I consider it one of the biggest waste of my time ever!
I'm hoping the program has grown more and I know Ross works hard and I congratulate him on keeping the program going. If you're an international company, perhaps their programs outside of US are more valuable since there are no other options for you.
But if you're US based, I would do my homework before joining them.
Why?
1 - the program was so disorganized. We were forced to follow this automated Powerpoint slide progression. If you needed it more time on one of your slides you copied the slide twice, to give yourself double the time. So basically we spent 3 months optimizing our pitches around this auto powerpoint process.
2 - we were used to build credibility for Village Capital. They would shuttle us around to their potential LPs to show it was a viable program. That's not bad in itself, however, it felt like we were providing more value to Village Capital, than Village Capital to us.
3 - Very founder-unfriendly terms. As I said we were one of the two top finishers. However, their financing term (which we only learned the details pass the half-way into the program) was nothing short of usury. We were forced to do a down round (by 4x) OR do the revenue share financing, where we would pay back 3X the money they loaned us.
I decided not to write about our experience, but given the reach of HN, I decided for the first time to publicly speak about it to warn other founders who might be interested in their program.
Can you clarify what "the program" refers to? Is this the new variant where demo days are discarded in favor of mock board meetings (as discussed in the blog)? Or is the demo day/mock board meeting just the last piece, and the underlying program is the same? Thanks.
When we graduated. The cohort class would vote the top 2 finishers among themselves. Which then would get the financing. This was a horrible idea!
It became very political. Basically we had 4 major sessions each 3-4 days alternating between Salt Lake City and Houston. At the conclusion of each session, we would rank each company on a set of criteria. The total score would rank each company. However, the last ranking would determine the final winners.
We finished #1 after the first session. However, I soon realized giving feedback (even privately) became rather contentious. People could easily mistake a genuine feedback for a political move to downgrade a company for scoring reasons. As a result, the value of cohort feedback diminished a lot.
The mock board meeting, was probably one of the more valuable things in the program. But the problem was the time with the mock board members was short, these "board" members had very little context about the company (so not very realistic). As a result, you had to spend most of the "board meeting" time educating them about your business before getting into the actual practice of a board meeting.
If you're in a remote location or city, with very little resources, then the program might be somewhat valuable. But if you live in any big cities, especially silicon valley. Then there is no value to it.
This is bad. The biggest value I get from YC are my peers from the batch and other alumni. We still reach out constantly and ask each other for pieces of code, business leads,etc.
YC puts A LOT OF EFFORT to build the community in the right way.
Lack of experience, probably the #1 reason. I think I just assumed every accelerator more or less followed the standards set by YC or very close to it.
Your question made me search my email to see if I missed something. I had't it just mentioned the amount and no details.
Other reason was, in their interview they did a great job selling us on how they have a network of investors as well as the largest hospital system in the world (partnering with them) where it will give us access to so much more than just their capital.
At the halfway point, we had a Webex call when their finance person took us through their financial terms. We still thought we were okay, since they indicated they would follow up on our existing seed terms. Well, they renegade that when the time came! Telling us, this would be a new term since our old term closed a while back.
Afterwards, I remember arguing with them when it came to their term sheet and using YC as the benchmark. It didn't persuade them.
So, the learning lesson for young founders who read this. Do your due diligence for the lessor known accelerators. Not just on financial terms. But overall benefits of the program.
"When we surveyed our companies and asked them where they met investors, it was rarely at an actual pitch event."
Seems like the author might be learning a lesson based on Village Capital's apparently unsuccessful demo days and applying it to all demo days. As someone who's gone through YC's demo day and who's attended it a few times since, I can tell you that startups meet a lot of great investors there. That some demo days add no value to either startups or investors is not in doubt. That doesn't mean the structure of a demo day makes no sense.
One thing YC recently did to address some of the concerns he has is introduce "Investor Day" immediately after their demo day. Will be interesting to see how that experiment plays out. https://blog.ycombinator.com/investor-day/
All that said, his points about pitch day formats exacerbating existing biases is quite interesting. Would love to see more data on that.
I was prepared to skeptical--investors of course will dislike situations which set up competitive bidding scenarios.
