Are you building a company, or your credentials?

Note: This post was originally published on TechCrunch

Y Combinator recently announced that for their next batch, they’ll accept applications from groups and individuals without an idea. That same night, I received a breathless call from a friend currently finishing up his MBA at an elite east coast business school, asking me for help putting together his “Without Idea” Y Combinator application. This friend is smart, dynamic, and an all around great person. But he’s not someone I consider to be entrepreneurial. He was a management consultant at a big firm for years before business school, and loved it. He’s the first to admit that his interest in startups conveniently coincided with the premier of “The Social Network” a few years back. So on the call, I asked him, “why jump into entrepreneurship now. You are someone who likes to be on a stable path. Why do you suddenly want to start a startup?”

His answer: “Even if the startup ends up going nowhere, graduating from Y Combinator would be such a great credential.”

And with that, it hit me. He was far less interested in actually building a company than he was in obtaining another credential to add to his mantle. This type of credential-seeking is rampant in the world at large: For example, many go to law school for the degree, not because they want to be lawyers. Perhaps there is nothing inherently wrong with credential-seeking, but it seems like something that does not belong in Silicon Valley… Here, it’s supposed to be all about how much value you’re creating for the world, not about how much perceived value has been bestowed upon you. Yet while dropping out of college may be en vogue, it seems like these days credentials, albeit not degrees, are very much in the startup zeitgeist. Whether it’s participating in an accelerator like Y Combinator, getting a seed investment from a big name super angel or celebrity investor, or being part of the “Company X” mafia, credentials are a hot commodity. Yesterday, PandoDaily ran the post “9 Practical Tips on How to Get Into a Top Startup Accelerator” … Substitute “Top Startup Accelerator” for “Law School” and you can see how we might just be jumping the shark here.

The issue is not with the credentials themselves (I have nothing but respect for Y Combinator, and I’m grateful to the big name super angels who backed my most recent venture, Topguest). Rather, the issue is that as our ecosystem places more value on credentials, it’s only natural for entrepreneurs to pursue them more. I was as guilty of this as anyone. When I first jumped into entrepreneurship about two and a half years ago with Udorse , I put credentials first, and product a distant second. For our first few months, we focused entirely on getting into TechCrunch50 (now Disrupt) as a finalist, and raising a seed round from prestigious investors. We succeeded on both counts, but failed as a team and product. It was all my fault… In retrospect, the mistakes I made seem so obvious (e.g. have a real product you believe in before you launch on stage at the highest profile startup event in the world, etc :-). But at the time, those credentials just seemed so sexy, and I wanted them at the outset to “set us up for success.” They didn’t. The story has a very happy ending: We pivoted Udorse into Topguest and were acquired by a strategic after 18 months, but the credentials had nothing to do with it.

Part of Paul Graham’s rationale for the Y Combinator “Without Idea” track is that many YC startups already are already changing their idea during the program, so it’s is a logical evolution. I think there is a fundamental difference between going after an initial idea, then pivoting, vs. jumping into entrepreneurship with no idea at all. With the meme of “team and execution are everything”, it’s easy to forget that ideas still matter. Part of what defines a great entrepreneur is their ability to paint a vision of the future that does not exist today, and rally an incredible team around it. You simply can’t do this without an idea. It’s possible that Paul and his team will be able to identify this ability by proxy in “Without Idea” candidates, but it will be extremely hard.  In any case, Attention All Credential-Seekers: You can now brand yourself as a YC entrepreneur without even having an idea, folks… Apply away!

After a long heart-to-heart with my friend, he decided to hold off on applying to YC this cycle. I’m going to help him brainstorm ideas, and introduce him to some prospective co-founders. He just may have the right stuff to build a real company, and I’m not going to hold his MBA against him.

If you’re in it to build a successful Company, the credentials will come to you, eventually. But if you’re in it primarily for the credentials, you should consider law school.

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Comments

  1. John Decker says:

    Goeff,

    Great article, when I read that Y was doing this I figured every hustler/ business entrepreneur who is trying to start a tech company and has no tech founder rolled their eyes. They know even with a great idea they have little or no shot. Plus its also almost impossible to get a co-founder especially in the Bay.

    Thanks
    John

  2. sainallapaneni says:

    Great article. I am surprised because I had the exact same discussion with my friend who has a great idea but is going for seed funding too soon. I strongly believe that his idea has so much bootstrapping potential that he should focus on the idea than getting a investor because at the end of the day the user does not care about who is backing you.. Its just what your product is. But as you said, thats the way the world sees and rewards credibitlity i guess. I personally love the statement that credentials would eventually come to you if you have a great product and a great vision. No reason to go to YC without know what to get out of the program.

  3. Couldn’t agree more Geoff. Great post.

  4. I guess time will only tell whether you’re right or wrong. Hard to second-guess Paul Graham sometimes, but I definitely agree with your rationale. When an accelerator accepts a company, they have a limited window into the people behind the company (or at least not a perfect vision). Hard to tell execution potential on just looking at past work unless that person is well-established.

    • Yeah, definitely not trying to second guess Paul Graham here (he is far smarter than I am), but I think there are negative implications to the YC “Without Idea” application track that may not be in their consideration set right now.

  5. Geoff,
    This is a great article.
    Couldn’t agree more, when you say
    ” If you’re in it to build a successful Company, the credentials will come to you, eventually. But if you’re in it primarily for the credentials, you should consider law school. “

  6. I agree with your point but why not leave him to apply for it? IF he gets in, he might learn a thing or two about credentials vs the balance of having great ideas,team,execution.

  7. It’s really easy if somewhat cynical for me to say that this is the pitfall of believing the only people with good, backable ideas are 22 years old. When you’re young and just out of school and don’t have the life experience to appreciate what goes into things, it’s easy to get caught up wanting the glamour job, the sexy degree the “cool credential” — you want to be in with the “in” crowd however you define that. You would never need to tell a 40 YO entrepreneur to focus on creating value and not on gathering credentials because A) they probably already have some real credentials and B) they just know better.

  8. Great post, Geoff. I too fell victim of credential-seeking. It wasn’t until I had suffered through the obstacles of starting (and failing) in my entrepreneurial ventures that I stopped chasing the credential, and started to chase after the right product.

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