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I think YC is an amazing value for the talented hacker in the Midwest looking to break into the Valley. On the other hand, if you're already here and connected into SV, it's really expensive equity.

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Being "well-connected" will only get you so far. YC helps you develop as an entrepreneur, among many other things unrelated to having the right connections. Even if you previously worked at a startup, that's still very different from founding your own company.

Also, I think a lot of people overestimate the value of their current network, and underestimate the value of the YC network.

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