Founder-Market Fit

YCombinator has said on the record that they invest in the founders, not the startup. Many end up pivoting in the batch because of this reason, usually to something their customers will buy more of or something their personal backgrounds are better suited for. I want to discuss this second point.

Many people joke that the only factors VC’s filter for are what school you went to and/or how long you spent working in Big Tech. This is not too far from the truth: a half-baked idea from an MIT student/2YOE @ Amazon has much higher chances of getting into YC than the same idea from a UNC student.

The thing that bugs me is not VC’s selection criteria; instead I find a problem in seeing founders (who are meritorious in their own ways; not everyone can get into MIT) solving problems in areas they have no real experience in.

For healthcare: I am more bullish on the founder who spent time working with nurses than the founder who interviewed 100 nurses.

For education: I am more bullish on the founder who spent time teaching children than the founder who worked with school superintendents.

For government: I am more bullish on the founder who interned for a Senator than the founder who skimmed some policy briefs.

VC’s use elite schools as proxies for intelligence, execution ability, social proof, and a whole myriad of other factors to prove that “yes, this person can start a great company.” In reality, it just leads to a distortion: People who actually understand the problem deeply can’t get the investment they need. The person with the most understanding of the problem that needs to be solved is not the one with x,000 of customer interviews and articles read, it’s the person with real, on-the-ground experience.

I think there are a few factors that lead to this:

1. Pattern Recognition
    
   There are so many people that pitch to VC’s every day, it’s not their fault to default to some pattern recognition. Credentials from a top school signal trust and slowly become one of the “hidden” criteria: they say it doesn’t matter, but it plays a role in their subconscious decision-making. This leads to the main question they ask going from “Has this person lived the problem?” to “What school did this person go to?” Just like that, the priorities shifted.

2. Storytelling > Experience
    
   Someone with flashy names on their resume can make a pitch deck for a industry they have 0 experience in and say “I went to X school” and “worked at Y company.” Investors will eat it up because it sounds clean and scalable, matching their heuristic for successful founders. On the other hand, someone with no names on their resume but years of experience in their industry, facing the problems they are trying to solve head on with connections galore, will have much less luck. They have a much more pragmatic view of the future, formed by years of dealing with administrative BS, regulations, and the real world of their industry. Unfortunately, this doesn’t signal confidence to investors and it becomes much harder to get what they need.

3. Investor Inexperience
    
   Simple: many investors haven’t worked in the industry either and there’s only so much DD can reveal. They cannot tell the difference between a good insight and naive simplification and end up defaulting to “the smart kid must be right.”

This whole structure creates a strange paradox in tech: the people most qualified to build solutions are often the least likely to be funded for them. And the people with the least domain exposure get millions to reinvent industries they don't truly understand. I think the next generation of great companies will come from founders who aren’t just visiting the problem from the outside, but have scars from living through them.