Y Combinator Tries Funding People Instead of Ideas
Normally we are writing about Internet and social media marketing. Many times that kind of information involves talking about companies that have just started up or have suddenly hit a point in their early development where they are taking off (Pinterest is a great example of this).
Venture capital (VC) is a critical component of the Internet industry’s inner workings. New ideas and business plans are flying around as everyone looks for the next great idea that will have the big payoff like a Facebook or (insert successful VC backed company name here).
We hear it can take a lot of work to get this funding. Sometimes the talk is that it has gotten a little too easy. This was one of the problems from the first Internet bust at the turn of the century. Well, one of the most well known investors, Y Combinator, is taking investment to a different level. It’s one that is interesting for sure. They are experimenting with investing in people who don’t even have an idea to sell.
If you’re a prospective founding team (or a uniquely promising individual), it is now letting you apply to join its next class of founders without an idea. This might sound contrarian at first, but it perfectly fits the early-stage startup model, where the team is what makes the company win, rather than the initial concept. Here’s more, from the description out today from Paul Graham and Co:
Why are we doing this? Partly because we realized we already were. A lot of the startups we accept change their ideas completely, and some of those do really well. Reddit was originally going to be a way to order food on your cellphone. (This is a viable idea now, but it wasn’t before smartphones.) Scribd was originally going to be a ridesharing service
This funding is seed stage funding so it is much different than finding an already budding new company and investing in them to move the needle further and faster. Y Combinator is experimenting with something that others may actually do on some levels but I am not sure who is advertising this kind of investment.
It’s an encouraging notion that people are willing to take a different perspective on the idea of investing by truly investing in people. My question is, how do the decide who has the “right stuff” to merit this kind of investment? I suspect it’s a pure Silicon Valley insider play because just anyone off the street can come by and have no idea to offer. There would need to be some level of familiarity with someone to say “Sure, we’ll invest in you because we think you have what it takes once there is something to concentrate on”.
What’s your take on this kind of development? Is it encouraging or does it seem like we are getting to a point in time where things are getting a little wacky?
Maybe this kind of thinking is something that marketers themselves can adopt? We get so hung up on certain skills or concepts that people have when we hire them that we could often miss some incredible raw talent that could be developed if we choose to take a chance. Just something to think about. Are you thinking? What’s your thoughts on Y Combinator’s efforts?