetups in other cities around the world we built some software that are going to help founders meet each other and have one-on-one coffees founders in the same city and then we're going to have a huge end of batch celebration after demo day in san francisco with all the batch and the alumni needless to say the program's still going to be friendly to founders participating remotely so the batch talks office hours things like that will still be online and we still have

founders from all over the world participating but i have to say you know founders i've talked to in every country have been excited to come here to meet us to meet their batch mates um to get out in front of zoom and and get off these cameras for a while so i'm really really excited yeah we kind of had a dry run a little bit last batch where there were a lot of these in-person meetups um and i went to a few i know you did too and the energy was great and so yeah now is now is the time

to make this move you know yeah the idea that we get to renounce something that was so quarter yc is actually quite fun what other trends are you seeing for the the summer 22 batch yeah i mean let's see to go through some of the stuff i've noticed so for one um more applications um i think that's that's i think that's always a trend but there's definitely more applications and you know i think the uh the new yc deal doesn't hurt on that one um and so yeah more applications more applications to

read and the energy is feeling good man how about you what what are you seeing in your group same thing i'm seeing um teams be slightly more technical which is exciting i mean when you work with strong technical teams we talk about taking punches strong technical teams punch back and so to me like that's always fun it's always um much more enjoyable work with strong technical teams but you know over the last you know let's say three four months what are you

seeing overall in our world i think that people that want to do a startup because they're excited about building something and solving stuff for users those people are still applying if anything those folks that aren't making fear-based decisions are more excited to apply to yc and do this almost because it's more rebellious or anti-anti-something yes like to to do a startup when it's like less cool to do it and this makes sense again if you if you actually look at the yc data some of the best companies we've ever

funded happened when either there was a full downturn or at least a blip i think we can call it a blip um like some of what happened in 2018 but look at when stripe was founded look at when airbnb was founded look at when dropbox was founded right yeah it's a weird trend because i agree with you it's both a little bit like i want to go against the flow there's that set of founders but there's also the set of founders who are just strategic who are just like hey look in the middle of the hype cycle hiring is harder getting access to customers is harder

like 17 of your competitors are gonna all get funded like you know it's it's weird because on the surface the hype cycle looks good but when you actually get into the dirt the hype cycle like hurts just as much as it helps and so you know i'm starting talking about is in this batch who are like yeah no this is actually like you know they're not wishing for a downturn but like this is the time when it's strategic to get in the game yeah make hay why the sun shines right this is where oh cool cat you know face the

price of facebook ads is dropping oh cool like all these factors are changing and so if you're like well positioned this is when you go on offense yes you're not like you're not like defensively oh i'm gonna hide there's a lot of folks that we talk to that are like extremely ready to go on offense yes yes they've been waiting for this moment now we're also seeing a lot more interest in san francisco and like i don't know like that's a dirty word i'm not sure if i'm allowed to say the term san francisco because we all know the tech world doesn't exist here

anymore right yeah well it's funny there was so much content marketing trying to fomo everyone that everyone was moving into whatever insert city name you know whatever the city was this is the next capital and then there was a lot less content marketing of all the people that moved back and so i don't know who you're talking to but a lot of the folks i've talked to quiet you know that were loudly talking about moving away to whatever city name yes you know they're much more quiet on the move back

i've not seen as many i'm not seeing as much of that but yeah i think a lot of folks are moving back right now new york too it just seems like people are going back to the big centers because they're getting bored and lonely and feel kind of over it again this is what i'm learning in office hours man is that people are they want to be where the action is you know i think you're saying it the right way i think the founders i talk to they don't want to build a startup ecosystem they want to be a part of a startup ecosystem and it's been

interesting because we saw it you know first in the end of batch survey when we asked people about oh as we add more in person components and it was like almost unanimous the founders in the previous batch were like if you had told us something was happening in the bayer we would have moved you know and like that was a response we didn't necessarily expect it's almost like you and i were convinced that that wouldn't be the case like i don't know how to explain it like the content marketing worked on me too a little bit yeah yeah but it's like it's not being borne out in the data that we

