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2024 Startup Trends: How Data From YC's Winter '24 Batch Can Help Your Job Search
Kyle Thomas
April 27, 2024
JOB SEARCH STRATEGY
WHAT CAN YC’S WINTER BATCH TELL US?
I know you all missed me the last few weeks, but after juggling three kids under seven while my wife was away at Coachella and a vicious stomach bug that ripped its way through our house like Jason Voorhees through a party of teenagers… I’m back!
This week, I was listening as four Y Combinator general partners chopped it up about the recent Winter 2024 YC batch (I’ll include a link to the interview at the bottom).
As I always do, I immediately thought…
What does this mean for you as a startup job seeker?
Don’t worry, I wrote everything down and shared it below.
We’ll dive into topics like…
How AI is dominating YC and why it really is different this time
The rise of consumer startups and developer tools
What more technical co-founders and younger founders means for your startup job search
Why San Francisco is officially back
And much, much more.
Let’s go!
AI IS DOMINATING.
This isn’t news to anyone paying even the slightest attention to tech, but AI is where all the smartest founders are building and YC’s data shows that truth.
70% of the companies funded in the recent YC batch were AI companies compared to just 7% four years earlier.
You may be saying, “How is this any different than the hype around crypto and blockchain? I heard all about those Bored Apes a few years ago, and it’s crickets today.”
There are two major reasons.
People can actually understand it. The application of crypto and blockchain were, in large part, hypothetical and reliant on a future decentralized world and adoption. In contrast, everyone can use and understand a chat box. When I heard two moms chatting about how they use ChatGPT while picking up my daughter from daycare, it was very clear that everything had changed.
People are paying for it. Lots of investment flowed into crypto and blockchain, but the barrier to understanding and the limited immediate use cases created a barrier to revenue. That’s not the case with the AI companies in the recent YC batch.
80% of the companies in the recent batch had no users and no revenue, almost 20% higher than the winter ‘20 batch.
But, within three months, the revenue of those companies had increased by over 3x, showing that people were actually willing to pay for these solutions.
FOR JOB SEEKERS: AI is not a passing trend. It is the future. Do everything you can to keep up to speed on the new capabilities and tools being released every week. One of the best ways to do this is by listening to This Week In Startups and watching the AI demos. Even if the companies you’re targeting aren’t AI companies, your ability to apply AI to make you more efficient inside the company will set you apart.
CONSUMER STARTUP RESURGENCE.
In 2020, starting a US-based consumer idea was ill-advised. If you were doing it, you were probably working on a bad idea.
From 2007 to 2010, there was a lot of optimism around consumer-based startups.
These were the earliest days of Instagram, Uber, Airbnb, Venmo, WhatsApp, and GroupOn.
What changed in 2010?
Facebook became a dominant player in consumer tech and could identify good ideas from new consumer startups, clone them, and/or crush them.
Now, with the AI platform shift, there feels like endless opportunity for the invention or re-invention of consumer-based products.
This has led to more consumer-based startups and startups that started as B2B and shifted to B2C in the recent YC batch.
For Job Seekers: If your expertise lies in engaging directly with end-users this is great news. It also opens the door to working on products you actually know, like, and use vs trying to get yourself excited about a B2B product with a use case you’ve never experienced.
But… it’s not all unicorns and rainbows now that AI has entered the room.
An evil empire is already emerging - OpenAI.
As the dominant player in the AI space, we’re already hearing, “Why won’t OpenAI just crush you?”
It’s a good question, but the space is new enough, and the use cases are wide enough that there is still significant opportunity to create the next big thing.
My take is that even if you join an AI startup today that is crushed by OpenAI, your experience will be invaluable and make you a valuable addition to the next startup you join.
And… if all the stars align and OpenAI doesn’t crush the company and it becomes the next big thing, you’ll have nothing to worry about as you sip on your martini on a yacht in Monaco.
FOR JOB SEEKERS: Being a user of the product and speaking intelligently about it will give you a competitive advantage in the job search. Show them how you use the product, how much it has changed your life/work, and that you would do whatever it takes to be able to work to grow it so more people can have the same experience as you.
