James Siminoff

Y Combinator is Dead

Image via CrunchBase, source unknownImage via CrunchBase

Sadly, and I truly mean that, I believe that the Y Combinator model is dead.  The idea that you can put something out there on the cheap, get traction and then raise a quick “real” round no longer seems to be valid.  While there will always be exceptions to this rule, from what I can see the market for these companies to the VC’s is mostly dead.

I loved watching the Y Combinator model happen, it enabled real entrepreneurs to go out there and build cool stuff.

Here is what I would do under the current market conditions.  I would buy a hotel that is about to go bankrupt (there are a lot of these right now) in the bay area.  I would then create in that building a fully self contained incubator; food, shelter, office, Internet, etc.  You could then take the young, creative, smart entrepreneurs that have been blocked from funding and put them in your fully contained incubator for them to build their businesses.

By doing the model in this way you would create a environment of insane entrepreneurism, a cost structure that is the most capital efficient and you would be able to sustain companies well beyond what a Y Combinator can currently do without the need for massive additional capital.

I hope someone does something like this because I would love to visit it!

UPDATE- Because of the amount of traction this post has gotten I would admit that I would change the title to what it is on Hacker News now, Self Contained Incubator.

The idea behind what I wrote here really was about creating a Entrepreneur Hotel, where you could stay and live at by selling equity in what you are working on.  While some say this is not much different then how it is now, I believe that it would be a lot different and would allow for good businesses that need more time to get to profitability or a next round the time and support to do that without the current wall that the more conservative VC model is creating.

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