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I have wondered if affluent parents can replicate at least the money part of Y Combinator. $120K is about the list price of two years of Harvard/MIT/Stanford .

I have wondered if affluent parents can replicate at least the money part of Y Combinator. $120K is about the list price of two years of Harvard/MIT/Stanford . With a son who loves to program, I have wondered if sending him to a cheaper school and giving him the difference in installments after he graduates is better than paying for a "name" school. It depends on the quality of the cheaper school, of course. And I think school prestige matters more for investment banking than tech, so I'd be less inclined to suggest a cheaper school to a budding banker.

tptacek 12y ago
They obviously can, the same way that they can offset the dollars by paying for their childrens' living expenses. But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors.
- yahelc 12y ago
  Which is, incidentally, not dissimilar from the signaling effects of attending Harvard/MIT/Stanford.
  - argonaut 12y ago
    In the tech world, the YC signal > H/M/S signal.
    - maxbrown 12y ago
      Kind of a generalization, no? Do you mean specifically for startup success and/or raising VC money?
    - _delirium 12y ago
      I don't think that's generally true. YC is very well respected in a very specific niche of tech, while H/M/S have much broader name recognition in tech generally. Depends to some extent on what you want to do. YC has great name recognition among VCs, so if you're going that route, it's a good name to have. A Stanford or MIT degree generally has better name recognition among people hiring for tech jobs, especially outside of the SF Bay Area and among people not culturally part of the "startup scene".
      - argonaut 12y ago
        Yeah, I should have clarified. It's a bit uncertain if YC > HMS to hiring managers at companies. YC is definitely > HMS in the startup and raising VC world. However, engineers and recruiters at the top tech companies like Google/Facebook/Amazon/Microsoft have definitely heard of YC.
- logicallee 12y ago
  > But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors. This idea (first quoted sentence) needs to die. It is toxic to the early-stage ecosystem. Any amount of money is a ton of money. Period. You can ignore the hustling that Jobs or Zuckerberg did for literally a couple of thousand dollars - read Zuckerberg's contracts at the time he was at Harvard making facebook. Look at the timing jobs "Stole" $5000 from Woz and founded Apple with it (making his friend a multimillionaire in the process). The reality is that no windfall bonus from Atari of less than $4300 - which is money that Jobs had 0, absolutely 0, access to, from any other source - equals no Apple. Look at the dates. You can also ignore what companies actually spend the YCombinator seed money on when it was $14K-$20K, at a time that the YC badge easily added $200K+ to a YC company's average valuation - a badge that doesn't bring instant liquidity. How many YC companies would not exist if YC only added its badge to the valuation, and not actually given any money.[1] What you can't ignore is that there are people who are working a day job while owning and building a company - working that day job because any amount of money, even part of a single full time earner's after-tax salary, is a ton of money. Just try raising it. [1] Imagine if the YC admission read: "Congratulations! This admission is easily worth $200K in extra valuation. With the YC badge, you should have no trouble raising money. We are therefore not making any cash investment, not even $12K, but rendering only services. We welcome you to the bay area on (date)."
  - tptacek 12y ago
    Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.
    - logicallee 12y ago
