Speaker Q&A: How to Get in to Y Combinator

Please welcome TechCrunch reporter Hayaan camps and emmanu hariharan Managing director YC continuity at y Combinator Hello everybody it's almost like we have A full room because people want to know How you get into white combinator That's funny that That's really good yeah well that's why We're here hi yes so I'm joined here With Anu who is part of the fund that Invests into later stage uh like a Murder company yes that's right so I Help lead our growth fund called YC Continuity which doubles down in YC's Companies you guys have a lot to double Down on that is true I often say we Um we are privileged or humbled by the Opportunity to partner with some of the Amazing YC Founders yeah I love it uh There's a QR code down here somewhere uh Please ask questions I'm just here to Look pretty and to to further these Questions I'm also sitting here with a Little phone that actually gets your Question so I'm not texting my mom Although she would probably love that Um well we have some questions already So I don't even have to use my prepared Questions that's not amazing yeah what Is the most important question you look At in the world combinator application I think that if you ask different YC Partners there will be different you

Know preferences in terms of what is Their favorite question my personal Favorite is Um actually two or three I think one is Really hard one is how long have you Known your co-founder it tells a lot About Um You know how much trust and how long of A duration have you spent with the Co-founder and not just in sense of time But like the depth of the relationship The other thing is that's my personal Favorite is what's uh something that you Have hacked on outside of the current Startup idea and there are some really Interesting answers and that kind of Tells about how resourceful the founders Are would you tell me one of your Favorite like side hustles side hacks One of my favorite side hacks well there Was this Um founder that had Um I think like exploited the flight Points in so many different ways without Having ever collected enough miles to be On loyalty or any sort of premium and Yet got business class all pretty much Free and like for almost 10 to 15 Flights people do that for a load of Stuff it's wonderful Um another question here are Solo Founders always a no-go That's not true at all we do fund solo

Funders but I think the important Takeaway and especially now I've been at YC almost close to seven years I can Tell you that It's really hard to build a company as a Solo founder so there's a reason why we Encourage Founders to have at least one Co-founder it's a battle of wills and You know your if your startup is Successful you're going to be building It for 10 20 30 years and it's really Hard to go through that Journey alone so We strongly recommend that Founders find A co-founder but we have funded funders Who are Solo Founders yeah I've done a Bunch of companies myself and I find Like just for continuity purposes right Sometimes somebody just needs a break or Needs like some down time for medical Reasons or whatever having somebody Who's been there from the beginning is So powerful not even I mean that's true But just not even that like you're gonna I mean I always say like it's a roller Coaster and the highs are high and the Lows are really low and both can happen On the same day and you just need Someone that you trust you can have a Conversation when you're low hopefully They'll lift you up and then they're low You'll lift them up so that's really What a great co-founding team looks like And if you can have that that's a big Plus

Love that Um another really good question here how Much money do you need to raise before You get into y combinator oh Net Zero I Actually most Um of the applications don't have just Have an idea don't they haven't even Launched they haven't raised any money They don't have traction we in fact Would say you don't need to have raised Any money we prefer I would even go First to say we prefer that you haven't Raised any money and you're at the very Early stage of starting a company Thank you Um does a referral help you get an Interview with Y combinator absolutely Not that's the reason we have an Application we do not like I mean I Wouldn't say it's a negative but we Don't we don't pay any attention to it Or give it extra signal now if once in a While a YC founder says very strongly or Gives a very strong referral because They've worked with that person okay That helps but I would say a large Portion of our Founders that no Referrals coming in yeah so you guys Built like a whole system to kind of Deal with all those applications right Because I think you get more than one or Two per cohort Yes I mean more than one or two that's a Few hundreds of that yes I mean the

