The Launch Pad: Inside Y Combinator

Teams interviewed: 170

Minutes per interview: 10

Teams accepted and funded: 64

Months to build a viable startup: 3

Possibilities: BOUNDLESS

Investment firm Y Combinator is the most sought-after home for startups in Silicon Valley. Twice a year, it funds dozens of just-founded startups and provides three months of guid­ance from Paul Graham, YC’s impresario, and his partners, also entrepreneurs and mostly YC alumni. The list of YC-funded success stories includes Dropbox (now valued at $5 billion) and Airbnb ($1.3 billion).

Receiving an offer from YC creates the oppor­tunity of a lifetime — it’s like American Idol for budding entrepreneurs.

Acclaimed journalist Randall Stross was granted unprecedented access to Y Combinator’s summer 2011 batch of young companies, offering a unique inside tour of the world of software startups. Most of the founders were male programmers in their mid-twenties or younger. Over the course of the summer, they scrambled to heed Graham’s seemingly simple advice: make something people want.

We watch the founders work round-the-clock, developing and retooling products as diverse as a Web site that can teach anyone program­ming, to a Wikipedia-like site for rap lyrics, to software written by a pair of attorneys who seek to “make attorneys obsolete.”

Founders are guided by Graham’s notoriously direct form of tough-love feedback. “Here, we don’t fire you,” he says. “The market fires you. If you’re sucking, I’m not going to run along behind you, saying, ‘You’re sucking, you’re suck­ing, c’mon, stop sucking.’” Some teams would even abandon their initial idea midsummer and scramble to begin anew.

The program culminated in “Demo Day,” when founders pitched their startup to sev­eral hundred top angel investors and venture capitalists. A lucky few attracted capital that gave their startup a valuation of multiple millions of dollars. Others went back to the drawing board.

This is the definitive story of a seismic shift that’s occurred in the business world, in which coding skill trumps employment experience, pairs of undergraduates confidently take on Goliaths, tiny startups working out of an apart­ment scale fast, and investors fall in love.