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Tonight's feast consists of mountains of white rice and a ketchup-hued chili served out of several large electric Crock-Pots. The founders eat standing up or hunched over laptop screens. A quick scan of the Y Combinator pantry, which includes six gallon-size cans of pinto beans, seven large cans of sloppy joe sauce, and a copious amount of canned tomatoes, confirms that the meal is typical. "Goop on rice -- the same every week," Graham says with a smile, as he shovels the stuff into his mouth. He used to cook the meals himself but recently ceded that duty to a professional cook.

Cheap meals are, in a strange way, part of Y Combinator's formula for start-up success. Graham wants founders to spend as little money as possible. Live cheaply enough, he believes, and you can become cash-flow positive without going on a lot of sales calls or spending too much time talking to investors. Graham calls this "ramen profitability" and says it allows companies to say no to bad investment terms and forces them to think about long-term viability. It also ensures that most Y Combinator founders are in their 20s -- or, for the few who happen to be older, that they are capable of living in dormlike conditions. "That culture of frugality and discipline is really important for the Y Combinator mindset," says Sam Altman, founder of Loopt, a graduate of Y Combinator's first class. "The start-ups that do well are the ones that are working all the time."

Like many software entrepreneurs, Graham has been writing code since his teenage years, but he also has a range of interests not common among computer geeks. He was an aspiring short-story writer as a high school student and majored in philosophy at Cornell as an undergraduate. After deciding that he found philosophy incomprehensible, Graham landed in a computer science Ph.D. program at Harvard. He excelled as a programmer, but about halfway through graduate school, he started taking classes in Harvard's art department. After receiving his doctorate, he enrolled at the Rhode Island School of Design with a plan to become a painter. He took classes at RISD that summer and in the fall enrolled at Florence's Accademia di Belle Arti, a nearly 500-year-old art school founded during the Renaissance. When I suggest to Graham that this was a weird life plan for someone with a computer science degree from Harvard, he says simply, "I never cared about the official rules."

Like many recent graduates who adopt this pose, Graham quickly ran out of money. The following year, he dropped out of school and went to work as a software engineer at a Boston start-up. From 1991 to 1995, he bounced among art school, temporary software-development jobs, and long periods spent painting. "I was doing this thing where I would consult for a while and then run out of money and be in a panic," he says. Eventually, he decided it was time to make some real money.

Graham teamed up with a friend he had met at Harvard, a brilliant hacker named Robert Morris, who is notorious for crippling the Internet in 1988 by accidentally deploying a computer worm. Their idea was to build software for retailers. "Netscape was about to do this big IPO, and they had a huge PR campaign," Graham remembers. "Netscape was saying that people were going to buy and sell a lot of stuff online. So we thought, OK, we'll write software for people to buy and sell things online."

In the fall of 1995, Graham and Morris raised $10,000 from a friend named Julian Weber, a corporate lawyer who was married to one of Graham's painting teachers. They used the money to buy a Web server and then started writing code. "It was one scary moment after another," Graham says. "We didn't know what a term sheet meant or what a valuation was or that companies had boards of directors. All of those things just seemed like words we'd read in a newspaper."

By the end of the year, Viaweb had a product, and Graham started calling on potential customers, offering to set up and manage their online stores for a fee of $100 to $300 a month. He was a lousy salesman but managed to persuade a few retailers to try it out. Because Viaweb was a software program that ran inside a Web browser -- hence the name -- Graham was able to continually respond to customer feedback. "We learned quickly by paying attention to the users," Graham says.

By Christmas of 1996, Viaweb had 70 clients, including Rolling Stone and International Male. A year later, the number had quintupled, and Yahoo came calling. In 1998, Viaweb accepted a $49 million buyout offer. "Viaweb was the prototype for the kind of company we fund now," says Graham. "The reason we know that it's possible to start a start-up with about $10,000 and someone to help with the paperwork is because that's exactly what we had."

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Max Chafkin

Senior writer Max Chafkin has profiled companies such as Yelp, Zappos, Twitter, Threadless, and Tesla for the magazine. He lives in Brooklyn, New York.

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