In this lecture, YC Partner Kevin Hale goes over how to package up your idea and communicate it to an investor. He shares his tips on how to craft your pitch in a clear and concise way that effectively grabs your audience's attention.
- this is a must watch!
- you want investors to pay attention to your startup
- people have a hard time understanding what your startup does
Kevin: This is gonna 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.
So, a quick recap. In the first part, I basically say a startup idea is a hypothesis for why your company is gonna grow really quickly. That hypothesis must compose of three different parts: the problem, the solution, and 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 people have the problem. Don't think you need to know about the solution is that you should not start with a technology, you should start with a problem. And lastly, you're looking to have something that's gonna 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 the work that 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 gonna 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 you 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.
So, down here, when you're filling out the YC application, we actually linked to a couple of things and one of them is How to Apply Successfully. I can't tell because I've 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 on it. So, I'm just gonna like, point out some stuff and really, like, 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 to 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 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 I do not need you to sell me as a YC partner. Right?
So, 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 they ask 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 the 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 wanna 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're able to instill this in other people. So, your goal is just to be clear, I will do everything else.
So, back to the application. These are the only two things we're gonna 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, etc. and I'm the most interesting person at the dinner table. And I tell it to other people, and those people wanna tell other people. That's it. Word of mouth is something where I remember what you do, I talk about it enthusiastic, 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 can 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 gonna 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, to make it simple, and make it obvious.
In today's presentation, we're just gonna focus on making your idea legible. It's gonna sound interesting, right? For clarity. Now, in my essay, I talked about how at demo day, when our startups are presenting to a roomful of 1,000 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 a 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. So, 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 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 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 shareholders, 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? So, that's like, 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. So, I've a very specific definition of complexity. And so, if you look at the root word, simple and complex come from the same root and having to do with twists 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 are ideas that are intertwined. So, simplicity means you are not trying to mix a bunch of things in your description.
Mystery. So, this is an odd one. Well, what I mean is anything where it's like, I'm not gonna understand what is going on when you're talking about your company. Jargon is one, obviously, any words that I don't understand, anything that's fake like indefinite pronouns. So, if you just use this, etc., and you don't describe what those nouns are, and then things that you just suggest, but aren't explicit about.
And the last is ignorable. And so, what I mean by that is there's some language that we will just ignore. So, in UX design, people will create a sort of blindness to things that they don't wanna look at or they don't find to be of important value. So, 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. It's probably lots of stuff that you heard about that, MBA speak, where you kind of like, 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 wanna 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 gonna shake her head. And that means it's got to be conversational. And 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. We'll have some examples of this. But if you wanna 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, it's 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'm 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 gonna 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 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, when we ask, "Describe what your company is gonna make." I don't even wanna read it. But basically, it starts talking about the story of the company. Or basically, like, "In the beginning, there was this problem, and we're gonna go through this issue, right? And then there's these bad guys, and they showed up, but then who's gonna save us? We're finally here to save..." And you're like, "I have to read another thousand applications." That's not gonna 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 have 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 gonna like this team?
Here's Dropbox. Synchronizes files across your or your team's computers. The thing about this is it's refreshing but also there's no pretense. 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 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. Lumineye 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, etc. This creates a foundation for my curiosity. Now, I will start from here to try to figure out, "Oh, how do you 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.
There's another one. So, Vahan, in the current batch, is building LinkedIn for the next billion internet users. So, doesn't perfectly connect me to what they're sort of making, but I'm intrigued. I'm excited about someone building the 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, etc.? It gets me on the right track.
Now, the reason I've used 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? And then attach it to some other vertical or something that you're trying to make work. X for Y is okay but most people abuse it or do it incorrectly. So, I'm gonna give you some tips.
First, should you use X for Y? Sorry for the legibility. Number one, is X a household name? This should be like a billion-dollar company, right? You can't use your uncle's like 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? So, everyone, as many people should know about this as possible, and for an investor, it should be clear that it's a billion-dollar-company 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? So, a lot of people don't think it's successful. So, be careful of that.
Does Y want X? So, 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, Airbnb, or Uber for, etc. It should be really clear that that's a segment that's either missing it, it's not being served well by the other one, and also that those people want to have that kind of model.
And then third one is Y should be a huge market? So, if you're building X for Y and in the last part doesn't sound like a really big business, that's not gonna work well for you, right? Because what we want, because you're essentially saying that you are something but it's a subset. And what we want to make sure is that subset feels like it could be really, really big. If you choose the subset that sounds like it's going to be really, really small, investors won't be as interested. It means that I'm worried that you will not have enough potential headroom to grow to become a billion-dollar company.
