Getting Into Y Combinator - TWICE!

Let's talk about startup schools, specifically Y Combinator. I've personally co founded two separate startups that have gone through Y Combinator and today I'm going to tell you everything that you need to know about the program, including how to get in. But don't worry if you aren't sure about my credentials. I'm going to pull plenty of quotes directly from current and former Y Combinator partners and back everything up with data and sources so you know it's accurate. I'm John Coogan and this is everything you need to know about Y Combinator. Whether you call them startup schools, incubators or accelerators, these programs are a great opportunity to grow your business, especially if you're a first time entrepreneur and still aren't exactly sure of how Silicon Valley really works. There are lots of accelerator programs around these days and they're all a little different. For this video, I'm going to focus on YC for two main reasons. First, it's what I know. Both of my startups, Soylent and Luci, have been through the program and I've never been a part of another accelerator. Second, YC is by far the biggest and most successful program out there. They've launched over 2,000 companies, created over 60,000 jobs, and generated over $300 billion in market capitalization. That's incredible performance for any investor, but what makes YC so unique is their speed and scale. Instead of networking to meet founders, putting them through a series of pitch meetings and requiring lengthy slide decks and detailed financial plans, YC has a standard application on their website that anyone can fill out and they decide who they fund based on a 10 minute interview. Common questions about Y Combinator generally fall into a few buckets. What's YC like? Should I apply? What does a good application look like and how should I prepare for the interview? I'm going to cover all of these, but one at a time. Let's start with what the program entails. Once you're accepted, YC will invest $125,000 in return for 7% of your company to get help you get started. Then you participate in a three month program where you meet with other companies and attend regular dinners with guest speakers. The program feels extremely short and it can fly by quickly, but it's an extremely competitive and intense environment that will really motivate you to build the best possible company. YC ends with a demo day where you present your company to investors and usually try and raise more money for the company. To some people, that sounds amazing, to others it might sound underwhelming, the value of YC is a bit intangible, but I've never met a successful founder who didn't absolutely love their YC experience and credit their early growth to the program. Going through YC used to mean moving to Mountain View, California or at least the Bay Area, but since the pandemic hit last year, YC has been entirely remote. Moving to Silicon Valley was a really cool part of the experience since you felt immersed in the startup culture as soon as you got there. Now you may be thinking that moving to Silicon Valley feels super glamorous and you'll be hanging out in amazing places like the Google Campus, but usually you'll be in a cheap hacker house instead. That's what happened to me with my first company. We were on a really tight budget, so we rented a cheap place in Sunnyvale about 30 minutes away from Mountain View and camped out there for the duration of the program. If you're interested in taking your startup seriously, I definitely recommend applying to Y Combinator, but it's common for entrepreneurs to not be sure about when the ideal time is to apply. But the good news is that there really is no wrong time to apply if your company is extremely early in development. You just need to listen to what the head of admissions at yc, Dalton Caldwell, says on the topic.

There is no such thing as too early. Sometimes in the extreme case people have changed their idea between when they get invited to interviews and when they get to the interview. We also fund people that end up pivoting mid batch. That means they've been working on their startup like a negative number of days that is clearly not too early. And so again, there's a lot of ideas around there that like the right way to apply to YC is to wait till you have a certain amount of stuff. Any kind of roadblock you put for yourself that you're too early, I would argue is your own self constrained roadblock, not something that's coming from us.

Sometimes companies think that they are too far along for yc, but there are plenty of great companies that have joined YC after raising money, hiring employees, launching products, or starting to generate revenue. There is one case where you shouldn't apply to YC though, and that's if you don't plan on growing your company significantly. YC doesn't fund lifestyle businesses or side projects, and those types of projects generally shouldn't raise venture capital at all. Side projects and lifestyle businesses can be great experiences, but they just aren't what YC looks for in companies that they fund, there are really only two things you need in order to get into a team and an idea. Current YC partner Jared Freeman explained these requirements really well.

The first ingredient is you need your founding team. That means you need the right set of people to work on your idea. And the second ingredient is you need an idea that that team is excited to work on. Those are actually the only two ingredients you need to have a successful YC application. A lot of people think that you need a bunch of traction or a certain amount of revenue or something like that, but it's just not true. Anywhere from a quarter to a half of the companies that YC funds every batch are companies with just those two things. Just an idea and a founding team.

So if that describes you, the next step is just to fill out the application. It's a very simple form and you honestly shouldn't spend too much time on it. Just keep your answers concise and honest, avoid jargon, and explain your plans exactly as they stand right now. It's okay not to know everything about the future. No one does. A big part of the entrepreneurial process is adapting to change and growing as a person and leader. As your company grows, instead of spending days trying to craft the perfect answer to every question, spend that time actually building your startup. The answers to the questions will come naturally at that point. Dalton Caldwell made a great point about the importance of actually starting to build your idea by before you raise money.

