Y combinator (YC) is the biggest and most well known accelerator in the world. They provide seed funding for startups.
Seed funding is the earliest stage of venture funding. It pays your expenses while you’re getting started.
Startup School Library
YC’s Startup school is a 10 week online course that teaches you how to start a startup. To get on the course you have to apply and hope you get accepted. However if you’re not accepted, you’re still able to access all the resources used on the course in YC’s startup school library.
Over the last few months I’ve gone through every resource in the library and noted down the most important points applicable to someone who is thinking about starting a startup or in the early stages of a startup.
Most summaries of YC’s startup school are quite short, this is long and it’s long for a reason. Think of it as a shortcut to going through the whole course or the library of resources. 10 weeks of work in an hour’s read. Of course this doesn’t take away from actually watching the videos and drawing inspiration from them, but this is here if you’re short on time :).
Ideas
The way to get startup ideas is not to try to think of startup ideas. It's to look for problems, preferably problems you have yourself. The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing.
Ideas in general need to be clear to spread, and complex ideas are almost always a sign of muddled thinking or a made up problem.
There needs to be people who want your idea urgently not just someone that might use it. It needs to be something that a small number of people want a large amount. If you have something that no competitor does and that some subset of users urgently need, you have a beachhead.
Are there groups of scruffy but sophisticated users that are currently being ignored by the big players?
When you have an idea for a startup, ask yourself: Who wants this right now? Who wants this so much that they'll use it even when it's a crappy version one made by a two-person startup they've never heard of? If you can't answer that, the idea is probably bad?
You don't need to worry about entering a "crowded market" so long as you have a thesis about what everyone else in it is overlooking. In fact that's a very promising starting point. More generally, try asking yourself whether there's something unusual about you that makes your needs different from most other people. You're probably not the only one. It's especially good if you're different in a way people will increasingly be.
If you're an outsider you should actively seek out contrarian projects. Instead of working on things the eminent have made prestigious, work on things that could steal that prestige.
Is there any particular problem you are passionate about, get some friends and try to find some solutions to this problem. The first solution will not always be the correct one.
How frequent is this problem and how intense is this problem?
Can you build a simple first version of this product?
Don’t outsource coding; a technical co-founder is very important.
Figure out your financial plan.
If you want to start a startup, ask yourself what's distinctive about you. What unique combination of abilities and interests do you have?
If you're not good at anything yet, consider working on something so new that no one else is either. It won't have any prestige yet, if no one is good at it, but you'll have it all to yourself.
When one company or industry replaces another, it usually comes in from the side. So don't look for a replacement for x; look for something that people will later say turned out to be a replacement for x. And be imaginative about the axis along which the replacement occurs. Traditional journalism, for example, is a way for readers to get information and to kill time, a way for writers to make money and to get attention, and a vehicle for several different types of advertising. It could be replaced on any of these axes (it has already started to be on most).
Make a product that early users love so much that they tell other people about it. If you make this, you will get growth by word of mouth.
Getting Started
Tech startups need at least one founder who can build the company’s product or service, and at least one founder who is (or can become) good at sales and talking to users. This can be the same person.
Start with something very simple—as little surface area as possible—and launch it sooner than you’d think. Simplicity is always good; you should always keep your product and company as simple as possible.
Get very close to your users. Literally watch them use your product. Sit in their office if you can. Value both what they tell you and what they actually do. You should not put anyone between the founders and the users for as long as possible—that means the founders need to do sales, customer support, etc. Understand your users as well as you possibly can. Really figure out what they need, where to find them, and what makes them tick. Ask them what they like, what they would pay for, what would make them recommend it. Try and do this regularly.
A startup’s early and heavily engaged users are its only real base of strength and chance for growth. Focusing on anything else puts them at an immediate disadvantage to better funded, organized, and wide reaching companies. Find the 100 people that really love what you’re doing and focus on them, try and grow 10% every week.
Focus on active users not the number of registrations.
When there’s disagreement on what to do, ask your users.
You need to have great execution and the prime directive of great execution is “Never lose momentum”. You do this by making it your top priority. The company does what the CEO measures. It’s valuable to have a single metric that the company optimizes, and it’s worth time to figure out the right growth metric. If you care about growth, and you set the execution bar, the rest of the company will focus on it.
Make sure you have a small number of goals that you want to achieve and everyone in the company should know this.
If you have a free product, don’t plan to grow by buying users. You need to make something people share with their friends.
Find a small market where you can get a monopoly and then expand quickly.
How do you find users to recruit manually? If you build something to solve your own problems, then you only have to find your peers, which is usually straightforward. Otherwise you'll have to make a more deliberate effort to locate the most promising vein of users. The usual way to do that is to get some initial set of users by doing a comparatively untargeted launch, and then to observe which kind seem most enthusiastic, and seek out more like them.
Idea – Product – Team – Execution
Think about why this is the perfect time for this particular idea and why now?
