Y Combinator often backs startups that duplicate other YC companies, data shows

Original Article ↗ Hacker News Discussion ↗

YC’s Investment Strategy

  • Many see YC’s behavior as rational VC portfolio construction: make many small, early bets, including multiple “horses in the same race,” to hedge idea, execution, timing, and luck risk.
  • At the current scale (hundreds of companies per batch, ~5,000 overall), avoiding overlap is viewed as impractical.
  • Some frame YC as “spray and pray” plus brand-signaling: they filter out obvious losers, then rely on batch support and YC’s halo to increase odds.

Duplicate Startups & Competition

  • Commenters note long-standing examples (e.g., two file-sync companies, multiple compression or podcasting startups in adjacent batches).
  • Overlap can be by product, geography, or niche (e.g., POS for bars vs coffee shops).
  • Several argue that superficially identical products can still target different segments, routes to market, or problem scales, so “duplication” is oversimplified.

Ideas vs Execution vs Founders

  • Strong consensus that ideas are cheap; execution, team quality, and persistence matter far more.
  • YC is repeatedly described as “backing founders, not ideas,” even encouraging teams to form first and choose ideas later.
  • Others push back, saying it’s not actually easy to pick “the right people,” and suspect selection biases toward elite schools and wealth.

Conflicts of Interest and Ethics

  • Some see funding direct competitors as an “obvious conflict of interest” and potentially corrosive to trust.
  • Others argue conflicts aren’t inherently bad; outcomes matter, and diversification is normal in investing.
  • Comparison is drawn to firms that copy or undercut partners, with the distinction that YC doesn’t operate products itself.

Impact on Founders, Employees, Ecosystem

  • From founders’ perspective, it can feel risky: fear of idea leakage and being undercut by a “YC twin” perceived as the favored child.
  • Employees of “loser” startups may suffer when similar, better-backed peers win; emotional and career costs are highlighted.
  • Some argue clustering can still benefit customers and workers: validates markets, creates talent mobility, and reduces perceived adoption risk.

Pivots, Market Validation, and Clustering

  • YC’s tolerance for pivots is seen as a key reason overlap emerges mid-batch; teams pivot toward known, fundable problem spaces under time pressure.
  • Multiple competitors are said to validate a market: often the main enemy is non-adoption (e.g., Excel), not the other startup.
  • Several note that popular ideas and tech waves (blockchain → LLMs, AI tools, devtools) naturally create dense clusters, with or without YC.

Broader VC / Tech Context

  • Some commenters view this as standard VC behavior, not news; others see it as emblematic of a “musical chairs” ecosystem with weak real-world value.
  • There’s disagreement over how competent VCs are at picking winners versus functioning as quasi-index funds.
  • A minority frames YC’s pattern as part of larger concerns about inequality, nepotism, and weakened social/ethical norms in tech and finance.