by Y Combinator10/23/2019
We’ve cut down the eighth week of lectures to be even shorter and combined them into one podcast.
00:00 – Intro
2:12 – Real vs fake progress
4:10 – How to determine if you’re prioritizing the right tasks
4:42 – Keep a spreadsheet of ideas related to moving your primary KPI
7:32 – Grade the new and old ideas once a week based on potential impact
9:52 – Consider the complexity of each task
11:32 – Don’t try to do everything at once
11:52 – How do I know I’m prioritizing my time well?
13:42 – What if I can’t complete my tasks in time?
15:32 – Moving fast
18:52 – How to apply to Y Combinator
20:17 – As a YC partner, you don’t need to sell me
21:12 – Can I understand the idea? Am I excited by it? Do I like the team and want to work with them?
21:47 – How do I describe my company in a very efficient manner?
22:52 – Making your idea legible
25:12 – Things to avoid when describing your company
27:34 – Be conversational
28:02 – Avoid jargon, no preamble, and be reproducible
28:47 – Nouns: what are you making, what is the problem, and who is the customer
32:47 – Using the X for Y formula of explaining your startup
36:57 – Be concise without leaving out the key nouns
40:47 – How to adjust a description
Craig Cannon [00:00] – Hey, how’s it going? This is Craig Cannon, and you’re listening to Y Combinator’s podcast. Today’s episode is a recap of the eighth week of startup school. I’ve cut down the eighth week of lectures to be even shorter and combine them into one podcast. First, we’ll have a lecture from Adora Cheung. Adora’s a partner at YC, and her lecture covers how to prioritize your time. Then, we’ll have a lecture from Kevin Hale. Kevin’s also a partner at YC, and his lecture is the second part of his talk on how to evaluate startup ideas. All right, here we go.
Adora Cheung [00:33] – Hello, as Kevin said, my name’s Adora. I’m one of the partners at YC, and I’m going to talk about how to prioritize time. Time, as you know, is precious, especially when you’re working on a startup. Time burns money, and money is the very basic thing that keeps a startup alive. Not to be too philosophical about it, but even if your personal burn is super low, you can eat ramen days on end, which I don’t suggest, and you don’t have to pay yourself for a very long time. There’s always a high opportunity cost to doing your startup. It’s super important to use your time the best way possible to maximize your startup’s chance for success, which means you need to be really good at identifying and prioritizing tasks that are going to be the most impactful for your startup’s progress, which I’ve noticed, after going through thousands of weekly updates from startup school founders, that a lot of founders are not doing this well, so hopefully this will be helpful. Let me first preface all of this by defining what time I’m talking about. Obviously, there are 24 hours in a day, and I’m not here to tell you how to allocate those hours across your startup versus everything else that is important to you: sleep, family, friends, hobbies, and so and so forth. Everyone has different situations, so it’s hard for me to, from up here, give you good generic advice on how to allocate your time across these things. I’m just going to assume you’re doing what’s best for you, whether it’s two, six, twelve hours a day that you decide
Adora Cheung [02:01] – to work on your startup, it doesn’t matter to me for the purpose of this lecture. I just want to help you figure out how to spend those two, six, or twelve hours that you’ve decided to allocate your startup in the best possible way. All right, so when it comes to things to work on your startup, my guess is that you already have something like a task list in which you put new ideas on to eventually work on, and you update that very frequently, so let’s start from there, that you have a task list of things to do. First, I want to make a real clear distinction between real and fake startup progress. This is the easiest way to classify whether a task goes in the “should do” or the “should not do” bucket. If it contributes to real startup progress, you should consider doing it, and if it doesn’t, then don’t. This seems trivial at first. Why would anyone do anything that amounts to fake startup progress? But let me explain further. Real startup progress is when you’re really focused on things that really move the needle for your startup. In the beginning, the best way to show this is through growth, in particular, growth of your primary KPI. I gave a whole lecture on this a few weeks ago on KPI and goals. If you haven’t watched it yet, please watch it. I talk a lot about primary and secondary KPIs. There’s always a balance between what to focus on, but for the purpose of this lecture, I’m just going to refer to the primary KPI as a thing to focus on growing. To summarize, your primary KPI almost always is either
Adora Cheung [03:33] – revenue or active users, and you should always be setting weekly goals for this. To move the needle on the KPI is the highest-leverage thing you can be doing. Also, it always comes in the form of tasks that involve talking to users and building and iterating your product. Nothing else. This is in direct contrast with fake startup progress, which is when founders focus on things that are not directly related to growing your primary KPI. Common things I see in weekly updates are things like attending conferences, focusing on winning awards, network events, optimizing the wrong metrics. While you may convince yourself these are good things to focus on, they’re actually many steps away from delivering real value to your customer, and so if all the things you could be possibly doing, spending any significant time on any of these things, it’s almost always a bad idea. The goal is not to optimize startup vanity, but actually delivering value to you customer. Doing the things that will help you directly help you increase your KPI. Now that we have one way to filter what tasks you should be working on, let’s go a little bit deeper and figure out how to determine if you’re prioritizing the right tasks. This, at first, also seems trivial. Presumably, you’re doing what you believe is high-value work. Nobody ever says, “Oh, let me do the thing that is going to help my startup the least,” right? But that’s what I’m going to challenge. There are hundreds of things you could be possibly working on to increase your primary KPI.