have about you get what i'm saying like like we i kind of bought into the content marketing too but we'll see i don't know like i think the other thing that i'm seeing and and it's interesting because i've got a brother who's this age a recent college grad i think what's so hard for a lot of people to see is that if you're a recent college grad you don't want to stay in the city you went to school in um you might be living with your parents and like in comparison moving to the bay area is

way better of an option than kind of your current setup over the last couple years and so i think that a lot of that content marketing is unfortunately written by like people our age people with kids people living in san francisco for like the last two years who were generally pissy about covid and it was like less responding to someone who might have spent a year and a half remote doing college or living in some small college town locked down and is like i want to get out of this you know like that kind of person is uh

san francisco looks like a beacon i think you want to be where the action is is i think how my summary is versus feeling like you're in a not where the action is so another thing that happened recently is uh we sent a letter to yc founders about the economic downturn which was uh happened to maybe get a little bit of exposure to the to the general public i'm not sure how that happened but it was interesting because i've been really impressed with how the yc founders have

responded you know what have you seen i think that if you're smart you know how to look at things like that as well as just general press or advice and apply it to your specific situation correctly like if you're a two-person startup with no burn what's happening in the late stage fundraising environment in ipos like if that's what you're worried about man you've got bigger problems okay

and so i think if you were able to say well what is my actual situation am i default alive how much cash do i have what's my runway and then make the right moves because again for some folks the actual move is to go on offense right like we said a moment ago where they're like okay i see so this is the score got it time to go hard against my competitors who are have higher burn yeah you know like this is a great time if you're the underdog and your large competitor is in trouble right

and so i think that smart founders know what applies to them and what doesn't versus overly freaking out about things that have nothing to do with them um you know what do you think like you often talk about this and and it's something that i think is becoming part of the culture of yc where we want to talk up to our founders versus down to our founders like we want to talk to the smartest kid in the class not the dumbest kid in the class and i think sometimes in the general public

that's not well understood but i think within the yc community it really is um the feedback that we got from alums was universally this caused me to take a sober look in my situation and if my situation was good i'm staying on plan if my situation wasn't i'm making changes and you know just to your point it wasn't i'm freaking out it was like okay i'm gonna take a second and and do a sober analysis of my company and i think what's unfortunate is that they had just gone through this

two year cycle where investors were basically screaming at them to burn and raise because investors were getting markups and they were raising new funds and right and so i think that in many ways this letter gave them a lot of people the opportunity to say okay wait a second like is that strategy actually good for my business and um it's obviously good for my investors business you know getting markups is obviously part of their business model but is that strategy good for my business

so um that's been really fun to see it's been fun to see the founders taking it in the right way um probably one of the last big trends is this new standard deal right you know that was big news over the past um four months and it's interesting because i think that in some ways um it was conceived of competitively people were looking at the yc standard deal being like oh like ycs to compete there's so many new seed funds out there

and i think what's interesting is if you would kind of take it inside baseball for a second that's really not the reason we did it at all like take us inside baseball a little bit dalton like what was the strategy behind it yeah i mean the strategy was it's good for companies to get fully funded the moment we accept them and you know frankly we saw some stuff that looked a little toppy to use the wall street best terminology

you're speaking in code be literal here what do we see it looks yeah um it looks like we we're not sure that things were sustainable that everything would keep going up forever how about that stocks may not only go up and so it seemed prudent to you know be it seemed prudent to give the companies more money so that in the event of a market change we were confident that everyone be fully funded again for context i think people forget this because of

all the crazy um seed round warped perceptions how much money did like airbnb and dropbox and all those folks raised back there how much money did airbnb is a million under a million these seed rounds are under a million and and diluting over 20 over 25 like so we actually know that half a million dollars is slash was enough money to build like one of the most successful companies ever and it made a ton of sense

to to have this budget to raise this money we could fund a lot of companies it's all raised we have it dry powder um so that no matter what happens if you get into yc you're good there's this saying that i love um the best time to fix the roof is when the sun is shining and you know i look at our opportunity to create this new standard deal for for yc founders and the fact that we have budget to fund over 1400 companies with this standard deal

