Startup Vortex

9 Lessons from Jessica Livingston on Starting Y Combinator

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Date:

March 17, 2025

4 min

Y Combinator (YC) has become one of the most influential startup accelerators in the world, helping launch companies like Airbnb, Dropbox, Stripe, and Reddit. But in 2005, when Jessica Livingston, Paul Graham, and their co-founders started YC, the idea of a structured accelerator program was still untested.

Jessica Livingston played a critical role in shaping Y Combinator’s culture and philosophy, helping founders navigate the uncertain world of startups, and she has written many essays to help startup entrepreneurs through her experiences.

Below are 9 key lessons Jessica Livingston has shared about building Y Combinator and what startup founders can learn from them, but first, let's do a quick recap on what is Y Combinator.

What Is Y Combinator?

As a startup accelerator, Y Combinator helps early-stage companies grow through funding, mentorship, and access to a vast network of investors and experts. It was founded in 2005 by Paul Graham, Jessica Livingston, Trevor Blackwell, and Robert Morris.

YC provides startups with seed funding, mentorship, and resources in exchange for equity. Twice a year, it runs a three-month accelerator program where selected startups receive funding, guidance, and connections to help them scale.

How Does Y Combinator Work?

1. Investment & Equity

YC invests $500,000 in startups accepted into the program.
The deal includes $125,000 for 7% equity in the startup and a$375,000 post-money SAFE (Simple Agreement for Future Equity) with an MFN (Most Favored Nation) clause.

2. The 3-Month Accelerator Program

Startups join the program by relocating, either physically or virtually, to Silicon Valley for an intensive three-month experience. This immersive environment allows founders to focus entirely on building their companies with access to YC's resources and network.

Throughout the program, founders receive direct mentorship from YC partners, who are seasoned entrepreneurs and investors. Their guidance helps startups refine their business models, navigate challenges, and prepare for scaling.

Each week, founders attend exclusive dinners and speaker events featuring some of the biggest names in tech, including Mark Zuckerberg, Elon Musk, and Patrick Collison. These sessions provide invaluable insights and inspiration from those who have built billion-dollar companies.

The accelerator end with "Demo Day", where startups present their pitches to a room filled with top-tier venture capital investors. This event serves as a crucial opportunity for securing funding and forging connections that can propel their businesses forward. Even after Demo Day, YC continues to provide mentorship, funding opportunities, and access to an exclusive network of successful founders. YC alumni form a tight-knit community, often investing in or advising new YC-backed startups.

Who Should Apply to Y Combinator?

The best candidates are early-stage startups with an MVP, founders who are full-time and committed to scaling, teams working on scalable tech-driven businesses, and startups in any tech industry (YC funds SaaS, AI, biotech, consumer, fintech, etc.).

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How to Apply to Y Combinator

YC now runs four batches a year, giving startups more chances to get in. The application process starts with an online form where you describe your product, team, market, and traction. If YC likes what they see, you’ll get invited to a short 10-minute interview. If accepted, you’ll receive a $500,000 investment and join the accelerator.

Want to increase your chances of getting in? Here are a few key tips:

Clarity. YC hates fluff, get straight to the point.
Show traction. Even if you're early-stage, highlight any growth, user adoption, or momentum.
Have a strong team. YC prioritizes founders with technical skills and deep industry knowledge.
Make it feel urgent. YC loves ambitious ideas that solve real, pressing problems.

A strong application isn’t just about having the best idea, it’s about showing why you and your startup are the right bet.

Paul Graham also has plenty of essays here to help you out on your founder journey.

Notable Y Combinator Success Stories

Over the years, Y Combinator has backed some of the most influential startups in the world. These companies have not only achieved massive valuations but have also fundamentally reshaped industries. Here’s a closer look at some of YC’s biggest success stories:

Airbnb – Changing the Way People Travel

Founded in 2008, Airbnb started as a simple idea, renting out air mattresses in a San Francisco apartment to help cover rent. What began as a scrappy experiment turned into a $90 billion+ travel giant, disrupting the hospitality industry. By enabling people to list their homes and unique stays on a user-friendly platform, Airbnb created an entirely new way to travel, offering travelers more affordable and personalized accommodations compared to traditional hotels. Despite regulatory battles in various cities, the company went public in 2020 and continues to redefine how people experience travel.

