Reference Groups and the YC Fellowship

As you may have heard, Y Combinator is going back to its roots with something called the YC Fellowship. Today is the last day to apply. [1]

It’s a equity-free grant of $12k for super-early-stage startups where founders will have an 8 week program to work on their idea. You don’t have to move to the Bay Area, a cofounder, or even a prototype but all are encouraged. It’s positioned as an experiment in reducing the barrier to entry (i.e. activation energy) for starting a startup.

There’s a number of obvious reasons why this is a compelling thing to apply for — you get free money, the YC name, mentorship from a YC partner, and a block of time to really drive hard on your idea. But I want to suggest another reason why it’s valuable to do a program like the YC Fellowship (or another legit accelerator like 500 Startups or TechStars) and that’s building a new reference group.

If done right, an accelerator gives you a really awesome network and reference group. [2] People who you relate to, learn from, and who you see as your peers.

I was just catching up with a friend from Stanford who was born in India and spent about 10 years in the US before returning to India. She previously ran an educational social venture, won an Echoing Green Fellowship, and now works for a fast-growing educational startup in Bombay. She’s ambitious and has big goals for the future, but her social circle largely consists of more traditional Indian couples who are settling down, having kids, and not thinking about taking over the world.

She said that she relies on her network from Stanford, and from a program run by the World Economic Forum called Global Shapers to have peers who “think like her” and who remind her that she doesn’t have to conform with the social circle that’s physically near her.

That’s why YC wants you want to move to the Bay Area — we are social creatures and by forming deeper bonds with other YC founders/fellows and other people in the Bay Area, you’re more likely to believe in your business and be committed to it. Even if the first company fails (which is likely) you will have reformed your identity as an entrepreneur. You’ll see your batchmates succeed and think “I’m just as good as them and I’m going to make the next one work.”

I speak from experience. Ridejoy didn’t work out. But there have been a number of successful companies that came from my batch (Summer 2011):

That’s a pretty big and legit list but remember that there were 63 companies that summer, most of which have shuttered or disbanded. For me and I’m sure for other founders, we’re proud to have been part of such a great group, and we’re also benchmarking ourselves against them and plotting out our next try.

As Nir Eyal, author of Hooked says:

[blockquote]”Identity helps us make otherwise difficult choices by offloading willpower. Our choices become what we do because of who we are. [Original post] [/blockquote]

What we believe is our identity is a huge part of what drives our decisions and our social circle drives our identity.

Before Ridejoy, I was working at an 7-person tech startup and was just starting to get connected in the startup world. YC threw me into a group of 150 other founders and placed us squarely in the center of everything.

Yes, the funding was awesome. Yes, the brand name is fabulous. Yes, the partners know their shit. But I would maintain that the biggest long-term benefit of doing YC was the fact that I will always think of myself as an entrepreneur and have a reference group of kick-ass founders who I relate to and aspire to be like.

If this is true for me, someone who was living with two startup engineers in downtown San Francisco, imagine how powerful this kind of reference group sift would be for a mom/dad of two kids living in the Midwest or a recent college grad living in Paris — outside of a tech hub and outside of a social group focused on technology entrepreneurship. [3]

So in my mind, that’s one of the biggest and least recognized reasons to enter into a great accelerator program like YC: for the reference group.

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Photo Credit: “Paul Graham talking about Prototype Day at Y Combinator Summer 2009” by Kevin Hale from San Francisco, CA, United States – Paul Graham laying down the ground rules for Prototype Day. Uploaded by Edward. Licensed under CC BY-SA 2.0 via Wikimedia Commons. Wish I was able to find one of our batch but couldn’t. =(

[1] I have no special knowledge to the program outside of what’s publicly available. If you’re just hearing about it now, it may be too late to apply as today is the last day for this batch but they may do it again so don’t get too hung up about it.

[2] “Reference groups are groups that people refer to when evaluating their [own] qualities, circumstances, attitudes, values and behaviors.” —William Thompson & Joseph Hickey, Society in Focus, 2005. (via Wikipedia)

[3] Of course, this works the other way too. When you join a college or company or affiliation group, you have to recognize that you’ll be instinctively start  making those members part of your reference group. Make sure it’s a group you’d want to aspire to be like.

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Jason Shen

Jason is a tech entrepreneur and advocate for Asian American men. He's written extensively and spoken all over the world about how individuals and organizations develop their competitive advantage. Follow him at @jasonshen.

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