DEVELOPER TOOLS ON THE RISE.
YC funded about 30% more developer tools in the most recent batch than four years ago, making it one of the largest dev tool batches they’ve had in recent years.
If you’re a developer, you’re saying, “Hell yeah!” these tools will make my life easier and I’d love to help build them.
If you’re not a developer, you’re asking, “Why should you care about that?”
Here’s why you should be excited, even if you’re a non-technical simpleton like myself.
AI is a technological revolution.
In a technological revolution, you must first lay the infrastructure for the benefits to become widespread.
The first cycle is when you’re laying the railroads, infrastructure, and all the tooling before the installation and proliferation of apps.
These tools will make it easier for people to create the next generation of AI-based or AI-enhanced startups, bringing with them a need for people to help build those companies.
So, for technical job seekers, this means more jobs today.
For non-technical job seekers, this means more jobs in the future.
FOR JOB SEEKERS: The future of these companies could look very different than what we’re used to. AI is allowing companies to do more with less. This means they might not need to hire teams of hundreds or thousands of employees to reach the size and scale of the current tech giants. That being said, this fear has accompanied every technical revolution, and you don’t see us all still reeling from the jobs lost from the introduction of the computer. The result has been the creation of jobs we never knew would exist. So don’t worry. There will be plenty of opportunities in the new age of AI if you pay attention to what’s happening and are up to speed on current technical trends.
MOST TECHNICAL CO-FOUNDERS EVER.
99% of the Winter ‘24 YC batch companies had a technical co-founder.
This is on-trend with everything we’re seeing in the current ecosystem.
AI is a highly technical vertical, so it makes sense that if there were more AI companies in the recent batch, there would need to be more technical co-founders.
The interesting thing may not be the rise in technical co-founders but the fall in funded “tech-enabled” businesses.
In the early days of startup investing, only pure software companies received funding.
Then, as software became more widespread and was applied to non-software businesses, so-called “tech-enabled” businesses started to receive funding (these are the Ubers, Airbnbs, Instacarts, and Flexports of the world).
This is how a company like WeWork raised over $16 Billion without a technical co-founder or any real tech driving the business.
With the rise in AI, we’re seeing a snap back to those early days, and the YC data shows that.
Marketplace startups are a classic example of “tech-enabled” businesses.
There were 4x fewer marketplace startups in the Winter ‘24 YC batch than in the Winter ‘20 batch.
The Bad News: The rise of “tech-enabled” businesses provided expanded opportunities for non-technical job seekers to get into the startup game. It’s how I got into startups. With those businesses losing favor and funding, I could see a scenario where there are fewer opportunities for non-technical job seekers. That being said, even the most technical company still needs all the non-technical business functions once it reaches a certain level of scale (Marketing, Business Operations, Finance, Communications, Customer Success).
The Good News: If you ask any top VC investor what they look for in a successful founding team, they’ll tell you a technical co-founder is a major success indicator. The rise of “tech-enabled” companies led to a rise in founders who were not builders. Companies founded by those people have a lower likelihood of success (lower than the already low likelihood of success). So, the hope is that more companies with technical co-founders equals more companies surviving. More companies surviving equals more startup hiring. And more startup hiring equals higher startup employment stability… hypothetically, of course.
FOR JOB SEEKERS: I don’t have the data, but I can see a world where there are fewer non-technical startup jobs available. That means landing those jobs will be highly competitive, and you’ll need a tight job search strategy and presentation. We’re already seeing this in the startup job search today. You can’t just “wing it” and expect to land a role at your dream company.
SAN FRANCISCO IS B-A-C-K!
During COVID, there was much talk about how the big cities were dead, that they would never recover to their true splendor, and that people had fallen out of love with working and living in big cities.
Well… Y Combinator would beg to differ.
Data from the most recent batch shows the percentage of Y Combinator companies based in San Francisco has returned to pre-COVID levels.
This matches a few trends I have been seeing and hearing.
Cerebral Valley is a thing. San Francisco is the center of the AI revolution. If you want to be at the cutting edge of AI and have the most AI opportunities available, get to SF.