So, here's an example that it 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. So, don't wanna do that.
All right, 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 read that like 1,000 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 focus and 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 your idea very efficient. I'll just look at it, I'll understand really clearly, I'll move around your application to be like, "Oh, I'm kind of excited, maybe there's gonna have this." And I'll look at that part and I'm like, "Oh, they do have it, that sounds awesome. Oh, what about this? Oh, that sounds awesome, too."
What we don't want is me to go like, "I don't know what they're talking about." Then I have to like, go to your website, I'm like, "I don't know what they're talking about. I don't know how that 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, etc. Super inefficient. Where is there going to be room for me to get excited as a result?
So, to be efficient, we need to be concise. Concise. The best way, I wanna 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, it actually gives me secondary information about you as a team. It lets me one, know that you've 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 understand your thing really quickly, you probably 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, 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 and communicate it clearly. And you might 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, etc.
So, there's a minimum stuff that we want to have, even though we're trying to be as concise as possible. Again, I wanna 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 this short version of whatever it is you're talking about, because again, I know there's like 100,000 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 ecommerce store. I can picture what it is, but again, it's not a description that helps me get excited about, 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 its potential. I also don't know, based on this, some nouns. I don't know exactly who the customer is. Is it people that are selling stuff too? Are they making an e commerce store for other shop owners? It's 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 wanna know for what, for whom, I don't even understand what the problem is that they're solving based off of this. And so, 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. Sounds more like a mission. I can't tell what the product is, and how they're sorted and go about it. Like, I couldn't reproduce this. If I had 10 companies build based off this description, you'd have 10 very different products. The only 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 and artificial intelligence is the thing that's gonna make me excited. And the thing is like, those are the buzzwords, those are the solutions, and it makes me worried that you haven't started with a problem.
Let's do an example of like how to adjust a description. So, here's a much longer one. So, 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 get in the way. And so, when I work with companies to help shrink and reduce and improve their descriptions so that I will get the most out of it. I wanna talk through the process.
The first thing I wanna do is 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 wanna be really careful. You wanna 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, etc.
But usually it's going to be whatever the product, like, the verb is like the thing that we're making. If we're thinking about this in an active voice structure, the subject, the verb, and then the object - the customer, the market, the people we're going after. Everything else, if we add anything back to this, I really wanna be really careful about why we're gonna add back to it. Is that gonna be the stuff that makes me excited?
So, the artificial intelligence, IoT suitable stuff, that's like how they wanna 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 is successful or not.
And then up here, I see two modifiers for medical devices, low cost, low power consumption. So, low cost, I could definitely see, that's super interesting. If you make a low-cost device in sub-Saharan community, then I'm like, "Oh, that's interest. That's really interesting." Because that's, like, it's hard just to make something, you know, for developing countries, but to make it so that 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 redo this, we come out to, "We create affordable medical devices for sub-Saharan Africa." Some people are gonna 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. I wanna tell you all of them." And the thing is, like, you don't have time, and I know it, as an investor. There is 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 that.
And again, you wanna 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, I'm 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.
All right, so we'll do a couple of questions about this presentation. And then I'll have Adora join me and then we'll answer questions about anything. Right here.
Man 1: Thanks for the presentation, Kevin. You talked a lot about what is presenting an application but you also hear a lot of pitches, especially in demo day. And what, in your opinion, are the killer tips to make a great pitch and get people to like you in a demo day?
Kevin: So, he's asking about, like, I talked a lot about here about writing an idea for the application, how's that might be different for companies who are pitching or presenting investors on like a demo day? What are things that we look for? And so, I talked about in that essay that I wrote how to pitch, how to design a pitch deck and talk about like how to present the ideas. The main thing to keep in mind is that at...
So let me describe the situation. So, demo day at Y Combinator, it's like 1,000 people in the room, and you have two minutes to talk about your company and show what you've built to get them excited. And then there's gonna be 200 other companies that will do the same thing on the stage. It's an extremely hard problem. And so, in two minutes, what do you get across? How do we get it so that in two minutes, a company on average will then raise $1.5 million after demo day?
