YC Startup School 2016 Notes - Part 1
I got invited to YC startup school this year, and wrote some of the nuggets of wisdom from founders, investors and YC partners that I found interesting. Here are my key takeaways.
Disclaimer: I’m paraphrasing most quotes that you see below.
1. On founding a team - Motivate your team with a common purpose
Ooshma Garg, fonder of Gobble (marketplace for home-prepared dinner kits) said that it was more important to define your company mission than to run a company by sheer ambition. Her point was that employees stick through the tough times with a common purpose and shared mission.
2. On persistence - Pursuit of feedback and introductions
In retrospect, it seems obvious that Gobble should have pursued dinner kits. They tried a delivery business based on home cooked meals, but didn’t see the much anticipated “hockey stick” till they pivoted to dinner kits. Gobble was around for a couple of years before YC, and even raised funding. Ooshma told the audience about her relentless pursuit of an introduction with Kevin Hale and her follow ups on figuring out what customers want.
3. What customers want - Look at your early adopters
Pinterest’s Ben Silbermann noted that it’s important to look at your early adopters even if they do not fit the customer profile that you had anticipated. PInterest’s early users were not the technophiles that they assumed that would use the site, but were often moms and dads.
4. Ben Silbermann - Tech will become more predictive
On his conversation with Sam Altman, Ben made a 5 second comment on the future of tech before the conversation changed directions but his comment stuck with me. And I’m paraphrasing here but he says that “technology will anticipate what users want. While you browse the internet, rather than receiving ‘factual responses’ to your queries as in the case of a Google search, tech companies will seek out a response to your ‘intent’ to purchase a product, or look up a recipe to make something that you just saw a picture of.” As computing power increases (more on this later), we will find it easier to analyze click trails, social graphs, intentions, behavioural patterns and clusters.
5. On hiring - Culture is important, especially in the early stages
Ben’s first hire was from a post he put up on Craigslist. Holding company BBQs was important in their early stages as they attracted potential employees to their home and got a mind meld going.
6. Build toys
If you want to get good at making things, whether it’s to scratch your own itch, or make something people want, start by building toys or throwaway projects. That is, your first version may not need a user authentication system, or be exceptionally well designed. A version 1 with a couple of embarrassing bugs that makes it look like a scrappy project thrown together still gets you momentum and motivation to charge towards the bigger problems worth solving, even moonshots.
7. Be obsessed
Speaking of moonshots, if I could describe the founder of Rigetti in one word, it would be “obsessed” - and I mean that in a good way. Chad Rigetti will not be stopped in his race to build the world’s most powerful computer, having already spent his last 25 years in research and has hired the best guys from NASA and IBM. Rigetti’s goal is to build the full stack of quantum computing - right from fabrication to providing APIs and services off their chips. Relentless is another word that’s often used. The difference I find is that relentless implies that you are persistent, perhaps even inflexible and charging ahead with your idea 100% of the time. Obsessed would mean that your startup or your idea is on the top of your mind 24/7, even when you are disheartened, even in the face of no-hope - with the mission to bring change to the world, you see that your product or solution is the only way to get there.
8. It’s okay to not know what you’re doing
Sam Altman came up on stage after Gobble and Rigetti presented and said that it’s okay for a founder to not know where to begin. He wished that we (the audience) had seen him meet Rigetti when they first spoke years ago, as in looking at them now it’s easy to get disheartened and say that “a startup is not for me. This relentless pursuit is just not something I’m cut out out for.” In fact, a lot of startups that come into YC are in their early stages - 50% were not making money when they applied, 14.2% of companies weren’t even incorporated, and 8.5% had solo founders. In their first meetings, many did not have all the answers - and that is okay.
9. Focus on branding - You get only a few first impressions to build trust with your customers
Or maybe this point is better rephrased as “Focus on what people want. BUT - Don’t ignore branding.” AptDeco moved furniture from buyers to sellers. At first, they outsourced to moving companies and independent contractors. One contractor showed up at a customer’s door with a van completely spray-painted with a graffiti-esque sign that said “CA$H”. The customer snapped the pic and let the company know that “hey, I know you guys are better than this. This just throws people off”.
10. Depth first, then breadth - On your go-to-market strategy
Focus on one customer profile, conquer a pond, then another before moving into the ocean. Doing a breadth first, then depth approach spreads yourself thin. This is true especially for geographically-segmented markets, and for marketplaces (Travel, Shipping, Uber for example).
11. Pay attention to customer acquisition costs (unit economics)
If it takes you $50 per lead (on a Google Adwords campaign) and you’re only making an average $15 in a customer’s lifetime of using your product, the economics just cannot scale there, without sources of alternate revenue. To quote AptDeco’s founder: “Build a real business”.
12. Be skeptical of your assumptions
While you pitch to investors and you’re figuring out the value you provide your prospects or customers, be skeptical about your assumptions - research and get feedback from prospects. Have numbers to back up your decisions. Are customers losing money if they continue to do things their way? Remember that customers don’t want to change, unless there’s something pushing them - in the form of competitors, market dynamics, and new revenue opportunities.
13. End all your meetings with a follow up date and time
Stayed tuned for Part 2 on notes on the talks from Marc Andreessen, founder of a16z, Reig Hoffmann (LinkedIn) and YC Partner’s Q&A session.