and i think to myself like you know i'm so happy we did that when we could because now we're going to be able to help so many teams that otherwise might not be able to do startups might not be able to raise money so and not be sure oh i don't know if i want to apply to yc i don't know if i want to start a company because i'm afraid i've read techcrunch articles the funding environment is rough you know there's all these like fears out there well it's like well yeah if you get into yc you get half a million dollars and like the day we fund you it's funny like people they almost sometimes people don't believe us they're like wait this

is contingent on something right it's like no we can use them no we give you the money up front yeah no but like don't other accelerators they have something where they take it back if you don't do it's like no like if you don't kill anyone you don't violate our ethics thing this is this is the deal um i think what was also interesting was to see how yc founders used the new standard deal in the last batch when they were fundraising um you know historically seed funding could dilute companies 25 30 even 35

i would say in more recent years that number was around 15 to 20 percent but we really saw a lot of founders able to get the money they need raise their seat around with 10 some even a little less dilution which was like huge i mean we all know those earlier rounds are where most of the dilution the company happens so that was awesome to see the other thing and i know you saw this in your group too it's just founders going into fundraising with confidence you know we talk about this all the time we tell the founders be

confident but it's hard to be confident when you only have six months or three months of runway when you go into fundraising it's a lot easier to be confident when you come in with half a million bucks what did you see in your in your group yeah i think the best founders were just very logical and non-emotional in in the way they handle this just it's business right like the best way imagine any financial transaction you want to buy a house you want to buy a car you

name it the more that you can be just a non-um not manipulated into being emotional or to be fomo like there's all these things if you could just be like hey i want to buy a car this is my budget this is what i want to buy okay let's work it out all right i bought the car that's how you want to approach any kind of financial business relationship right it's just to be non-emotional and so that's having this extra money helped people not be quite as susceptible to being told to be afraid basically right yes

being told to be afraid and it's such a weird thing to watch your founder simultaneously be almost negged by an investor and be told to raise more money from that investor right where the investor is like your plan's never going to work you're not raising enough money you're going to die you're dedicated up if you take my money then it would all work out and it's like i've been so happy to see why c founder is able to kind of push back against all of that and and really be sober right like just be sober in your planning and

and um things work out better it's just it's funny because like we always are optimizing for you know we're former founders i think it's like what would have helped me when i was a founder and it's just funny how like doing that really seems to annoy investors that we're like again we're like giving away we're like on the wrong team a lot they seem really bad like i thought like it's isn't that weird man like why we're we we have a grand nefarious strategy of giving founders what we wish

we had when we were a founder i mean isn't that like so funny because it's kind of one of the core guiding principles of yc when we think of what we're gonna do yeah it's like what would i have wanted yeah like that's certainly how i think about this yes and and the opposite too like what would i have thought of as like like how do we not do the stuff that i would have just like been like that's who cares i mean it's hard to do in practice it's just at the end of the day more leverage for yc founders good

more options for yc founders good that's the game obviously so anything more on the standard deal so far so good again like the folks that are in my group dispatch man they're feeling they're feeling good they're feeling very good yeah and and probably the last trend and maybe one of the most um heartwarming trends is how many alumni reach out to us and say they're watching these videos like how much has that come up for you in the last six months since we got this thing rolling a lot i think when we first started

recording these my perception i wasn't really sure who the audience was and i'm maybe i'm still not sure but it certainly would appear that um a lot of yc alums um are watching these which is awesome that we have this direct line um for people you know to hear hear from you and i personally about what's going on with yc i mean it seems better than other forms of communication right you know it was interesting because you know we put out a video it was interesting as we put out a public video

about making sure that you are prepared for down economic times before we even sent a letter and and one of the reasons we were inspired to kind of send a letter was the number of alums who had watched that video and reached out and said thank you for doing this like we're we're rethinking our plan and so um i just think it's exciting to see that the yc alumni are watching these videos alongside prospective um founders it's it's awesome to see all right well i think that's it so um in closing we are really looking forward

to meeting the next batch which is going to happen very soon mid-august i'm sorry mid-june and then we're also ridiculously excited to meet all the founders that we've funded over the past years we're going to do a massive alumni event in san francisco in the fall and so for all the people we haven't seen in person yet we'll see you soon dalton great to see you sounds good bye [Music]

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