Adora Cheung [05:11] – Is what you’re working on right now the best thing you can do to meet your weekly goal, or have you tricked yourself into doing something else? The reason I’m skeptical is because it’s actually quite easy for low-value work to unnoticeably creep into your schedule, and it actually takes a lot of work and effort to not let this happen. Here’s an experiment. Try journaling, in great detail, of each day in the past week, every single hour, so hour-by-hour, what is it that you are exactly doing. Be honest on what you thought the impact was before you actually did it, and what it was increasing your primary KPI. You’ll be surprised by how much of it was actually low-value work. The reason is not because you’re lazy, or I hope not. It’s more because we tend to be, as humans, on autopilot, so we don’t give much thought to what we’re doing with our time. And our natural instinct is actually to go for low-value work because it’s usually the easiest and quickest thing to accomplish, and if it fills our desires to check as many things off of a list as possible, it feels really good to check things off, so … But once you’re aware of this, preventing it is actually quite simple, but it does take time, thought and discipline. First, if you aren’t already, you should keep a spreadsheet of ideas that can move your primary KPI. Not to be too repetitive, but these tasks are almost always a variant of two things, right? One, talking to users, and two, building product.
Adora Cheung [06:44] – Talking to users helps you with three things, right? It converts them into customers and revenue, or helps you convert them into customers and revenue. It helps you understand if you’re on the right track or not, and it helps you figure out if your product… Sorry, it helps you figure out your product’s road map. Building product actually delivers a solution to the user to see if it actually translates into more customers and revenue. So, as you come up with these ideas, you should log them into your spreadsheet, and keep doing that, as every idea you get. But the key is don’t do them right away. Just write them down, and this is important because always switching to the thing you just thought of, which always sounds better now than later, causes a ton of whiplash for founders, and it’s a primary culprit in making no progress during the week. Now you’re tracking this list. Then, once a week, go through each item in your spreadsheet and grade the new and re-grade the old items based on how impactful you think the task would be on achieving the weekly goal for your primary KPI. There are three grades you can give to each task on your list: high, medium, low. These definitions are a little arbitrary in the sense that it’s all relative to whatever else is on your list, but in general, high means its a task you believe that will help you meet your goal for the week with high probability, medium is you’re not sure, but with okay probability, you can hit your weekly goal, and low is with very low probability.
Adora Cheung [08:10] – You’ll see that it’s actually pretty easy to figure out what those low and high-value tasks are when you compare them against everything else you could be doing, which is why this exercise, no matter how pedantic it is, is important to do. Let me go through an example. Let’s say I’m a founder of a SaaS sofware, generic SaaS sofware company. My goal for the next week, and I just kind of launched, and my goal for the next week is just to get five new paying customers. Here’s just a sliver of things I can do to reach that goal. At the top, you’ll see that the most impactful thing I can do is go to offices of ten potential customers who were actually entered to me by friends or whoever, and I know that, if I show up to the office, I have a very good chance, just from experience, I have a very good chance of convincing them to buy my product. That’s why that’s at the top of the list. The next few are of medium impact because they involve me filling out my pipeline, which is one step away from landing new customers, but necessary to do. I also have the second thing here, I also have video demos I can do, which for me, aren’t as effective as doing in-person, but worth doing as well, because they do lead to some new customers. You’ll notice that there are a couple items at the bottom of this, which involve programming. A very common mistake technical founders make is to build things first, and then go talk to users. And according to this list, to meet my weekly goal, this means they would be choosing the least impactful thing to do for that week.
