Y Combinator (YC), a renowned Silicon Valley startup accelerator, has a history of backing seemingly similar startups, even direct competitors. This approach, recently highlighted by the PearAI controversy, where a YC-backed startup was accused of cloning another YC product, raises questions about YC's selection criteria.

YC's Rationale

YC CEO Garry Tan defends this practice, emphasizing the benefits of choice and competition. YC's official stance prioritizes founders' potential over the uniqueness of their ideas, focusing on individuals with the vision and resilience to build successful companies. This is reflected in their founder-focused selection process.

Differing Perspectives Among YC Alumni

While some YC alumni express concerns about competition from similar products within the YC network, others, like Avocado CEO Nick Evans, view it positively. Evans argues that competition is healthy and that investors' understanding of the industry, gained through working with multiple companies in the same space, is crucial for a startup's success. He believes startups fail due to internal issues rather than external competition.

Data Analysis of YC Product Trends

Deckmatch, a product analysis data startup, conducted research on YC-backed companies, revealing trends in product categories. Popular categories include AI code editors, PoS systems for restaurants, business finance/payroll tools, AI sales and CRM, AI meeting assistants, and AI legal assistants. Areas that were previously popular but have seen a decline include crypto trading platforms, e-commerce store platforms, and corporate expense cards. OpenAI's research on AI morality could be relevant to some of these AI-focused startups.

Deckmatch's Background

Deckmatch, not affiliated with YC, was prompted to analyze YC products following the PearAI controversy. The company provides product analysis data on millions of startups to investors and corporate innovation teams. Their new product, AlphaLens, allows users to identify unique and similar products within their database. This research offers valuable insights into YC's investment strategy and the types of startups they support. For more on AI's impact, see Sequoia's 2020 fund growth driven by AI. Also, consider the evolution and challenges of ChatGPT in the context of AI code editors.