Part of the power of YC is that it's in some way collective bargaining.
There's a similar phenomenon at top law schools (I was a lawyer in a previous life). When law firms come to campus to interview students, the school's goal is to obscure which students are top students and which aren't. Why? To protect the middle and bottom of the class and facilitate everyone getting jobs based on the school's brand.
The YC Demo Day format and the removal of the fundraising slide can in part be explained by the desire to obscure which companies will be hot (unlike say, if there are booths), so that everyone can raise based the YC brand versus just the hottest companies.
The general idea above is certainly true for most top schools. AFAIK, several (Yale, Stanford) give no rank whatsoever. A number of the top schools will only segment by one or two major divisions. For example, many give distinction for top 10% and top 30-35%. Some will publish what the actual GPA is for cutoffs, so employers do have a good idea, but many do not post such information.
The goal of a Demo Day presentation is not to convince the audience to invest. It's just to convince them to follow up with you. It's at that second stage where the demos happen-- as they were in fact happening all over the building during the breaks between sessions.
At events like TC Disrupt, where startups demo in booths,
few (perhaps no) investors ask for demos from all of them. The startups have posters and investors decide based on those which to approach and talk to further. In effect YC Demo Day presentations are those posters.
As someone who pitched on stage yesterday I have mixed feelings on this subject. I understand that seeing a graph up and to the right on every single slide, 74 times in a row, might get a little repetitive. That said, you're also getting pitched by 74 companies who actually have graphs that are up and to the right. You're being pitched by companies who have been focusing on nothing but acquiring users, talking to users, learning from users, and building in parallel. Many of us took money from those users. By making sure we realized graphs that go up and to the right would be a standard on which we were judged, we were all essentially "tricked" into doing something that SHOULD be obvious for any entrepreneur, which is doing nothing but talking to users, building a product users like, signing users up, and ultimately charging users (this isn't always something to focus on from day one depending on the product). Everyone else is going to have a graph that goes up and to the right? Shit, I better as well! What I'm trying to say is, being pitched by companies who are already doing this well in such a short amount of time should be a good thing.
While 2:15 is most definitely short, it also gets you thinking about the 2 - 3 things that you want potential investors to remember about you. How can we be most effective in the least amount of time? It's an amazing exercise and it's very helpful for pitching in the future.
After pitching, the investors who really love your vision or idea let you know they are interested, and you have plenty of time to tell them more, show them your product, etc.
I think the issue is that any startup can produce a metric in which they have a nice graph going up and to the right, no doubt some of the 75 companies are likely far more attractive than others but it probably isn't clear without followup which those are.
At the same time I am not sure you can do it any other way and still have the time for everyone to see all the pitches. You are right that longer presentations with a group this big would probably result in most of the audience forgetting most of what they see.
I imagine it would be frustrating for companies which have actual real revenue and growth as opposed to ones that have grown 800% from 1 to 8 users in 3 months.
I don't disagree, but I also think this system is a great way for investors to get a quick glimpse of a ton of awesome companies at once, and find the ones they are most interested in and chat more. Someone else in this thread already mentioned this, but the point of the pitch is not to close a deal. That takes multiple conversations, sometimes days, sometimes weeks.
Personally, I only want to talk to investors who are actually interested in our space, or have expertise and connections in the space, especially when there are hundreds in the room (half the conversations would be a complete waste of time otherwise).
True. The accelerator that operates out of the space I work at, they emphasised the idea of including a slide about what type of people the startup is primarily interested in working with.
It looks like there's room to really stand out by drawing a graph that goes up and to the right, then down and to the right, and then up and to the right again.
I think a big part of why Demo Day is run like this is because good products do not speak for themselves.
Investors are often not the target demographic of a particular product and given the range of products (wedding registry app, logistics/shipping software, developer tool for checking insurance claims, humor website, etc) most YC companies have chosen to show traction as a proxy for both demand for and quality of, their product as well as the execution ability of the team.
As others have pointed out, this is a great way to get an investor interested in learning more about the company.
Investors often asked YC companies themselves, "What company is hot?" instead of judging things on their own.
If you have booths with demos, having more investors gathered near one booth might end up as signaling to other investors that this is the "hot" one of the batch, which results in more gathering. And where the investors cluster could have been a random event, or the location of the booth was better, etc. I can imagine founders spending all their time being big and splashy with swag and posters.
The point of those 2 minutes is not to explain the product. It's to get you to want to talk to the company presenting. Deals don't get closed based on the substance of a 2 minute presentation, but meetings can and do get scheduled based on one. The booth idea is not a bad one but it doesn't allow the companies to blast their message to everyone at once.
WTF with all the title changing? This one was originally posted as "On why Y Combinator Demo Day does its companies a disservice", which is what I clicked on from the main page, but now is retitled to "On YC Demo Day, and those graphs", which is an inferior title for the purpose of, you know, suggesting to the casual reader whether they'll want to read it. The submitted title even made use of the article's actual subhed (reformatting it to remove the question, per guidelines).
Interesting to see the startup industry running into some of the controversies of academia. :) This 1- or 2-minute pitch, where you essentially advertise your real pitch (poster or demo or longer talk) by using a "graph going up and to the right", along with 1-3 slides and a quick blurb, is a mainstay of academic conferences, and not liked by all. Sometimes called "1-minute madness".
I think the main problem is the time constraint. None of these solutions can lead to investors figuring out which businesses to follow up on out of 75 businesses in under 3 hours.
Also why have demo booths when it's an online service? Why not try it out from a customers perspective and log onto the website. If you need someone in a booth to step you through it then I would be very surprised.
How would you try warehouse software, a wireless network, or a developer tool? A number of the companies that presented yesterday are not easily try-able and some that simply wouldn't appeal to this demographic in any meaningful way.
interestingly, we intentionally didn't show a graph, nor did we actually say any of our numbers when we presented yesterday. Our goal was to tell a story about why what we were doing mattered and I think that resonated really well with investors. Not sure if our presentation works for everyone else, but I do believe being a bit different was immensely valuable.
I really enjoyed your presentation for that reason - you did a great job of building a narrative that wasn't exactly "We're X for Y in a $Z billion market". I did consider your HN vote count and Kickstarter numbers similar to an "up and to the right" graph, but is your distinction that you only displayed them, and didn't weave them into the pitch?
The authors main point: "But it really seems like a better format for this would have been to have people demo-ing in booths, keeping the focus on what they’ve been working so hard on: the product."
There's a similar phenomenon at top law schools (I was a lawyer in a previous life). When law firms come to campus to interview students, the school's goal is to obscure which students are top students and which aren't. Why? To protect the middle and bottom of the class and facilitate everyone getting jobs based on the school's brand.
The YC Demo Day format and the removal of the fundraising slide can in part be explained by the desire to obscure which companies will be hot (unlike say, if there are booths), so that everyone can raise based the YC brand versus just the hottest companies.