      You're simply empirically wrong [about the 'amount' of money that represents, whether it is large enough to make a substantial difference], and your anchors[1] are not only irrelevant and misleading in an early-stage context, but extremely toxic.[2] What was Google's first check in the amount of? $100K. It was a ton of money. As Wikipedia points out, "The first funding for Google as a company was secured in August 1998 in the form of a US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist." They used that to raise "On June 7, 1999, a round of equity funding totalling $25 million", about 10 months later. Pop quiz. Which was more money, the $100K in the first context or the $25M in the second? Well, as I've heard they never did spend much of that $25M, it sat in Google's bank account while they grew and raised further rounds.... But that $100K? That was a ton of money. Basically, you are wrong that it was not a ton of money, your anchors and comparisons are toxic and misleading, and if he had not cut that check then Larry and Sergey would not have created Google. That is what actual reality shows us. You simply do an incredible disservice to all early-stage startups by talking in these terms. I gave you several actual examples of far less than $120K being a ton of money in an early-stage context. As little as $5000 being a ton of money. I also specifically stated that if, say, $20K, weren't a lot of money, then it would make no difference empirically if YCombinator did not actually pay that cash. And YC companies wouldn't have either relied on or even actually spent that cash. But it does make a difference, and they did. As I specifically point out: your FTE expenses are completely irrelevant, and even part (less than 100%) of the after-tax portion of a single FTE salary is a ton of money. (In an early-stage context.) To imply otherwise does a huge disservice to all first-time, early-stage founders everywhere. The very idea is toxic and needs to die. [1] The meaning of anchor I use is: http://en.wikipedia.org/wiki/Anchoring http://en.wikipedia.org/wiki/Anchoring [2] Your figures both about (1) the cost to the company of a fully loaded FTE senior engineer and (2) the amount that a good freelancer can generate above living expenses in a year, are irrelevant and do not need to be argued. I will grant both as irrelevant to the discussion.
sailfast 12y ago
While the education is one thing (and surely valuable), I think you also have to look at the connections and network you develop at a "name" school vs. other schools. Those are not things you see on a bill, but they are extremely valuable. EDIT: I'm not saying this can't be achieved at other schools - I didn't attend a "name" school, but the network definitely matters and can be a huge bonus especially if you know what industry you want to target.
karamazov 12y ago
Off topic, but if your son has the chance to go Harvard/MIT/Stanford, he absolutely should. The difference is primarily in the caliber of the other students, and it makes a world of difference to have such a concentration of talent in one place. (Note that I'm not saying there isn't talent elsewhere, just that there's an incredible concentration of it in the top n schools.)
- kapilkale 12y ago
  It doesn't necessarily make world of difference. When you compare students who attended top private schools vs. those who were admitted but attended state schools, they actually have equivalent incomes down the line. What's likely happening is that really smart kids at good state schools end up finding the pockets of talent there anyway. Pretty scary implications for the value of a Harvard degree. source: http://www.newyorker.com/archive/2005/10/10/051010crat_atlarge?currentPage=all http://www.newyorker.com/archive/2005/10/10/051010crat_atlar...
  - johnrob 12y ago
    To some degree, the elite universities are selling success to those already predestined for it. This is an end game state for any popular institution that accepts a subset from a pool of applicants. The battle to get in ends up being a significant source of the value creation. Raising a venture round from Sequoia is probably a decent non-academic example of this. I would not be surprised if companies who turn Sequoia away are just as successful as those who are funded by them (although the former is probably a small data set!).
  - gagaga 12y ago
    The network you'll make at top-tier schools is IMO a lot more important than anything else.
- ericd 12y ago
  Yeah, the difference in peers alone is worth the cost delta. Especially true if you go to MIT - the student body and culture there is absolutely wonderful. One of my favorite places on Earth.
ZachPruckowski 12y ago
Most likely, your kid's startup you dropped $120K into is going to fail. Make sure you consider that case very carefully - what are his chances like at 26 with a less prestigious degree and a failed startup under his belt compared to a Harvard/MIT/Stanford degree plus 5 years in a salaried job that those can get you?
mbesto 12y ago