Any company that’s like one company with just a tiny difference usually fails. E.g. X with better design.
Move fast and be obsessed with quality. Ship product and launch new features on a regular basis.
Don’t worry about a competitor at all until they actually have a product that is better than yours.
Make potential users try your product as soon as they say they’re interested.
You should take extraordinary measures not just to acquire users, but also to make them happy. For example, send a thank you note to your first few users. The experience of being your user should be insanely great. You can and should give users an insanely great experience with an early, incomplete, buggy product, if you make up the difference with attentiveness.
The best early adopters are usually other startups.
Founders of B2B startups should sometimes take over-engagement to an extreme, and to pick a single user and act as if they were consultants building something just for that one user. The initial user serves as the form for your mould; keep tweaking till you fit their needs perfectly, and you'll usually find you've made something other users want too.
A big launch doesn’t matter. Launch your product right away; it’s the only way to fully understand customers’ problems and whether the product meets their needs.
Look for a way in which you can accomplish 90% of what you want with only 10% of the work/effort/time. If you search hard for it, there is almost always a 90/10 solution available. Most importantly, a 90% solution to a real customer problem which is available right away is much better than a 100% solution that takes ages to build.
When it comes to customers most founders don’t realize that they get to choose customers as much as customers get to choose them. Recruiting 10 customers who have a burning problem is much better than 1000 customers who have a passing annoyance. It is easy to make mistakes when choosing your customers so sometimes it’s also critical for startups to fire their customers. Some customers can cost way more than they provide in either revenue or learning. For example, Justin.tv/Twitch only became a breakout success when they focused their efforts toward video game broadcasters and away from people trying to stream copy written content.
If you have not yet made something your customers want – in other words, have found product market fit, it makes little sense to grow.
Don’t worry if your company seems badly broken. Nearly every startup has deep, fundamental issues, even those that will end up being billion dollar companies.
Have a definite goal.
Create an experiment if you can’t make a prototype, e.g. a website. Doing things that don’t scale allows you to become an expert in your business.
Don’t give your product away for free; users will treat the product differently.
Growth
A startup is a company designed to grow fast, the only essential thing is growth.
To grow rapidly, you need to make something you can sell to a big market. That's the difference between Google and a barbershop. A barbershop doesn't scale.
It’s important to know your company’s growth rate. To operate on growth is to have a clear goal. You want to make sure everyone is pointing in the same direction in terms of growth.
The best thing to measure growth rate is revenue or active users. Pick a growth rate you can hit and try to hit it every week. Do whatever gets you on your target growth rate. The best rate to focus on is monthly active users (MAU).
Growth goals need to be an absolute number and not percentages. Break down this absolute goal into sub goals. E.g. new + retained monthly active users to reach active users goal; you want to set a goal that is a stretch, but at the same time motivates the team such that it is realistic to achieve. The goals must be communicated with the entire company so everyone is aware what they need to achieve.
Network effects really drive growth, as market places grow old users can reopen accounts. Add categories to increase growth, for example amazon started with books and then added categories.
Focus on retention and what drives retention. How quickly can you drive the user to that magic moment that drives retention? Ask users what the best reason is for them using your product. Figure out the retention % you need to have for your product.
Don’t focus on growth if you cannot retain customers, if you can’t retain first focus on retention.
Retention checklist: Pick a leading indicator of revenue and repeat behaviour. E.g. rebook rate (% of Customers who rebooks after first booking). Pick the right time period and this might change depending on business. Identify an initial user action within period 1 (what do they do that is leading indicator for revenue). Identify a follow on user action in period 2 and identify % that is still engaging in that action in period 2.
On your retention curve long term retention should be stable and parallel to the x axis. Retention should be parallel to companies in your specific vertical. Retention of newer cohorts should be performing better than older ones, this means you’re improving your product and value proposition.
Retention curve – look at the percentage of MAU who still use your product after a month, measure every day after the month. If the curve is parallel to x axis then you have product market fit. Measuring Daily Active Users (DAU) may be better than MAU when measuring retention.
Understand everything that is going on with your product, identify the opportunities from the metrics you look at, see where there are gaps and execute against it. You should understand the numbers as to why growth is this way even if it’s up.
Your intuition will run out and you will want data. Research and data allows you to gain empathy for your users. You can predict the future with data, e.g. what revenue you’ll gain for customers in the future who start to use multiple categories.
First 100 users: Ask your friends and make them pay, research and reach out to who you’d like to have as your users. Social media and PR initially are good and buy ads if you get targeting right.
Use SEO and think about the return of investment for these growth techniques. You should care the most about marginal users in terms of notifications, not power users.
Make use of the other features on your site to trigger someone to use your product.
Find your best customers and then use Facebook to find similar types of customers that you can target.
Make sure you target properly, it’s not always what it looks like with some data.
Put your registration form in the landing page.