Whole reason we had the YC application Is one we just wanted people to tell us What we were looking for it's such a Stark difference from the series a pitch Or any of the subsequent pictures that You do because you put together a pitch Tag no firm tells you what they're Looking for and we just said well that Sounds bizarre we know what we are Looking for just let's ask that in the Application so just write it out and a Large portion of our sort of selection Process is really around is there some Sort of founder market fit are there are Is there at least one technical founder Co-founder because we think that's what It takes to start shipping at a high Velocity and test it out during those 12 Weeks and launch the product and so it Has nothing to do with referral and we Don't want it to be that way in fact we Don't want this to be a closed Network So you should be able to get into YC Without having to know anyone in the YC Team or any YC founder I slept through The um sat through makes you sound very Negative I enjoyed the demo Day this Year and you know even just at that Scale it's just an incredible number of Super high quality companies that come Out the other side how good are they When they go in or like how what is the Delta from the beginning to the end of The program yeah so I think first of all

The selection process itself is pretty Stringent right our acceptance rate is Less than two percent so the fact is Um you know the fact that they made it Itself means they stood out of the rest Of the applicant pool their application Was clear the idea is good but in many Cases I think I don't remember the exact Percentage but a significant percentage Haven't launched so in those 12 weeks What the group partners are working with Them is essentially getting them to Launch talk to customers and figure out What is the use case what is that early Sign of business model right those are Only the two things that they're Tweaking so a large portion of them Launched during YC yeah no I love that Um what's the number one drawback of Going through YC as a founder Well I think it wasn't me somebody in This room I I don't know what is the drawback I'm Very biased I think YC is one of the Best institutions you could go to you Should ask other founders Very good answer Um what's the biggest red flag do you See on YC applications or in the Interview process Red flag I would say two common red Flags one actually I think Dalton Caldwell who was a TechCrunch a couple Of years ago touched on this which is

You're starting a company just because That's the hottest thing right now which Is you know a year ago it was crypto Maybe now it's something in Ai and that You can see through the application Because you know he calls up the tar pit Idea because you haven't really flushed It out you just know there are a lot of Investors interested in investing in That space and the application is so Blurred like we cannot even understand What is the idea what is that product Even though you have not built it so That's number one that's one of the most Common uh things or you know we look I Wouldn't call it red red flag but a Yellow to Red Flag we try to test it out The second red flag is explicitly lying You know like don't lie it's just say Whatever you're building on and Sometimes you know not too often but Once in a while we do see that it's a Big disconnect in what they said in the Application versus what they are Actually doing Three weeks into the lockdown I ended up Launching a virtual events platform I am that founder basically but that's Why I'm back in back of the age not the Founder and It's uh it happens a lot where people go But I think it actually goes to Something you said earlier which is the Founder market fit right like somebody

Who has a really deep understanding of a Particular industry or Market or Market Dynamic has a much higher chance of Being successful as a founder and I Imagine that's actually the extension of What we're talking about here like if You are a fair weather founder or Somebody who kind of goes with the flows You probably don't have that founder Market fit exactly like I always use Christina from vanta as an example like You know would we have known five years Ago that Christina was the uh the Founder to start a real-time sod you Know soft to compliance product probably Not but look at her background you know When she came to YC she basically said I Worked on Dropbox paper while I was Working in Dropbox every stock to Compliance was so painful I went and Asked other companies and 30 other Project product managers did they face The same problem and that's how the idea Came right and they hadn't launched I Mean they were just in the very early Innings when they were going through YC But for us that's found the market fit Right so we're not asking like hey have You spent 10 years in stockto compliance But it was a problem you experienced in Some role and you've kind of tested it As whether it's a problem with at least 30 to 40 other teams we have some sense For that and you're technical enough to

