Comment by simonw
5 days ago
You said "Why haven't we seen an explosion of new start-ups?" so I replied by pointing out that a sizable percentage of recent YC batches are new AI startups.
I categorize that as "an explosion", personally. Do you disagree?
I'd disagree, because you've misunderstood his point.
His point is that if AI were so great, loads of NON AI startups would be appearing because the cost to make a company should have dramatically dropped and new opportunities for disruption in existing businesses should be available.
His point is that they aren't.
You pointing at AI startups in YC actually highlights the opposite of what you think it does. People are still looking for the problems for AI to solve, not solving problems with AI.
Your example is actually a bell-weather that there is no great leap forward yet, otherwise the companies delivering real world value would be taking spots in YC from the AI tooling companies. Because they'd be disrupting existing businesses and making lots of money, instead of trying to sell AI tools.
It's like you pointing at the large batches of YC companies doing crypto 5/10 years ago and saying that proves crypto is a game changer and everyone would soon be using crypto in their development.
The YC companies are focused on the AI tool hype, not making money by solving real world problems.
Yeah, I agree. I don't think the business value of this new AI stuff has been unlocked yet. I think it will take a couple more years for the best practices for applying this stuff in an economically valuable way to be a) figured out and b) filter out to the rest of the economy.
Yeah I don't agree that having more start-ups checking a box saying that at least one of their component uses some form of AI indicates that we are experiencing a surge in new start-ups.
The amount of start-ups getting into YC hasn't really changed YoY: The W23 batch had 282 companies and W24 260.
The YC acceptance number is a measure of how many startups YC has decided they can handle in a single batch. I think percentage of accepted startups doing X carries more information than total number of startups accepted as a whole.
> The YC acceptance number is a measure of how many startups YC has decided they can handle in a single batch.
Agreed.
> I think percentage of accepted startups doing X carries more information than total number of startups accepted as a whole.
Disagreed, I think it carries almost no information at all. The only thing your analysis signifies is that companies believe that using AI will make YCombinator more likely to fund them. They are competing for a limited number of slots and looking for ways to appeal to YCombinator. And the only thing that signifies is that YCombinator, specifically, likes funding AI startups right now.
This is not surprising. If you're an investment firm, funding AI companies is a good bet, in the same way that funding Web3 firms used to be a genuinely good bet. Investors ride market trends that are likely to make a company balloon in value or get bought out by a larger company. Investors are not optimizing for "what redefines the industry"; investors optimize to make a return on investment. And those are two entirely different things.
But it's also not surprising given YCombinator's past - the firm has always kind of gravitated towards hype cycles. It would be surprising if YCombinator wasn't following a major tech trend.
If you want evidence that we're seeing an explosion of companies, you need to look at something much more substantial than "YCombinator likes them".
And that's especially given the case that OP wasn't asking "is the tech industry gravitating towards AI?" They were asking, "are we seeing an explosion of new economic activity?"
And frankly, we're not. There are a lot of reasons for that which could have nothing to do with AI (tariffs and general market trends are probably a bigger issue). But we really aren't seeing the kind of transformation that is being talked about.