YC owns the product analytics space
I saw a tweet the other day that said YCombinator "dominates the product analytics category".
This is indeed true. YC has invested in all the top players in the product analytics space: Mixpanel (S09), Amplitude (W12), and Heap (W13).
Not only that, it continues to invest in companies in this space like PostHog (W20) - disclaimer: I work here - and June (W21).
But the interesting thing to me is that YC is not just betting on this trend/industry. It's creating the market as well, and that's where the dominance lies.
Hundreds of companies come through YC each year. During the batch they learn about how to build a successful company, from YC's perspective.
So, what if YC tells a batch that product analytics is an essential piece of building a modern business? Well, the whole space has now just gained a few hundred promising startups as new clients - most of which will fail, but a few of which are bound to become unicorns (and then pay Amplitude 6 figures a year).
While B2C YCombinator companies need to go out into the world, a significant portion of the future market for B2B companies like product analytics ones is right there, inside YC.
And that's not all - YC companies are looked up to all over the world, so their practices influence tons of other companies. If a YC company is using product analytics, I should use it too.
Thus, YC is betting on the space and driving it forward at the same time. Of course, this is the general idea with any trend, but it is particularly apparent here.
Going even further, there are adjacent investments that have also been a fundamental piece here. To teach startups about analytics, who does YC invite? Segment (S11): the top CDP to deliver data into tools like product analytics platforms.
Ultimately, if you use X or Y for product analytics, it doesn't matter. Somehow someway YC gains from it.
Plus, at the end of the day, you might only feel you need product analytics because of YC in the first place.
So that's it for this piece. I just wanted to quickly jot down some thoughts about what a great investment strategy looks like.
Final note: with Segment's acquisition and Amplitude's recent IPO, it seems like the bets in this space are starting to pay off.
05/11/2021: Was just browsing HN today and saw this. Another one for the list.