I’ve co-founded two YC companies and learned a lot in the process, so here are my key takeaways
from Y Combinator. Start Small: It can be easy to focus on big companies that you might be
competing with in the first days of starting a company, but that’s a mistake. Big things have
small beginnings. Every company starts as nothing more than an idea, but what makes
companies get really big is consistent compounding growth over a long period of time. Growth rate is
by far the most important factor in a startup's success. It’s what every venture capitalist values
most when considering an investment so you need to start thinking about growth immediately. Focusing
on growth rates instead of absolute numbers can be extremely motivating. This is because,
the smaller you are, the easier it is to have a high growth rate. If you only have
a few hundred users, doubling that number in a month is completely doable, and that will start
compounding pretty quickly. As you get bigger, doubling every month might not be possible,
but 20% monthly growth is usually sustainable for companies with strong product market fit, and 20%
monthly growth works out to a ten x increase over a year. I’ve personally seen this with my YouTube
channel. The number of subscribers is still really small, but I’ve been growing the channel
20% per month on a very consistent basis, which is extremely promising. So if you’re watching this
and you’re not subscribed, please do me a favor and help me keep that growth going. Y Combinator
is just 3 months long and many enter the program with just an idea or basic prototype. Without
fail, the companies that get the most attention at demo day have the highest growth rates. It’s
way better to be a company that went from making $1,000 at the start of the program to $10,000 in
just 3 months, than be a company making a million dollars without any growth. If you’re ever feeling
like you’re in a David vs Goliath situation, going up against massive competitors, just compare
your growth rates. The biggest companies in the world aren’t growing 10x in a year, but you can
if you build a great product that people love. And that brings me to lesson number 2:
get into build mode. No job or college degree can fully prepare you for being the founder of
a startup, they are all too specialized. Building a company from scratch requires bringing together
so many different skills and this is one of the hardest, but also most rewarding aspects
of entrepreneurship. Paul Graham says that “if you want to start a startup, it’s good to know about
multiple, unrelated things. Startups often depend on 4 or 5 different kinds of knowledge,
and it’s great if they can be all found in 2 founders” - it’s rare to start your company
already knowing about all the relevant disciplines required to succeed though,
so that’s why it’s so important to get into build mode. When I say “build mode” I mean being willing
to roll up your sleeves and learn the relevant skills to accomplish the task in front of you.
You might be a great programmer, but no one will sign up for the app you built if you can’t figure
out how to promote it. So you might need to learn how to write compelling blog posts or run digital
ads in order to start growing. When I started my first company, I wasn’t a very good programmer. I
was able to throw together basic prototypes, but I didn’t have much experience actually growing a
digital product. So I spent months coding and eventually got to a point where I was pretty
comfortable writing Python. I’m still not an expert, but I know enough to be dangerous and that
helps me manage engineers effectively. My second time through Y Combinator was a little different.
A few months before I started YC, I was managing a large team at my previous company and had lots of
support. My day to day was mostly management and I really wasn’t in that “builder” mindset anymore.
The first company had scaled to over 50 employees and it didn’t make sense for me to spend time
writing code when I had a whole team of talented developers who were way better than me. As soon as
YC started, I really focused on shifting back into build mode. Since I was comfortable programming,
I spent time learning more about marketing and branding. I figured out how to produce video
content, which is really valuable when you’re selling products online, and also led to this
YouTube channel. You shouldn’t be afraid to learn new things when you’re working on a startup.
