[Beliavsky]

I have wondered if affluent parents can replicate at least the money part of Y Combinator.

$120K is about the list price of two years of Harvard/MIT/Stanford . With a son who loves to program, I have wondered if sending him to a cheaper school and giving him the difference in installments after he graduates is better than paying for a "name" school. It depends on the quality of the cheaper school, of course. And I think school prestige matters more for investment banking than tech, so I'd be less inclined to suggest a cheaper school to a budding banker.

[karamazov]

Off topic, but if your son has the chance to go Harvard/MIT/Stanford, he absolutely should. The difference is primarily in the caliber of the other students, and it makes a world of difference to have such a concentration of talent in one place.

(Note that I'm not saying there isn't talent elsewhere, just that there's an incredible concentration of it in the top n schools.)

[kapilkale]

It doesn't necessarily make world of difference. When you compare students who attended top private schools vs. those who were admitted but attended state schools, they actually have equivalent incomes down the line.

What's likely happening is that really smart kids at good state schools end up finding the pockets of talent there anyway.

Pretty scary implications for the value of a Harvard degree.

source: http://www.newyorker.com/archive/2005/10/10/051010crat_atlar...

[johnrob]

To some degree, the elite universities are selling success to those already predestined for it. This is an end game state for any popular institution that accepts a subset from a pool of applicants. The battle to get in ends up being a significant source of the value creation.

Raising a venture round from Sequoia is probably a decent non-academic example of this. I would not be surprised if companies who turn Sequoia away are just as successful as those who are funded by them (although the former is probably a small data set!).

[gagaga]

The network you'll make at top-tier schools is IMO a lot more important than anything else.

[ericd]

Yeah, the difference in peers alone is worth the cost delta. Especially true if you go to MIT - the student body and culture there is absolutely wonderful. One of my favorite places on Earth.

[morgante]

As someone who essentially took that path, I can't recommend it. My parents and I had saved up a decent college fund ($100k or so), but instead of using that to go to Top School I took the chance on a school which offered me a full ride.

Sure, I'll be graduating about ~$140k better off than most other students. But over the lifetime of a successful tech entrepreneur that amount of money is fairly meaningless. Having spent a significant amount of time on top campuses (where most of my friends went), I often regret making that decision—the caliber of students is truly higher, and the friends/networks you have from a school like Harvard will pay dividends throughout life.

[acjohnson55]

Get the best of both worlds and do a master's at a top notch school.

That's my story. I went to good-but-not-world-renowned state school for undergrad on a full ride. I did my best to wring the absolute most out of that experience, and it paid off in many ways, including a fellowship that paid for my master's at an Ivy. Most grad students don't get plugged into "the network", but I went out of my way to engage in campus life. In the process, I'm fairly positive I built just as good of a network as if I had attended for undergrad.

Point being, everywhere you are has something to offer. Make the most of your situation!

[morgante]

> Get the best of both worlds and do a master's at a top notch school.

Glad that worked out for you.

To be clear, my school is actually extraordinarily good academically (we're privately funded by an oil fortune)—it's just that the prestige of the name and student's isn't quite at Ivy quality.

> Point being, everywhere you are has something to offer. Make the most of your situation!

I'm doing my best, and doing pretty well (making 6 figures as a college sophomore), so my regrets are more social/intellectual than monetary. Though sometimes I wonder if YC would have accepted me if I had advertised my Ivy League stamps of approval (acceptance letters)...

Maybe I'll go to Harvard when I get tired of developing and decide to "pivot" into management/finance.

[acjohnson55]

Though sometimes I wonder if YC would have accepted me if I had advertised my Ivy League stamps of approval (acceptance letters)...

Be glad you didn't. I don't think it would have sent a positive sign. Frankly, no one wants to hear about the things you didn't do, and things like acceptance letters and SAT scores don't matter going forward.

