I agree with Seth and Paul. Vibe is very important. We've taken a lot of trouble to ensure a happy vibe at YC. Partly it was to distinguish ourselves from others in the startup funding business. VCs' offices tend to be quite grim, even when they're expensively done. But the main reason was simply that we ourselves spend a lot of time at YC. We want it to be a happy place because we want to be happy ourselves.
That's one difference between starting a company when you're rich and when you're poor. You won't put up with unpleasant stuff when you're rich. Often that's a disadvantage, but I think it turned out to be an advantage for YC.
Employees act dry and "professional" and it's a miserable way to live. It's a spiral of doom that causes the best people to leave and biggest losers to dig in their heels.
The "Amateurs" section of "What Business can Learn from Open Source" is probably my favorite thing PG has written.
Vibe is often the single thing that differentiates a successful company from an unsuccessful competitor. The worst is "fake vibes", things constructed by corporations to look like collaboration and a good vibe that are really just manufactured.
It goes way beyond free food and ping pong. Is management on your side? Do they listen to your concerns and desires as an every day employee? Are you lied to regularly? Is everyone proud of their work?
I think ensuring good vibe is a corollary to the "A people hire A people" argument... if you take the time to hire people who share your positive attitude, then hopefully the organizational culture will reflect that.
"Now it's something that I watch for when visiting startups -- my guess is that upbeat and energetic companies will outperform the ones that feel oppressive and hopeless."
I've mostly only seen the vibe just implode (or at best only slightly diminish) when a startup gets acquired. Granted my experience is VERY limited.
I find it hard to imagine that many startups get acquired and it REALLY IMPROVES THEIR VIBE! ;) But maybe I'm wrong, any counter-examples to that scenario?
That's one difference between starting a company when you're rich and when you're poor. You won't put up with unpleasant stuff when you're rich. Often that's a disadvantage, but I think it turned out to be an advantage for YC.
http://www.flickr.com/photos/tlbtlbtlb/434812635/in/set-72157600027668946/