Stripe – Revolutionizing Online Payments

Online payments used to be a nightmare for businesses before Stripe came along. Founded by brothers Patrick and John Collison in 2010, Stripe made it simple for businesses of all sizes to accept payments online with just a few lines of code. Today, the company is valued at over $50 billion and powers payments for millions of businesses, from startups to Fortune 500 companies. Its infrastructure has been critical in the rise of the digital economy, making it one of the most important fintech companies of the modern era.

Dropbox – Making Cloud Storage Mainstream

Before Dropbox, file sharing was clunky and frustrating. In 2007, Drew Houston and Arash Ferdowsi launched Dropbox to solve this problem, offering an easy way to store and sync files across devices. The product quickly gained traction, becoming one of the first mainstream cloud storage solutions. Dropbox went public in 2018, and while competition from Google Drive and iCloud has grown, it remains a leader in enterprise file sharing, serving millions of users worldwide.

Reddit – One of the Most Influential Platforms on the Internet

Reddit was founded in 2005 as a simple link-sharing site, but it quickly evolved into one of the most powerful communities on the internet. With thousands of active forums (subreddits) covering everything from investing and memes to niche hobbies and breaking news, Reddit has become a go-to source for internet culture and grassroots movements. The company has faced challenges around content moderation, but its impact is undeniable. Today, Reddit boasts hundreds of millions of users and is preparing for a long-awaited IPO.

OpenAI – Pioneering the Future of AI

Many people don’t realize that YC was an early backer of OpenAI, the company behind ChatGPT. Founded in 2015 as a nonprofit research lab, OpenAI aimed to develop artificial intelligence that benefits humanity. It later transitioned into a for-profit model to secure funding for large-scale AI research. With the launch of ChatGPT in 2022, OpenAI brought AI-powered conversations to the mainstream, triggering an AI arms race among tech giants. Backed by Microsoft and other major investors, OpenAI is shaping the future of artificial intelligence in ways that will impact nearly every industry.

These startups are just a few of YC’s biggest wins, but they highlight the accelerator’s ability to identify and nurture companies that redefine industries. From payments to AI to travel, YC alumni continue to shape the future of tech.

Is Y Combinator Worth It?

If you're an early-stage startup looking for funding, mentorship, and access to a top-tier network, Y Combinator can be a game-changer. However, giving up 7% equity for $125,000 isn’t for everyone, especially if you have other funding options.

Alternative startup accelerators to consider:

Techstars – Global network with strong industry-specific programs.
500 Global (500 Startups) – Focused on diverse, global startups.
Alchemist Accelerator – Best for enterprise/B2B startups.
Pioneer – Remote-first accelerator for early-stage founders.

9 Lessons I Learned from Co-Founding Y Combinator by Jessica Livingston

And now, let's finally get into the 9 lessons from Jessica Livingston!

1. There’s No Single Mold for Success

One of the biggest myths about entrepreneurship is that there’s a “type” of founder you have to be. This couldn’t be further from the truth. There’s no one-size-fits-all path to success. Play to your natural strengths, not someone else’s.

2. Be Genuinely Interested in What You Do

If you aren’t passionate about the problem you’re solving, you’ll give up when things get tough. The only way to push through is if you genuinely care about what you're building.

3. Ignore the Mainstream, Focus on Your Users

When we first started Y Combinator, many in Silicon Valley wrote us off. But we didn’t care—we focused on what founders needed. Mainstream opinions don’t matter unless they’re from your users. Listen to the people you’re helping.