Network effect is the value the network can give you. It’s very hard to beat an app with a very strong network. The network effect is assessed by the barriers to entry. This is how difficult it is for someone else to destroy your network effect and the barriers to exit, which is how difficult it is for users to leave your product due to losing the gains from the network effect. You need to make sure that as your network grows your initial core users should be using it more and you should focus on them as you grow.
Who is that one person who is going to get everyone else using your products?
“Growth hacks,” like Hotmail’s inclusion of a signup link in its user’s default email signature, can be extremely helpful in driving viral growth early in a product’s path to product market fit (PMF).
Identify growth channels by asking these two questions:
How do customers find solutions / solve this issue today?
How do your best users use your product today? Can you do something to get more such users to discover the product quickly?
Referrals are the top channel to use within your first year.
The 4 most important elements you need to kick off a growth team are the following:
Clean data set to track key metrics and goals
Segmentation tools to be able to understand and segment the customer and activity at a granular level
Rigorous experiment dashboard to analyse the experiment results and the statistical significance behind them
Peer review process to discuss and analyse findings
Dashboards contain:
Experiment group metrics
Control group metrics
A set of metrics defined to track and measure statistical significance
Initially, you can use tools like Mixpanel, Optimizely, Superset and Chartio to track your experiments.
Your first 100M users will look a lot different from the second 100M users. Therefore it is important to do the following:
Solicit real time feedback from users
Use tools like Inspectlet to track UX
Pay attention to how users use the product internationally. There may be cultural nuances in addition to language gaps (for example, people in Japan do not like to post photos of people without their permission and products may need to adapt to local taste).
Document every single use case. What is perfectly normal for one group can be very different for another group of users.
As you scale it is important to add dedicated user researchers to the growth team.
Create your own competition – build what you think will compete with your product.
Design for groups – features that facilitate group interaction e.g. friends nearby, speak to someone at random and transfer contacts (FB and Instagram).
Extend features from users inner desires.
Be an avid user of your own product so you can solve your own problems.
The more time you hit someone with the same message, the less they’ll click on it.
Growth channels to explore – Is this a rare behaviour that people use google to find a solution? E.g. buying a house, use SEO for this. This doesn’t necessarily work for things that are used everyday
SEO matters and will matter even more.
SEO - What is this thing related to, to make sure that there is a path for that page to be found by a bot? Create content for SEOs.
Content writing – You want to come up with anything related to that service.
If you really know your customer you will be able to understand what people are looking for and use that to optimise. Use Google keyword planner, search for key words in relation to what you need and look at traffic.
Use analytics to look at URLs that are getting most traffic and then assess their key words. Images just help with UX in terms of content marketing. Make sure images are tagged with key words.
You can’t hope for organic traffic, in the mean time you can generate paid traffic. You can share on social media and someone may use the content, from there google may discover it. Get listed on all directories.
Create interesting content and people may link to it, a good metric is whether people share it on social media.
Take into account that people are clicking through on a smaller screen like a mobile.
You want to be on the first page for what your specialty is.
International SEO – Content should be locally translated, make sure to post in a new sub directory dedicated for that language.
Google the guide on SEO best practices.
Email, SMS and push notifications all work in the same way. Do not spam users, email companies put you in a spam folder and it’s very hard to get out. What is the compelling subject line you’re going to put there so people will open your email?
Newsletters are stupid. The most effective types of emails are notifications, things you should receive.
Don’t make it hard for people to opt out of push notifications.
Experiment to see what small changes change how your product is used and do as many as possible.
Only invest in performance marketing if you have revenue, if you do not, don’t. If you have revenue work out how much it costs to acquire each user (Customer acquisition cost). If you have a free product, ignore marketing.
You shouldn’t be doing brand marketing in the early days. Don’t think about growth channels if you have less than 500 users. Don’t have a growth team if you don’t have product-market fit.
Product market fit – Identify the metrics that represent the value users get from the product, measure the repeat usage of this.
There are only four channels to manage at scale: FB, Instagram, YouTube and google.
Can you make a list of all the people in the world that would use your product?
Referrals invite example – social proof – clear value – urgency – exclusivity – social proof.
Create an incentive for a user to invite their friends, and for their friends to accept the invite. Rewarding both sides is crucial — if the incentive is missing for either side, it won’t catch.
Appeal to users’ sense of vanity and competitiveness to encourage them to spend more time using your product and invite others into it. Expose metrics for them to drive up.
Freemium – The key here is to enable users to experience enough magic in the free version to see the value in upgrading, but not too much so they don’t feel the need to upgrade at all. LinkedIn is an example company that does Freemium well. It’s not uncommon for startups to build a great free product and say they will “figure out monetization later on.” This is a recipe for failure. Having a monetisation roadmap and strategy from the get-go is crucial for any freemium business.
Freemium – Listen to feedback from people who are paying for your product. It’s Good to have a free plan if you’re going to get leads, if you have low number of users using your free plan you don’t need it.
Virality: If your startup is building a consumer product, your product has to be viral.