Adora Cheung [09:44] – But with this method, if they’re honest about it, they have no choice but to get off their butt and go talk to users instead. So, along with the impact that it might have on helping you achieve your weekly goal, we also need to consider a second dimension of how complex the task is, that is, how long would it take for you and your team to complete it. Because there are many tasks within each category of impact, for example, there’s like four of here in medium, and three in low, and so the question is how do I stack-rank those within that category? This dimension of complexity helps. We can grade complexity in three ways: easy, medium, and hard. An easy task is something that you can do in less than a day. That means you can do a bunch of easy tasks in a day. A medium task is something that takes one or two days for you to do. And a hard task is one that takes many days to do, and you may not complete it within the week. Once you go grade all of them, you’ll have, again, the second dimension here, where you have impact and then also complexity. Now you can easily stack-rank all the tasks on your list, and it’s pretty easy to choose what you should prioritize. So, given the objective is to hit your weekly goal, the obvious choice is always to go … Something with the … To go for the combos of high, easy combos and high, medium. That is something, a task that has high impact and is easy to do, you should always do those first, and then go to high-impact and medium-complexity. What you really don’t want to do is focus on these
Adora Cheung [11:23] – bottom things here, right? Something that has, probably, very low probability in helping you achieve your goal, and is very hard to do. Takes a long time to do, there’s really no point in doing any of those things. Just as important as selecting the right task to work on is making sure you don’t try to do everything at once. Pick enough tasks that you can complete and do well. Doing too many things means you won’t be able to complete much with, much of the tasks with much conviction, and makes it really hard to show progress from week to week. How do I know I am prioritizing my time well? Ultimately, you know you’ve done well if you’re hitting your weekly goals consistently, so it’s … You’re doing well if your graphs look like that. Sadly, most of us have graphs that look like this. These troughs of sorrow, where it’s decreasing and you’re kind of like stable for a while at the bottom. That’s when you start doubting yourself, it’s like, “Am I working, really, on the right thing or not?” And so, what can we do about this? Or how do we know? One way is to do what you’re already doing in startup school, which is writing weekly updates and being really consistent and honest about it. The key components of weekly update is pretty straightforward. What was your weekly goal? Did you succeed? If not, what was the biggest block of the growth? What did you do, and what was the predicted impact, and what was the actual impact? And what did you learn this week? What were the big learnings this week?
Adora Cheung [12:51] – And then, by doing an ongoing evaluation of your weekly updates, it will help you improve how you select and prioritize tasks. Once in a while, you should review all your weekly updates, like from beginning, the first one you ever wrote for your startup, to the current one, to the last one. And check for things like do you feel like you’re learning fast enough? Are you predicting the impact of each task well? Did you let low-value work or even worse, fake progress, creep into your schedule? Is your biggest blocker the same thing for every week? A lot of people actually get in a rough spot where they’re not learning anything new, and just doing the same thing over and over without realizing it. Reviewing your updates will help you realize that, and will force you to try to get yourself out of that bad loop. In terms, this last one, in terms of completing tasks, if you’re finding yourself always running out of time to complete tasks you felt was totally possible to complete in the week, I have two suggestions for you. One is, perhaps, your task is actually too complex and you should break it down into medium and easy tasks. The second one is, maybe, it is that your schedule needs to be rejiggered a little bit. I recommend a modified version of what we call the maker’s manager schedule, which was popularized by Paul Graham. The essay is linked in the startup school library. The basic idea is this: there are high-contact switching costs to different types of tasks. For example, coding and meetings like talking to users,
Adora Cheung [14:27] – meaning it’s hard to restart and to ramp back up on a task especially like coding, and it’s costly to exit at a time when things are finally flowing and you’re getting stuff done. So, if you find yourself switching back and forth too much, it may be that you’re wasting time, and need to rejigger things so you have a continuous chunk of time devoted to each one. So, many people will actually split their … Divide their week into days, right? So, one full day, they will just spend coding, and then the next full day, they’ll spend meetings and talking to users and so forth instead of even having like one hour here, one hour there, one hour there. For people who need to get more stuff done in the day, then they’ll do half the day, they’ll spend coding, and then half the day, they’ll spend talking to users. So, this is, for any of you solo founders out there, this is incredibly important for you because you don’t have the opportunity to divvy up the work it costs multiple people, so it’s really important to get your schedule correct. All right, so I’ll end with one final piece of advice, which is moving fast. So, in the beginning of your startup, your primary objective is to move as quickly as possible to prove that you’re building something people want. The faster you figure this out, the faster you can pivot into something or have the confidence that you have product-market fit and can start scaling in building a tremendous business. Making decisions thoughtfully and quickly is super important.