> And I think school prestige matters more for investment banking than tech It has less to do with prestige and more to do with risk. IMHO, there are only two routes to becoming part of today's tech elite. You either build something that gets traction or you join a team that has already done so. These are IMHO the two strongest signals today, especially given the increase of noise. Don't believe me? Just search around AngelList for 30 min. If your son gets a CS degree from Stanford or MIT, it will automatically put him in that basket of "join a team who has already done so", just as working for Google, Facebook, Twitter, etc does.
morgante 12y ago
As someone who essentially took that path, I can't recommend it. My parents and I had saved up a decent college fund ($100k or so), but instead of using that to go to Top School I took the chance on a school which offered me a full ride. Sure, I'll be graduating about ~$140k better off than most other students. But over the lifetime of a successful tech entrepreneur that amount of money is fairly meaningless. Having spent a significant amount of time on top campuses (where most of my friends went), I often regret making that decision—the caliber of students is truly higher, and the friends/networks you have from a school like Harvard will pay dividends throughout life.
- acjohnson55 12y ago
  Get the best of both worlds and do a master's at a top notch school. That's my story. I went to good-but-not-world-renowned state school for undergrad on a full ride. I did my best to wring the absolute most out of that experience, and it paid off in many ways, including a fellowship that paid for my master's at an Ivy. Most grad students don't get plugged into "the network", but I went out of my way to engage in campus life. In the process, I'm fairly positive I built just as good of a network as if I had attended for undergrad. Point being, everywhere you are has something to offer. Make the most of your situation!
  - morgante 12y ago
    > Get the best of both worlds and do a master's at a top notch school. Glad that worked out for you. To be clear, my school is actually extraordinarily good academically (we're privately funded by an oil fortune)—it's just that the prestige of the name and student's isn't quite at Ivy quality. > Point being, everywhere you are has something to offer. Make the most of your situation! I'm doing my best, and doing pretty well (making 6 figures as a college sophomore), so my regrets are more social/intellectual than monetary. Though sometimes I wonder if YC would have accepted me if I had advertised my Ivy League stamps of approval (acceptance letters)... Maybe I'll go to Harvard when I get tired of developing and decide to "pivot" into management/finance.
    - 12y ago
hga 12y ago
In the case of "a son who loves to program", if the target is a Computer Science degree, if your son can get into any one of Stanford, UC Berkeley, CMU or MIT, go for it. These are the top CS schools in the US and I gather the world, and there's a big quality gap between them and those below them.
jedberg 12y ago
Back in the 90s, I had a friend who was an instructor for Sun Certification classes. He told us of a kid who, when he turned 18, was given his college savings by his parents to do with as he pleased. He chose to spend the ~200K getting every Sun cert available. He then became a consultant at 21 making about $500K a year, at least for a few years. Don't know what happened to him after those certs became useless, but I hope he converted somehow.
- nostrademons 12y ago
  I also know a family whose father gave them their inheritance when they turned 22. Instead of getting jobs after college, all but the eldest (who already had a job) spent several years bumming around their apartments, paid for by their dad, and failed to launch. Their careers still haven't recovered. YMMV. I do think it's better to give money to people who are already succeeding and could just use a bit of acceleration or a chance to do something riskier, though. At earlier stages advice and introductions are often more useful in the long term.
ZenPro 12y ago
If your son has co-founders or would like them then this is an idea with the potential to be disastrous. If the startup (company) goes the distance then whatever equity you bought with investment would convert to your son as part of his inheritance altering the partnership drastically. The legal and financial ramifications can be quite complex.

