I have been tracking Y Combinator (a new kind of venture firm for early, early stage startups) for several years. They have a distinctive approach to the early-stage funding process and have funded some interesting companies. YC is in the news again because of Google's recent acquisition of Omnisio, a YC investment.
Thinking back on several years of YC history, I dervied the below list of companies that I would have funded had I had the opportunity to do so. I tried not to cloud my judgement with hindsight (that is, I'm not just picking the ones that ended up being successful). Also, note that these are not what I think to be the best YC companies — just the ones that I’ve thought about in the past.
1. Reddit: I remember the day I first encountered Reddit. They were presenting the product at one of the early Web Innovators Group meetings. I was still a grad student at MIT at the time, and went to the meetup with a few of my classmates (we were working on a paper about “Web 2.0” for one of our classes). Interestingly, Kiko (remember them?) was one of the other companies presenting that evening. I’ll be honest and admit that on the first evening, I didn’t quite “get reddit” (the category of social news was very new at the time). But, reddit showed up on my radar pretty quickly a little while later. I noticed a bunch of traffic coming to OnStartups.com (this blog) through reddit.com. It caused me to take a second look, and I’ve been following them ever since. I don’t know Steve Huffman that well (he might actually be even quieter than I am), but Alexis is about as nice a guy as you can find and has a weird, quirky creativity that is magnetic. To build a successful startup, it helps a lot if people actually like you.
2. Xobni: I met Adam Smith for lunch at a Thai place in Coolidge Corner (Brookline) a long, long time ago. Long enough that it was before the exceptionally talented Matt Brezina joined as co-founder. Even back then, I liked Xobni for one simple reason. It complies with my notion of “the problem you solve should be ugly, the solution should be beautiful.” There are few things less fun to develop these days than desktop applications for Windows. It’s ugly. What’s even uglier is developing desktop software that has to integrate as a plug-in to something else — like Outlook. That’s one ugly problem. Further, the fact that millions of people still use Outlook made it in an interesting commercial opportunity. Plus, I really like Adam. He’s super-smart and listens. [Matt, I like you a lot too, but I didn’t know you back then and I’m trying to talk about my early, early thoughts on the company].
3. Pairwise: I saw the pairwise guys present at the YC Demo Day (the big day following months of furious coding that is the core of the YC experience). Of all the companies in that cohort that presented, I liked Pairwise the most. It appealed to my data-driven nature and they had something that I felt had commercial opportunity. More importantly, unlike many startups, it seemed they were actually thinking about the “how do we make money” part very early in the process. I haven’t kept up with Pairwise much since then, and they haven’t written on their blog since November, 2007 — so I’m guessing things didn’t take off like they had hoped. Regardless, I thought the guys were great and the idea was a good one.
4. Wufoo: I’ve been dealing with the frustration of web-based forms for a long, long time. It’s a common enough problem that lots of people try to solve it by creating a “form builder” of some sort. It’s an appealing problem to try and solve (unlike what Xobni is doing, it’s a fun problem to work on). We even built one as a part of our landing page application at HubSpot (not because it is fun, but because it is a necessary part of what we do). Back to Wufoo. The thing I like about them is that they are exceptionally good at the UI/UX thing. I’m not a designer myself, and don’t play one on TV, but I know great design when I see it. I also know how hard it is to do right and how rare it is to find people that have that gift. What’s even rarer is the notion of great UI/UX design talent intersected with a strong business sense — which the Wufoo folks seem to have.
5. Disqus: Of all the startups from YC that I’ve seen, I feel like I understand Disqus the best. Having been a blogger myself for some time, I get the notion of centralized comments and the tradeoffs therein. This is why I met with Daniel Ha — coincidentally, at the same Thai restaurant in Coolidge Corner where I met Adam Smith. (Yes, I’m a creature of convenience and the place is 2 minutes from where I live). Daniel’s one of those entrepreneurs that makes a great early impression. He’s clearly smart, but also recognizes there’s stuff he needs to learn that’s going to increase his odds of success. I like the general notion of Disqus (always have) and even back then, there was some early evidence that folks were going to use it. Disqus is also one of those companies that likely benefits most from an association with YC and Paul Graham.
6. RescueTime: Tony Wright (the founder of RescueTime) probably doesn’t even recall this, but he and I first had online contact years ago. He reached out to me way back then as a reader of my blog and reported a problem with the commenting system. Since then, Tony and I interact sporadically (mostly through each other’s blogs). Tony’s one of those guys that I’d bet on simply because he has an uncanny knack for how the startup game is played. Intersect that with an interesting idea that could get massive appeal, and you have a great startup.
So, there you have it. 6 Y Combinator startups that I probably should have been more aggressive about investing in. But, that’s not my style.
My best wishes to all the Y Combinator founders. Particularly those that are working away furiously on their products in preparation for demo day coming up soon. I hope to see/meet many of you there.
By the way, if you're not in YC, but you're a superstar web developer (take 5 minute quiz) and looking for a fantastically fun startup gig, I'm recruiting for HubSpot. Just drop me an email. I'm easy to find.