Adora Cheung [15:58] – Time is often wasted in indecisiveness. The key is to be okay with making a wrong choice and learning fast. Of course, choosing the right thing to do at the get-go is the best thing possible, but it’s also the case that a person who chooses the wrong task to work on today but moves quickly learns why it’s wrong and moves to the right one is better, often, than the person that takes forever to choose the right tasks to work on and is twiddling their thumbs, working on low-value stuff in the meantime. That’s all I have today on how to prioritize time. To summarize, what you should be doing? Always be working on things that directly impact your primary KPI. Do the things that have the highest impact to meeting your weekly goal, and that usually always means what? Talking to users and building product.
Craig Cannon [16:44] – All right, now for Kevin’s lecture.
Kevin Hale [16:47] – This is going to be part two of a talk I gave at the very beginning of startup school on evaluating startup ideas, and the thing to know about both of these talks is we’ve been talking about them from the point of view of the investor. Basically, it was helpful, I thought, to explain to founders how investors evaluate startup ideas, and looking at that structure so that they can better understand their own ideas, opportunities, and then, in this presentation, present them better to the people that they want to get excited. Quick recap, in the first part, I basically say a startup idea is a hypothesis for why your company is going to grow really quickly. That hypothesis must compose of three different parts: the problem, the solution, and the insight. And the basic parts is your problem should be pretty big, pretty pervasive, have a lot of these characteristics to make it feel like there’s a very big market that a lot of people have the problem. The only thing you need to know about the solution is that you should not start with the technology. You should start with a problem. Lastly, you’re looking to have something that’s going to make your company unique and have some kind of unfair advantage that we call an insight that will show why your company will grow faster than other companies. I talked about five different types of unfair advantages that your company can have, and kind of what are the benchmarks for meeting them. Now, the thing to keep in mind about understanding and creating this startup idea is that … I don’t need you to do all of the work.
Kevin Hale [18:30] – To lay all of that out in detail. That stuff that you’ll kind of want to know or keep in mind, but a really good investor will do that on their own. They’ll hear what you’re talking about and extrapolate. And so, what I’m going to cover in this presentation is how do you package up that hypothesis? How do you take all the things that you understand about your company and your startup idea, and how I present it to an investor so that they can make a decision that’s in your favor. This is the YC startup application, and basically, this is the application, all the questions that we ask that YC partners will use to evaluate your startup. Down here, when you’re filling out the YC application, we actually link to a couple of things, and one of them is how to apply successfully. I can’t tell because I read so many applications, but it feels like founders are not reading that essay. It was written by Paul Graham in 2009, and almost everything in there still holds to this day, and people still make mistakes from it, so I’m just going to point out some stuff and really punch it in here while I have your attention. So, here’s a quote from that essay. Basically, we believe, for every company that we will interview at YC, we bet there’s probably another company that’s just as good as them out there, but they messed up on the application, and we didn’t realize it. We didn’t invite them, and basically, the reason is because they didn’t express their idea clearly. That’s it. Like, you might think, “Oh, I didn’t show off all that
Kevin Hale [20:08] – complex stuff about my startup idea, and that’s why they didn’t pick me,” and I want you to know that’s not true. And so, the first thing I want you to keep in mind is that I do not need you to sell me as a YC partner, right? A good investor, so an average investor, what they do is they talk to you when you tell them about your idea, and it feels like they’re poking holes. All the questions asked about what’s all the reasons why this could go wrong. A good investor does it the other way around. They hear what you say and they imagine and they use their optimism, and they use … Knowing that some kind of rare event has to happen for you to become a billion-dollar company, and they try to imagine all those rare events that could possibly happen to you, and then they pitch that path back to you, and so we are really good at selling ourselves so you don’t need to do that, and the thing is, you guys are kind of bad at selling things in the beginning, right? And what I need you to understand is that I’m trying to evaluate these three statements when I’m hearing your idea. Do I understand it? Am I excited by it? Do I like the team and do I want to work with them? Surprise! In your weekly updates, when you do your group sessions, these are the questions that we ask you to ask one another. It’s basically the questions that we’re trying to figure out for ourselves, and we’re hoping that, every week, when you talk with other companies, you are practicing getting feedback and understanding whether you were able to instill