Life is going to be filled with tough calls. Sometimes, you may have 5 promising but exclusive options to choose from. You can't make the most of the path you've taken while wasting mental energy on the ones you didn't. Take it from someone who wasted a lot of mental energy on such things before learning not to.

You said elsewhere you go to NYU -- what's stopping you from maximizing your social and intellectual opportunities?

[morgante]

> Be glad you didn't. I don't think it would have sent a positive sign. Frankly, no one wants to hear about the things you didn't do, and things like acceptance letters and SAT scores don't matter going forward.

I know (it's why I don't usually go around talking about how I could have gone to Harvard). Though it does sadden me that the VC and tech ecosystem is almost as prestige-focused as Wall Street.

> You said elsewhere you go to NYU -- what's stopping you from maximizing your social and intellectual opportunities?

Mostly that I don't have much commonality with those around me. Everyone seems to be focused on getting the "right" internship and studying, while I'd like to have meaningful conversations about intellectually intriguing topics. Plus, my general lack of social skills and nerdiness at a school which is decidedly not nerdy.

[acjohnson55]

Mostly that I don't have much commonality with those around me. Everyone seems to be focused on getting the "right" internship and studying, while I'd like to have meaningful conversations about intellectually intriguing topics. Plus, my general lack of social skills and nerdiness at a school which is decidedly not nerdy.

What you describe socially/environmentally sounds a lot like the typical Ivy League experience. Gossip, politics, inner circles within inner circles, who-you-know, etc.

Fortunately, social skills are something you can improve, if you set your mind to it. That's one reason I'm really glad I did my college experience in the order I did. I don't think I could have truly taken advantage of my grad school experience if not for going to undergrad someplace where everyone wasn't constantly jockeying to get ahead.

I'm sure you have more commonality with people than you think. Being adept socially is all about finding those commonalities. Usually, that means being able to step out of your own head to empathize with what other people's social needs are. The most social people I know have a way of making other people feel like the most interesting person in the world.

It sounds like you've got a lot going for you, and if you're a sophomore now, you've got a lot of time to figure everything out. Best of luck. Drop me a line if you want to grab a coffee or something. I went to NYU for my second grad school experience :)

[tim333]

For what it's worth I went to Cambridge (UK) and didn't really build a network of useful friends and contacts. You often have to work at that stuff and I was a bit of a geek / not extra social. You can always do it deliberately later through something like MBAs, YC etc. I had a friend who had a good time and made lots of high power contacts doing the UCLA Executive MBA later in life. The brand recognition of the name is handy - people assume you are bright in a way they wouldn't if you go to a no name place.

[MaysonL]

If you're making 6 figures as a sophomore, have you considered putting in apps to transfer to some of the top tier selective colleges? Couldn't hurt.

[morgante]

> If you're making 6 figures as a sophomore, have you considered putting in apps to transfer to some of the top tier selective colleges? Couldn't hurt.

I've considered it, but HYPS essentially don't accept transfers. Plus, being in New York for the next year is very helpful professionally (I currently attend NYU).

[FD3SA]

Listen to this man. Going to a top school has a massive effect on your luck surface area.

Given that the best course materials can increasingly be found online, the only benefit of a school is its social network, in which the elite schools have a formidable monopoly.

[tptacek]

They obviously can, the same way that they can offset the dollars by paying for their childrens' living expenses. But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors.

[logicallee]

> But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors.

This idea (first quoted sentence) needs to die. It is toxic to the early-stage ecosystem. Any amount of money is a ton of money. Period. You can ignore the hustling that Jobs or Zuckerberg did for literally a couple of thousand dollars - read Zuckerberg's contracts at the time he was at Harvard making facebook. Look at the timing jobs "Stole" $5000 from Woz and founded Apple with it (making his friend a multimillionaire in the process). The reality is that no windfall bonus from Atari of less than $4300 - which is money that Jobs had 0, absolutely 0, access to, from any other source - equals no Apple. Look at the dates.