Return to work. In-person work is returning, and those willing to work in person are more desirable hires to startup companies. The number of remote roles seems to be shrinking while founder desire to build in person is increasing.
FOR JOB SEEKERS: As Hamilton taught us, you want to be in “The room where it happens.” Based on where the VC money is flowing, right now, that’s San Francisco, New York City, Boston, San Jose, and Los Angeles. If you want more opportunities, get to one of these locations. You can take two approaches. 1) Pick up and move 2) Move temporarily to test if you would want to live there and to meet as many people in person as possible.
INTERNATIONAL PULLBACK.
There is no such thing as an AI dev tool for Brazil.
In the olden times (aka the last few years), many international companies were launched as clones of their US-based counterparts.
These came from hyper-localized or hyper-regulated industries where these international companies would have a competitive advantage.
As with seemingly everything - AI has changed that.
The most recent YC batch was the most US-centric batch in recent history, with the share of international companies dropping by almost 50%.
Developer tools, consumer AI, and open-source solutions are the companies on the rise in YC.
Those companies are being built to be used by everyone everywhere, and they’re putting down roots in the US.
FOR JOB SEEKERS: If you are in the US, this is great news. The next generation of world-changing companies will be built back home in the good ol’ U.S. of A. If you’re based internationally, the number of these localized clone companies will likely shrink, resulting in less opportunity. However, we’re already seeing localization pop-up in niche AI companies like AI legal software that specializes in UK law.
CRYPTO FREEZE.
In the past, the crypto bull runs have resulted in a surge of crypto companies applying to YC.
Despite the recent crypto bull run, zero crypto companies were funded in the recent YC batch.
That is likely coming from a few reasons.
Founders Shifting Attention to AI: In the past, crypto was the most interesting problem set for many founders and presented the largest opportunity. Now, all of that attention has shifted to AI. Those who would have been founding crypto companies in the past are now founding AI companies.
Crypto Shell Shock: The US has taken a regulation-by-enforcement approach to crypto. Founders are worried that if they’re successful, they could face jail time. The SVB fraud and Sam Bankman Fried going to jail for 25 years aren’t helping the government’s sentiment toward the industry either.
FOR JOB SEEKERS: If you’re hoping to start a career in crypto, there are going to be fewer opportunities than the heyday of the last few years. This doesn’t mean you’re out of luck. It just means fewer opportunities to go after, which will increase the level of competition.
YOUNG GUNS ON THE RISE.
The median age of founders in the recent YC batch dropped by four years, from 30 in 2020 to 26 today.
This speaks to the optimism and opportunity around AI.
Young founders often receive the advice that there isn’t any rush to found a company today and that they can always start their company after college.
That may not be true today.
AI is moving so fast, and its applications are so applicable to everyone that although the classic Silicon Valley adage of “this time is different” typically spells doom for a technology cycle, this time, it might actually be different.
This could be a once-in-a-lifetime opportunity for these young companies to be started and for you to join them.
FOR JOB SEEKERS: I’m speculating here, but there are two ways that a trend of younger founders could play out. One way is that younger founders want to hire younger people, making it harder for older job seekers to land jobs at newer companies. Another way is that younger founders will seek the guidance of more experienced startup job seekers. Either way, if you are a senior or executive-level candidate, it’ll be important to demonstrate how your experience will help give them all the benefits of prior booms and avoid the pitfalls of the busts.
The startup tides are changing, driven by the AI tsunami.
This is not going to be a trend that goes away - so lean into it.
The increase in funding of pure software businesses could lead to a decrease in the number of non-technical openings across startups, making it that much more important to have a thoughtful job search strategy when applying for those roles.
If you’re focused on joining an AI company, get to one of the AI hubs (San Francisco, ideally).
If you’re not focused on joining an AI company, set yourself apart by becoming versed in improving yourself using AI (both in the job search and once you land the job) and how you can advertise that to target startups.
To hear the reflection of the most recent YC batch in the words of the YC team themselves, I’ve included the video for your viewing pleasure below.
So until next week… let’s become career champions together 🏆
Kyle
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