Kevin Hale [21:35] – this in other people, so your goal is just to be clear. I will do everything else. Back to the application, these are the only two things we’re going to focus on today. What do I put in the … What’s my company going to make, how do I describe my company in a very efficient manner? The first way to do this is to be clear. The reason we focus on this is because a clear idea is a foundation for growth, and what I mean by that is that the best companies in YC, or around the world, grow organically. They grow by word of mouth. What does word of mouth look like? It looks like this. It’s basically I talk about your company, what you’re doing, making, et cetera, and I’m the most interesting person at the dinner table, and I tell it to other people, and those people want to tell other people. That’s it, word of mouth is something where I remember what you do, I talk about it enthusiastic(ally), and it spreads on its own. Marketing and advertising, it’s a tax I believe companies pay because they did not make something remarkable. Now, before anyone could remember at the dinner table what you do, they have to understand, and so I have very simple rules for how to make things easy to understand. This will sound familiar if you’re familiar with an essay I wrote on how to design a better pitch deck, and I’m going to focus on, basically, saying that the way I talk about designing a pitch deck actually works for ideas and lots of other things, and so the way I make things easy to understand on a pitch deck or a slide is to make it legible,
Kevin Hale [23:12] – I make it simple, and I make it obvious. For today’s presentation, we’re just going to focus on making your idea legible. This is going to sound interesting, right? For clarity. Now, in my essay, I talked about how, at Demo Day, when our startups are presenting to a room full of a thousand investors, it’s kind of an interesting audience. Number one, the audience is filled with really old people. They tend to not have very good eyesight as a result. They all can’t sit in the front row, like you lovely people. Some of them have to sit in the way back and stand up. And that means, if you create a legible slide, they have to be ones that even old people in the back row with bad eyesight can read. Now, how does that apply to a legible idea? Well, basically, you are designing a slide that democratizes the idea, right? And so, people who are blind or people who are ignorant, you’re basically designing something for everyone in the room, not just the ones in the first row. A legible idea can be understood by people who know nothing about your business. That will make things very clear to the widest possible audience. Now, this is super important because you will talk about your company more than anything else. It is actually the thing that we are really great at at Y Combinator. We have our companies constantly practice talking about their startup. Startup school curriculum is designed around helping you constantly practice talking about your startup, and this is because you are going to need a lot of people if you’re
Kevin Hale [24:52] – going to become a billion-dollar company, so you are trying to find a co-founder, you have to have a way of talking about your company clearly, whether you’re getting users or investors or employees, or share holders, you have to get really good at this, and you have to be able to do it quickly and efficiently. Here are things to avoid, that makes things not clear. That makes your idea muddy. The first is ambiguity, right? That’s obviously, the opposite of clear or straightforward. Something’s a little abstract, something could be interpreted in two ways, and therefore, it might take a question to understand what you do. Complexity. I have a very specific definition of complexity, and so if you look at the root word, simple and complex come from the same root having to do with twist or braids. Things that are simple are ones that have one braid, and things that are complex have multiple braids. They’re intertwined with one another. A simple idea is one idea that does not fold, a complex idea, or ideas that are intertwined. Simplicity means you are not trying to mix a bunch of things in your description. Mystery. This is an odd one. But what I mean is, anything where it’s like, “I’m not going to understand what is going on when you are talking about your company.” Jargon is one, obviously. Any words that I don’t understand. Anything that’s vague, like indefinite pronouns. So, if you just use this, it, et cetera, and you don’t describe what those nouns are, and then things that you