At TechCrunch Disrupt, the tech press is so fundraising focused. The naive assumption about the way you start a startup is you first create a pitch deck and then you go network of investors. And then like the other part about building a product, what have you is later. And so that's certainly something we look for in founders is folks that don't put the cart before the horse.

A lot of people think that they should try and network their way into YC or create some elaborate pitch for their company in order to draw attention, but that kind of stuff actually works against you. Try and put yourself in the position of an investor or YC partner. Imagine you're living in an apartment building and two things keep happening. Every day someone pounds on your door to tell you about their great startup, and then every night you look out your window and see someone burning the midnight oil coating in the apartment across from yours. The aggressive startup keeps pounding on your door, telling you how great their idea is, but you see no evidence of this. Sure, they have determination, but. But you can't tell if they've actually built anything. But the programmer in the next department is constantly working, charting their growth and talking to users. One day, the investor bumps into the programmer in the mailroom and they strike up a conversation about the mysterious project. Because this programmer has actually built something, there's a lot to talk about, and the conversation happens quite naturally. That's what a great YC application should look like. It merely allows the YC partners to get a glimpse of what's happening at a startup and that is already determined to succeed. So you've written your answers, kept them all short and to the point you're making real headway on what you're building. So YC asks you to interview. What should you do to prepare? The answer is strikingly similar to writing an application. Interview prep still shouldn't be your number one priority. You need to be building your startup. One of the most impressive things a startup can do is show progress between interactions with an investor. Every investor wants to see a line that goes up and to the right, but it's really hard to get a feeling for a trajectory from a single data point. That's why investors often track companies for months and sometimes years before investing. YC has a much shorter time horizon, but it can still be extremely valuable to show progress between the time that you apply and when you interview. This doesn't mean you need to go from idea to massive company in two weeks. No one is expecting that, but just having written more code, developed a new prototype, or talk to more users can be extremely meaningful at the early stage. This will benefit your startup regardless of whether or not you get into yc. So it's a win win situation. I was just talking to a very early stage company that was about to interview with YC and they were naturally interested in prepping for the interview and making sure that they had good answers, but they hadn't actually pushed a prototype of their product into production. After prodding a bit, I figured out that they could in fact launch a very rough but functional version of their idea before the interview and start onboarding users. So that's what I recommended. Now, I'm not a YC partner and I don't know if that will be enough for them to get in, but even if they don't, I think they will be moving faster and learning from these early experiments. It's important to remember that YC interviews are only 10 minutes long, so you have to be concise. Gary Tan, who's a former YC partner, outlined three key points that you you need to get across in the interview first is problem.

What is it? Second is the solution, is it good? And are you the ones to do it? Third is how big can it really be if you succeed, where does this go?

Those are the three key points you want to get across and hopefully they should all tie together into a nice story that anyone can follow. When we interviewed at YC with my current company Lucy, the pitch was straightforward. Smoking kills millions of people. It's a huge problem and we have a solution in the form of tobacco free nicotine products. Our team consisted of a former smoker, a PhD biochemist and a programmer and tobacco is a huge trillion dollar industry globally. If we were successful, it would be huge. Simple stories like that are extremely powerful, but it's important not to try and tell a long story in every one of your answers since you only have 10 minutes. When a partner asks you a question, don't give a bunch of background information and explain nitty gritty details before answering the core question. Treat your response like a newspaper article and structure the response as an inverted pyramid. The most important information comes first. Then if you have time, you add important details to support your original point and then you add background info at the very end. This allows the partner who asked the question to cut you off and move on to the next question if they are satisfied with your answer and and keeps the interview moving along. Now what if you don't get into yc? Don't worry at all. I know plenty of founders who applied multiple times before getting in and I myself was rejected the first time I applied. Before co founding Soylent, I started an education technology company and applied to yc, but my application wasn't very good and I didn't even get an interview. The biggest problem with my application came down to exactly what Jared Friedman outlined. Team and idea. I hadn't really tested my idea with any real people who could use the product that I was building and my team wasn't really fully formed yet. I had a third co founder on my application but he was on the fence about joining. It seemed like if we got into YC he would take the leap of faith and join the company, but if we didn't, he wasn't really interested. That's a really bad sign and I think YC picked up on it. Everyone on your team should be fully invested and willing to work on the project problem regardless of whether or not investors like the company. Tons of companies get rejected by investors and go on to become massively successful. Determination is everything in startups, so good luck if you apply to yc. If you have any questions about the process, feel free to leave me a comment below or DM me on Twitter. And if you like the video, please consider subscribing to the channel. Thanks for watching it.