Y Combinator founders reveal why they went back through the program

Y Combinator, the famed startup accelerator founded by Silicon Valley icon Paul Graham, will host its first multi-day Demo Day in San Francisco on August 19 and 20.

With this year's Demo Day, 150 founders have returned to Y Combinator at least once to launch a new startup, and the Summer 2019 batch includes 10 alumni.

Justin Kan leads the group with four separate stints at the accelerator, where he founded calendar app Kiko, streaming service Justin.TV that later turned into Twitch, on-demand business service provider Exec, and startup legal assistance company Atrium.

Michael Seibel, CEO of Y Combinator's accelerator program, went through the accelerator as an entrepreneur twice before joining the company full-time.

Many founders who spoke with Business Insider said that going through Y Combinator a second time is especially lucrative for startups that create services for other startups because batch members are essentially built-in customers.

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It was March 2005. YouTube has just launched. Google unveiled a new product called Maps. “Selfie” had yet to truly enter the the popular lexicon. And English computer scientist Paul Graham welcomed the first group of entrepreneurs to Y Combinator.

In the 14 years since then, the renowned accelerator program has gone from hosting a handful of inspired entrepreneurs on meager living stipends to funding some of the biggest private startups in Silicon Valley.

Next week, Y Combinator will host another of its famous Demo Day events, during which entrepreneurs from the program's Summer 2019 class pitch their products to some of the biggest venture capital investors. This year, for the first time in San Francisco, Y Combinator's Demo Day will be two-day event taking place on August 19 and 20.

“That first Demo Day was just a bunch of Paul's friends, not the luminaries of Silicon Valley investment that you have now,” Kiko Calendar and Justin.TV cofounder Emmett Shear told Business Insider. “I don't think anyone raised money at that Demo Day even if they raised money later.”

Read More: New Y Combinator President Geoff Ralston explains why he's so excited about investing in the youngest startups, and his philosophy for helping them to grow

This summer's batch, as the cohort of entrepreneurs taking part in the 3-month program is lovingly referred to by YC alumni and investors, includes 10 founders that are giving the accelerator a second go. In the last 14 years, 150 entrepreneurs have returned to the program at least once to launch a new startup.

“YC is like a tool and the better you are at using tools, the more you can make out of it,” Y Combinator CEO Michael Seibel told Business Insider. “The first time you were doing it you were just kind of learning how things work. Having done YC, I thought it was more educational, and you don't feel like you have to go get a degree again. When I thought of it as a tool, suddenly everything clicked.”

Before leading the program, Seibel was one of its earliest participants as an entrepreneur. He cofounded Justin.TV with repeat YC'ers Shear and Justin Kan during the Winter 2007 batch. The live streaming startup later became Twitch and was purchased by Amazon for $970 million in August 2014. Seibel returned to YC in 2012 with Socialcam, a streaming app that was a rough predecessor to Snapchat, with a new founding team and a working prototype, a step up from his experience in 2007.

“I was a second-time founder, my cofounders were first-time founders,” Seibel said of the Socialcam team. “Spinning out of Justin.TV, they were actually my employees. Now they were my equal partners and I wanted them to have the same foundation that I had.”

Fourth time's the charm

Kan cofounded Kiko, a calendar app, with Shear right out of college as part of the inaugural YC batch in 2005. Kan told Business Insider that the first batch was structured similarly to subsequent batches, but the main difference was that the weekly dinners — a hallmark of the YC program — were hosted at Graham's personal residence in Boston.

“YC was just an experiment. It was much smaller, there was no brand, and our Demo Day was like a 15-person audience,” Kan said. “It was pretty weak.”

Kan and Shear struggled to get traction for Kiko, and eventually their startup folded. That's when they joined forces with Seibel to launch Justin.TV. In total, Kan has gone through YC four times, most recently with Atrium, a legal services startup for other startups.

“I think YC is really good for setting the DNA of your company early on,” Kan told Business Insider. “I really liked that it was insanely customer-focused. With Atrium, we are a company that sells to other startups, so our market was YC founders. We wanted to start close to our customers.”

A ripe sales environment

Seibel said that Kan's route isn't unusual for repeat YC founders. Although many first-time entrepreneurs go through the program with a consumer technology idea, repeat founders go after solutions to sell to other startups given the built-in customer acquisition strategy.

“There were more startups the second time, and they were really great first-time customers for us,” Gusto cofounder Eddie Kim told Business Insider of his second YC experience in 2011. “YC founders are paying themselves so they needed a payroll system, and we needed customers that needed payrolls.”

Aside from the collaborative community, Zeus Living cofounder and YC alum Kulveer Taggar attributed the healthy sales environment in YC to founders' need to be scrappy.

“If you are a [enterprise] company, YC is a huge asset,” Taggar said. “A good example is Stripe, because YC really helped them when they first started. YC founders are great customers because they give you feedback and are okay with glitches. Everyone knows how hard it is and everyone was willing to help each other out.”

The next 10 years of YC

By the time Seibel sold Socialcam in August 2012, YC had offered him a role as what was then called a part-time partner. He's been on the YC payroll ever since, and now leads the accelerator program as CEO.

“This kind of new generation of people who were former YC founders are coming in to run YC, and now it's time to build on that foundation as opposed to change it,” Seibel said.

Seibel points to some of the program's new tools, like the remote Startup School program and Series A initiative, as examples of building on top of the existing program and adding what he wished had been available when he was a founder. But aside from that, he is focused on what he sees as the first decade of YC before jumping ahead.

“It's weird, because the kind of hopelessly sad part is that I've only been a YC founder, so I'm running this accelerator and it's great and I enjoy it, but what's weird is YC is all I've ever known,” Seibel said.