Y Combinator’s Strategy for Building Durable Startups
Why Michael Seibel and Dalton Caldwell Insist There Is Still Time to Do Great Work in the Era of AI.
In an environment saturated with fleeting trends and the hyper-speed narrative of Artificial General Intelligence (AGI), it is easy for founders to mistake momentum for actual progress. This challenge is precisely what Y Combinator (YC) partners Michael Seibel and Dalton Caldwell address in their recent counsel, urging founders to reject the allure of easy wins and the panic-driven pursuit of AGI. Their advice provides a grounding force, arguing that the principles of commitment, patience, and embracing complexity remain the true foundations of building durable, generational companies.
TL;DR
Embrace the Hard Problems: Difficulty is a feature, not a bug, of a valuable solution. If a problem feels too hard, it often means others are avoiding it, creating the potential for a powerful economic moat.
Reject the Guidebook Myth: True startup success is not found by searching for “cheat codes” or a rigid set of best practices (the “MBAification” trap). It is achieved through sustained, non-linear work.
Prioritize Learning: The correct response to the AI era is to strategically and impatiently learn the new tools while maintaining a long-term business focus.
Avoid Short-Term Betting: Guard against the “casino-ification of modern capitalism”: the habit of seeking wealth through quick, short-term bets, by committing to the long-term, hard work necessary to build a durable, value-creating company.
Y Combinator
Founded in 2005 by Paul Graham, Jessica Livingston, and others, Y Combinator is the original and most famous startup accelerator. It is a program that provides early-stage funding, mentorship, and a network to companies in exchange for a small equity stake. YC pioneered the concept of funding startups in batches, applying a mass production technique to early-stage investing that has since been replicated globally. Its mission is to increase the number of successful startups by helping founders master the fundamentals of product development, scaling, and achieving product/market fit. YC’s alumni list includes iconic companies like Airbnb, Dropbox, Stripe, and Coinbase.
The Partners
Both Seibel and Caldwell are quintessential YC partners, having successfully navigated the startup ecosystem as founders themselves before joining the firm’s leadership.
Michael Seibel is a seasoned entrepreneur who co-founded the live-streaming platform Justin.tv, which later pivoted and became Twitch, selling to Amazon for $970 million. Seibel served as the CEO of the YC Startup Accelerator from 2016 to 2024, leading efforts to expand access and promote diversity among founders, notably through programs like Startup School. He currently serves as a Group Partner, continuing to drive YC’s core strategy.
Dalton Caldwell also has significant founder experience, having led the digital music service imeem and co-founded the ad-free social network App.net. As a Partner at YC, Caldwell has advised many of the firm’s most successful companies and is known for his focused, practical advice on navigating product development and avoiding common pitfalls like “tar pit ideas.”
Deep Dive into The Theses
The Anti-Easy Button (Valuable is Hard)
This thesis argues against the cultural tendency among modern founders to treat problem-solving like a simplified test, where maximum difficulty is a signal to pivot rather than double down.
The “What”: The core assertion is that everything that is valuable is hard, but not everything that is hard is valuable. The authors critique founders who, when faced with genuine complexity, abandon the problem entirely, much like a student trained to assume a difficult math problem means they are missing the simple trick. They cite a founder who, upon finding the customer’s biggest challenge, determined it “seemed too hard to solve” and spent months searching for easier, less important problems. True value, they contend, is only secured by grinding through the complexity others avoid.
The “Conversation”: The paradox of startup success is that founders must be both “insanely impatient” to execute rapidly and committed enough to know that “doing great work takes a long time.” The search for an easy answer, they argue, is a trap of “MBAification”—the belief that there is a rigid guidebook or best practice framework that guarantees victory. This mindset fails to recognize that durable advantage, or an economic moat, a sustained competitive barrier, is constructed through the unique, long-term mastery of a difficult problem. The goal is to provide an “Easy Button” for the client, not for the founder to find a shortcut.
The “Why”: When Gusto, formerly ZenPayroll, launched, they didn’t reinvent finance; they simply moved payroll from paper and phone calls to a clean online interface. Users loved it because it allowed them to “forget about it.” Similarly, OpenSea started as a “simple website” that barely worked and relied on third-party wallets. By grinding out a simple use case, they built a massive company.
Historical Context: This thesis is validated by YC’s most successful alumni, particularly those in infrastructure and enterprise. Stripe (YC09), for example, tackled the immensely hard, regulated problem of unifying and simplifying global payment infrastructure. Likewise, early companies that dealt with complex regulated environments, like finance or biotech, or deep technical challenges, like database architecture, faced years of “toil in obscurity.” These founders resisted the temptation to pivot to an easier consumer app, understanding that the difficulty was the very barrier that would prevent competition once their solution finally clicked.
Countering the “AGI or Nothing” Mentality
This thesis is a necessary warning against the emotional and financial overreactions to the perceived imminent arrival of AGI, arguing that market panic can be a greater threat to a startup than the technology itself.
The “What”: The authors caution against the toxic belief that “anything not spent on some sort of AGI pill type life trajectory is a bad call.” Versus waiting for AGI to solve everything for us, it is still very valuable to build companies utilizing current AI capabilities. This is the likeliest path to solving current customer problems. They fear founders are making short-term, panic-driven bets and pivots away from profitable, real-world businesses purely out of a fear of missing out (FOMO) on the perceived AGI wave.
The “Why” This panic is driven by what Caldwell calls the
“casino-ification of modern capitalism.” Young founders have been implicitly trained—via crypto cycles and viral hits—to believe wealth is the result of short-term gambling rather than sustained effort. Seibel challenges founders to list the software companies they respect most. Rarely did any of them “blow up” overnight. Real success, even in the AI era, involves sustained periods of long work.
The “Conversation”: The tension lies in balancing impatience with endurance. Seibel and Caldwell argue that the “AGI era” does not change the fundamental laws of business physics.
Impatience: Founders must be insanely impatient to learn new tools and ship code.
Patience: Founders must accept that building a generational company takes a long time. The correct response to the AI era is not to pivot wildly out of FOMO, but to integrate these new tools into a long-term plan. “Toiling in obscurity,” as Palantir did, is not a sign of failure, it is often a prerequisite for success. Distribution, securing customers, and solving a problem better than anyone else still require long-term focus. The greatest enduring companies of the internet era were built by founders who understood the enduring opportunity, not just the fleeting hype. A founder’s patience and judgment are more valuable than their panic, confirming that even in the AI era, there is still time to do great work.
Why This is Important
The AGI cycle feels distinct from previous shifts, such as the internet or mobile, due to its immediate, dramatic productivity gains and the accompanying existential narrative, which lends an urgency to the call to action. However, the YC partners argue that the fundamental laws of business have not changed. While the tools are new and powerful, the principles of building distribution, securing customers, and solving a problem better than anyone else still require long-term focus. The greatest enduring companies of the internet era were built by founders who understood the enduring opportunity, not just the fleeting hype. A founder’s patience and judgment are more valuable than their panic, confirming that even in the AI era, there is still time to do great work.
The combined theses from Seibel and Caldwell are a defense of foundational principles in a chaotic market. For founders, they represent a required course correction against the impulse to chase speed and simplicity. The advice provides clarity in an age of confusion: don’t look for the guidebook or cheat code. Generational companies are not built by those seeking to minimize effort, but by those who find a profoundly difficult problem and commit to solving it with sustained, focused effort. By rejecting the easy path and the panic button, founders can build a valuable company that will survive the market’s cycles and capitalize on the long-term, structural opportunities presented by technological shifts like AI.
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