It was a ritual that Y Combinator (YC) had down pat. On February 12, 2020, the startup accelerator issued an email invitation to its Winter 2020 Demo Day on March 23 and 24. Almost 200 early-stage companies would “present themselves to a room of specially selected investors,” the invite explained. It included information on the venue—a pier next to the San Francisco Giants’ Oracle Park—and noted (twice) that lunch would not be provided.
After 15 years and 30 batches of companies, YC Demo Day was one of the startup ecosystem’s most familiar institutions. But as the Winter 2020 edition approached, it became clear that COVID-19 was about to disrupt every aspect of business as usual.
By early March, tech companies such as Facebook, Google, Microsoft, and Twitter started telling employees not to come into work, or at least recommending against it. So it was hardly surprising when YC managing partner and director of the early-stage program Michael Seibel sent an email to those who’d RSVP’d announcing that Demo Day wouldn’t involve a roomful of investors after all:
On March 23, YC will host our 30th Demo Day online. With the growing concern over COVID-19, we believe this is the right thing to do for the safety of all attendees, including our team, founders, investors, and the media.
While we won’t be able to recreate every aspect of Demo Day, we’ll try our best to create an amazing experience for investors, our founders, and all of you.
Four days later, as it looked like the pandemic might lead to a protracted slump in investing, YC moved Demo Day up a week in hopes of squeezing it in before things really fell apart. Rather than attempt to fully recreate founders’ traditional live pitches in virtual form, it switched to a stripped-down format in which each startup got a single slide to summarize itself. (Fortunately, it later became clear that investors were surprisingly unfazed by the global health crisis.)
For Y Combinator, these abrupt changes to Demo Day were a big deal. But they were only the beginning of the adjustments it would need to make to its twice-yearly boot camp for batches of new startups it’s invested in, which includes three months of work with its partners, alumni, and other experts and culminates in Demo Day.
“We had to invent what a new remote YC experience would be,” says Seibel. “We moved YC online and hosted all the events over Zoom. For the first time we brought all the founders together on a Slack channel as well, so that they could interact with each other.”
Nobody is arguing that a Zoom call or Slack channel can match everything that’s satisfying about meeting with one or more people in person. Not does YC contend that its current incarnation is an absolutely faithful replica of the in-person, Silicon Valley-based program. “It’s a different experience for sure,” says YC president Geoff Ralston. “It’s fully remote. How can it not be different?”
Still, in terms of YC’s higher mission—helping to turn promising raw ideas into small companies with an honest shot at getting big—Seibel and Ralston say that the online incarnation has exceeded their expectations. Which is why many aspects of it may remain in place even once there’s no reason why YC couldn’t revert to its old, familiar self if it felt like it. The details remain a work in progress: The Summer 2021 edition of Demo Day, on August 31 and September 1, will be another online-only affair, with the format of future installments TBD.
“The bottom line for me,” says Ralston, “is that we are still able to fundamentally transform the trajectories of companies that come in and work with us for three months.”
‘That’s when the real changes happened’
By the time Y Combinator took the Winter 2020 Demo Day online, it had been thinking about the threat of COVID-19 for a while. Indeed, Ralston says that he had been bracing himself for a pandemic ever since reading New York Times reporter Gina Kolata’s 2011 book Flu: The Story of the Great Influenza Pandemic of 1918 and the Search for the Virus That Caused It. As the possibility of the coronavirus hitting the U.S. looked increasingly real, “we had been having conversations about what this might mean for future batches when suddenly it became really clear that it meant something for our current batch,” he says.
On March 10, YC announced that at least part of its Summer 2020 program would be held in virtual form. “The Winter ’20 batch was far more about ‘How do we finish a batch?'” says Seibel. “It wasn’t ‘How do we recreate YC?’ The Summer ’20 batch was, ‘okay, now we have three months to figure out how to recreate YC almost from scratch.’ That’s when all the real changes happened.”
Ralston says that he quickly concluded that the pandemic would not be a blip that could by history by the summer. “I didn’t say to the organization, ‘Okay, it’s going to be two years,'” he recounts. “But there was no way I believed we would be back in the office before the end of 2020. The math didn’t work.”
The sorta-good news was that long before the pandemic began, Y Combinator had built its own software platform and made it a core part of the experience for startup founders. It did so partly because pure human contact was hard to scale at the pace that YC wanted to expand. In 2010, for instance, its winter batch of startups included just 27 companies. Five years later, that had more than quadrupled to 114; five years after that, the winter 2020 batch stood at 197 companies.
Michael Seibel, Y Combinator
Who knew that forcing people to drive down to Mountain View made it harder versus allowing them to click a button on their computer?”
Yet another YC offering, Startup School, was an in-person event at first and then became an online program. It’s a free course and community that budding entrepreneurs can take from anywhere. Seibel explained its purpose in 2019: “We meet a lot of founders who kind of know that there’s good advice online, but don’t really know who to trust and who not to trust. And they’re not sophisticated. They don’t know all of the names. And so oftentimes they’re just looking for one place to go to get all the advice they need.”
Seibel wasn’t kidding about Startup School catering to a large audience. At the time he told me that, the most recent class had included 20,000 participants. Along with standing on its own, it can lead to bigger things: 44% of companies accepted into YC’s full program are Startup School alums.