Apps built for collaboration or communications between co-workers are inherently viral. Some have a single user mode, but additional value is realized from the product with multiple people.
Examples of virality -
Your product sends messages of some kind. You attach a promotional signature to each message, linking back to your product.
A hardware product set in a highly visible location that is exposed to potential customers.
It’s fun to have fun with content – it’s hard to know what works. Pick a form of content and be great at it, you don’t need to do every type of content. What are the top three things your audience reads? To find out the best platform ask your customers which platforms they use the most.
Sales & Marketing
It is easy to be good at sales if you are really passionate about your product. With sales always show up in person whenever it’s important.
Find out who will be your innovators and early adopters. Attend conferences, get the attendee list and schedule meetings with them for the event.
When you get somebody on the phone, remember to shut up. You don’t need to speak about every feature you have etc. Do as little speaking as possible, ask a lot of questions. Do everything you can to find out what this person needs.
Religiously follow up – Literally follow up as much as possible e.g. 30 times. Follow up under a week; it should be thoughtful and personalised. Get people to a yes or no as quickly as you can, maybes will kill you. Don’t quibble over minor points when sending over contracts and executing it.
If someone says they will use your product if you add a feature, don’t add the feature and then go back to them. Ask them to sign a contract with the feature in the agreement or tell them you will do it if you get enough demand.
If someone asks for a free trial, say you can’t do that but then say you do annual deals where if they’re unsatisfied in the first 30 days you’ll give them their money back.
The 30 second pitch is how you speak about your company - what does your company do? How big is the market? How much traction do you have?
The 2 Minute pitch is for people who you want to raise money from or want to work for you - A Clear 30 second pitch, unique insight (opportunity to tell something they don’t know), how you make money, team and the big ask (know your stuff about fundraising).
PR
Only do Founder-led PR.
Press is a not a scalable user acquisition strategy.
With press you should have a targeted audience and goals, such as investors, customers and industry. Have a story, milestones/metrics, and stunts, hiring announcements and contributed articles. Pitch a story that people want to read. You want to be introduced to a reporter, better to get in touch through someone rather than cold emailing. Get a reporter to meet you face to face. No need for PR companies. Make sure the press is worth it.
Never outsource the key messaging of the company to a PR firm or your head of marketing. You should figure out what the message of the company is going to be yourself.
Pick three or four journalists that you develop really close relationships with that like and understand you, then contact them yourself; they’ll actually pay attention and care about the company.
Focus on content marketing after you make something people want, when you don’t have a high churn rate.
Pick a goal in terms of content marketing – engagement or conversions. Set up mixpanel to analyse analytics and install a Facebook pixel. Brainstorm when doing content so it doesn’t sound similar to others.
Ask for headlines. Tell everyone to remove their names and pick the best ones.
Remember you’re competing with everything else on the internet. Promote your content as much possible (don’t be lazy).Better to put your content on your own website than medium.
Leadership
As a founder you NEED to have ABSOLUTE CONVICTION of your product and your vision.
Building a company is somewhat like building a religion. If people don’t connect what they’re doing day-to-day with a higher purpose they care about, they will not do a great job.
Energy is important; you can tell how the company is going to go by the energy of its employees. You have to believe in what you’re doing. Perseverance is important.
The CEO’s job is to define the Mission (purpose), Strategy (direction), and Metrics (pace and performance).
Once you’ve written “Mission-to-Metrics” for your startup, and gotten feedback from your leadership and other key employees, you have to start communicating it to everyone regularly. You have to reiterate the Mission-to-Metrics much more than what feels reasonable, which may run counter to your instinct to be efficient. Your employees will not internalize the message unless you communicate it constantly. The real test is not simply whether employees can repeat it, but whether they can make good decisions in your absence based on the context you have provided.
CEOs should encourage co-founders and early employees to work together to codify a set of values and behavioural norms that feel authentic and aspirational to everyone.
Great leaders think and communicate clearly. They describe a vision of the future that people find compelling to work hard to achieve. Great leaders spend hours preparing their internal communications. They don’t just wing it, no matter how naturally talented they are as communicators.
When looking to hire leaders, try to meet as many of the best people in the field as possible as a way to sharpen your recognition skills. Spend as much time as you can get to know executives that you are considering hiring.
Have an efficient mechanism for reaching a decision in your company, it doesn’t necessarily have to be consensus based.
People & Culture
Transparency is important in company culture. The first 10 people you hire represent you and what the culture of the company will be. Look for people who you want to work with, who are talented. Also be transparent on why it will be hard when they join. Use referencing as a tool to assess someone, for example ask referees how they would rank this person at what they do?
Get to know someone you want to hire as a person.
What is company culture? The everyday assumptions, beliefs, core values and behaviours/actions of each member of the team in pursuit of your company mission.
As a leader ask yourself what personal values are most important to you? What are the most important values for business success? What values will you look for in employees? What could never be tolerated? It should be uniquely tied to your mission. Think harder, deeper, and longer about your values.
