Y Combinator, Silicon Valley’s Start-Up Machine - NYTimes.com

Haisha Chen is a 23-year-old Chinese-born University of Chicago graduate who goes by David so that Americans remember his name. With two friends, Teng Bao and Dafeng Guo, Chen created software that allows Internet users to build simple, elegant Web sites, designed with mobile devices in mind, in 15 minutes. They called their product Strikingly. Last July, to their parents’ alarm, the men bought one-way tickets to San Francisco — Chen from Shanghai, Guo from Hong Kong, Bao from Chicago. They rented a single bedroom in a cramped apartment in San Francisco’s Outer Richmond neighborhood, sleeping on two futons, one of which prevented the door from opening more than a few inches. They spent $1,600 a month on rent, food and all additional expenses combined. After four months, they got a call from Mountain View, offering $100,000 for a 7 percent stake. They moved immediately. “When I got here, I was very emotionally touched by all the great companies in this area,” Guo told me in an outburst of passion. “These were all the companies I had heard of since I was a kid. I felt like I should be here. Like I belong.”

Last year at Brown University, Walker Williams and Evan Stites-Clayton created Teespring, a crowdfunding Web site that sold custom-made apparel — “Kickstarter for T-shirts.” For six months they had mild success with fraternities and campus clubs but were only slightly profitable. Then something unexpected happened: a New Zealand man used Teespring to design a Sherlock Holmes T-shirt and sold it on a Facebook fan page with about 300,000 members; ultimately, 1,800 people bought the shirt. The man earned about $18,000; Teespring made $8,000. Soon other virtual communities — like the Twitter account for fans of the 1990s TV show “Boy Meets World,” and a Facebook page called “I Big Trucks, Mudding, Bon Fires . . . Country BOYS! :)”— began selling shirts, with staggering success. In November, Teespring earned $133,336; in January, $489,029. But the founders felt they could do better. “We don’t want this to be a $30-, $40-, $50 million business,” Williams told me. “We’re looking at the big picture here.” I asked Williams and Stites-Clayton to define “big picture.” They responded in unison: “A billion dollars.” When the investors called with their offer of $100,000, Williams and Stites-Clayton also moved to Mountain View.

The Mountain View investors are the partners of Y Combinator, an organization that can be likened to a sleep-away camp for start-up companies. Y.C. holds two three-month sessions every year. During that time, campers, or founders, have regular meetings with each of Y.C.’s counselors, or partners, at which they receive technical advice, emotional support and, most critical, lessons on the art of the sale. There is no campus, only a nondescript office building in Mountain View — on Pioneer Way, around the corner from Easy Street. Founders are advised to rent apartments nearby, so that they can run to the office in minutes should an important investor pay a visit.