Silicon Valley’s Most Powerful ‘Mafia’ Gets a New Boss

The power of Y Combinator has always been its network. The legendary Silicon Valley startup accelerator is known for smelting mere ideas into some of the most successful companies in technology, including Reddit, Airbnb, Dropbox, and Stripe. And in turn, the mythologies of those companies often commemorate crucial early contributions from people within Y Combinator’s powerful circles.

Yet Y Combinator’s success has also inspired a torrent of copycats, and today’s entrepreneurs have their choice of many incubators, accelerators, and startup schools. Why apply to YC? If you ask Garry Tan, who will take over as YC’s president and CEO next year, the answer is simple: its network is still unbeatable.

Tan, originally a designer and software engineer, went through the accelerator himself in 2008 as the cofounder of Posterous, a blogging platform that later sold to Twitter. He rejoined YC as a partner in 2010, where he worked for nearly five years and advised over 1,000 companies. He also created Bookface, an internal LinkedIn-meets-Facebook for YC alumni to seek advice, post job announcements, and trade gossip.

It’s this last contribution that makes Tan the most proud. Bookface, he once said, is “the biggest successful founder mafia ever created.” Now, as he prepares to take the reins of Y Combinator, it’s this alumni mafia that Tan plans to tap into. The next chapter of YC, as he sees it, is about harnessing the talent of its past in order to secure its place in the future.

Tan’s third act with YC comes at a challenging moment, as fundamental assumptions about how startups and tech companies should operate are shifting. YC is just starting to reintroduce in-person programming after two years of remote cohorts—a reversal from the previously strict requirement to move to San Francisco. The change dissuaded some founders from applying, but has also allowed non-US companies to make up more than a third of recent cohorts.

At the same time, YC is competing with dozens of other startup accelerators, venture studios, and incubator programs for the best early-stage entrepreneurs. When Tan went through the program, in 2008, YC’s model was one of a kind. Now, founders with a good idea have an embarrassment of opportunities to choose from; some seedling startups get millions of dollars from investors right off the bat, as investors flush with cash look for somewhere to put it.

Perhaps for that reason, YC sweetened the deal for its most recent batch of founders, increasing the standard investment from $125,000 to $500,000. That’s more than double the size of other accelerator programs, and more than the standard angel investment for most pre-seed startups.

“No other accelerator can match that investment package,” says Randall Stross, the author of The Launch Pad, a book that followed YC’s summer 2011 cohort, which included companies like Genius and Caviar. “And no one else can come close to matching its roster of successful alums.”