Build a team that’s so talented that it makes you uncomfortable and you have to raise your game.
What is different about you to every single other person? Use that to establish your values. You want diversity of backgrounds, age, but you don’t what diversity of beliefs.
You should spend the time to learn a role before you hire for it. If you don’t understand it, it’s very hard to get the right person.
Look for smart and effective people. Have someone do a day or two of work with you before you hire them.
As a founder, you’ll assume that everyone will be as excited about your company as you are. In reality, no one will. You need to spend a lot of time getting candidates excited about your mission.
Recommended reading - Elad Gil – High Growth Handbook
Product
The first thing you should do is think about the industry that you are getting yourself into. Whether it is big or whether it is huge, you should really immerse yourself in that industry. Read all the companies in the industry’s financials and quarterly reports. You should become an expert in your industry.
Before you even create a product or before you put code down, you should really storyboard out the user experience of how you are going to solve the problem. And that is not just meaning the website itself, it also means how does the customer find out about you. It can be through an ad or word-of-mouth, and then they come to your site and they learn more about you. What does that text say and what are you communicating to them when they sign up for the project and when they purchase the service? What are they actually getting from your service or product? After they finish using the product or service do they leave a review or do they leave comments? You need to be able to go through that whole flow and visualize in your head what the perfect user experience is. And then put it down on paper and put it into code, and then start from there.
What's the right approach to new products? Pick three key attributes or features, get those things very, very right, and then forget about everything else. This advice probably only applies to consumer products (ones where the purchaser is also the user -- this includes some business products)
The best companies create a market. Find a hidden need, what are you a substitute for; what need are you serving better?
To get feedback from users talk to people who have consciously chose not to use your product.
The goal of talking to users is getting to understand what they really want, not what features to build because users don’t know what features they want. Listen to customers, not their solutions. Ignore their solutions.
Interview a user to find out what feature you should build. Once you've talked to about six to eight people, you are usually about done. It's unlikely you're going to discover a bunch of new information, which is why it is important to talk to different extremes of people. Don’t show users your product, you want to learn to guess what’s in their heads and avoid putting things there. Talk to who you need to speak to, not just who is available. Record the interviews, also interview users who are already using competing products.
Get people to give you their credit card and I guarantee you they are actually interested in the feature. Focus on the values that help you get that first dollar to acquire that first user. MVP – Minimum viable product – Make a video of what you’re going to do if you can’t build it yet.
An MVP is not just a product with half of the features chopped out, or a way to get the product out the door a little earlier. In fact, the MVP doesn’t have to be a product at all. And it’s not something you build only once, and then consider the job done. An MVP is a process that you repeat over and over again: Identify your riskiest assumption, find the smallest possible experiment to test that assumption, and use the results of the experiment to course correct.
Find out which of your assumptions are wrong by getting feedback on your product from real users as quickly as possible.
Launch as soon as your product is better than what is out there.
Find your most desperate customers to use your MVP. People who won’t be able function without your product. Try to identify bad customers early e.g. people who are constantly complaining.
It’s advantageous to be small.
Your product needs to be necessary. It shouldn’t be a small and rare problem or customers won’t be inclined to pay. You can have a product that people use but they don’t care about it enough to pay.
If you have viral growth and customers are talking about you, you need to build a good referral program. Where are people learning that they can refer people? Do it when you can see someone is highly engaged in your product.
Think about how relationships work in the real world and how you can apply this to the way you run your business and build your product in this way? First impressions are vital to seduce. A lot of times when assessing a product you never think about what emotions are on the person's face when they interact with this. With customer support, have a function that asks what the customer’s emotional state is.
Have a look at the Little Big Details website. Little Big Details is a curated collection of the finer details of design.
The first sign of product market fit is if your product is broken and people are still actively using it, the second sign is if you’re a SaaS company and you have major brands finding and using you organically and finally when you have very strong customer feedback on your product. If you never have product market fit, your company will die.
How to know when you’ve achieved PMF? When the number of people who are coming back to your product is high and paying customer renewal rates are good. Don’t scale your team past 20 before PMF. Don’t delegate anything important until you’ve achieved PMF and once you’ve achieved it scale aggressively.
PMF is the Venn diagram of ability to grow on one side and retention on the other.
It’s very hard to raise the price of a product; it is very easy to lower prices. Start on the high end. With raising price, just tell them and then raise it. If they have a subscription tell them you’ll lock their subscription for one year if they are on a monthly plan
B2B product
Nail the one use case that everybody has a problem with in Enterprise software. Make sure there is a macro technology trend that you are riding on top off. Find the technology trends that incumbents aren’t going to be able to respond to. Sales should be used to close deals. Make sure you build a product that is as easy to adopt and as viral as possible.
Spend a lot of time with your futuristic customers but don’t build exactly what they’re asking for. They’ll see things before you will. Companies don’t know what they want so don’t build just what they ask for.
