A Leaner, Stronger, More Modest Y Combinator

“This is way better.” That was the prevailing sentiment at today’s Y Combinator Demo Day where 47 fresh startups strutted their stuff for investors. Compared to the 65 demos a year ago and tedious 75 in August, investors told me this tighter Demo Day was more manageable, the quality of the startups was higher, and it felt like the old YC that earned the reputation as tech’s premier incubator.

The founders who presented today at Mountain View’s Computer History Museum dug the more exclusive version of YC too. “I thought the class size was pretty perfect” said one co-founder of an ecommerce startup who preferred not to be named. “There was a huge round of applause when they announced [how few applicants were admitted]. Everyone felt so much more special.”

Beyond the feeling like they’d won the startup lottery, cutting the class size by a third granted each company more face time with YC’s partners and mentor network. While Demo Day presentations are always meticulously practiced, that guidance may have led the companies to clearer visions of where they were headed. I heard fewer vague ideas where monetization would get hammered out later, and more concrete roadmaps.

Amongst the batch were the typical “Airbnb for X” (Flightcar’s airport vehicle rentals) and “Kayak For Y” (SimplyInsured’s health insurance selector). There was as also a bit of deja-vu. Swapbox, which sets up public lockers for package delivery, was nearly identical to the previous YC class’ BufferBox, which got acquired by Google leaving an opportunity for an independent approach. And WeFunder’s equity crowdfunding platform for startups does almost exactly the same thing as YC Summer 2012’s FundersClub. Great minds think alike, I guess, especially when there are big markets to chase.

There were a fair number of “no-brainers”, said investors in attendance, though that’s not necessarily a bad thing. It just means there were plenty of startups tackling offline problems where people: 1. Hate the experience, 2. Spend a lot of money, and 3. There’s little technology being applied. Wevorce wants to smooth out divorces, Zenefits makes doling out employee benefits easier, and Lawdingo connects people to attorneys. These companies are a bit like modern art. “Anyone could make that!” “Yeah, but you didn’t, and they did.”

ThalmicPerhaps there weren’t as many crazy moonshots as years ago. Some investors mused that many of the building blocks of the web have been built, so now founders are addressing more discrete problems. However, it can be very tough to tell the difference between a startup that sounds too simple, and one whose simplicity could turn it into a backbone of the Internet.

A handful had the whole crowd impressed, though. Thalmic’s armband that senses electrical impulses to control apps was downright futuristic. And Watsi’s platform for crowdfunding medical care tugged our heartstrings when it showed a little Nepalese girl whose life it saved. Their success will determine that of YC itself now that Sequoia’s funding has been spent. YC has to support itself on exits from its investments from here on out.

Time will tell whether the startups that presented today will eventually change the world. But Y Combinator’s willingness to scale back it size shows admirable modesty. Entrepreneurship has grown into a full-fledged fetish these last few years, and YC grew along with it. To buck that trend, raise the bar, and offer more personal attention took handing out some tough rejection letters. But the benefits could be felt in the excited atmosphere. This isn’t a startup factory anymore.

Today Graham, Jessica Livingston, Garry Tan, and the other YC partners looked visibly less frazzled than at past Demo Days, like they’d been sleeping at night rather than fielding emails from frantic founders. This time they could sit back in confidence and watch the companies they nurtured make their big debut. And I think the startups made their parents proud.

Read more about today’s YC Demo Day:

The Top 7 Startups From Y Combinator’s Winter ’13 Demo Day

Paul Graham Says Y Combinator Is Pickier Than Ever, With ‘Hardly Any’ Bad Startups In Current Batch

Women Make Up 10% Of Founders In Y Combinator’s Current Class

[Image Credit: Inc via YC]