In Y-Combinator's case, the "user" in the network is a startup. YC creates a pretty amazing network effect for the companies who pass through. This includes:
1. Peer based help.
Many YC founders will ask other batchmates for their advice, feedback, and recent learnings. When I left Google to start my first company, there was similarly an invaluable network of ex-Google founders to tap into. This allows you to learn who the helpful investors are, tips on hiring, and about new types of distribution or platforms. These sorts of peer networks are invaluable and typically quite hard to come by quickly. YC plugs you directly into this network of peers.
2. Early advice and mentoring.
Beyond peers, YC provides a series of role models and mentors just a few years ahead of the current batch. YC founders can tap into founders at almost any stage of the startup lifecycle to get advice on what to expect next. This is where the true network effect of YC kicks in. By having more startups distributed throughout the lifecycle of a company, YC provides a broad based cross-mentoring network for all its companies. Each new company helps advise and mentor later companies.
3. Customers & market validation.
One of the most powerful aspects of YC is its built in customer development. Especially for B2B companies, YC provides an instant initial testing ground and potential user base for the startup's products. These early customer wins helps with both product testing and iteration, but also provides the startup with fast market validation. By having a number of early brand name customers (from prior YC batches) using the product, YC B2B companies can both get to revenue faster (helping with fundraising) as well as to some notion of product/market fit (due to fast and broad feedback).
A number of YC founders have emerged as prominent angels. They can provide early capital and validation for a startup, allowing it to bootstrap a seed round more effectively. The first few dollars raised are always the hardest, so early investors are valuable in giving a seed round momentum.
Surprisingly, very few traditional venture firms have an ex-YC founder as a partner. I would expect this to change and to follow the pattern of Google, where VCs hired a number of ex-Googlers into their firms to access that talented network.
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