To find out the problems an enterprise is having, spend a lot of time with people who work for these enterprises and ask them about their issues.
The last thing you want to do as a company is building out things that the market is going to do better, stick to your core competency and outsource everything else
Figure out how to have a story that people want to tell about your product where they are the most interesting one at the dinner table. And then that person is your sales person. That person is your sales force for you.
How to set up metrics – Don’t use Google analytics. Use Mixpanel (need a technical team), amplitude, heap etc. Everyone should know how to use this, in the start pick 5 – 10 simple metrics. Name the metric something that everyone will understand.
Pivot = changing the customer and/or the problem (rare)
Iterate = changing the solution (common)
Questions you’ll likely need to ask in first 24 months?
Is my product easy to understand
Is it easy to get started with my product
Are people coming back to my product?
Ways to measure if your product is easy to understand?
Did people bother to sign up?
Ratio of single page visits to multi-page engagement
B2B: Do they visit your pricing page
Consumer: Performing A/B test of copywriting.
There shouldn’t be many steps on your landing page to use your product. E.g There is only one step to use Google.
Email and text confirmations when signing up lead to significant drop-offs when, you don’t need to do them at the start. It is important to iterate on your initial UX. Let users in the product before asking them to sign up.
If you have no users, it is difficult to track metrics so just talk to your users and write down every bit of feedback.
Product design
The best design is all about simplicity. It needs to be something that makes the user feel good and it looks good, but it’s also functional. Put your self in the shoes of the people who will look at this product.
Product design – What’s the problem and who’s the solution for? User research
Interaction design – How does it work? Use prototypes
Visual design – how does it look? Minimalism – if it can be removed without taking away any meaning, remove it! Contrast is important to highlight what’s more and less important. Closeness, put things that are related close to each other. Contrast + Closeness = Grid. Get feedback from users on this design.
Prioritize; pick which things are most important so when you can’t achieve something you know what to cut out.
People treat computers like people e.g. be polite. Interaction is a conversation that happens over and over again. People will do what you tell them to do, don’t use a passive voice on your website.
Remove confirm password, it increases conversion!
Don’t reinvent the wheel at the interaction stage, copy what works!
Make sure that you have appropriate designs for Web and mobile.
Where to find low cost visual design? – Fiverr, 99 designs.
Pitching to investors
How do you seem like you'll be one of the big successes? You need three things: formidable founders, a promising market, and (usually) some evidence of success so far.
The most important ingredient is formidable founders. Most investors decide in the first few minutes whether you seem like a winner or a loser, and once their opinion is set it's hard to change. The way to seem most formidable as an inexperienced founder is to stick to the truth.
Convince yourself that your startup is worth investing in, and then when you explain this to investors they'll believe you. To evaluate whether your startup is worth investing in, you have to be a domain expert. Know everything about your market.
Your target market has to be big, and it also has to be capturable by you. But the market doesn't have to be big yet, nor do you necessarily have to be in it yet. But every company that gets really big is "lucky" in the sense that their growth is due mostly to some external wave they're riding, so to make a convincing case for becoming huge, you have to identify some specific trend you'll benefit from.
Keep working on your startup whilst trying to raise money, don’t stop to a standstill.
There are two questions VCs ask that you shouldn't answer: "Who else are you talking to?" and "How much are you trying to raise?” When asked this reply to investors that there are several different routes you could take depending on how much you raise.
There is nothing investors like more than a startup that seems like it's going to succeed even without them. Investors like it when they can help a startup, but they don't like startups that would die without that help.
The way to handle rejection is with precision. You shouldn't simply ignore rejection. It might mean something. But you shouldn't automatically get demoralized either. If an investor gives you specific reasons for not investing, look at your startup and ask if they're right. If they're real problems, fix them. But don't just take their word for it. You're supposed to be the domain expert; you have to decide.
You should give up n% of your company if what you trade it for improves your average outcome enough that the (100 - n) % you have left is worth more than the whole company was before.
In the general case, if n is the fraction of the company you're giving up, the deal is a good one if it makes the company worth more than 1/ (1 - n).
You can use the same formula when giving stock to employees, but it works in the other direction. If i is the average outcome for the company with the addition of some new person, then they're worth n such that i = 1/ (1 - n). Which means n = (i - 1)/i.
Your primary goal is not to describe everything your system might one day become, but simply to convince investors you're worth talking to further.
It's good to talk about how you plan to make money, but mainly because it shows you care about that and have thought about it. Don't go into detail about your business model.
When fundraising, pitch to investors at once, not one by one, to have leverage and tilt the market in your favour.
Founders should raise money when they have figured out what the market opportunity is and who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate. You should raise as much money as you need to reach profitability, so that you’ll never have to raise money again. Certain kinds of startups will need a follow-on round, such as those building hardware. Their goal should be to raise as much money as needed to get to their next “fundable” milestone, which will usually be 12 to 18 months later.