But the writer has some good points, including demo days favor men more than women, as well as extroverts:
For entrepreneurs who don’t pitch well — or who don’t fit investors’ mental image of a successful entrepreneur — Demo Days may hurt more than they help. The preparation teaches entrepreneurs to focus on transactions more than relationships (when, in reality, an in-depth conversation after the pitch matters a lot more than the pitch itself).
The Demo Day format is not ideal for investors, either. If you’re picking who pitches best, not who runs the best business, you’re not getting the best results.
What I have seen happening at accelerators, universities, and startup events in the Boston area is this intense focus on pitching. It's all about showing off the team, presenting a problem, sharing market or usage stats, prepping a slick video, and getting the deck just right. This approach emphasizes superficial qualities over the product or service being built. Product demos are almost an afterthought, and information about build progress or actual discussions with customers are turned into a couple of bullets on slides 4 and 5.
So yeah, by all means, ditch the demo days. But don't assume that focusing on "building relationships" will solve the problems of investors favoring certain types of people, or glossing over product and customer discussions. Extroverted founders and talented salespeople can project empathy, ask the right questions, and send other signals that are more likely to suggest a "good relationship" to investors. These qualities/skills will not determine who runs the best business.
I actually like tech interviews specifically because it's hard to BS your way through them.
I've definitely seen smooth talkers with great resumes get through any other filter, but I've never seen a false positive with the technical interview.
It's not that you can BS your way through a tech interview, but that the skillset required to do well in a tech interview is different than the one you need to be good at a developer job.
I've seen way more than a few false positives from tech interviews, along with tremendous amounts of false negatives: People with backgrounds of being transformative to teams and organizations that just couldn't look good enough while solving random algorithm problems to save their lives.
It's just hard to see the kinds of things a company misses when they keep insisting in asking people about graph algorithms and implementing red black trees, because those same companies just never get to see the kind of people that you get when you do things differently.
I currently work for a company that does relatively traditional tech interviews and does 95% of sourcing from big schools and ver well known tech companies. I fail to see a major difference between my coworkers here vs my coworkers at places where your average dev went to a midwest state school and was never asked an algorithm question during interview.
I've seen people who can whip up a nice solution to an interview problem but can't plan out a larger system. Or they have some cool way of solving the interview but then it turns out they want to write 100% of their code as monkey-patches. Or they write great code but cannot get along with anyone. Or they can solve the interview but don't actually have the deeper expertise that they said they did. I'd call all of those false positives from the technical interview.
I guess you could counter that you need to have a 10x longer technical interview that covers all these aspects, but a long interview process is going to filter out all the candidates who are good enough not to have to put up with one.
This is why I wish system design questions were more common. I couldn't care less if you can do a bunch of palindrome algorithm problems on a white board. I do care if you understand the scalability, maintainability, and implications of your code. And if you understand how different data structures work and are used. Most whiteboard problems fail spectacularly at this.
I agree that, in principle, system design interviews are great. The problem is that, in practice, I have seen them generate way too many false positives. This was at great companies and with people who had absolutely stunning resumes.
Ah, but the problem with technical interviews isn't the false positives, it's the false negatives -- introverts, people who are inexperienced with whiteboards, people who think it's silly to memorize BFS and DFS when they could look them up, women, people of color.
False positives are way more expensive than false positives. Any filter that is not heavily biased towards false negatives over false positives would likely be terrible for the business goals of interviewing. That is a baseline fact.
I am not sure why you think women and people of color are extra bad at whiteboard problems. In my experience the applicant pool for technical and engineering fields is heavily biased towards white, asian and Indian males, but that happens way before the stage of the whiteboard interview.
The guys/gals that can express themselves without anxiety are, more generally, going to make a better impression. Those with social anxiety or those with less social skills than those "extroverts" will, more generally, make worse impressions.
Any interview/test/discussion without overwhelming objectivity will be subjective by nature and therefore subject to emotional bias.
> For entrepreneurs who don’t pitch well — or who don’t fit investors’ mental image of a successful entrepreneur — Demo Days may hurt more than they help.
How does this prepare founders for the eventuality of needing to sell their protect in a similar way that they are pitching their demo?
It doesn't and it doesn't matter. I doubt good business will sink or swim based on "demo day" type expositions and vice versa for a bad business. Eventually the "market" will figure it out... It may take some time for that to happen however.