Kevin Hale [26:29] – just suggest but aren’t explicit about. The last is ignorable. What I mean by that is there is some language that we will just ignore. In UX design, people will create a sort of blindness to things that they don’t want to look at, or they don’t find to be of important value. For example, ad blindness is a big one that people sort of understand. And the thing is, when you’re talking about ideas, there’s a way of using language that is also easily ignorable. Things that just won’t stick in your head. Things like marketing speak … There’s probably lots of stuff that you’ve heard about that. MBA speak, weird kind of puff-yourself-up talk that doesn’t give any extra information, and then buzzwords. And so, when you say certain types of words, that … As an investor, I’ve heard over and over again, or I will equate with zero information or value, then I will ignore them, and the result is parts of your pitch will end up being not even heard by me, and therefore, I will not remember them. What you want to do is be conversational. A great pitch is one where you can tell it to your mom, and she gets it. She’s proud of you, right? She’s not going to shake her head. That means it’s got to be conversational. That’s really good for word of mouth, because we talk in normal conversational speak. We don’t talk like an MBA. We don’t talk like CEOs all the time, so it’s best to talk conversationally. Again, avoid jargon, words that are only understood or used by your industry. No preamble. I’ll have some examples of this,
Kevin Hale [28:11] – but if you want to be clear, let’s go straight to what you want to talk about. Let’s not have a winding path to eventually getting there. And the last one, this one’s a big one, is being reproducible, so when I hear your idea, can I imagine it in my mind? Can I see what I would have to build to create your company? If I don’t have that, then I have no picture in my head about what your company does, and until I have that picture, I can’t ask any of the questions that helps me understand if I get excited about you, or understand other nuances of your business. To make things reproducible, I need to know nouns. I need to have objects that I’m going to imagine in my head. And there’s three types of nouns that I should understand from your startup idea. First one is what are you making? That should be really clear. What is the problem? And then who is the customer? The two are kind of related to the market, right? But I should have these kind of three nouns in my head. So, let’s go through some examples. This is, says, “We are going to transform the relationship between individuals and information.” This sucks. The thing is, we see this all the time. Number one, all the nouns that you see down here are abstract. They’re ideas I can’t reproduce, based off of this. Has zero informational value. I still have to ask questions to answer the three nouns that I need to have. This is a bad description for a company. We will see stuff that starts like this, and we ask, “Describe what your company’s going to make.”
Kevin Hale [29:57] – I don’t even want to read it, but basically, it starts talking about the story of the company, or basically, it’s like, “In the beginning, there was this problem, and we were going to go through this issue,” right? “And then there’s these bad guys and they showed up, but then, who’s going to save us? We’re finally here to save …” And you’re like, “I have to read another thousand applications, that’s not going to work for me.” This is the description on the actual application that Airbnb put to YC. “Airbnb is the first online marketplace that lets travelers book rooms with locals instead of hotels.” It’s concise, it’s descriptive, I understand what they’re building, I had a sense for what they’re making, and then I can start thinking about my other two ideas of whether I’m excited about it, and then am I going to like this team. Here’s Dropbox. “Synchronizes files across your or your team’s computers.” The thing about this is that it’s refreshing, but also, there’s no pretense. They don’t, they aren’t playing defense. I see a lot of company descriptions where they’re like, “I’m worried about this,” or “I’ve gotten this kind of feedback,” and so they give up clarity to make themselves look bigger and blow themselves up, or make themselves try to look more interesting. They’re trying to protect themselves against something way ahead of time, and the whole problem is, usually, what it ends up doing, is it brings me farther away from you, all that padding that you’ve put on yourself. Here’s a description from a company in the current batch.
Kevin Hale [31:30] – “Lumini is building x-ray vision for soldiers and first responders.” We don’t have to go deep into the details. I don’t need to understand how they exactly do this, et cetera. This creates a foundation for my curiosity. Now, I will start from here to try to figure out, “Oh, how do they do this? Is this the right team to do this? How far along are they? Do they have traction? Do they have customers?” I start going down the route of asking all the right questions based off this one description. This is a good one. Here’s another one. Vahan, in the current patch, is building “LinkedIn for the next billion internet users.” Doesn’t perfectly connect me into what they’re sort of making, but I’m intrigued. I’m excited about someone building into LinkedIn, and I know it’s some kind of social network for business people, and so now I’m curious about how. I don’t need you to answer how in the description, but I understand what you’re doing, and then now, I can start making questions in my head about, like, how would I evaluate whether this is working or successful or promising or not? Or is this the right team? Do they have a certain amount of traction, et cetera. It gets me on the right track. Now, the reason I use this example is because we have a lot of companies who try to use the X for Y, and what I mean by that is, like, LinkedIn for whatever, or Uber for blank, or Airbnb for blank, and so that X for Y is super useful because it allows you to shortcut business model and some kind of complex behavior, right?
