# YC and Hard Tech Startups

**Author:** Sam Altman
**Type:** Essay
**URL:** https://www.ycombinator.com/library/4r-yc-and-hard-tech-startups

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YC and Hard Tech Startups

# YC and Hard Tech Startups

by Sam Altman

Some people think YC only funds straightforward software startups. That’s definitely not the case — YC’s largest exit to
date is a self-driving car company, [Cruise\\
Automation](http://fortune.com/2016/03/11/gm-buying-self-driving-tech-startup-for-more-than-1-billion/), and we’ve
funded many other hard technology companies like [Gingko Bioworks](http://www.ginkgobioworks.com/),
[Oklo](http://oklo.com/), [Helion](http://helionenergy.com/), [Rigetti Computing](http://rigetti.com/),
[OpenAI](http://openai.org/), [Perlara](http://perlara.com/), [Verge Genomics](http://vergegenomics.com/),
[X-Zell](http://www.x-zell.com/), [Athelas](http://getathelas.com/), [Auro Robotics](http://aurobots.com/),
[Bagaveev](http://bagaveev.com/), [Boom](http://boom.aero/), [Gecko Robotics](https://www.geckorobotics.com/), [Multiply\\
Labs](http://multiplylabs.com/), [OpenTrons](http://opentrons.com/), [Varden Labs](http://vardenlabs.com/),
[Atomwise](http://atomwise.com/), [Transcriptic](http://transcriptic.com/), [IronOx](http://www.ironox.com/),
[20n](http://20n.com/), [Bikanta](http://bikanta.com/), [Industrial Microbes](http://imicrobes.com/), [Cofactor\\
Genomics](http://cofactorgenomics.com/) and [many](http://www.ycombinator.com/companies/?vertical=Biomedical) [more](http://www.ycombinator.com/companies/?vertical=Hardware).

We’d like to fund a lot more hard tech companies
[1](http://fortune.com/2016/03/11/gm-buying-self-driving-tech-startup-for-more-than-1-billion/), and I’d like to explain
how YC most helps hard tech founders.

At the earliest stages, there’s actually a lot more in common between a self-driving car company and a file sharing
company than people think–all kinds of startups usually work best when initial costs are low and iteration cycles are
fast. It’s relatively easy for a software startup to take short cycle times and low-costs to an extreme, but hard tech
founders are often surprised by how effectively they can do this, too.

Many hard tech founders come from academia or big company backgrounds, where projects can be expensive and slow. We help
these founders shift into a much more iterative mindset so they can move faster.

Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the
model of quick iteration and requires a relatively small amount of capital. This project is often the smallest subset of
their technology that still matters to some user or customer. It may at first look like a detour, but it’s a starting
point that lets founders build measurable momentum–for themselves, for recruiting employees, and for attracting
investors.

![YC Logo](<Base64-Image-Removed>)

# What is Y Combinator?

We're an accelerator that funds startups — like Coinbase, Instacart, Reddit, Doordash — at their earliest stages. Starting a company? Even if it feels early, 40% of our companies joined with just an idea.

[Apply](https://www.ycombinator.com/apply)

And while we encourage hard tech startups to start small, we love when founders think very big.  When needed, we help
founders think through a long-term plan of how they can develop their technology to build companies of massive impact.
It’s not a YC company, but Tesla is my favorite example of how powerful this small project + long-term planning
mentality can be. Their vision has always been to bring an affordable electric car to the masses, but they first built
the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. The Model S then generated the
revenue to start the Model 3.

And Oklo, which is building next generation nuclear reactors, is a promising example from YC. When they first came to
YC, they were considering going after several very different markets simultaneously. We encouraged them to focus on one
market they could enter quickly and not try to do too many things at once, but we also encouraged them to open up to
thinking through their most impactful possible future.

In terms of cost, we help hard tech startups operate as efficiently as possible. One factor that lead to the explosion
of internet startups was that web hosting became a couple of orders of magnitude cheaper and easier to do. This is
happening now for hard tech: there are many more standard components and services at much lower costs for startups in
biotech, energy, robotics, and everything in between. We help founders think about how to build their first version and
source components as quickly as possible, and we have deals with suppliers and service providers that you can use based
on your needs.

We also help hard tech startups balance the need to move quickly with complex regulatory environments. Hard tech
startups often operate in heavily regulated markets, and the activation energy required to get over regulatory hurdles
kills many of them. Even the most regulated industries have paths to quickly test your assumptions though, and we help
you find the best plan of attack without getting into trouble.

When appropriate, we help hard tech founders find customers. For some startups this doesn’t make sense—there are some
ideas that people will obviously want if the technology can be figured out, and there are obvious other things to focus
on. But for others, it can be a useful way to find that smallest useful project and/or build more momentum.

Gingko Bioworks, which biologically engineers custom microbes, is a good example of this— before YC they had done a few
large deals, with long ~6 month sales cycles. But when they went through YC, we encouraged them to figure out how to do
minimal sized engagements that they could sell more quickly. During YC, they took this strategy and closed 3 new
Fortune-1000 sized customers. They say this strategy gave them a lot of momentum to keep building on to where they are
[now](https://techcrunch.com/2016/06/08/ginkgo-bioworks-grabs-100-million-in-financing-to-buy-a-whole-lot-of-synthetic-dna/).

Hard tech companies go through the same 3-month batch format as all of the startups we fund. No matter what people are
working on, it ends up being very motivating to be around other founders for this short, intense period of time. And
during the batch, hard tech founders have hardware and biotech days, where companies come together to hear from
successful founders on how to best tackle their specific problems.

Hard tech companies also join the same 3,000-person-plus YC alumni network as all of our startups. The network is just
as useful for a hard tech company as any other startup—alumni are resources for advice, recruiting, and serve as first
customers. For example, Transcriptic, which operates a robotic laboratory for outsourced science experiments, offers
$20k in credits to every YC biotech company that wants to use their service. This both helps other YC companies, and
turns them into customers that Transcriptic can grow with as their customers' businesses scale.

Alumni and batchmates also give moral support—more so than with others, we hear from hard tech founders how isolating a
startup can be; problems are difficult and payout can be very long-term. Having a group of other founders going through
the same things can help a lot.

Finally, we are particularly good at helping hard tech companies raise money. Fundraising can often be harder for hard
tech founders, as the things being worked on often fall outside investors' comfort zones. But at this point a lot of
investors take YC's judgement as an encouraging sign. Being backed by YC can help legitimize daunting ideas.

We hope to fund a lot more hard tech companies in the future, and if you’re tinkering on something or even just toying
with an idea, we hope you’ll [apply now](http://www.ycombinator.com/apply/), even if that means you have to turn in your
application late. There will be many $10 billion+ hard tech companies in the future, and we hope to help a lot more of
them get started.

[1](http://fortune.com/2016/03/11/gm-buying-self-driving-tech-startup-for-more-than-1-billion/) I use ‘hard tech’ to
mean a startup where there is doubt that the technology can be built at all.