Unfortunately, start-ups don't function like normal businesses. If they can't get their name out there sufficiently, they'll die before the market takes its sweet time "figuring it out."
Demo-day results are suggestive, just like SAT scores. It's a measure of the founder's ability to sell (which is arguably the most important task for a CEO).
It doesn't matter if it's a great product. Amazing products have been created and destroyed when the founders couldn't market it to an audience.
Much like your inclusion of this typo, maybe it's the criteria for the "eventuality" that is problematic. Does the VC industry have a means by which to take imperfect people seriously? Before they're a CEO with $10B in funding, that is.
It's not clear to me from the article that Village Capital has attended a YC Demo Day. It only mentions that organizations like YC helped popularize the concept.
I think for someone that has gone through a startup program most that is written in the article are obvious truths. Yes, there might be a lucky few who benefit from a demo day, because that's one of the few chances where you might get the attention of investors that might usually not be that easy to reach. However most people will meet their investors during the program via some connections.
To me, demo days feel like they are mostly PR events for the accelerator. It is a very easy way for an accelerator to get people to notice it, since it is one of the few events an accelerator is usually hosting, where they have significant presence and they can attract a lot of reports with the startups. Apart from that, it is very hard, especially for smaller accelerators, to even be mentioned in an article of one of the startups they funded.
At the end of each program, the entrepreneurs assess each other in an open and transparent process. The two highest-ranked ventures receive seed capital from VilCap Investments and co-investors. In 2013, this peer-selected investment model won the Harvard Business Review/McKinsey M-Prize for innovation.
Is a survivor-style fundraising mechanism better than a demo day in front of investors, who are probably well experienced to look beyond stagefright?
Do investors who target women and unattractive men have less competition for the same product?
Or does the effect last through all rounds of funding, customers, going public and so on? In that case the investor would be rational to mimic the preferences of the market.
I suspect it lasts through a few rounds of funding but at the point the company is large and can afford PR, and so on, it no longer matters.
This might mean that the smart investor should target the ignored company if the investor has enough money to get them to the point that they are self-sustaining.
This is why I enjoyed the Indie.vc program - No demo day. Instead, stay where you are and focus on building your business. Since the goal is growing a business, not prepping for another funding round, there's no need for a demo day.
That's a very open ended question which is hard to answer. Do you have a more specific question? My company (Tapster Robotics) was part of the first Inde.vc "batch" of 8 companies. We were the guinea pigs as we figured out what worked and didn't. But I liked that we didn't have to move (I'm in Chicago), though we did meet up once a quarter in different cities to catch-up for a few days. With no demo day (and no expectation to raise another round) all our discussions revolved around building the business, not grooming ourselves for the perfect investor pitch. My previous startup followed the "traditional" Silicon Valley model of being in forever-VC-pitching mode. This time around, I'm happy to be off that treadmill.
This makes a lot of sense. If investors can get a real feel for who they're investing in rather than a lot of marketing/canned pizzaz, I think they'll make consistently better decisions and founders will get a much clearer understanding of where they fall short.
Not to say that showing a proof of concept should be ditched entirely, but making a marketing pitch is not always the same as having a good idea.
"You desperately need a good pitch when you have a bad company. When you have a great company, you don’t need a great pitch." -Peter Thiel (Maureen Dowd interview NYT)
I don't think there's anything new here. This is real life, human nature --however one might care to put it. Startup demo's are not about demo's at all.
From politics to selecting an air conditioning contractor and beyond, presentation and engagement matter a lot. It's not that people are stupid or superficial, these things (and others) create impressions and confidence. And, in some cases, they are crucial to the success of the venture.
When I first launched into the world as an entrepreneur, decades ago, I was too much of an engineer. One key element that was missing is I sucked at selling. You can engineer an amazing product but, contrary to the popular saying, people won't beat a path to your door unless you are good at selling it. The history of business is paved with the carcasses of great products that never got off the ground because the people involved couldn't sell them.
In my case I recognized this from the very start and actively sought help in the area where I was most deficient. The first few months after we started to sell our hardware product were terrible. I'd mess-up presentation after presentation. Yet, with constant coaching I eventually figured it out. Within about eight months or so I was so comfortable selling that I could actually sell a product without saying a single word about it during a demo.