Solve it right that's that's kind of What we mean by founder market fit yeah Totally and I think it's actually Interesting as sitting here as somebody From TechCrunch we're a little bit Complicit in that right we do a lot of Writing about Elon Musk who's done I Don't know how many companies and God Knows how many different fields you're Like there cannot be perfect founder Market fit in all of these and I imagine That if you get he probably wouldn't Apply to a y combinator but if he did You ended up with an application that is Like you're all over the place what's Going on So I would actually a great example of That is Blake the founder of boom right He is a vice founder Um So Blake's background for those of you That don't don't know he actually Started a company in the coupon space in E-commerce he sold it to Groupon that Has also worked at Amazon and then here Is a guy who's building supersonic Jets But the amount of work he had done on You know put into understand the space What was going to be different about the Supersonic jet this time that he's Building he also has had a passion for Flying planes and deeply understands This was very evident in the application Yeah and so then it we knew that this

Was a battle of wills he also had Started the company a year before he Went through YC and he had sort of Enough proof points in the application That he had deep understanding of the Space so we did accept him yeah Thank you Um how much weight do you typically Place on a kind of Ip right so pending Or issued padded filings and that kind Of thing but we don't I just think that People tend to Sometimes over rotate on this thinking a Patent is going to kill the company or IP is going to kill the company those Things never kill the company in our Experience internal disputes and Ignoring customers the single biggest Reason companies die not because the Competitor launch not because of Ip so We know I was just saying they're way More efficient ways of killing companies Than IP Um Does white combinator ever fund startups That aren't deeply software based That are not deeply software based you Just mentioned boom so I guess we kind Of yeah no I don't think I think what we Are I mean we've funded probably more Than 3 500 companies so we've definitely Funded all the outliers that you can Imagine Um I think that when we say deeply

Software that's like heart attack but What as I said like what we are looking For is a Are you do you when I say technical Co-founder it's not just software Founder like do you have domain Expertise in whatever you're doing so in BIO it would be something deep in BIO And do you have have you demonstrated That you can work on products like that Which especially require FDA clearance Um in the case of hard tech it's like do You have deep understanding of the hard Science that's behind it So that's kind of how we look now that Is the certain uh element we use which Is like we should also be as YC able to Help them in those 12 weeks so we use That lens so if it's totally an outlier And we don't oops and we don't Understand sorry about that we don't Understand then you know we may not be The right fit and we may not get it Either so we are very transparent with The founders then yeah so in this app uh There's a feature where people can Upvote questions and now the top one is In all caps okay I'm gonna try and not Shout it but it says what happens in The Elusive 12 weeks that's why I see well Actually this is it's like you know you Ask a YC founder before they go through YC and they have this impression of what Happens in 12 weeks and after demo day

Whenever I ask them what do you think Happened in 12 weeks they were like a Woman I didn't know this was what was Going to happen so what happens in the 12 weeks is essentially look there are Only two things we want you to do write Code talk to users That's it it's as disciplined as that And we divide you into groups so there Are about four groups you have a peer Group every two weeks you have a group Officer check-in with the group partners And the rest of the group you also do Lots of officers uh with the group Partners but really in that 12 weeks our Goal as partners is scheduled to focus Focus is launch launch why are you Waiting you know perfect is the enemy of The good get to a launch have you at Least recruited 100 users what's their Feedback if it's B2B SAS probably 10 Users right so depending on the product It's different uh what do you learn from Them okay if it's really working well Can you scale can you get it make it From 10 to 30 users next week so that's Really what's going on and when I asked Founders at the start of the batch they Think there's going to be this whole Programming and there's lots of parties No write code talk to users get ready For demoday at the end of 12 weeks That's it I love the Simplicity we should just do

More of that I love that Um I think I know the answer to this but I'm going to ask you anyway is it better To prove out an idea and then apply or Apply as early as you possibly can There is no right time to apply so I Would apply we've accepted all forms of Teams teams with ideas which they pivot We have a lot of pivots I mean you guys Are going to hear from brex next which Had applied as a VR startup into IC and That's how we took them in we believe in Strong teams teams come first we do want To test a little bit of the founder Market idea and what we are really Testing there is is this a tar pit idea Do they really understand what they're Doing sometimes when we accept teams we Tell them We don't like your idea would you be Open to a pivot because we don't think You you actually have deep domain Expertise so we do that too so I would Say apply at the first instance you Think you want to start and by the way The other truth is we've accepted Companies that apply the second and Third time in fact a good portion of YC Companies that get income and at the Second and third time because they've Kind of kind of done at least two Iterations of their idea And so when you ask somebody to Pivot Does that mean pivoting from their idea