If you are meeting investors at an investor day, remember that your goal is not to close–it is to get the next meeting. Investors will seldom choose to commit the first day they hear your pitch, regardless of how brilliant it is.
Who you are and how well you tell your story are most important when trying to convince investors to write that check. Investors are looking for compelling founders who have a believable dream and as much evidence as possible documenting the reality of that dream.
Generally make sure the slide deck is a coherent leave-behind. Graphics, charts, screenshots are more powerful than lots of words. Consider it a framework around which you will hang a more detailed version of your story.
https://blog.ycombinator.com/how-to-design-a-better-pitch-deck/
Most companies need one miracle to be successful, never pitch to an investor that you need lots of miracles to succeed. When pitching to an investor get down to the details of the product you don’t need to tell a story, crisp and concise.
If you need money early, plan for needing less money.
Create a scenario with personas for investment pitches etc.
Legal and Finance
Don’t incorporate when it’s just an idea, it’s still just a side project and you don’t really know who your co-founder will be yet.
Split equity with your co founder, give appropriate shares and use vesting.
Open a business account ASAP.
Once you take a lot of money it gets harder to change direction. Another drawback of large investments is the time they take. The time required to raise money grows with the amount.
We advise founders who go on to seek VC money to take the first reasonable deal they get. If you get an offer from a reputable firm at a reasonable valuation with no unusually onerous terms, just take it and get on with building the company. Who cares if you could get a 30% better deal elsewhere? Economically, startups are an all-or-nothing game. Bargain-hunting among investors is a waste of time.
If an acquirer thinks you're going to stick around no matter what, they'll be more likely to buy you, because if they don't and you stick around, you'll probably grow, your price will go up, and they'll be left wishing they'd bought you earlier, ditto for investors. What really motivates investors, even big VCs, is not the hope of good returns, but the fear of missing out. So if you make it clear you're going to succeed no matter what, and the only reason you need them is to make it happen a little faster, you're much more likely to get money.
You should treat your optimism the way you'd treat the core of a nuclear reactor: as a source of power that's also very dangerous. You have to build a shield around it, or it will fry you. It's ok to be optimistic about what you can do, but assume the worst about machines and other people. Shielding your optimism is nowhere more important than with deals. If your startup is doing a deal, just assume it's not going to happen.
Even if you ultimately do the first deal, it will be to your advantage to have kept looking, because you'll get better terms. Deals are dynamic; unless you're negotiating with someone unusually honest, there's not a single point where you shake hands and the deal's done. There are usually a lot of subsidiary questions to be cleared up after the handshake, and if the other side senses weakness, if they sense you need this deal they will be very tempted to screw you in the details.
The only way a startup can have any leverage in a deal is genuinely not to need it. And if you don't believe in a deal, you'll be less likely to depend on it.
When fundraising, raise money as quickly as possible and then get back to work.
Enterprise sales
Find the champion of your product in the company, the higher up, the better. Stay off the radar of detractors who oppose your products and rally the champions to overpower them. Try to avoid IT organizations, most will view change as threatening and risky for the business. With handling legal contracts, give in on the stuff that won’t make a difference to you. Uncover the motivations of every player - Build strong relationships with your champions.
It’s important to instrument your sales process (collecting data and generating reports).
Competition
Focus on the users first and not the business model.
The vast majority of people who visit your site will be casual visitors. It's them you have to design your site for. The people who really care will find what they want by themselves. Explain, as concisely as possible, what the hell your site is about. If you have something impressive, try to put it on the front page, because that's the only one most visitors will see. Though indeed there's a paradox here: the more you push the good stuff toward the front, the more likely visitors are to explore further.
The people at Google are smart, but no smarter than you; they're not as motivated, because Google is not going to go out of business if this one product fails; and even at Google they have a lot of bureaucracy to slow them down. What you should fear, as a startup, is not the established players, but other startups you don't know exist yet. Looking just at existing competitors can give you a false sense of security. You should compete against what someone else could be doing, not just what you can see people doing.
The most important quality in a startup founder is determination. Not intelligence, determination.
Later Stages
You need every employee to know who their manager is and for everyone to have exactly one manager. Every manager should know their direct reports - For when you’re growing and employees get to 20+.
Get your own personal organization system right as you grow. Write down how you do things and why you do these things, the why are the cultural values.
HR is important as you grow, have a performance feedback system. Give a lot of equity out to your employees. When you cross 50 employees, there’s a new set of HR rules you have to comply with. As soon as everything is working you should hire a full time recruiter.
In the first year or two, founders should not deal with acquirers, period.
In the early days, hiring senior people is usually a mistake. As the company starts to scale though, it’s actually valuable to add senior people/executives to the team that have built companies before.
Try not to delegate the one thing you really want to remain involved with–if it’s something you enjoy or think will benefit a lot from having you involved, you’ll be more satisfied.