Once the pandemic rendered in-person YC impossible, the fact that these kinds of virtual elements were already in place softened the disruption at least a little. At the same time, the firm was going through the same transition as millions of other organizations, as Slack and Zoom suddenly replaced rather than supplemented face-to-face communications.
Communicating via a video conferencing app such as Zoom may have a reputation for being terrible and exhausting, but Seibel says that in some ways, he’s found it refreshing. “You can see everyone’s face,” he notes. “So when I’m talking, when I’m doing group office hours with a small group of founders, I can see whether I’m engaging them or not. I can see whether they’re bored or not.”
More important, meeting via Zoom meant that YC didn’t need to ask guest speakers such as founders who’d graduated from its program to spend a few hours in highway traffic to impart their wisdom. “Who knew that forcing people to drive down to Mountain View made it harder versus allowing them to click a button on their computer?” Siebel jokes.
Meanwhile, the roomful of investors who were part of Demo Day in its traditional form also adjusted well to not being in the room. Seibel says that many prefer the online version of the event and would rather spend a half hour on Zoom with a startup than taking an hour meeting over coffee.
‘What we do, we have to do in person’
As Y Combinator evolved during the pandemic, the constituency whose lives and livelihoods were most subject to change were the founders of its portfolio companies. For years, a key part of the whole proposition was uprooting yourself to spend three months embedded in the San Francisco Bay Area startup culture—something the firm positioned as not only helpful but nonnegotiable. “What we do, we have to do in person,” its FAQ used to firmly explain. “We would not be doing a startup a favor by not making them come to YC events in person.”
It’s easy to see why YC prized the intimacy and immediacy of a program that transpired in private in one place. I’d seen its power for myself in 2019 when I got to observe one of YC’s famous dinners for its startup founders. Guest speaker Mathilde Collin, cofounder of customer-service-by-email platform Front, talked about leaving Paris for San Francisco to participate in the YC program in 2014. The rapt attention she got was not something that happens over Zoom. And with $138 million in funding, Front is an example that any newly hatched YC company would love to emulate.
Adam Michalski, Partnered
Being able to stay at home and not have to leave my family to go to the West Coast, I saw as, frankly, a plus.”
Once COVID-19 arrived, however, YC had to abandon its attachment to its old format. Both the firm’s partners and members of recent, virtual YC batches say that it’s pointless to fixate on the specifics of what’s been gained or lost. Ralston compares the situation to Burning Man: New attendees focus on the experience they get, not a past they didn’t participate in.
“Obviously, I don’t think it’s the same as being there in person, particularly the serendipitous walking-to-the-water-cooler conversations,” acknowledges Adam Michalski, the CEO of Partnered, a YC Winter 2021 startup that offers a shared customer-relationship manager for companies that partner with each other. “But nonetheless, I think they did a really good job at just making it so that you actually did feel a sense of community amongst a very large batch [of companies].”
Ultimately, “being able to stay at home and not have to leave my family to go to the West Coast, I saw as, frankly, a plus,” says Michalski. “The efficiency that you get, being able to pop from Zoom to Zoom, is also just really great.”
Sonakshi Nathani has an even better excuse than Michalski for appreciating the ability to be part of a YC batch from afar. She’s the Hyderabad, India-based CEO of Bikayi, a YC startup that aims to be the Shopify of its home market. But it’s not avoiding travel time that she values most. Founded in 2019, Bikayi was already enough of a success without YC that it had customers to support, something that would have been impossible to accomplish under YC’s old drop-everything-and-travel-to-Silicon-Valley regimen.
“We used to get around 60 or 70 [support] calls daily,” she says. “We were just three people working together.” Only when she heard that the YC program was going remote did it sound like a realistic option—whereupon Bikayi successfully applied to be part of the summer 2020 batch.
‘Silicon Valley is also available online’
Both Ralston and Seibel are careful to emphasize that the fact that founders can be part of YC from anywhere does not mean that it turned out that there was no benefit to spending time in the Bay Area. They certainly haven’t become part of the chorus of entrepreneurs who have melodramatically abandoned San Francisco and environs in recent days.
“Silicon Valley still remains a special place,” says Ralston. “It’s a unique place to start a startup. But it was sort of inevitable that it would not remain unique in its ability to dominate as the cradle of tech startup success. That’s spreading out around the world has been going on for years and years.”
“I still think that founders who are going to want the experience of being in a city where being a startup founder is normal and not weird will come here,” adds Seibel. “I think founders who don’t need that experience are going to find that Silicon Valley is also available online. And this is just going to provide founders with more choices.”
It’s also an opportunity for Y Combinator. Back in 2019, when the firm still insisted that startups make the trek to Silicon Valley to participate in its program, Seibel was already marveling at how many budding entrepreneurs around the world, from Mexico City to Lagos, Nigeria, felt like YC material. “It turns out that this startup community is global, and it’s online, and that means it sprouts up in all these various places,” he told me at the time. If nothing else, bringing YC to at least some of these people rather than making all of them come to YC is a more efficient way to scale.
According to Seibel, the investment community that helps propel startups upward after their initial YC funding already appreciates the more far-flung nature of the newest batches. “A lot of investors have told me that they love that they’re getting access to international companies they’d never gotten access to before,” he says. “They’re learning about markets they never were able to learn about before.”
However YC ends up once COVID-19 is truly not a factor in its operations, its embrace of remote technology may not look like a pivot. Instead—as with many changes to business imposed by pandemic conditions—it could feel like it got to a place it was going anyway. Just a whole lot faster.