Into their domain expertise or like how What does a pivot service look like I Mean Um so basically for example brexit is a Great example right they came in as a Virtual reality startup and we thought They're amazing Founders that built Stripe for Brazil they know fintech and They're doing virtual reality so we said Would you be open to a pivot now of Course really good Founders often say Yes if this doesn't work we're open to a Pivot but it's not like they walk in day One and they say you have to pay that It's kind of you know the founder has to Own the idea I think within three weeks Of them starting they realized they had No clue about hardware and they said Okay this is not the company we should Work on and then they started Brainstorming fintech ideas so that's a Pivot and it worked out yes I mean Gusto was a pivot yeah there's a Lot of successful YC companies that put Up a vet during the batch yeah and but I Think that speaks to you having a Particular you as an American manager Having a particular strength for picking The kind of Founders who are Who are showing promise right and Showing like what is that X Factor what Is the thing that makes you go actually Love the founders hate the products try Over kind of thing I think that if you

Think about it one the number and PG is Written about this the number one thing A Founder needs to succeed is Determination it's not intelligence Actually it's more determination now of Course we need they need to have domain Knowledge and it needs to translate into Execution but determination solves a lot More problems so that's what we are Really testing for in both the Application and the interview process if You look at our interview we don't ask You to come pitch your company again We've already read your application and The questions are hard questions and so What we are looking for there is we know As a Founder you don't have the answers To everything And so and most Founders almost all Founders are optimists but when can they Be rational and say oh that's a good Question and I don't know the answer to That or I need to double click on that And learn along the way because the most Important thing is a combination of Determination and resourcefulness to Learn along the way to scale because There's going to be a lot of surprises In your journey so that's what we are Testing for I love that as somebody Who's not particularly intelligent but Very stubborn I feel like you just gave Me some hope there into it Um will y combinator ever go back to

Being in person we are in person We already the last patch actually had Significant in-person competent in fact We just announced the next patch will Also be in person so we do have uh a big In-person company and we have a weekly Uh Thursday meeting where the founders Meet uh regularly on a weekly basis and We started that since the last batch Yeah love it Um what level of feedback do you give on Rejections or people who don't make it To the end of the application process We so one thing YC really has I think Strives to do not just on the early Stage we do that even at continuities we Are very honest with feedback there's no Sugar coding we tell you assets what we Think we are going to be wrong some uh You know many times but at least we are Very honest whenever we say what's what The exact issue is I think when it comes To application pretty much everybody Gets feedback sometimes the feedback may Sound dissatisfying but the reality is We get more than 15 000 applications and So if that Clarity in that application As to why you're working on the idea and The composition of the team doesn't Exist you know the middle of the pack Can find our feedback frustrating we Hear that but it's just simply that I Wouldn't read and read more than that Like the really clear applications

Automatically surface to the top for Tech wrench I do the pitch deck teardown So I look at a lot of pitch decks and It's so Incredibly obvious if there's a good Pitch there you know there can be Mistakes there can be like quirks but if It's good it's good and it's like it Shouts basically Um we only have a few seconds left but I Have a a question here that I know the Answer to so I'm going to ask you anyway Um do you fund startups from Southeast Asia or developing countries or do People have to be in the US no Um in fact I think 40 more than 40 of The batch last batch the most recent Batch was from outside the US we fund Companies from everywhere we have a lot Of companies from Southeast Asia I think Our second largest African pool is Actually India we funded lots of Startups in latam so no YC is global I could sit and talk to her and ask you Questions all day but we're out of time Thank you for being a wonderful audience For sending me way more questions that I Know what to do with Have a beautiful day

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