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People think reapplying to YC looks desperate. YC thinks it shows determination. Some founders get accepted on their 4th, even 5th application. YC tracks your progress across every attempt. They see you improving. The mistake most founders make is reapplying with the same thing… but YC already said no to that version. The right approach is treating each application as a checkpoint. Apply in October. Get rejected. Spend the next three months shipping product and getting users. Apply again in January with 10x the metrics. Get rejected again. Spend three more months doubling revenue. Apply in April with real traction. YC moved from two batches per year to four specifically to enable this. You have four shots per year to prove you're building something people want. The process of applying can become a great checkpoint and forcing function to be honest about your own progress…. Even if you don’t feel ready to apply. In fact, second-time applicants often have 10x the metrics of their first pitch. The rejection forced them to focus on what actually matters. This applies beyond YC… Most investors say no the first time you pitch them. Come back three months later with better numbers and suddenly they're interested. YC wants to see you're coachable and you execute quickly. Reapplying with measurably better metrics every three months proves both.

YC backs 5-10 versions of the same company every batch. For YC, this strategy works. They deploy $75M per batch across 150 companies anyway. One winner pays for five competitors when you're operating at that scale. If one becomes the breakout, the 7% they own covers the losses from backing the others. For VCs, the math is different. You’re concentrating capital in ~3-4 companies per quarter, not 150. We have to pick one, maybe two if the approaches are fundamentally different. The problem is beyond just portfolio construction. It's operational. You can't split attention between direct competitors. You can't share confidential information when both companies are asking for intros to the same customers. Most seed funds face this dilemma eventually. You back a company, then six months later a better team tackles the same problem with stronger traction. Some investors refuse to back competitors out of loyalty, then watch the better company rise and dominate the market. Others back multiple competitors and destroy trust with all of them when founders realize they're competing for the same investor's attention. Is it better to miss an opportunity than to create conflicts you can't manage? Concentration matters when you're trying to add real value beyond the check. YC can afford to spray and pray. Most seed investors can't.

Everyone laughed at these college kids' "stupid" fake website. Now it controls more traffic than Netflix and YouTube TV combined. $10 BILLION in value from faking 100s of users. Here's how Reddit quietly became the most powerful site in history:

YC Demo Day is PACKED!

This is why at Lobster Capital we *only* invest in YC startups. To all YC founders out there, DMs are open 👀

0.8% acceptance rate in the latest YC batch

By far the best addition to this demo day is the bubble tea 🧋

I've hated products that did millions in revenue. Ugly design, confusing user experience, makes zero sense to me personally. - Customers loved them anyway. Company scaled. I've also loved products that felt genius. Elegant interface, solves a real problem, should be massive. - Zero traction. Dead within 18 months. My opinion was worthless in both cases. This is the hardest lesson for new investors. You think being smart means you can recognize value before the market does. That your taste matters, that your gut instinct is signal. It's not. The market is smarter than you, smarter than me, smarter than any individual investor. It aggregates thousands of customer decisions with real dollars and real willingness to pay. I’ve built my entire investment thesis around this. We don't need to love the product or understand every nuance of why it works. We need proof that customers are buying. Revenue is the truth. Everything else is opinion. This is why we focus on companies with strong early traction. $100K MRR growing 20% monthly tells us more than any founder pitch. Hundreds of thousands in contracted pipeline with Fortune 500 logos beats a beautiful deck every time. Your job isn't to predict the future, but to recognize when the future is already happening and you're just too stubborn to see it. Take ego out of investing, it rarely feels obvious when you're making the decision. The market decides winners. We just try not to be too stupid to notice.

I Bet Everything on YC — Here’s Why I could have done anything. I chose YC. Here's why O made the bold decision to focus 100% of my fund on Y Combinator startups — and why most other VCs secretly want to do the same but don’t have the conviction to say it out loud. This is what it looks like to go all-in on a thesis.

People think reapplying to YC looks desperate. YC thinks it shows determination. Some founders get accepted on their 4th, even 5th application. YC tracks your progress across every attempt. They see you improving. The mistake most founders make is reapplying with the same thing… but YC already said no to that version. The right approach is treating each application as a checkpoint. Apply in October. Get rejected. Spend the next three months shipping product and getting users. Apply again in January with 10x the metrics. Get rejected again. Spend three more months doubling revenue. Apply in April with real traction. YC moved from two batches per year to four specifically to enable this. You have four shots per year to prove you're building something people want. The process of applying can become a great checkpoint and forcing function to be honest about your own progress…. Even if you don’t feel ready to apply. In fact, second-time applicants often have 10x the metrics of their first pitch. The rejection forced them to focus on what actually matters. This applies beyond YC… Most investors say no the first time you pitch them. Come back three months later with better numbers and suddenly they're interested. YC wants to see you're coachable and you execute quickly. Reapplying with measurably better metrics every three months proves both.

YC backs 5-10 versions of the same company every batch. For YC, this strategy works. They deploy $75M per batch across 150 companies anyway. One winner pays for five competitors when you're operating at that scale. If one becomes the breakout, the 7% they own covers the losses from backing the others. For VCs, the math is different. You’re concentrating capital in ~3-4 companies per quarter, not 150. We have to pick one, maybe two if the approaches are fundamentally different. The problem is beyond just portfolio construction. It's operational. You can't split attention between direct competitors. You can't share confidential information when both companies are asking for intros to the same customers. Most seed funds face this dilemma eventually. You back a company, then six months later a better team tackles the same problem with stronger traction. Some investors refuse to back competitors out of loyalty, then watch the better company rise and dominate the market. Others back multiple competitors and destroy trust with all of them when founders realize they're competing for the same investor's attention. Is it better to miss an opportunity than to create conflicts you can't manage? Concentration matters when you're trying to add real value beyond the check. YC can afford to spray and pray. Most seed investors can't.

