7 Takeaways From Y Combinator CEO's AMA with MESTMichael Seibel is CEO and Partner at Y Combinator. In addition to his work with big name startups coming out of YC, Michael founded a number of companies himself, including Socialcam, which was sold for $63M, and Justin.tv, which became Twitch and was acquired by Amazon for $1B. Michael has been an advisor for hundreds of startups, and even mentored the Airbnb co-founders whom he recommended to YC before he joined.
Michael is one of the most sought-after people in the global startup community, and he is bullish about African startups in particular. For instance, he's one of the key investors in Paystack, one of the most prominent up-and-coming fintech startups in Nigeria.
He took some time to chat in an Ask-Me-Anything - organized exclusively for the MEST community. The session was moderated by Jasper of Capital and Growth. Capital & Growth is a leading free, Q&A site for technical entrepreneurs and new partner of MEST.
Here are key takeaways from the chat.
- Ability to communicate, commitment, traction and having a technical co-founder will take you a few steps closer to getting into YC
These are key areas that reviewers of application to YC place a lot of weight on:
Communication: You should be able to clearly answer the question "What does your company do?" in 30 seconds.
A technical co-founder: The founding team should have the resources to bring its MVP to market without using an external contractor.
Traction: In the context of applying to YC, traction refers to the speed at which the founder is operating the company. How long you have been working on the business and, how much you have accomplished?
Commitment: YC wants to see founders who are fully invested in the startup, not founders who are looking to YC to validate their idea.
- The main causes of failure in startups are mistakenly assuming product-market fit, and founder disputes.
For startups in general, the number one cause of failure is founder dispute. Founding team break-up is deadly.
For YC companies (a company that has been able to get into YC and receive YC funding), the main cause of failure is founders mistakenly thinking that their company has hit product-market fit. Companies tend to follow this moment by scaling up their teams and their expenses, and that is often deadly.
For startups in general, the number one cause of failure is founder dispute. Founding team break-up can be deadly.
- The main indicator of product-market fit is when demand exceeds supply.
The best definition of product market fit is if your product has been used by so many customers that you cannot handle all the people who are coming in through your front door everyday. It is almost impossible to not know you’ve hit product market fit. The vast majority of people who say they have, have not.
- The best teams harness all the team members’ skills
Startups should try to leverage the collective brainpower of the entire company, not separate teams into a set of thinkers and a set of doers and say that the doers shouldn’t be thinking, they should just be taking orders. The goal of a company is to bring in the smartest people possible who are effective and then use both their physical and mental abilities.
- Ability to build and ship a product is the most important thing in a startup
It is the hardest thing for a startup to do. It is harder than acquiring users and customers. The percentage of the startups that build and ship get customers, whether the customers are enough to make it a billion dollar business, that all depends.
- Founders should be in love with the problem they are addressing, not the solutions they are building
More startups would succeed if they were more bullish about keeping the customer and the problem the same and changing the solution.
A lot of founders fall in love with their solution/product, instead of falling in love with the problem it’s solving. For successful founders, the reason you are really passionate about your startup is because you really care about the problems you’re solving, and the solution is just a means to an end. The end is solving the problem. So, if your solution is wrong, throw it away; do something else. More startups would succeed if they were more bullish about keeping the customer and the problem the same and changing the solution.
- Work on solving a problem you care about, not what is trendy or what you think investors are interested in
It might take ten years to build a large, impactful company, so choose to work on a problem that you actually care about. A problem that you don’t mind waking up everyday day for the next ten years working on. Don’t choose based on what you think investors would like or what you think is hard or what you think is the trend, because you cannot predict those things. Choose based on what you love.
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