Up to a few hundred employees, try announcing every potential job offer on an internal mailing list. If you do it, very often someone in the company will know something good or bad about the prospective employee.
It’s critical to make a habit of reiterating your roadmap and goals so people can understand and internalize them.
Take your best people outside the normal workspace for a weekend where everyone has time to just talk and think through the bigger picture. People have interesting ideas when they’re out of the day-to-day.
How to Apply to YC
Be exceptionally clear and concise. Whatever you have to say, give it to them right in the first sentence, in the simplest possible terms.
The first question Paul Graham looks at is, “What is your company going to make?
One test of whether you’re explaining your idea effectively is to ask how close the reader is to reproducing it.
Another mistake is to begin with a sweeping introductory paragraph about how important the problem is.
Better to start with an overly narrow description of your project than try to describe it in its full generality and lose the audience completely. One good trick for describing a project concisely is to explain it as a variant of something the audience already knows.
It’s a common mistake to say the distinctive thing about your solution will be that it’s well-designed and easy to use. That is not an insight. You’re just claiming you’re going to execute well.
They don’t mind if you’re doing something that will face serious obstacles. The best startup ideas are generally outliers that seem crazy to most people initially. But they want to see that you’re aware of the obstacles, and have at least a theory about how to overcome them.
If they can see obstacles to your idea that you don’t seem to have considered, that’s a bad sign. This is your idea. You’ve had days, at least, to think about it, and they’ve only had a couple minutes. They shouldn’t be able to come up with objections you haven’t thought of. It is for this reason better to disclose all the flaws in your idea than to try to conceal them. If they think of a problem you don’t mention, they’ll assume it’s because you haven’t thought of it.
Generally, the advice Paul Graham would give to applicants is: help them out. Investors are optimists. They want to believe you’re great. Most people you meet in everyday life don’t.
So before submitting your application, print it out and take a red pen and cross out every word you don’t need. And in what’s left be as specific and as matter-of-fact as you can.
Application video - In the video introduce yourselves, explain what you’re doing and why, and tell them anything else you want to about the founders or the project. The video should be one minute long and should be uploaded to YouTube.
Don’t apply to YC if your business does not look fast growing enough or you’re not sure you don’t want to work with something very long. There should be clarity on who is building the product.
Great applications are super easy to read, they read with no effort whatsoever. Great applications tell a great story.
Make it clear that there is at least one person in the team that can at least make the thing you are working on.
There should be some evidence that you are serious about your startup.
Interviews last 10 minutes, the questions are very basic. Interview prep – demonstrate a mastery of your business, don’t be too over-confident be self-aware.
Hardware
If you choose to raise any amount of venture capital investment you are making an implicit agreement with your investor that your aim is to grow the company to a valuation of more than $1bn within 5–10 years. Given a typical hardware multiple of 5x, that’s a minimum of $200m in yearly revenue. That is an incredibly large amount of money.
Even though hardware is traditionally capital intensive, I recommend starting small. Try to spend as little money as possible launching an initial product for a small audience. See if they like it. Improve. Adjust your marketing. Work towards finding real product market fit.
Be aware of the growth requirements that come with VC funding. If you are not already experiencing exponential growth or if that isn’t even your goal at all, consider bootstrapping or financing your business through other means.
General advice
The aim is to make money and then be cool not to be cool and maybe make money.
Learn a lot about things that matter to you, work on problems that interest you with people you like and respect.
How can a non-technical founder most effectively contribute to a startup? Focus on sales unless you have expertise that can help startup.
The singular determinant of start-up success is the market; great teams can die in terrible markets.
Don’t do anything that doesn’t get you into you next milestone. E.g. don’t attend conferences, blogposts or read news until you reach your milestone.
Three key things a startup needs to do to be successful
Product is meaningfully better than alternatives.
Acquire customers in a differentiated way that scales.
Invent your business model without killing traction.
Great brands are built on a core consumer insight, know what you stand for and that becomes a foundation of your brand.
Starting a company with a single co-founder is kind of like a vote of no-confidence, it probably means the founder couldn’t talk any of his friends into starting the company with him.
It is possible to launch too fast. The danger here is that you ruin your reputation. You launch something, the early adopters try it out, and if it's no good they may never come back. We suggest startups think about what they plan to do, identify a core that's both (a) useful on its own and (b) something that can be incrementally expanded into the whole project, and then get that done as soon as possible.
Don't hire too fast. Hiring too fast is by far the biggest killer of startups that raise money.
Practice your pitch in front of friends.
Your time is precious, you cannot cave, people are relying on you.
You don’t want your investor over your shoulder all the time but there are models where you can get office space and not have investors on your shoulder.
Be yourself as a leader and be authentic.
Great founders seek the networks that will be essential to their problems and their tasks, find the best location.
FIN
Thank you to YC for putting this useful content on the internet and thank you to everyone who contributed to the YC Startup School library. Every single bit of information in this post has come from the YC website.
Please feel free to leave any feedback or comments :)