You can also ignore what companies actually spend the YCombinator seed money on when it was $14K-$20K, at a time that the YC badge easily added $200K+ to a YC company's average valuation - a badge that doesn't bring instant liquidity. How many YC companies would not exist if YC only added its badge to the valuation, and not actually given any money.[1]

What you can't ignore is that there are people who are working a day job while owning and building a company - working that day job because any amount of money, even part of a single full time earner's after-tax salary, is a ton of money.

Just try raising it.

[1] Imagine if the YC admission read: "Congratulations! This admission is easily worth $200K in extra valuation. With the YC badge, you should have no trouble raising money. We are therefore not making any cash investment, not even $12K, but rendering only services. We welcome you to the bay area on (date)."

[tptacek]

Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.

[newsum]

Exactly. move into your mother's house. become a 1099 contractor at $100/hr+. save, save, and save. a year later there's your bootstrap funds + credit cards, excess of 100K. Outsource design/dev if necessary, launch it, raise a large seed round/series A, valuation 4m+

You don't have to give away anything. be an entrepreneur.

[ricardobeat]

And do that before you have kids.

[abracar]

Outsourcing design/dev doesn't sound like a good idea (nor does credit card debt)

[newsum]

nor does hoping/praying to get into YC so you can build the company of your dreams. take risks, calculated of course.

[mikeg8]

An idea-stage startup should not be paying a FTE 120k. That is lunacy and engineers need to start to understand this. More equity, lower salary until there is money coming in would help more companies survive longer while they look for product-market fit.

[tptacek]

I don't doubt that you're right about this, but I'm using the (lowball) estimate of the cost of a single developer as a benchmark for the amount of money we're talking about. Also: I'm not sure what you call someone who takes half salary in exchange for equity. It's probably not "cofounder", but "employee" doesn't fully capture it either.

[eldavido]

Maybe.

I have a roommate in SF. He's freelancing, I'm working at a company. He's making more cash than I am, but I'm working on building a company (as an employee) that's shipped multiple iterations of a category-leading product, raised $XX million in VC, and hired almost 100 people.

I'm not disputing that a good freelancer can clear $120k net of taxes and living expenses, just that that's the best path to take, if the end goal is to be an entrepreneur.

[tptacek]

Are we sure we're talking about the same thing? I'm not suggesting a freelancer can net $120k in a year. That's easy. I'm suggesting a freelancer can net $120k plus living expenses in a year --- a number perhaps closer to $200k-225k. The reason I think that I that I know a lot of people who do --- many of them outside my (particularly lucrative) specialty.

Practically every established consultancy in the US throws off numbers like that year in year out, as a routine. Which is one reason a lot of consultancies end up spinning up product teams.

[logicallee]

You're simply empirically wrong [about the 'amount' of money that represents, whether it is large enough to make a substantial difference], and your anchors[1] are not only irrelevant and misleading in an early-stage context, but extremely toxic.[2] What was Google's first check in the amount of? $100K. It was a ton of money. As Wikipedia points out, "The first funding for Google as a company was secured in August 1998 in the form of a US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist." They used that to raise "On June 7, 1999, a round of equity funding totalling $25 million", about 10 months later. Pop quiz. Which was more money, the $100K in the first context or the $25M in the second? Well, as I've heard they never did spend much of that $25M, it sat in Google's bank account while they grew and raised further rounds....

But that $100K? That was a ton of money.

Basically, you are wrong that it was not a ton of money, your anchors and comparisons are toxic and misleading, and if he had not cut that check then Larry and Sergey would not have created Google. That is what actual reality shows us.

You simply do an incredible disservice to all early-stage startups by talking in these terms.

I gave you several actual examples of far less than $120K being a ton of money in an early-stage context. As little as $5000 being a ton of money. I also specifically stated that if, say, $20K, weren't a lot of money, then it would make no difference empirically if YCombinator did not actually pay that cash. And YC companies wouldn't have either relied on or even actually spent that cash. But it does make a difference, and they did.

