Y Combinator Webinar Notes
Some useful advice for (potential) startup founders.
Back in November 2020 I attended a Zoom event hosted by IIT Kharagpur. It was a conversation between Vivek Nautiyal, a startup founder in India, and Y Combinator CEO Michael Seibel. They spoke about startups and growth, and Michael gave further advice about YC's application process and some do's and don'ts for founders.
I really enjoyed the session. Below are the notes I took, annotated and edited later for readability. I think anyone who's ever thought about starting a company would find this advice extremely useful.
All opinions below - including any "I"'s and "we"'s - are Michael Seibel's, not mine, although I've paraphrased a lot of what he said. I've also categorized the points as best as I could.
Talking About Founders
When YC conducts interviews with startup co-founders, it's easy to tell whether the co-founders like each other - and a lot of them don't - but it's hard to say if they can support each other long term.
Founders, when looking for co-founders for their startups, generally over-emphasize skill matching, but under-emphasize support and trust. The relationship between co-founders is more important than their individual skill levels.
How Startups in India are Different from Those in the US
Indians rely more on WhatsApp as a general tool, even for business.
Perception of the internet is very different in tier 2 and tier 3 towns in India, and you have to keep that in mind when conducting business there.
There's a lot of "vagueness" in government regulations in India - you need to get local advisors who know the lay of the land to navigate this.
Contrary to popular belief, the United States is not necessarily the ideal of technological growth every time. It lags behind in a lot of areas. You can "leapfrog" America in those industries, and it might even be better to start a startup in another country.
Example of this - food supply chains. It’s quite possible that an orange eaten in New York and an orange eaten in San Francisco came from the same farm! The sheer distance food travels in the US is problematic and not healthy. India does better in those terms - the food tends to be more locally grown and thus healthier, so distribution can be easier.
Details About YC Applications
The typical YC batch gets 12,000 to 16,000 (yes, you read that right) applications from startups looking for funding.
Out of those, around 1200 of those companies are selected for interviews.
Out of those, around 250 of those are finally taken in for that batch.
It’s extremely common for companies to re-apply to YC after getting rejected. In fact, a lot of companies get in after their 2nd or 3rd application. There’s no such thing as one shot only. Re-applying is not looked down upon.
YC doesn't care about the current position of a company, but more about its trajectory - another reason why a 2nd application can have good chances.
There's a founder who got in to YC after their *eighth* application.
When you’re interviewed by the partners, you only need one partner in YC to believe in your company and think you’d be worth investing in. It’s not a majority vote. Even if a single partner believes in your company, you’re in.
No rule as to how many companies YC accepts; that number is not fixed.
YC biases towards software - 100 times cheaper to build than other things.
What does YC look for in a company?
Exactly five things:
1. Can the founding team build the product?
It matters because you will put more care into building the product than any higher contractor ever could, because you care more. The more you care, the better the product will be.
2. Evidence of progress
The more time you've been operating a company, the more it is that people will expect from it.
For example, if a team is working for one month on a mobile app, and they have a 100 users, cool! But if they've been working for two years on an app, and it’s not even on Testflight yet, that’s really not good.
It’s gotta be impressive, it’s gotta “make me a little afraid”.
3. Relationship between co founders
When things get tough, will you support or turn on each other?
(If you check these first three boxes, there’s a 95% chance of getting a YC interview.)
4. Clarity of communication
You will eventually have a large team - you need to communicate the vision, culture, goal of your company well.
So if you can’t communicate this vision in an interview, you will never be able to communicate it to thousands of potential employees.
5. Do you know something that other people don’t?
A common mistake among founders - they assume they are smart, and everyone else who came before them and failed is an idiot.
For example, if I’m making a local delivery app, it would be a mistake not analyzing all the other delivery apps that came and failed before me. What am I doing different with this app that won’t fail? Why did they fail? You have to have a coherent theory of why others in your space couldn’t make it.
Good founders, when asked that question, have a great answer.
Even though these five things sound extremely simple, only 1.5 - 2% of the companies we interview check all five boxes.
On Trends, Peer Pressure, and Final Thoughts
We invest so early, we have no idea who’s going to win.
Whatever trend is hot, the founders who started that trend started way before that trend was hot. Eg. Zoom and remote work, which is trending in 2020, started way before.
Don’t care about trends and your peers (especially your peers), but about your customers.
If you can put yourself in the top 5% smart kids around you, you did well, right? But YC founders are almost always from the top 5% of wherever they came from, and still most of them fail. Even in a group of the smartest people, i.e. the top 5%, you have to be ahead and think differently. Don’t peak in high school.
In an environment like this, the things that worked for you before won’t work for you now.
The best analogy for the startup game is not university, it's sports. The startup world is not here to nurture you, but to find out who’s extraordinary.
Avoid the negative influence of your peers. Fall in love with a problem and your customers, you’re better off.
There’s a lot of hype around companies that raise money and/or have prestigious investors. It’s overrated.
Keep your head down, work hard, make ten customers love you, then another ten, and so on. Don’t give a damn about getting invited to prestigious events and things like that. Make your customers love you. That’s it.
Because when they don’t, everyone knows that you didn't make anything anyone wanted.
This is great Sid! Looking forward for many more such blogs/articles
It's impressive as to how seriously one can attend and absorb through a zoom meeting & put it up soo well including the logistics. We have been semi entrepreneurs in health care but hardly did we know anything of this stuff but in retrospect I understand we were right on many things & so we made it. Appreciate this sensible & serious write up which would help & guide at large.. Congrats.. Keep up the good work Siddhesh