Training a generation of entrepreneurs to live as cash efficiently as possible during the market discovery phase of a startup, to me, is the biggest innovation happening at Y Combinator these days. And its clearly paying off.
Eliminating the moral hazzard problem of startups, where they take on a ton of other people’s money and then have plenty of time to sit around and “figure things out” while renting plush offices and buying nice chairs really is an innovation.
When you’re cash strapped, you have to find a way to make money – a better way than just flipping the switch on ads, which is much harder than people think.
It’s like Zappos, as Garry Tan profiles in his book, where they couldn’t raise VC money because of the dot-bust climate, so they had to find a way to make real revenue.