As I specifically point out: your FTE expenses are completely irrelevant, and even part (less than 100%) of the after-tax portion of a single FTE salary is a ton of money. (In an early-stage context.)

To imply otherwise does a huge disservice to all first-time, early-stage founders everywhere. The very idea is toxic and needs to die.

[1] The meaning of anchor I use is: http://en.wikipedia.org/wiki/Anchoring

[2] Your figures both about (1) the cost to the company of a fully loaded FTE senior engineer and (2) the amount that a good freelancer can generate above living expenses in a year, are irrelevant and do not need to be argued. I will grant both as irrelevant to the discussion.

[tptacek]

Your comment is very emphatic, but you didn't rebut either of my points:

* 120k will barely pay the fully loaded cost of a single engineer

* A good freelancer can generate 120k above living expenses in a year

Your response was "the fully loaded cost of an engineer is irrelevant". That's a weird argument, given that the cost of engineers dominates the expenses of early-stage startups.

[waterlesscloud]

That's cool and all, but what matters to a very early stage startup isn't the cost of hiring an engineer, it's covering the founders' living expenses and whatever business expenses arise (which may be very small).

You know this, so I'm not sure why you're off on a tangent about things that don't normally apply in these situations.

[nostrademons]

$100K is a ton of money to a student or someone whose career hasn't really "launched" yet. It's peanuts to anyone working in tech with a track record. You can easily save that much money in 1-2 years working at a 9-5 in a big company, or consulting.

The skills to get that big company job or land those consulting clients are pretty much the same skills you need to make your product company successful. An understanding of what people will pay you money for. Ability to execute on a project. Collaboration and communication. And of course, solid coding skills. The difference is that a product company also requires a fair degree of business strategy, determination, and sheer resourcefulness that you don't need to get a job.

So if you want to found a successful company, you're much better off developing those skills, testing them by getting a job or someone else to pay you money, and then striking off on your own. If you just get the money, chances are you will lose the money pretty soon too.

[argonaut]

You say it "was a ton of money," but you haven't provided any reasons that is the case, other than claiming that Google would not exist otherwise, something we don't really know either. Maybe Larry and Sergey didn't really need that 100k either, but took it just in case? And even if it were a lot of money at the time, 1999 was a different time and place. First-time founders were a lot less sophisticated. The seed funding environment that exists today didn't exist. AngelList did not exist. The current market rate for engineers and cost of living is a lot higher than then.

[Iftheshoefits]

That $120k has to buy incorporation and legal fees, business operating expenses, and living expenses for at least 2 founders for three months. It's significantly better than $17k plus a note, but it's still a small enough amount that the program effectively selects for founding teams who either don't need the money (e.g. already have substantial financial means from other sources) or haven't got anything to lose (e.g. 20-somethings fresh out of school, or still in it). That excludes a huge talent pool.

[ZenPro]

This. This x100.

We are in a crazy scenario where we are seeking a Series A with a good product in a validated market fit.

The investors have essentially said unless you are eating ramen noodles and scraping by we are not interested.

^^ That attitude essentially rules out anyone with a family, prior commitments or debts from college/life.

Why would a funding round not earmark a portion for a fair (albeit lower than market) salary?

[uiri]

I just want to raise the point that your Apple example doesn't take inflation into account. The $4300 in 1975 is roughly $18.5k (to within $500) in today's dollars. This is inline with YC's previous seed funding of $17k.

I have to agree with you that what is "a lot of money" is entirely relative; I don't think that $5k in today's terms is a lot of money by any startup's standards but any amount upwards of $15k or so is definitely "a lot of money" to a larval startup.

[ScottBurson]

I don't think you're expressing yourself very well, but I do think you have an interesting point. I would put it this way: if you want to start a company, and you manage to raise, say, $30k from friends and family, you should be very much encouraged, not discouraged. That's not to say you won't want to raise more later, but this may very well be enough to get you off the ground.

