How about the "I had countless friends who were nearly finished with their computer science (CS) degrees and had an idea for a company, but they struggled to move from concept to finished product. I wanted to help them bridge that gap", says they 21 year old that never launched anything.

Something is fucked up here. I don't blame Charlie Guo, he's just a product of the environment, but why would anyone invest in him doing this idea? There's no knowledge or experience. It's like investing in my idea for in home brain surgery. It doesn't make any sense, and the article thing raised multiple red flags to me.

Unless there's some kind of actual contract (leave before X years and you have to return Y% of the funding), I don't think that should be very surprising. People start on something (even a funded something) and then change to other things all the time, if their interests change or another opportunity arises.

For example, a portion of the people who win $30k/year National Science Foundation graduate research fellowships take a year or two of the funding, and then decide a PhD isn't for them. Some of those people, after taking $30k or $60k in PhD fellowship funding, leave grad school to start a company instead. I don't think it should be that surprising that people might go the other direction as well, taking $30k in Y Combinator funding, trying a startup for a bit, and then deciding to leave the startup and go to grad school instead.

A research fellowship is not seed funding, though. YC doesn't "give" people $30k, it invests $30k in their business.

It's not identical, but it's not like the NSF "gives" people $30k of the taxpayer's money just as a gift ether. The goal is to invest public money in future researchers. In both cases there's a clear intent that you will use this as seed money to jump-start a project that will achieve the funder's goals (monetary return and positive PR for Y Combinator, production of research & PhDs for the NSF GFRP). But there's no requirement that you continue to do it indefinitely, and no ban on bailing out if you decide it's not for you after spending $30k of the funder's money. I don't see this as any more morally binding in the Y Combinator case than the NSF case.

In addition, it's not like leaving a PhD funded by an NSF GRFP leaves zero net positive impact. Funding research leads to papers (hopefully with valuable insights) and to knowledge and training passed down to other researchers. I don't think it's a very good analogy to startup funding in that sense. (Although I suppose one could make the argument that alums of failed companies have hard-earned experience so some of the value is still there, diffused out to wherever they go next.)

In the best case I think that's possible, but in the usual case someone who leaves a PhD program after a year does very little research. US-style PhDs don't typically require a master's degree first, so first-year PhD students are doing mainly course work and "figure out what I want to do for my PhD" project-shopping. If you do that for a year and bail, it's pretty common that you wrote zero papers and did very little research. If you leave after two or three years, it's more likely you will leave some kind of research contribution, although it's also pretty common for people who realize they are going to leave to just "pivot" to full-time MSc coursework, so they can leave the program with a master's degree. In that case, the NSF basically funded someone to take MSc courses, which is arguably not useless, but isn't what the NSF intends to fund.

I think with this amount of money it's just a risk of funding people. Putting in strings requiring repayment if the person changes areas, when you're giving someone <$100k, is pretty heavyweight for either the NSF or Y Combinator, so they just try to pre-screen for people they think are going to use the money as intended and stick with it, and accept that some percentage of people will instead use the money to flail around for a year or two and leave. If the percentage gets too high, then I guess reconsider the screening process.

Yes, that's true. For full disclosure, I left a PhD after 4 years to work in industry (I was frustrated by some aspects of academia), having spent three years on an NSF fellowship, so I may be biased here :-) I absolutely didn't go into it thinking I would do that, and I try to bring a researchy perspective everywhere I go now. I also think it depends on the school and the field. Where I was, it was common for first-years to get on a project right away and help churn out results. Probably guided closely by older students or advisors, but still doing productive work.

I think you're right re: clawbacks, though. I can't imagine the mental pressure were the scenario to be "you MUST stay in academia or you owe the government $XXXk". I actually know a PhD student on a (non-US) government scholarship who has a clause like that. He calls it his "slave contract".

Getting back to the original topic, I think that for any venture with a high rate of failure (startups or grad school or...), there has to be some room to allow the funded person/people to say "this isn't working" in good faith and pivot or leave. That's totally different from someone taking funding without the intention to use it properly, or just deciding they're bored or whatnot.

Contracts are to business what skeletons are to people. They explain something of the raw structure, but little more. (Also, if you find yourself looking at it, something has gone wrong.)

Every time I have taken investment, I have seen it as a commitment to see a venture through. Maybe it works, maybe it doesn't, but I am going to give it all I have. So no, I don't think, "gosh, I found something more fun to do," is a legitimate reason for walking away from a startup. If that's how somebody thinks, then they are not cut out for starting a company, because there are always points where almost anything else will be interesting or appealing.

Fellowships are different. I'm advising a new fellowship program right now and, like all education, it's seen as an opportunity to help someone learn. We expect a certain percentage of people to go on to do the thing we want people to do, but if not they'll be taking the knowledge and doing something else, which is also fine.

My concern here is really with the system. If we are pressing money upon people who aren't suited for it, then something's pretty wrong. Nobody should be "trying a startup for a bit".

The app still exists, so it hasn't vanished off the face of the earth.

I'm concerned that graduates have the expectation that you an sit in a room, brainstorm and come up with a killer idea which will get millions in seed funding. That doesn't show that you're interested or knowledgeable in the field/problem area you're trying to solve. It sounds like the gold rush.

That's not to say that you shouldn't sit in a room and brainstorm, but sitting down and listing currently-hip ideas is a quick way to crash. Sit in a room and list current big problems that you have a lot of knowledge about!