And the thing to keep in mind is that, yes, there's 100 reasons why your company is great. You cannot say all of them in two minutes, you can't say them in a short conversation when you're meeting a bunch of investors inside of the room. There's like maybe five to six points that are really, really great about your company, maybe the investor will remember one or two of them. One of them has to be remembering what you do. And so, the goal of you being on stage is not to say all the things that's great about your company, it is to get people to want to have a conversation with you, to say, like, "I can't ignore having a conversation with that person." That's what a great pitch does.
And what that means is, you don't make the slides be the thing that they remember. You wanna make yourself. It's about your presence, the way you talk, how confident you are, etc. Basically, do you present yourself in a way that people go, "I wanna interact with you."? And so, the presentation is more about making the founders look formidable and impressive to use a language that everyone understands and is clear, but feels inevitable. And so, the goal is not to do all this fancy stuff. It is to do very simple fundamentals and talk about them in a way so that everyone will understand. Right there.
Man 2: I applied a couple of times and the one question that's always the bane of my existence is the, "What's the surprising or amusing thing that you've noticed about the world?" Could you provide some clarity in terms of what you're looking for there? Is it something about the business or is it like something witty? Like, I just spend way too much time on that question.
Kevin: So, we have a question on the application to YC that is about explain what you...
Man 2: It's like, what's something surprising or amusing that you like to...?
Kevin: Yeah. So, share something surprising, amusing that you've noticed about the world. And he's saying I'm having a hard time with the question. And so, any tips about that? So, again, we at YC, we don't really judge ideas. I talked a lot about how to present your idea. But the idea is a reflection of how you think. So, everything that we have in the application is to try to understand more about the team and the people who are behind the company.
So, a question like that is very obvious. It lets us know, how do you think about stuff? What do you find interesting or amusing? Because part of it is that YC is optimized to spend time with lots of people every single week for dinner. And I want to spend time with people I like, people who are not assholes, and are kind of interesting. Right? And so that kind of question, it's a basically a dating question, to letting me know, it's like, "Oh, I wanna buy this guy dinner." Right here.
Man 3: In my example, it's a very specific financial problem that I'm trying to attack. So, should I work on trying to make that very complex in very specific problem, something that anyone understands? Or should I talk to the right people that understand that type of problem?
Kevin: Gotcha. So, the question is he's working on a very complex FinTech solution or app. And he's wondering, it's like, how do I balance this talking to the right people so I can use jargon and who understand the complexity versus making a version of the idea that everybody can sort of understand? The answer is you have to do both. So, everyone that you're talking to at industry, your users, customers, or your business partners, you get a shortcut with them. And that's most of the people you're gonna interact with. And the thing to know about that is you need to have that developed, right? That customer or business partner speech so that you're efficient and talking with them.
The thing is, you also have this other one, if you're interested in outside investment, having the press want to talk about you, etc. You need to have a good storytelling narrative for non-experts. So, really, it is not one or the other is how you have to do both. And the thing is for FinTech people, because there's so much around all these other people who just understand this stuff, they rarely practice the other thing, because they just assume it's always going to be like that. But when they come to YC, it's the first time they want money from investors who might not know about their space or they wanna talk to press who's not gonna understand what they're doing, etc. Right here, sitting down.
Woman: How do the best, most memorable applications make you feel?
Kevin: So, how do the best, most memorable applications make me feel? Probably the best ones. Make me go like, "Fuck. I wanna join their company." That's like the best ones, right? It's like, "Man, these guys seem really cool, they're super smart. I feel like I'll learn a lot of stuff from them. Man, how do I get on their bandwagon?" Right. Like, I'm thinking about quitting YC. So, would be, like, the best ones possible.
In the second tier, it's really just like, I'm energized. Because when I'm reading tons of applications, I just don't understand what's going on or I feel like people wasted a lot of time on the wrong stuff. I'm just getting frustrated. Like, when I hit an application where all of a sudden it goes like, "Oh, it's a breath of fresh air." And I like, "I wanna spend time with them, I wanna ask them a bunch of questions, I get very curious and then I like want to jump around the room." I'm a very active guy.
So, like, think if like Adora got excited. She'd like drink a glass of water something like that. But really, the best ones are the ones that makes us wish we had done the company or that we would join them. That's the best. Right here.
Man 4: Why or the how are very important for the idea, how can you include them?
Kevin: How can I what?
Man 4: Include them?