[morgante]

To be honest, I imagine they'd all still exist even if YC gave no funding. A program like YCVC would exist (because VCs put inordinate trust in YC) and startups would get the funding they need.

And, let's be honest, $120k really isn't a lot of money. Sure, it might be more than my net worth right now—but as an engineer I could easily save up that amount in less than 2 years.

[SocksCanClose]

... actually a "ton" of money is technically £2000, or $3365 at the 22APR14 exchange rate. $120,000 is therefore ~35.66 tons of money.

[_deh]

A ton is £100, you're thinking of an Archer.

[yahelc]

Which is, incidentally, not dissimilar from the signaling effects of attending Harvard/MIT/Stanford.

[argonaut]

In the tech world, the YC signal > H/M/S signal.

[_delirium]

I don't think that's generally true. YC is very well respected in a very specific niche of tech, while H/M/S have much broader name recognition in tech generally. Depends to some extent on what you want to do. YC has great name recognition among VCs, so if you're going that route, it's a good name to have. A Stanford or MIT degree generally has better name recognition among people hiring for tech jobs, especially outside of the SF Bay Area and among people not culturally part of the "startup scene".

[argonaut]

Yeah, I should have clarified. It's a bit uncertain if YC > HMS to hiring managers at companies. YC is definitely > HMS in the startup and raising VC world.

However, engineers and recruiters at the top tech companies like Google/Facebook/Amazon/Microsoft have definitely heard of YC.

[maxbrown]

Kind of a generalization, no? Do you mean specifically for startup success and/or raising VC money?

[ZachPruckowski]

Most likely, your kid's startup you dropped $120K into is going to fail. Make sure you consider that case very carefully - what are his chances like at 26 with a less prestigious degree and a failed startup under his belt compared to a Harvard/MIT/Stanford degree plus 5 years in a salaried job that those can get you?

[mbesto]

> And I think school prestige matters more for investment banking than tech

It has less to do with prestige and more to do with risk.

IMHO, there are only two routes to becoming part of today's tech elite. You either build something that gets traction or you join a team that has already done so. These are IMHO the two strongest signals today, especially given the increase of noise. Don't believe me? Just search around AngelList for 30 min. If your son gets a CS degree from Stanford or MIT, it will automatically put him in that basket of "join a team who has already done so", just as working for Google, Facebook, Twitter, etc does.

[sailfast]

While the education is one thing (and surely valuable), I think you also have to look at the connections and network you develop at a "name" school vs. other schools. Those are not things you see on a bill, but they are extremely valuable.

EDIT: I'm not saying this can't be achieved at other schools - I didn't attend a "name" school, but the network definitely matters and can be a huge bonus especially if you know what industry you want to target.

[jedberg]

Back in the 90s, I had a friend who was an instructor for Sun Certification classes. He told us of a kid who, when he turned 18, was given his college savings by his parents to do with as he pleased. He chose to spend the ~200K getting every Sun cert available.

He then became a consultant at 21 making about $500K a year, at least for a few years. Don't know what happened to him after those certs became useless, but I hope he converted somehow.

[nostrademons]

I also know a family whose father gave them their inheritance when they turned 22. Instead of getting jobs after college, all but the eldest (who already had a job) spent several years bumming around their apartments, paid for by their dad, and failed to launch. Their careers still haven't recovered.

YMMV. I do think it's better to give money to people who are already succeeding and could just use a bit of acceleration or a chance to do something riskier, though. At earlier stages advice and introductions are often more useful in the long term.

[ZenPro]

If your son has co-founders or would like them then this is an idea with the potential to be disastrous.

If the startup (company) goes the distance then whatever equity you bought with investment would convert to your son as part of his inheritance altering the partnership drastically.

The legal and financial ramifications can be quite complex.

[hga]

In the case of "a son who loves to program", if the target is a Computer Science degree, if your son can get into any one of Stanford, UC Berkeley, CMU or MIT, go for it. These are the top CS schools in the US and I gather the world, and there's a big quality gap between them and those below them.