Mikayla Orange

You’ve likely read several takes on last week’s YC batch. Still, I thought I’d share mine with a few themes I’m tracking. Given our focus on Series A, the value in YC for us is in tracking early rising stars and identifying where some of the smartest founders are starting to build. I won’t talk about the volume of AI agents — that was an interesting highlight from the last batch. What stood out instead was how much more grounded the applications felt — especially when it came to vertical focus, operational depth, and knowledge work. Here are three-ish themes that stood out: 1. Less focus on SMB, more focus on knowledge workers. I was surprised to see so few companies focused on the 90% of companies in the U.S. that employ 200 employees or fewer. The SMB market is sizable, and we, along with many other investors, have been bullish on tools meant to serve this market. Instead, this year’s batch included tools for accountants, pharma reps, legal back office, researchers, and more — a theme consistent with our observation of increased usage of AI as an assistant for teams with human bottlenecks. 1a. "Cursor for X." Cursor has left an indelible mark on the industry, so much so that founders are using the product as a blueprint for workflow-focused AI agents. A few companies that stood out were Vesence (Cursor for Lawyers), Nomi (Cursor for Sales), and Mesmer (Cursor for CTOs). To the point above, some of the most exciting tools are AI-native partners for high-skill professionals and knowledge workers. It’s worth mentioning that not one demonstrated clear evidence of a replacement. 2. Vertical Operating Systems. Our next evolution from vertical agents is vertically focused operations and management systems or platforms that function as full-scale operational support. You can think of these as AI-native versions of Toast, Veeva, or Guidewire. Standout examples include Kaelio (healthcare), Hemut (trucking), and Waffle (SMBs), all of which are building AI-powered infrastructure to replace legacy software stacks completely. 3. Healthcare – AI for clinical ops. A number of founders are building for the messy middle — the process-heavy healthcare system that, despite exorbitant costs, still isn’t functioning optimally. Standouts, in addition to Kaelio above, were Aegis (healthcare claims), Novoflow (medical ops), and SynthioLabs (Voice AI for pharma). There was also at least one personalized healthcare agent, Galen AI, that leveraged patient records to provide personalized healthcare (a step beyond ChatGPT and bots already used in virtual care delivery). My take: The X25 batch shows a market that is clear evidence of maturing in the right direction. I’m most excited about clear, immediate use cases and defensible, specialized systems that solve complex, industry-specific problems. AI is rapidly moving from a novelty to the core engine of our economy. Anything I missed? Feel free to share your thoughts.

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Zynga sold for $12.7 billion. Its founder says startups fail due to this: They try to innovate too early (unless its deep tech). Mark Pincus calls it the “All new fails” rule: 1/ Don’t start with “new”: Start with what’s already proven to work. Copy it legally, study it deeply. 2/ Proven means 10 out of 10 users say: “Yeah, that works.” If they don’t, it’s not proven. 3/ Founders fail because they skip the proven phase: They chase novelty before they’ve earned the right to innovate. 4/ The Zynga story began with poker: Same table, same felt, same gameplay, nothing original. 5/ Then they made it better: No downloads. Just click and play. Friction cut in half. 6/ “Better” means 10 out of 10 users agree: Not your team, not your investors, real users. 7/ Only after proven and better do you earn “new”: That spark that surprises and delights users emotionally. 8/ Zynga’s “new” was showing your friends’ faces: It made games social, not solitary. 9/ Forget MVP, build a minimum viable idea: A concept that hits emotional resonance before metrics. 10/ Seek true signal: You’ll feel it viscerally before you can measure it. 11/ Silicon Valley worships originality: But originality without resonance is noise. 12/ Better founders are great students first: They copy what works before they try to change it. 13/ Most products die from founder ego: They’re “new” before they’re useful. 14/ Users don’t care about novelty: They care about ease, trust, and delight. 15/ “Proven → Better → New just works. And it built a $12.7B company. 📩 Get ai + vc intel in your inbox via my newsletter Startup Riders, link under my name ☝️ 📌 Source: Mark Pincus on Why Most Startups Fail a16z #ai #llms #agent #startups #founder #vc