Kevin Hale [33:10] – And then attach it to some other vertical or something that you are trying to make work. X for Y is okay, but most people abuse it or do it incorrectly, so I’m going to give you some tips. First, should you use X for Y? Sorry for the illegibility. Number one, is X a household thing? This should be like a billion-dollar company, right? You can’t use your uncle’s pet shoe store as the X for this because people don’t know your uncle’s pet shoe store, and they don’t know if it’s successful or not, right? As many people should know about this as possible, and for an investor, it should be clear that it’s a billion-dollar company or opportunity. Everyone has to agree that it is successful, so you could have a really big X, everyone knows about it, but it’s infamous, right? People don’t think it’s successful, so be careful of that. Does Y want X? Is it really clear why the target that you’re going after wants this kind of model applied to it? This kind of solution applied to it, whether it’s Airbnb for or Airbnb … Or Uber for, et cetera. It should be really clear that that’s a segment that’s either missing it, is not being served well by the other one, and also that those people want to have that kind of model. And then the third one is Y should be a huge market. So, if you’re building X for Y, and the last part doesn’t sound like a really big business, that’s not going to work well for you, right? Because what we want … Because you’re essentially saying that you are something but that’s a subset.
Kevin Hale [34:58] – And what we want to make sure is that subset feels like it could be really, really big. If you choose a subset that sounds like it’s going to be really, really small, investors won’t be as interested. Does it, it means that I’m worried that you will not have enough potential head room to grow to become a billion-dollar company. Here’s an example that doesn’t work, so we had a company in the batch that started off by describing themselves as Buffer for Snapchat. Buffer is a nice company, but definitely smaller than Snapchat. You don’t want to do that. Alright, so, basic summary for this section: Lead with what, not why or how. You don’t need all that other stuff. That stuff gets in the way of your clarity for the most part. I’ll read like a thousand applications every single batch, and it’s a really hard thing to do. Basically, even though it’s my job, it’s really, really difficult to have that much focused attention across all these different applications, so I need some empathy. I need you to help me out, and what we want is that, when I bring up your application, and I’m looking at it, let’s make our intimate time really pleasurable, right? Let’s make the time that I spend on an idea very efficient. I’ll look at it, I’ll understand really clearly, I’ll move around your application and be like, “Oh, I’m getting excited, maybe there’s going to have this,” and I’ll look at that part and be like, “Oh, they do have it, that sounds awesome! Oh, what about this? That sounds awesome, too!” What we don’t want is me to go like, “I don’t know what …
Kevin Hale [36:35] – What are they talking about?” Then, after I go to your website, I’m like, “Don’t know what they’re talking about! I don’t know how this sort of works.” I go back to it, I try to figure something else out, I try to see if, like, some other partner might understand what you’re doing, et cetera. It’s super inefficient. Where is there going to be room for me to get excited, as a result? To be efficient, we need to be concise. Concise. The best way, I want to keep this in mind, is to use some examples, and so, here’s some things I need you to keep in mind. Yes, I want you to be concise, use as few words as possible, and what I want you to understand is the concision is … Actually gives me secondary information about you as a team. It lets me, one, know that you have thought deeply about your idea. Because you’ve thought so deeply about it, and because you’ve practiced talking about it so much, and you’ve gotten really good at getting people excited and understanding your thing really quickly, you probably have figured out how to do it in a short amount of time, so it lets me know that this is a founder that has thought deeply about the idea. The other thing about being concise is it shows me that you are efficient, and if you’re efficient with your words, then you’re probably efficient with your thoughts, and that means you’re probably also efficient with your actions. And what that means is that I will start to believe that you understand what is most important about your business, you understand how to communicate it clearly, and you might
Kevin Hale [38:05] – actually know how to always figure out the most important part of what to do about your company to make it grow, to make it work, et cetera. So, there’s some minimum stuff that we want to have, even though we’re trying to be as concise as possible. Again, I want to understand the nouns. So, if we’re so concise that I can’t understand these, then your concision is too much. The other is I want to get to this point when I read the concision, or the short version, of whatever it is you’re talking about, because again, I know there’s like a hundred thousand reasons why your company is great, but when I’m reading your application, I’m only going to maybe remember two to three of them, and so we have to try to make sure those most important ones come up to the top. This is a real startup school company description. It’s an online e-commerce store. I could picture what it is, but again, it’s not a description that helps me get excited about it. It doesn’t help me lead to all the other things. I have to do, now, more work to understand why this is fast-growing and has potential. I also don’t know, based on this, some nouns. I don’t know exactly who the customer is. Is it people that you’re selling stuff to, or are they making an e-commerce store for other shop-owners? Just ambiguity. IT security services. This is most of the descriptions that we see on startup school. It makes it really, really hard for us to understand it. A meritocratic decision support system? The thing is, I want to know for what? For whom?