Most angel investors aren’t investing, just gambling on friends. Seeing 10 startups per year and making 2-3 investments is a bad decision. You end up over concentrated in a narrow selection of opportunities that suffer from adverse selection. Inevitably, these investments perform badly and you think that "getting into the best deals is hard". The only reason to be an angel is if you believe you have an edge in getting into “the best deals” before an institutional investor is able to. Your investments are only as good as your deal flow. If you only see deals from your immediate network, you'll never access the best companies. Those deals go to investors who've spent years building relationships and reputation. Pass on the first 20 deals you see. Then you need to see 100+ companies annually to develop real judgment. This means more than seeing the pitch deck… I mean actually understand them. - Talk to the founders. - Analyze the metrics. - Watch how they respond to questions. - See the patterns that separate winners from noise. Most investors skip this step. They want to write checks immediately. They think being smart means they can recognize value without building the pattern recognition that comes from volume. None of this happens overnight. You can't shortcut reputation. You earn it by showing up consistently, let the deal flow build and the investments will follow.

By far the best addition to this demo day is the bubble tea 🧋

AI is only at day one. Over the next 5, 10, 20 years, we’ll see entire industries rebuilt by automation. The gig economy was just the start — agents are next. We’re not at the end of the story — we’re on the first page.

YCs inherent diversification allows it to take wilder bets than other VCs Its diversification has only increased with growth in cohorts. That means crazier and more ambitious bets For example, it's estimated that their $20K cheque for 6% of AirBnB would’ve been worth $6 billion at IPO. YC generally follows on in later rounds, which reduces dilution. Though this was in 2009. Now YC gives $125K for 7%, with $375K on a MFN SAFE for the seed round - with four cohorts per year, raising larger funds to do so. Some companies have already raised and have revenue, rather than being an idea stage company like Airbnb at the time. In 2005 the first batch was eight. In 2011, batches were 30, 40, 50, 60 (then) went up to 80, now the batch size is 160 (4x p/y) YC will continue to make returns with this model, and it needs more AirBnBs and DoorDash’s (300,000 Xers) So it’s increasingly taking more risky bets: - Lithography machines like Inversion Semiconductors - Pothole-filling autonomous robots with Pave Robotics -- A host of AI recruiters and sales agents, despite the concentration of the market YC can take bets on things that have a 10% chance of working, or have 10 other competitors for one reason only... Returns

Everyone laughed at these college kids' "stupid" fake website. Now it controls more traffic than Netflix and YouTube TV combined. $10 BILLION in value from faking 100s of users. Here's how Reddit quietly became the most powerful site in history:

One of the most overlooked questions in early-stage investing: “That $500k ARR… is it contracted or live?” The distinction matters… A lot! **Contracted ARR (cARR)** This is the total value of signed agreements. On paper, it looks great. But most enterprise SaaS contracts bill only when deployments go live. Example: Megacorp signs for 8 plants at $100k each. Contracted = $800k ARR. But if only Pittsburgh is live, you’re actually billing $100k ARR. **Live ARR** This is cash in the bank, month after month. It’s the only number that pays salaries and keeps the lights on. The Gap is Dangerous • Delays → rollouts slip, revenue lags by quarters (or years in healthcare). • Cancellations → a contract signed is not always a contract realized. • Overhiring → founders scale to cARR, then scramble when live revenue doesn’t catch up. Patterns by Sector - Enterprise SaaS / Healthcare → huge gaps, long deployments. - SMB / Consumer SaaS → smaller gaps, instant activation. Investors should: • Always separate contracted vs. live. Ask: “What’s hitting your bank account right now?” • Underwrite to live ARR and cash balance, not aspirational contracts. • Probe deployment schedules, churn risk, and customer concentration. Guidance for Founders - Be transparent: report both contracted and live ARR. - Don’t hire or expand on promised revenue. Spend only what live ARR + cash can support. Contracts are promises. Promises slip. Cash doesn’t. That’s the number that keeps a company alive.

The Only Interview Question Y Combinator Has Used Since Day One "What single project or task would you consider your most significant accomplishment in your career to date?" It's more revealing than you might think. It cuts right to what matters: ➊ Can you actually get things done? Theory is nice. Execution is everything. ➋ What do you value? Your answer reveals your priorities more than any "what's your greatest strength" cliché ever could. ➌ How do you frame success? The way you tell the story matters as much as the story itself. What makes a great answer isn't the size of the achievement, but the depth you can go into about it. Paul Graham himself said "What if you're interviewing a kid from south-side Chicago who against all odds went to college? That is exactly the sort of achievement that impresses us." In fact, YC funded Qasar Younis, who started life in a house with dirt floors in Pakistan, moved to Detroit at 7, and through sheer determination built a startup (Talkbin) that Google acquired shortly after Demo Day. The brilliance of this question is that it works for everyone: ㊀ For seasoned executives, it cuts through the resume fluff ㊀ For new grads, it reveals drive regardless of opportunity ㊀ For career-changers, it shows transferable grit The follow-up matters too. Can you talk in detail about… Your specific contribution… The obstacles you faced… How you measured success… What you'd do differently As Elon Musk puts it "Anyone who really struggled with a problem never forgets it." Next time you're interviewing candidates (or preparing for an interview yourself), remember past accomplishment predicts future performance better than anything else.