Y Combinator chief executive Garry Tan says college entrepreneurs who adopt a “fake-it-till-you-make-it” playbook risk following Theranos founder Elizabeth Holmes and FTX creator Sam Bankman-Fried “straight to jail.”
What Happened: Speaking during a live taping of the accelerator’s Lightcone podcast at YC’s AI Startup School, Tan blasted unnamed university programs that he says encourage students to embellish traction and “lie to investors.”
“I’m very worried about them because what we’re coming to understand is they are teaching you to lie,” he told an audience of undergrads and Ph.D. candidates. “Software is the most empowering thing in the world. Why do you have to lie?”
Tan, whose seed fund has backed Airbnb, Reddit and DoorDash , warned that fraud scandals have already tarnished tech’s image. “That’s a waste of time, and you’re going to go to jail,” he said, invoking Holmes’ 11-year sentence and Bankman-Fried’s 25-year term. “They don’t represent us!” he added to applause.
Why It Matters: YC managing director Jared Friedman echoed the critique, arguing that classroom formulas produce a “cheap facsimile” of real startups because “anytime you try to bottle up entrepreneurship and teach it as a college course, what you end up with is a method, not a company.”
Tan also faulted campuses for barring next-generation tools such as AI code editors. Group partner Diana Hu asked how many students could use Cursor and only a handful raised their hands. “They’re quite literally prohibiting the students from learning the tools that they are going to need,” Friedman said.
The debate lands as regulators tighten scrutiny of startup disclosures after high-profile collapses. Holmes was convicted in 2022 of defrauding investors in her blood-testing firm, according to Reuters and began serving an 11-year term last May. Bankman-Fried was sentenced in March to 25 years for an $8 billion crypto fraud.
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