tptacek 12y ago

They obviously can, the same way that they can offset the dollars by paying for their childrens' living expenses. But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors.

yahelc 12y ago
Which is, incidentally, not dissimilar from the signaling effects of attending Harvard/MIT/Stanford.
- argonaut 12y ago
  In the tech world, the YC signal > H/M/S signal.
  - maxbrown 12y ago
    Kind of a generalization, no? Do you mean specifically for startup success and/or raising VC money?
  - _delirium 12y ago
    I don't think that's generally true. YC is very well respected in a very specific niche of tech, while H/M/S have much broader name recognition in tech generally. Depends to some extent on what you want to do. YC has great name recognition among VCs, so if you're going that route, it's a good name to have. A Stanford or MIT degree generally has better name recognition among people hiring for tech jobs, especially outside of the SF Bay Area and among people not culturally part of the "startup scene".
    - argonaut 12y ago
      Yeah, I should have clarified. It's a bit uncertain if YC > HMS to hiring managers at companies. YC is definitely > HMS in the startup and raising VC world. However, engineers and recruiters at the top tech companies like Google/Facebook/Amazon/Microsoft have definitely heard of YC.
logicallee 12y ago
> But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors. This idea (first quoted sentence) needs to die. It is toxic to the early-stage ecosystem. Any amount of money is a ton of money. Period. You can ignore the hustling that Jobs or Zuckerberg did for literally a couple of thousand dollars - read Zuckerberg's contracts at the time he was at Harvard making facebook. Look at the timing jobs "Stole" $5000 from Woz and founded Apple with it (making his friend a multimillionaire in the process). The reality is that no windfall bonus from Atari of less than $4300 - which is money that Jobs had 0, absolutely 0, access to, from any other source - equals no Apple. Look at the dates. You can also ignore what companies actually spend the YCombinator seed money on when it was $14K-$20K, at a time that the YC badge easily added $200K+ to a YC company's average valuation - a badge that doesn't bring instant liquidity. How many YC companies would not exist if YC only added its badge to the valuation, and not actually given any money.[1] What you can't ignore is that there are people who are working a day job while owning and building a company - working that day job because any amount of money, even part of a single full time earner's after-tax salary, is a ton of money. Just try raising it. [1] Imagine if the YC admission read: "Congratulations! This admission is easily worth $200K in extra valuation. With the YC badge, you should have no trouble raising money. We are therefore not making any cash investment, not even $12K, but rendering only services. We welcome you to the bay area on (date)."
- tptacek 12y ago
  Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.
  - logicallee 12y ago
    You're simply empirically wrong [about the 'amount' of money that represents, whether it is large enough to make a substantial difference], and your anchors[1] are not only irrelevant and misleading in an early-stage context, but extremely toxic.[2] What was Google's first check in the amount of? $100K. It was a ton of money. As Wikipedia points out, "The first funding for Google as a company was secured in August 1998 in the form of a US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist." They used that to raise "On June 7, 1999, a round of equity funding totalling $25 million", about 10 months later. Pop quiz. Which was more money, the $100K in the first context or the $25M in the second? Well, as I've heard they never did spend much of that $25M, it sat in Google's bank account while they grew and raised further rounds.... But that $100K? That was a ton of money. Basically, you are wrong that it was not a ton of money, your anchors and comparisons are toxic and misleading, and if he had not cut that check then Larry and Sergey would not have created Google. That is what actual reality shows us. You simply do an incredible disservice to all early-stage startups by talking in these terms. I gave you several actual examples of far less than $120K being a ton of money in an early-stage context. As little as $5000 being a ton of money. I also specifically stated that if, say, $20K, weren't a lot of money, then it would make no difference empirically if YCombinator did not actually pay that cash. And YC companies wouldn't have either relied on or even actually spent that cash. But it does make a difference, and they did. As I specifically point out: your FTE expenses are completely irrelevant, and even part (less than 100%) of the after-tax portion of a single FTE salary is a ton of money. (In an early-stage context.) To imply otherwise does a huge disservice to all first-time, early-stage founders everywhere. The very idea is toxic and needs to die. [1] The meaning of anchor I use is: http://en.wikipedia.org/wiki/Anchoring http://en.wikipedia.org/wiki/Anchoring [2] Your figures both about (1) the cost to the company of a fully loaded FTE senior engineer and (2) the amount that a good freelancer can generate above living expenses in a year, are irrelevant and do not need to be argued. I will grant both as irrelevant to the discussion.

sailfast 12y ago

While the education is one thing (and surely valuable), I think you also have to look at the connections and network you develop at a "name" school vs. other schools. Those are not things you see on a bill, but they are extremely valuable. EDIT: I'm not saying this can't be achieved at other schools - I didn't attend a "name" school, but the network definitely matters and can be a huge bonus especially if you know what industry you want to target.

karamazov 12y ago

Off topic, but if your son has the chance to go Harvard/MIT/Stanford, he absolutely should. The difference is primarily in the caliber of the other students, and it makes a world of difference to have such a concentration of talent in one place. (Note that I'm not saying there isn't talent elsewhere, just that there's an incredible concentration of it in the top n schools.)

kapilkale 12y ago
It doesn't necessarily make world of difference. When you compare students who attended top private schools vs. those who were admitted but attended state schools, they actually have equivalent incomes down the line. What's likely happening is that really smart kids at good state schools end up finding the pockets of talent there anyway. Pretty scary implications for the value of a Harvard degree. source: http://www.newyorker.com/archive/2005/10/10/051010crat_atlarge?currentPage=all http://www.newyorker.com/archive/2005/10/10/051010crat_atlar...
- johnrob 12y ago
  To some degree, the elite universities are selling success to those already predestined for it. This is an end game state for any popular institution that accepts a subset from a pool of applicants. The battle to get in ends up being a significant source of the value creation. Raising a venture round from Sequoia is probably a decent non-academic example of this. I would not be surprised if companies who turn Sequoia away are just as successful as those who are funded by them (although the former is probably a small data set!).
- gagaga 12y ago
  The network you'll make at top-tier schools is IMO a lot more important than anything else.
ericd 12y ago
Yeah, the difference in peers alone is worth the cost delta. Especially true if you go to MIT - the student body and culture there is absolutely wonderful. One of my favorite places on Earth.