You’re not going to be an expert, but learning about a particular discipline will help immensely
when you eventually start hiring. All of this will be a lot easier if you follow lesson 3: avoid
distractions. Starting a company is a full-time endeavor. In some cases, you can get started
while still working a 9 to 5 or finishing college, but once you start taking your startup seriously,
you’ll quickly realize the value of focus. When I went through Y Combinator, moving to the bay area
was a requirement, and one that I really benefited from. I was completely broke, which meant living
in a fun part of San Francisco was off the table. I wound up moving to a run-down house in Sunnyvale
which isn’t exactly a nightlife hub. That was a huge benefit though. With no distractions, I was
able to focus entirely on learning new things, writing code, and testing startup ideas. I had
tried to work from other places but never had much success. There are always fun events happening on
college campuses and working from a friend's house wasn’t productive for me either. There is a lot of
discussion about burnout in the tech world, but I don’t think that really applies to the early
days of a startup. If you’re working on a big idea that you’re really passionate about, you shouldn’t
burn out. When I started my first company, I spent plenty of late nights programming, but it didn’t
feel like work to me. I really enjoyed the process of learning and building new things I thought of.
Now, this is all a lot harder if you’re completely alone, which is why co-founders
are so important. And lesson 4 is to really focus on building relationships with your co-founders.
The experience of building a startup is very unique, and it can be hard to relate to if you
haven’t done it before. This is why entrepreneurs love to work with venture capitalists who have
actually started companies before. And having a team around you that feels the same way about
avoiding distractions and just building is so important. But you don’t need to be spending
every waking hour working in front of a computer. Getting to know your co-founders on a deeper level
is one of the most critical things you can do. Ideally, you’ll already have experience working
with your co-founders when you start your company, but it doesn’t matter if you’ve known each other
for years, or just a few months, you can always build a stronger relationship. Understanding
what really motivates a person is vital to any good working relationship, and motivation is a
complex and emergent property. Oftentimes, what drives a person to build a startup could trace
back to their childhood or upbringing, and you usually don’t get to know someone on that level
around the watercooler. Not every conversation has to be a psychoanalysis, but building trust between
the co-founding team will pay dividends for years if it’s done right. Plus, one of the amazing
things about bringing talented people together is that their experiences can cross-pollinate one
another. In that Sunnyvale house we had people who had studied economics, biology, computer science,
and electrical engineering. We had a great time just hanging out and talking about what we had
each learned in college and trying to summarize complex topics succinctly. Everyone has different
life experiences and sometimes great things can come out of combining disciplines. Taking
advantage of these unique situations requires being ready to iterate, which is lesson 5. We
tried dozens of startup ideas in that hacker house and every time we iterated on our ideas we got a
little bit better. It’s always tricky to know when to stay the course versus when to change
directions, but iteration doesn’t always have to be a binary choice. You might have a crystal clear
vision of what your product should look like, but if users don’t love it and you’re not growing,
something needs to change. You can’t be afraid to iterate and course correct as needed. In 2012,
nothing was working for us. We spent months building our first product,
only to completely flop when we launched. So we increased our pace of iteration. The next product
we launched in just 3 weeks. It failed again, so we decided to try and test a new idea every week.
By speeding up the pace of our iterations we figured out what was actually required to get
feedback on new ideas. Ask yourself: do you need to build the entire product before launching?
Or would a landing page do the trick? Sometimes all you need is a blog post describing what you’re
planning to build. If there is real demand for your solution, people will comment on your post
and encourage you to move forward. It’s useful to set clear deadlines. Y Combinator is itself
essentially one big deadline: demo day. You need to get up on stage and present your company to
hundreds of investors. Clear communication is a must, so you have to iron out exactly what the
problem is and how you’ll solve it. You’re also expected to show some metrics and they better be
up and to the right. YC has weekly dinners and meetings with partners, which should force you
to start thinking about achievable milestones. You never want to show up with zero progress
because you got distracted. Even if your latest iteration takes you in a different direction,
that could still be solid progress if user satisfaction has increased. One of the biggest
benefits of Y Combinator is the competition. All the companies are on a level playing field:
3 months to deliver the most progress possible. You should definitely have longer term goals in
mind, but thinking in weekly sprints can really help keep you focused on what’s most important.