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Startups: New H-1B moves are a stealth “Series A tax” on talent. The headline: the administration just unveiled a $100,000 one-time fee on new H-1B applications (the White House says it applies only to new cases, not renewals), and it’s also pushing to replace the lottery with a wage-weighted selection that favors higher-paid roles. Congress, meanwhile, has an H-1B reform bill in the mix. What this means for early-stage hiring: Runway math changes. A $100k fee per new H-1B could equal multiple months of someone’s salary + options—per hire. Expect boards to ask “can we justify this at Seed/Series A?” Salary bands move up. A wage-based allocation system rewards higher offers; startups will have to either pay closer to BigCo bands or risk losing out. Time-to-fill stretches. Fewer viable visa paths = more rejected offers, more searches, and delayed product roadmaps. Geo strategy gets real. More teams will add near-shore hubs and US-based contract-to-hire while they navigate immigration risk. Visa portfolio thinking becomes standard: for top candidates consider O-1A (extraordinary ability), TN (Canada/Mexico), E-3 (Australia), or L-1 transfers via partner entities. (Talk to counsel—facts matter.) University recruiting/remote fellowships may become the bridge to eventual sponsorship once rules settle. Founder POV: If “talent is the moat,” then policy just raised the toll. Winning teams will (a) budget for the true cost of global hiring, (b) sharpen compensation/leveling, and (c) build Plan B/C pipelines so you’re never one policy away from a missed launch. Curious how this hits your hiring plan? Drop your stage + headcount goals; I’ll sketch an immigration-aware recruiting playbook you can bring to your next board meeting.

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NYC is losing young technical founders to SF — and it’s not about vibes. It’s about cost of entry. SF has far more entry infrastructure than NYC: i.e. the housing, community, and early support (financial and otherwise) that lets founders start building before they raise capital. This is widening the gap between the two cities' tech sectors. We are specifically calling for ideas (and hopefully action) to address NYC’s dearth of hacker houses: physical spaces that combine housing, workspace, community, and early peer support. I’m convinced that seeding hacker houses, if done right, is a low-cost, high-impact way to attract more young technical founders to NYC — and critically, something this community can actually do. And we should. The data is stark. Venture investment in NYC is ~19% of SF’s total — the lowest since 2017 — and the biggest, most innovative companies (especially in AI) are overwhelmingly being built in San Francisco. People who want to be entrepreneurs tend to work where those companies are. Unsurprisingly, many students and young builders assume they must go west. But do they actually want to — or is it just easier to get started there? I spent significant time in the Bay last year, and one difference stood out immediately: SF is dense with hacker houses and founder residences that help people get from 0→1. These resources are especially critical for recent grads and first-time founders who might lack capital or built-in networks. NYC may have long-term pull, but at the earliest stage, higher upfront costs and friction (recent Economist data suggests ~50% higher rents than SF) push many founders away. Hacker houses may sound anachronistic, but they’re real centers of gravity. We estimate SF has at least ~10x more active hacker houses than NYC, and that these houses have helped foster hundreds of billions of dollars in market value. I’m an NYC tech evangelist. I’ve worked on tech ecosystem development at New York City Economic Development Corporation, helped design national innovation programs for the Obama White House, and now invest in early-stage companies as a GP at Max Ventures. From a dollars-to-impact perspective, seeding hacker houses in NYC is one of the most efficient levers the city can pull. We wrote an overview doc (linked below) that explores this concept — and we'd welcome feedback from the NYC tech community. We are also hosting a small series of conversations — starting with a dinner in February co-hosted with Tech:NYC, Keel (Brent J. Smith), Company Ventures and Inspired Capital — to bring together leaders across tech, real estate, and policy. 👉 If you’re a founder, operator, VC, student, or have built / lived in a hacker house: • Does this resonate? • What would make this work in NYC? • Who’s already doing something adjacent we should talk to? Would love to connect if you’re interested in contributing or joining the conversation.

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turns out selling to enterprise is a bit different than getting your yc cohort to buy founders get tripped up on this all the time. here's why you’re not closing enterprise deals and how to change that: 1. product compliance, security, governance, even interpretability. these are non-negotiables. your startup pals might “vibe” their way into innovation. enterprise buyers can’t. they answer to regulators and investors. black-box ai is a non-starter. fix it or you’re out. 2. pricing infra spend has ballooned. now it’s trickling into app prices. cfos are pissed. token-based or fuzzy usage models look like cloud-spend creep all over again. remember why finops became a category? so finance could even stomach the aws bill. enterprise buyers want clarity on total cost. if your pricing feels like smoke and mirrors, expect the zoom call to end early. realize, the cfo prob has no idea what your thing does.. doesn’t care. $ in, and $ out.. that’s it. make sure you can paint that picture. TCO and time to value. 3. gtm you’re not ai-sdring your way into a meeting with jamie dimon. you’re not one-call-closing a fortune 1000 off a paid ad click. enterprise sales is an elaborate dance. buying committees, blockers, endless defense from compliance, legal, security, finance. you need the right team composition and a partnership strategy that’s already in motion. –– Ps> more of this on my substack.. link in comments