4. Find a Co-Founder with Complementary Skills

Paul and I had complementary skills, and that’s what made us a strong team. It’s essential to partner with someone who balances your weaknesses and shares your values.

5. Make Something People Want

The most critical thing you can do as a startup founder is to build something people actually want. This was the foundation of YC’s success—we knew there were people who needed access to early-stage funding, and we created it for them.

6. Rejection is Part of the Process

Startups come with rejection—from investors, customers, or even the market itself. Don’t let that stop you. Use rejection as fuel to keep going and iterate on your product.

7. Start Small, Stay Nimble

We began YC on a small scale in Cambridge, and this allowed us to pivot quickly. By staying small, we were able to adapt and move our operations to Silicon Valley when the time was right. Flexibility is a superpower in the startup world.

8. Credentials Don’t Matter, Results Do

You don’t need to go to an elite school or have perfect credentials to build a successful startup. Users only care about your product. If you’re solving their problem, they’ll stick with you, no matter your background.

9. Be Bold and Intrepid

Starting a startup takes a certain amount of boldness. You’ll work on ideas that seem crazy to most people. You’ll be ignored, maybe ridiculed. But being intrepid and pushing through the doubt is what separates the founders who make it from those who don’t.

The Impact of Jessica Livingston on Y Combinator

Jessica Livingston’s role in YC often goes underappreciated compared to co-founder Paul Graham, but she was instrumental in shaping its culture. She helped create a supportive environment for founders, one that emphasized collaboration, transparency, and mentorship.

She also played a key role in building YC’s founder-first mentality, ensuring that the accelerator wasn’t just about funding but about guiding startups through the earliest and hardest stages of company-building.

How Y Combinator Changed the Startup Ecosystem

Before Y Combinator, early-stage startups struggled to secure funding without extensive connections or proven track records. Jessica Livingston and Paul Graham pioneered the accelerator model, providing:

Seed Funding – Early capital to help founders get off the ground
Mentorship – Advice from successful entrepreneurs and YC alumni
A Founder Community – A powerful network of startup builders
Demo Day – An event that introduced founders to top investors

Today, accelerators based on YC’s model exist worldwide, proving the scalability and impact of their approach.

Jessica Livingston’s Advice for Aspiring Founders

If you’re building a startup, Jessica Livingston’s advice is as relevant today as ever. As a co-founder of Y Combinator, she played a crucial role in shaping the startup accelerator that has helped launch thousands of companies. Her wisdom is simple but powerful:

Focus on what matters:

Ignore outside noise and build for your users. It’s easy to get distracted by trends, investor opinions, or what competitors are doing, but the most successful startups obsess over solving real problems for real people.

Find the right partners:

Whether it’s a co-founder, an early hire, or an investor, alignment is everything. A strong founding team that complements each other’s skills and shares a common vision can make or break a startup.

Keep going:

Setbacks and rejection are inevitable. Fundraising will be tough. Growth won’t always be linear. But the founders who push through, adapt, and stay persistent are the ones who succeed in the long run.

Y Combinator’s impact on the startup world is massive, and much of that success is rooted in the philosophy that Livingston helped create. She championed the idea that startups don’t need to follow a rigid playbook, they need to lean into their strengths and keep moving forward.

Did You Know? 15 Most Valuable Private Companies That Are Yet to IPO

Let's end this off with some fun facts because why not!

IPO markets have been brutal, but many of these startups have been ready to go public for years, and they STILL have not gone pulbic. Yikes! What could be holding them back?

1. Stripe - $70B

2. Scale AI - $13.8B

3. Rippling - $13.5B

4. Faire - $12.4B

5. Brex - $12.3B

6. Deel - $12B

7. Gusto - $9.5B

8. Flexport - $9B

9. Razorpay - $7.5B

10. Benchling - $6.1B

11. Fivetran - $5.6B

12. Rappi - $5.3B

13. Zepto - $5B

14. Checkr, Inc. - $4.6B

15. Relativity Space - $4.2B

When will Stripe go public is the real question. 🤔

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