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YC received its biggest news in years this week: Gary Tan will be the organization’s new president and CEO, effective January 2023. Tan co-founded and helped scale Initialized Capital to a venture firm that now manages over 3, $2 billion in assets. Throughout, he has always had roots in YC, both as a former partner in the organization.
One detail that didn’t make it into my story this week is how Tan is bringing a content creator vibe back to @ycombinator leadership. He succeeds Jeff Ralston, who has not been too public about his work at the accelerator. However, Tan has amassed over 220,000 YouTube subscribers for his technical videos. Themes of Tan’s YouTube channel range from how to lead like a champion to how dev teams can build like Google and, yes, how to apply to YC in 2022. Reminiscent of YC co-founder Paul Graham’s essays, many of which inspire entrepreneurs to jump into startups companies Start with
YC’s choice to put a creator at the helm is consistent with their product focus over the past year. In June, the accelerator announced Launch YC, a platform where people can sort startup accelerators by industry, batch and launch date to discover new products. Launch YC invites users to vote for newly founded startups “to help them climb the rankings, try product demos, and learn about the founding team.”
As standing out inside YC becomes increasingly difficult, and given how important distribution is to early stage startups, YC offering a way for startups to generate a little more buzz could make the implied cost of equity of his program more attractive. Tan continues the same focus, both as a well-known tech personality and as a creator who has spent years building a brand focused on early-stage startups.
Creator news aside, Y Combinator’s executive shake-up raises another issue: competition. Tan did not say how his new role at Y Combinator and his future role at Initialized, which is as a venture advisor, will overlap when asked about competitive or complementary dynamics. He offered StrictlyVC a similar sentiment:
When I left YC, I was always careful to never ask YC partners “Who was cool?” The initiates did their own thing. That doesn’t change with me inside. Initialized was created to be the ideal firm that founders would choose because of the ethos, the approach to founders (gentle advice, not your boss) and what makes it extremely unique is the great emphasis on the team and the services from that team. Few companies focusing on pre-market seed do this. The best do and Initialized is one of them… The community has a database of investors to help them choose and Initialized is the highest ranked out there and will be as long as it continues to do no harm and help. That doesn’t change either.
These are just the first questions about creators and competition we have for the future of Y Combinator. Good thing Demo Day happening next week will continue the conversation.
For my full interview with Tan, check out my TechCrunch story: “Gary Tan’s return is a full-circle moment for Y Combinator.” And to thank you for being a Startups Weekly subscriber, here’s a little TC+ discount for you: Enter “STARTUPS” at checkout for 15% off your subscription.
In the rest of this newsletter, we’ll look at the surprise shutdown of an app, the latest and greatest in party circles, and the aftermath of a data-driven fund. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter. I appreciate your support as always!
The end of Zenly
Earlier this week, Snap laid off 20% of its global staff in an effort to restructure its business. The cut comes after CEO Evan Spiegel’s memo in May, in which he wrote that the company would miss revenue targets in the second quarter.
And layoffs aren’t the end of the story. Snap is slowing production on Snap-funded originals, minis and games, hardware, Pixy Drone, as well as standalone apps that include Voisey and Zenly. Aside from the fact that Snap says it’s still developing its augmented reality glasses, called Spectacles, the surprising thing about this shift is the shutdown of Zenly, a wildly popular app it acquired five years ago.
It’s common for companies to shut down applications, especially acquisitions, years into the business during restructuring efforts. Additionally, Zenly doesn’t generate much direct revenue and still operates as a standalone app. Still, as my colleagues Paul Sawers and Romain Dillet point out, there was quite a bit of shock when Snap slipped through the cracks.
Here’s why it’s important: Sawers and Dillet point out that “Zenly shows no signs of stagnating, and if anything, it looked like it had the potential to be one of Snap’s prized possessions if only it could figure out how to turn it into a money-making machine. ” As you will see in their story, It turns out that the shutdown may be in Snap play on defense, not just offense.
Let’s talk about party circles
This week I delved into a debate as old as time on Equity Wednesday and TechCrunch+: party circles! The positives are obvious: with more investors at the table, startups have more opportunities for distribution, exposure and advice throughout their lifecycle.
The cons are more complicated. Is party investment worthwhile, as is capital from smaller, more dedicated sources? Are there too many cooks in the kitchen? Is it a negative signal that this startup had to recruit from dozens of people instead of one highly-convinced partner?
In my storyI interviewed three people from all different seats at the venture project table, from the engineer leading the products to split these processes, to the party startup that sparked a party round, to an investor whose job it is to collaborate with (and sometimes compete with c ) the excitement of angels interested in these circles.
Here’s what’s important: I love it when debates really matter and in this case they do. The definition of a party round seems to have changed over the years, partly in response to many of the dynamics that occur when there is no specific lead investor in a funding round.
I’m experimenting with a new section on Startups Weekly, where each week we track an old story or trend to see what has changed since our first glance. This week I caught up with Abe Othman, the brains behind the data science at AngelList Venture – including his $25 million Quant Fund. In December 2021 I broke the news about the startup’s fresh new fundwhich is an investment vehicle that hopes to place $250,000 worth of checks in over 100 companies.
The fund’s big twist is its approach in using quantitative factors to decide which startups to invest in. I then reported that his team tracks the velocity of startup hiring by looking at how many job applications a company receives within a specific time period. Signal removes factors such as investor bias, founder networks, and even noisy valuations.
Here’s what’s new: The fund has deployed about $6 million, about a third of the fund, to 530 startups since December, with more than 35 larger checks in high-signal startups. Othman says the fund’s larger checks have been directed at women and minority founders with a higher percentage of the overall portfolio composition than risks in general. Othman estimates that their portfolio is close to 20% female.
“As you know, we intentionally practice venture investing differently … our largest portfolio allocations are to founders who write back to cold email, which takes a lot of faith on their part,” he added. That’s consistent with what he said last year, when he described the firm’s approach to cold email as “less competitive” than other funds out there.
Wait. Look at him? Yes, I’m excited too. And while we’re on the subject of housekeeping, a few more notes:
- Listen to TechCrunch podcasts, including our own a crypto-focused show that goes by Chain Reactionand a show focused on the founder, which is called Found. The TechCrunch podcast also continues to entertain me, so pay attention to all the good shows they put on.
- Remember, TechCrunch Live is on a brand new platform, and we’ve made it easier to apply for a pitch internship. Investors (and my inbox) can attest to the importance of brevity, comprehensibility and clarity in pitches, so it’s great to see. Startups can now apply any day and any time for Pitch Practice from filling out this form.
- TechCrunch Live is coming to Minneapolis. On September 7th, join the TechCrunch team as we interview the best and brightest in town. Minneapolis is among the best cities in the Midwest to start a company — and you’ll soon find out why!
- Go mining for an opportunity in TC Sessions: Crypto, this November in Miami. Yes, you heard that right, we’re coming to Miami.
Seen on TechCrunch
Seen on TechCrunch+
And just like that, another week ends. That was weird. I met one of the most famous actors in the world, went viral on Twitter and ate amazing pasta at Che Fico. This newsletter feels more and more like a weekly diary of the wacky world we’re all in, half-baked stream of consciousness and all. Thanks for reading along and enjoy the long weekend.