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Last week, I talked with a current batch of YC founders. Here’s how I answered their number 1 question. Their most pressing question was simple: How do you get the big logos? My answer: Your network. Shamelessly. Our first customer was WeightWatchers. Through someone I used to work with. Our second was an agency where my cousin worked. Even today, my dad just made an intro to one of his mentees who might be our next customer. If you're an early-stage founder trying to land your first few customers, use your network. Shamelessly. Friends, family, former colleagues, your parents' friends. All of them. A lot of founders hesitate because it feels like you're asking for a favor. It's not. You're giving people a chance to be part of what you're building. They want to help. They want to see you succeed. If you're part of the latest YC batch or just starting, your first ten customers will likely come from people who already believe in you.

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From early hire to CBO, Art L. shares how Brex scaled from a corporate card for startups to a global spend platform built for enterprises, with lessons on building trust, navigating M&A, and leading through change. Catch it all on the latest Sourcery drop 🎙️⬇️

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There’s a reason so many talented people struggle to land a job in VC. It’s not just about credentials, it’s about understanding how the industry works and how firms actually hire. In this week’s newsletter, I break down six of the biggest barriers and how to tactically work around each one. A few insights I cover: 1. VC firms run lean and don’t post roles publicly There are only ~3,400 active VC firms in the U.S., and most hiring happens through internal referrals. To break in, you need to build relationships before a job even exists. 2. Fit matters as much as experience Firms don’t just look for sharp resumes, they want candidates with founder empathy, domain expertise, or differentiated sourcing ability. 3. The “you need VC experience to get VC experience” loop is real You can break it by building a track record independently: share startups with investors, join a scout program, or angel invest if you can. 4. The hiring process is often opaque and unstructured Warm intros still outperform cold emails. Staying top-of-mind through content, sourcing, or deal sharing can make the difference when a role opens up. If you’re trying to break in, or help someone who is, I hope this gives you a more tactical path forward. Read the full post here → https://lnkd.in/giEFka6D #venturecapital

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For the first time ever, YC included agencies in their request for startups. I’d be lying if I said I was surprised. Historically, Agencies were rarely considered in venture conversations because of the required human capital. Revenue scaled only with headcount. This made software-like margins impossible to replicate. YC’s argument is that this is no longer the case, thanks to AI. In a roundabout way, they're saying you can get the same output with less humans, and that all of the salaries you aren't going to pay go right back to your bottom line. That's the semi-obvious stuff. The less obvious angle here is that YC realized how fundamentally great the business model is compared to what they typically invest in. The venture game is one of moonshots. You pour a bunch of money into an asset that will burn cash for 5-10 years and hope it either turns cash flow positive at scale, gets acquired, or IPO’s. By no fault of YC, this leads to a lot of failed companies and a lot of burned investor money. To me, YC asking for agencies is almost a safer hedge to a lot of the moonshot venture plays they try. Sure, rarely do agencies get acquired for what SaaS companies do or even IPO…but they're much more predictable and easier to spin up and operate than a lot of other companies. I say this is someone who's automated and systemized a lot of our fulfillment. We're able to run an extremely lean team for a relatively large client base because of these systems. And I do think this will become the norm moving forward.

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YC feels like a time machine. Things that would normally take months end up happening in weeks. The biggest driver? The environment. Every two weeks you’re expected to show progress. You’re surrounded by founders who are moving just as fast or faster. Everyone is shipping, testing, and sharing what’s working. That changes your standards. When you’re building alone, time stretches. It’s easy to spend weeks debating a decision, tweaking something that hasn’t been tested yet, or convincing yourself you need more time before launching. YC removes that luxury. And once you experience that pace, you start wondering why you ever built slower.

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Every single time I talk to a YC founder, they say the same thing… The best part about YC was The 1:1:s. It’s also why YC still works in the age of infinite content. Lots of ink spilled on YC's network, funding, and brand. But the real moat is the unscalable stuff. From the outside it can look like YC is getting too big, too many startups, too many batches etc. But YC doesn't scale perfectly - it scales just enough to make these unscalable moments possible for 100 companies at a time. In a world where every startup framework is documented online, every growth hack is tweeted, and every investor deck template is available for free, what's scarce isn't information. It's personalized feedback from someone who's seen your exact mistake 50 times before. Everyone tries to replicate YC's "systems" - the batch model, Demo Day, the network. They miss that the value is in the moments that don't scale. The unscalable layer is what separates YC from every online course, accelerator clone, or founder community. It's why founders still move to San Francisco for 12 weeks instead of just watching the videos.

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