Kevin: Oh, okay, yeah. So, I talked a lot about focusing on the what and then kind of avoid the how and the why, but they might be really important. How do I include them? You will not include them in the description. They will be included elsewhere. So, there's questions on the application that asked you about how are you gonna get your users, what is an insight that you understand about the business no one else does, how you came across this, etc. So, there's opportunities elsewhere.
One thing to keep in mind is, I would highly recommend trying to keep your answers within one to two paragraphs at the most. That makes it for an application that's very skimmable by me. So, the whole thing is the how and why is important, but you can't just say it all at once. Like, sometimes you'd like to talk to someone and they're telling you a story, but they're trying to tell everything about everything all at once. And it feels like he's not giving you time to breathe or think. You wanna sort of avoid that context. Right over there, enthusiastic curly hair.
Man 5: How do you know a company is on the right track to getting product-market fit?
Kevin: How? That sounds like a together question, but I'll answer it. So, how do you know if a company's on the right path to product-market fit? So, if you have to ask a question, do I have product-market fit? The answer is probably no, you probably don't. Right? But if you're so busy, and you're frightened that the company is gonna fall apart, because you have so many customers coming in asking stuff for you, you're just figuring out how do I hire? How do I serve everyone that wants to come to me? You're too busy to ask that question because you're just making money hand over fist, that's product-market fit, you're on the right path.
The whole thing is it feels like something else, changes in the company. It feels like you're out of control. So, if you are in control of your company, you feel like you can relax and you're sleeping well, you're not on the right track. Very few companies ever experience this. Far back .
Man 6: Okay. Well, if you can talk about your experience doing this because right now, you're on the other side of the stories, but you can go back to when you were applying to Y Combinator on and making this exciting?
Kevin: So I tell a small anecdote about when I applied to YC, and about how this sort of applies. When I applied to Y Combinator, I was really bad at describing what our company does. So, we actually had pitched two different ideas. They told us to prepare for both and when we got into the interview, one of the ideas they immediately said, not interested. And the other idea we needed a pivoting in the middle of the interview.
And so, the way I had described the company, in the beginning, was I said, "We are building a content management system that has a concept called reversible forms that allows you to both put data input in from the back end, and also collect data from users on the front end." That's a horrible description of a company. And part of that idea that fed that is like, I wanted to be a content management system because what was hot at the time, it was buzz, where it was movable type in WordPress. We wanted to build software like that and we wanted to build a new version of this.
And then I added, not even normal jargon, I made up jargon that I put into my description and I pitched it. And Paul Graham was just like, "Oh, no, what are you talking about?" But he was like, "I think you're building a Form Builder." And then we were like, "No, no." We looked at everyone in that space, they suck, they're really bad. We don't like what they're making, we don't want to be there. Not realizing that was the opportunity. Everyone was really bad there but their businesses still succeeded. And so, that's like the clear example of this from like the other side.
And so, I actually spent a lot of times, like, Adora and I spent a lot of time fixing, mentally in our heads, what you guys are making or doing. And so, actually after we're reading applications, a lot of times, partners have to basically redescribe or repitch back what you're making, so that way they can understand why they're gonna get excited.
I'm gonna do one more question and then we're gonna do combo, right here.
Man 7: So, hello. So, how do you tell an idea that has multiple stages? For instance, if you want to become Z, but before that you need to do X and Y.
Kevin: So, how do you tell and describe an idea that has multiple stages, like you have to do part one, before you can do part two and three. I would focus only on describing what part one is and then later on, you talk about what are the other phases that are important. Now, oftentimes, when I hear something like that, a YC partner will immediately have like an alarm go in their head, and they really are going to push you on. Why do we really have to do part one? I'm gonna push so hard and why can't we go straight to part three. Because what you're basically saying is like...it sounds almost like a defense instead of you saying your strategy.
It sounds like it's like, "Hey, I'm gonna talk about what my company's doing but I'm worried that you're gonna think it's really small. So, don't worry, we're gonna do parts two and three, they're gonna be even bigger." And the thing is, that's a really weak pitch, doesn't sound very confident, etc. Now, what you wanna avoid is saying, like, "We're doing number three..."
What you could do is if we're doing number three and we're starting with number one, but that has to be very efficient. That number three is very quickly can be said and that number one makes it sense. So it's like, I wanna build automated market...I just met a Colombian company today and they wanna make automated marketing software for WhatsApp, for small, medium businesses. And they're starting with hair salons, right. And then they're gonna move on to all the other industries that need help with them.
All right. Thank you very much. I'm gonna invite Adora to come on.