ZachPruckowski 12y ago

Most likely, your kid's startup you dropped $120K into is going to fail. Make sure you consider that case very carefully - what are his chances like at 26 with a less prestigious degree and a failed startup under his belt compared to a Harvard/MIT/Stanford degree plus 5 years in a salaried job that those can get you?

mbesto 12y ago

> And I think school prestige matters more for investment banking than tech It has less to do with prestige and more to do with risk. IMHO, there are only two routes to becoming part of today's tech elite. You either build something that gets traction or you join a team that has already done so. These are IMHO the two strongest signals today, especially given the increase of noise. Don't believe me? Just search around AngelList for 30 min. If your son gets a CS degree from Stanford or MIT, it will automatically put him in that basket of "join a team who has already done so", just as working for Google, Facebook, Twitter, etc does.

morgante 12y ago

As someone who essentially took that path, I can't recommend it. My parents and I had saved up a decent college fund ($100k or so), but instead of using that to go to Top School I took the chance on a school which offered me a full ride. Sure, I'll be graduating about ~$140k better off than most other students. But over the lifetime of a successful tech entrepreneur that amount of money is fairly meaningless. Having spent a significant amount of time on top campuses (where most of my friends went), I often regret making that decision—the caliber of students is truly higher, and the friends/networks you have from a school like Harvard will pay dividends throughout life.

acjohnson55 12y ago
Get the best of both worlds and do a master's at a top notch school. That's my story. I went to good-but-not-world-renowned state school for undergrad on a full ride. I did my best to wring the absolute most out of that experience, and it paid off in many ways, including a fellowship that paid for my master's at an Ivy. Most grad students don't get plugged into "the network", but I went out of my way to engage in campus life. In the process, I'm fairly positive I built just as good of a network as if I had attended for undergrad. Point being, everywhere you are has something to offer. Make the most of your situation!
- morgante 12y ago
  > Get the best of both worlds and do a master's at a top notch school. Glad that worked out for you. To be clear, my school is actually extraordinarily good academically (we're privately funded by an oil fortune)—it's just that the prestige of the name and student's isn't quite at Ivy quality. > Point being, everywhere you are has something to offer. Make the most of your situation! I'm doing my best, and doing pretty well (making 6 figures as a college sophomore), so my regrets are more social/intellectual than monetary. Though sometimes I wonder if YC would have accepted me if I had advertised my Ivy League stamps of approval (acceptance letters)... Maybe I'll go to Harvard when I get tired of developing and decide to "pivot" into management/finance.
  - 12y ago

hga 12y ago

In the case of "a son who loves to program", if the target is a Computer Science degree, if your son can get into any one of Stanford, UC Berkeley, CMU or MIT, go for it. These are the top CS schools in the US and I gather the world, and there's a big quality gap between them and those below them.

jedberg 12y ago

Back in the 90s, I had a friend who was an instructor for Sun Certification classes. He told us of a kid who, when he turned 18, was given his college savings by his parents to do with as he pleased. He chose to spend the ~200K getting every Sun cert available. He then became a consultant at 21 making about $500K a year, at least for a few years. Don't know what happened to him after those certs became useless, but I hope he converted somehow.

nostrademons 12y ago
I also know a family whose father gave them their inheritance when they turned 22. Instead of getting jobs after college, all but the eldest (who already had a job) spent several years bumming around their apartments, paid for by their dad, and failed to launch. Their careers still haven't recovered. YMMV. I do think it's better to give money to people who are already succeeding and could just use a bit of acceleration or a chance to do something riskier, though. At earlier stages advice and introductions are often more useful in the long term.

ZenPro 12y ago

If your son has co-founders or would like them then this is an idea with the potential to be disastrous. If the startup (company) goes the distance then whatever equity you bought with investment would convert to your son as part of his inheritance altering the partnership drastically. The legal and financial ramifications can be quite complex.