And at the early stage, there are really only two things that are important: your product
and your users. Every week you want to be making your product better in some tangible way and
then increasing the number of users getting real value from your product. That “real value” part is
important. There are plenty of ways to game the stats and make it look like you’re growing when
you’re really not. It’s vastly more important to get a few dedicated users who really love
what you’re building as opposed to adding more and more users who are indifferent about your product.
There are tons of activities that feel like work, but actually do nothing to advance your company
at the early stage. When you’re just a team of co-founders and an idea, you really need to resist
the urge to professionalize. This can be really tempting, because there is immense social pressure
to fulfill a set of criteria for what “work” looks like. Things like an office, business cards, and
fancy equipment will all make your company look more professional, but might do nothing to improve
your product. If all of your friends work at big companies, they might think you’re a complete joke
for spending all day coding in a run-down hacker house. Although that’s changed a bit over the last
year. Getting an office or business cards may make you feel like you’re more of a “real” company,
but for many startups, the customer just doesn’t care about the company behind the product,
they just want it to work. Pretty much every YC company is a mess behind the scenes. No one has it
all figured out from day one, so don’t stress over this. Every successful company goes through rough
patches and has to work through difficult issues. Entrepreneurship is never easy. But spending time
and money trying to make yourself look more professional than you are is often a waste of
time. To be fair, certain businesses might need office space earlier than others, or business
cards to sell into enterprises at conferences, but you should really think about whether what
you’re doing will have an immediate impact on your startup. And that brings me to lesson 8:
you need to learn how to synthesize advice from different sources. This one is a bit meta,
but you have to develop a skill for assessing what’s actually relevant to your startup. It’s not
uncommon to hear an amazing story from a unicorn founder during YC and think that you need to apply
their strategy to your business, but this can be a mistake. YC has lots of incredible partners,
each with their own unique startup experiences. These experiences obviously affect the advice
that they give and you need to figure out how to apply new ideas to your business specifically. No
one will ever know your startup as well as you do, so you shouldn’t be afraid to discount a certain
lesson about startups if you think it just doesn’t apply. Now, startup advice comes in many forms.
Some is extremely high level and battle tested throughout decades. This is advice like “build
something people want” or “pursue a big market”. Those recommendations are pretty hard to argue
with, since they are so useful. It would be very odd to try and build a startup based on
the idea of “building something people don’t want” - but hey, nothing’s impossible. Where
you want to be more discerning is when it comes to tactical startup advice, like go-to-market
strategy. The best way to launch a new startup is constantly evolving, so recommendations like
“create a high-production value video” don’t last too long. As soon as a specific growth strategy
becomes widely known, it usually stops working. Once every startup is making launch videos,
they lose their effectiveness. YC can be a bit like drinking from a firehose. You’re getting a
constant torrent of feedback about what you’re building, and that can be intense at times. If
you’re not doing well, you’ll know it. That’s why this last lesson is so important: Enjoy Yourself
Startups are a long journey. Dustin Moskovitz, who co-founded Facebook, was once asked what it
was like to be part of an “overnight success” like Facebook. I still love his answer, he said: "If by
'overnight success' you mean staying up and coding all night, every night for six years straight,
then it felt quite tiring and stressful." No matter how fast your company is growing,
there will always be a ton of work. In fact, oftentimes, the faster you grow
the more work you’ll have to do. There are always growing pains to work through and
you’ll be constantly inundated with challenges. That’s why it’s so important to try and find
a problem that you really love working on. And I’m not just talking about the mission.
My first company was in the education technology space, and I thought the idea of helping people
learn would be extremely energizing. The goal was exciting, but the day-to-day of trying to sell
products to schools was completely unsatisfying to me. In order to be able to stay motivated for
years, you need to love the mission, the industry, and the day-to-day. This means you should never
chase trends. Even if you see a certain type of company getting funded every month,
you shouldn’t even think about starting a company in that industry unless you’re really
passionate about the space and could see yourself really thriving in that environment for years.
If you want to chat about YC, just leave me a comment below or DM me on Twitter,
and please check out this recommended video, the YouTube algorithm thinks you’ll really like it.