These presentations to potential investors have a far greater purpose than simple product demos. They serve to communicate to the audience a range of information about the entrepreneur. Important data points. One of them being whether or not the person can actually sell what they are making. If you can't sell and are going to hire someone to do so, you might be better off having them do the presentation. Folks who understand selling can sell anything, including a startup looking for funding.
To paraphrase an observation made decades ago by Smokey Yunick, a famed race car designer:
"When all the smoke and bullshit clears out you have to sell the damn thing".
One of them being whether or not the person can actually sell what they are making.
If the founder is indeed going to be in a position of standing up to a group of potential customers and selling something to them, whether it's a car or an expensive software package, then I can see the importance of such a presentation.
If, however, the sales takes place in a store, on a website, or in a catalog, then a different set of skills are needed--developing sales funnels, setting up distribution partnerships, converting online visitors, and writing stellar marketing copy. Yet I have never seen a demo day or investor pitch session that focuses on those skills, even though they will have a huge impact on the success or failure of many types of ventures.
If you can't sell and are going to hire someone to do so, you might be better off having them do the presentation.
That makes sense. Serious question, though: but do demo day organizers encourage it? How would investors or audiences react?
Folks who understand selling can sell anything, including a startup looking for funding.
I know this is true, yet I find this disappointing. It means that great salespeople can sell a turkey, which not only hurts investors but takes money away from more capable enterprises.
> If, however, the sales takes place in a store, on a website, or in a catalog, then a different set of skills are needed--developing sales funnels, setting up distribution partnerships, converting online visitors, and writing stellar marketing copy. Yet I have never seen a demo day or investor pitch session that focuses on those skills, even though they will have a huge impact on the success or failure of many types of ventures.
I understand what you are saying. Still, selling hasn't really changed in a long, long time. People were doing what you listed back in the days of mail order catalog selling. The technologies are different today but a lot of the same skills apply.
Selling isn't about technologies, it's about people. Of course, anyone can spend thousands of dollars a day on AdWords, blast a product out and generate tons of traffic. That doesn't sell. Generating good copy that sells and excellent landing pages and maybe even videos requires understanding how and why people buy. If someone can't sell themselves in an in-person demo they are not going to do well in any other medium. Are there corner cases? Of course. Yet, they would be better if they could sell in person. Writing copy or making a great video don't happen in isolation of an understanding of interpersonal dynamics.
Why doesn't Coca Cola just say "Our product tastes better and it's $1.23 per bottle. Buy it"? Instead they create these elaborate commercials with cute computer generated bears or groups of people dancing, etc. They understand they need to sell on emotion, not logic.
Most products, even something as dry as penetration testing software, have an emotional element. In some cases it might be more overt than in others, still, it's there. In the case of penetration testing software you need to convey strength, confidence and experience in order to generate one of the most powerful emotions: Trust.
One thing to bear in mind is how different Village Capital is than YC. I think it makes a ton of sense for them to do it this way, I think Techstars (alum!) should consider it, but it does seem like it works for YC.
So maybe solution is in changing optics for such events - Demo Days are primary for PR stage play helping humanizing startups and their creators and not for helping entrepreneurs raise money and meet investors?
I consider it one of the biggest waste of my time ever!
I'm hoping the program has grown more and I know Ross works hard and I congratulate him on keeping the program going. If you're an international company, perhaps their programs outside of US are more valuable since there are no other options for you. But if you're US based, I would do my homework before joining them.
Why? 1 - the program was so disorganized. We were forced to follow this automated Powerpoint slide progression. If you needed it more time on one of your slides you copied the slide twice, to give yourself double the time. So basically we spent 3 months optimizing our pitches around this auto powerpoint process.
2 - we were used to build credibility for Village Capital. They would shuttle us around to their potential LPs to show it was a viable program. That's not bad in itself, however, it felt like we were providing more value to Village Capital, than Village Capital to us.
3 - Very founder-unfriendly terms. As I said we were one of the two top finishers. However, their financing term (which we only learned the details pass the half-way into the program) was nothing short of usury. We were forced to do a down round (by 4x) OR do the revenue share financing, where we would pay back 3X the money they loaned us.
I decided not to write about our experience, but given the reach of HN, I decided for the first time to publicly speak about it to warn other founders who might be interested in their program.