Y Combinator: New Start-ups Borrow Proven Business Models
BY Maeghan Ouimet
The Silicon Valley incubator debuted its biggest and most selective class to date. The unofficial theme: Pick a successful business model and improve it.
Silicon Valley incubator Y Combinator debuted its 15th class of start-ups Tuesday at the California History Museum in Mountain View, California. Calling it "the best class yet," founder Paul Graham noted that it was the largest to date (75 companies) and also the most selective. But the most original? Not quite. If there was one theme in this summer's class, it was this: Find a great business model and improve on it.
Here are five start-ups that took the stage Tuesday with business models you might recognize:
Founder Jonathan Tang comes from a family that has rooted itself in the textile and garment industry over multiple generations. As a result, Tang has direct access to fabrics at lower prices than even the large department stores. And those department stores have another disadvantage for customers: They offer a skewed sizing curve, he says. So a medium here isn’t always a medium there. Tang thinks he can do better.
Like Warby Parker does with glasses, Vastrm will send you a number of shirt options, get your sizing information and fabric preferences, and save your size for later orders. Why is this better than Warby Parker? “Well, not everyone wears glasses,” Tang says, “Everyone wears a shirt.”
Funders Club may emerge as one of darlings of this class, probably because the idea speaks directly to a room of investors. Just as eTrade provides online trading of public companies, Funders Club intends to provide investors with a platform upon which they can actually invest in private companies, rather than pledge money for perks as on Kickstarter. According to the company, 90% of start-up value is created in private markets--and that's what makes this eTrade look-alike better. In just 25 days, the Club has processed $1.3 million in accredited investments.
Founder Apoorva Mehta will be the first to tell you that there have been some "spectacular failures" in the online grocery shopping space. Yet, where companies like Webvan failed during the dot-com bust, Mehta believes Instacart will succeed. The company aims to be the connection between customers and merchants, providing real-time inventory to side-step supply and demand issues, just the way Uber does for car service. Now, you can order cereal or snacks for the office with the click of a button.
Move over, Sean Parker. Nineteen-year-old hackers Samvit Ramadurgam and Ritik Malhotra claim to have hit upon the secret sauce to successfully connect like-minded strangers: text messages. The founders say 80% of Hubchilla's current user base is 17-24 year-olds and it's spreading virally. Unlike services such as Airtime and Chatroulette--both of which require users to be online to engage in conversation--Hubchilla provides asynchronous communication between random people. The start-up pulls information from users' Facebook profiles to match them according to interests, gender, and location.
Founders Jamie Wong and Tim Robertson say they want to monetize people's passions for their home cities. Instead of offering a room or an apartment a la Airbnb, Vayable users offer their local knowledge. A Parisian art connoissuer might provide personal Louvre tours or a San Franicsco foodie might offer to show travelers the hottest dining spots. So far, Vayable has over 3,000 guides available in 600 cities across the globe. The founders were eager to point out that tours and activities make up the fastest growing segment of leisure travel in the U.S. They also were quick to highlight that Vayable’s growth is on par with where Airbnb was when it pitched at Demo Day in 2009.