Kevin Hale [39:44] – I don’t even understand what the problem is that they’re solving, based off of this, and so is it for … Is it because a lot of people have non … Basically, I have to ask so many questions in my head to figure out why did they get to this sort of description. Learn and sharing knowledge about data science and artificial intelligence. It sounds more like a mission. I can’t tell what the product is and how they’re sort of going to go about it. Like, I couldn’t reproduce this. If I had ten companies build based off this description, you’d have ten very different products. The other thing that’s odd about company descriptions is you guys tend to capitalize and make proper nouns very weird words and phrases. You should not do that. It’s not like a magazine title. And, it makes me think, sometimes, you’re emphasizing the wrong things. Like, you’re thinking the data science in artificial intelligence is the thing that’s going to make me excited. And the thing is, like, those are the buzzwords. Those are the solutions, and it makes me worry that you haven’t started with a problem. Let’s go into an example of, like, how to adjust a description, so here’s a much longer one. “Our company will make low-cost and low power consumption medical devices based on artificial intelligence and IOT suitable for sub-Saharan communities.” Now, relatively clear. I could understand it reading it, but it’s not the most concise form of this, and I feel like there’s a lot of things getting in the way. And so, when I work with companies to help shrink and
Kevin Hale [41:12] – reduce and improve their descriptions so that I will get the most out of it … I’m going to talk you through the process. The first thing I want to do is just figure out what are the nouns in the description. Here we go. Our company, medical devices for sub-Saharan communities … Oh, shit, we’re almost done, right? Everything else that gets added on here, whatever verb, adjectives, or adverbs you want, you want to be really careful. You want to know, like, is it giving maximum punch for this, right? And so, really, the verb is going to be, usually, just, you’re making something, et cetera. But usually it’s going to be whatever the product … Like, the verb is, like, the thing that we’re making. If we were thinking about this in an active voice structure, the subject, the verb, and then the object, the customer, the market, people who we’re going after. Everything else, if we add anything back to this, I really want to be really careful about why we’re going to add back to it. Is that going to be the stuff that makes me excited? The artificial intelligence in IOT-suitable stuff, that’s, like, how they’re going to get to it, the technology, and I’m more worried that they’re wanting to use buzzwords to describe it, right? Hopefully, that’s, like, a secret weapon that you have, but I bet it’s not the defining characteristics of whether this company’s successful or not. And then, up here, I see two modifiers for medical devices. Low-cost, low power consumption. So, low-cost, I can definitely see. That’s super interesting.
Kevin Hale [42:42] – If you make a low-cost device in a sub-Saharan community, then I’m like, “Oh, that’s interesting. That’s really interesting, because it’s hard just to make something, you know, for developing countries, but to make it so it’s actually affordable for them? That’d be interesting.” The low power consumption … I can give or take there. I’d have to know more about the company to know whether that’s actually crucial to understanding whether this company has an unfair advantage or not. So, if I was to re-do this, it would come out to “We create affordable medical devices for sub-Saharan Africa.” Some people are going to be very squeamish about this. A lot of founders are worried, it’s like, “You’re putting me in a box, man! It’s too reductive! My business is complex! I do a lot of things, and a lot of things make me great, and I want to tell you all of them!” And the thing is, like, you don’t have time. And I know it. As an investor, there’s no investor that thinks any business is, like, simple and easy. I just don’t think that from the default, so you shouldn’t be worried that I’m going to think something small of it. Again, you want to be careful of the defense on here. Once I get to this, then I’ll start asking the other questions. It creates that foundation for curiosity. All right, we’re pretty much here at the end. The best way to help me, and I would love for you to help me, is to be clear and concise. Thank you very much.
Craig Cannon [44:14] – All right, thanks for listening. As always, you can find the transcript and video at blog.ycombinator.com. If you have a second, it would be awesome to give us a rating and review wherever you find your podcasts. See you next time.
Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200). The startups move to Silicon