How YC Was Created With Jessica Livingston

In 2005, founders had few options for very early funding: venture capital firms wanted tested ideas and large investments, while angel funding was limited. After a slow process with a Boston VC, Jessica and Paul Graham decided to create a program with small checks so founders could leave jobs, cover expenses, and test ideas. YC first planned to invest in companies individually and was briefly called Cambridge Seed.

Jessica brought her event-planning experience to YC’s weekly dinners, interviews, and other gatherings. Inspired by Paul Graham’s inexpensive anti-spam conference, they used simple setups and invited speakers founders wanted to hear. As batches and alumni grew, regular events helped founders meet peers and alumni who could offer practical advice.

YC aimed to make starting a company easier by standardizing incorporation and investment paperwork, reducing legal complexity and cost. For its first summer program in 2005, eight companies joined, including those led by Sam Altman, Steve Huffman, Alexis Ohanian, Justin Kan, Emmett Shear, and Aaron Swartz. Weekly dinners and peer comparisons gave founders momentum, and Reddit’s early launch helped the team see the batch model was working.

Jessica said YC’s reputation grew gradually as companies such as Dropbox, Reddit, and Airbnb became well known, alongside press coverage and word of mouth. Greater visibility also brought distractions, including criticism and requests for meetings, so the team tried to protect its focus and avoid bureaucracy. She described Yuri Milner’s offer to invest in every company in a batch, which led to $150,000 in uncapped funding for each startup in one batch.

Startup School followed the low-cost, informal model of Paul’s earlier conference: it was free, used a borrowed venue, and had no sponsors. Jessica described YC’s culture as curious about founders and their ideas regardless of background, and as a place where people who felt unconventional could belong. She said founders tend to remain independent-minded and determined as they succeed, while gaining confidence and access to more people.