Building Minimal Viable Product with Michael Seibel | Decode Academy UC Berkeley Course Fall 2020

great um so agenda uh i'll go over logistics real quick and then a topic overview and then uh after that will be the speaker session and then current q a at the end of um the lecture um logistics same policy um camera on meals on and then um if you have any questions send it in the chat and then we will pick a couple and then ask the speakers at uh at the end of the session and then um use the race and feature if you have any um serious question on the spot um about assignments uh turning your assignments separately um even if you guys are in the same group um and then there's no accommodation for missing assignments and then um two things are due uh this day just keep in mind and then um email uh decoys v gmail.com for any questions so as a quick recap uh last time we were here we talked about um finding the finding the problem that you want to solve and then coming up with a solution for that so today we'll go over the empty stage of things um so real quick about the definition by the book uh mvp is a version of a product with just enough features to satisfy early customers and provide feedback on for future product development in another word the simplest thing you can give to the very first set of users to play with and to test your assumptions um so here are two pictures on the left i would say that's more of a mvp type of sketch and then on the right is more like a finalized product so that's the mvp the other one is not um moving on uh in the case of zappos uh this is an example uh the founder actually went to the physical store like foot locker or something um took a bunch of pictures of the shoes and then posted them on the landing page um and anytime um any time my order was placed uh the founder will actually run to the physical store um pick it up and then ship it to the customer um so you know just by doing by having a simple um landing page the founder was able to prove that there's um people who were actually willing to buy shoes online um and then he was able to sell a bunch of shoes with zero inventory in the early days so total perspective this is a quote from reed hoffman um a lot of people think that launching a product is a once a lifetime event but actually it's not you can launch a bunch of products launch a bunch of virgins uh multiple times as a founder um so here are another two graphs um on the photograph on the left the straight uh the straight line is more of your expectation of things and then the curvy one is uh the reality and the gap between these two lines is called the value of disappointment and then moving to the graph on the right the value of disappointment um within the value of disappointment it's actually a long process um so starting here you might come up with something and you show it to a mom and your mom is going to be like oh it's awesome i'm proud of you and you think you know your business is going to take off like a rocket but in reality you know usually it doesn't work like that your friends some of your friends might be like oh it sucks i can just um use some other products to place yours and uh this and that um so then after a bunch um iterations you started to um talk talk to to to strangers and to to real customers um to a point where they they love it so much that they tell their friends [Music] um um can everyone hear me okay though just let me pause real quick okay is it better now good for me awesome um let's see okay so this might be your initial product um looks something like this um gets the general idea across the board um but it's not really you know what people really want and then then you you know get to a point like this you keep improving and then you know you come up with not really fancy but then you know you get the core feature it's much better than climbing upstairs um and people love it people use it every day and then after a long while um you get to this point uh fancy and stuff um but keep in mind that none of these fancy stuff matters until you figure out um the solution to the problem that you're trying to solve um so mvp is more like a process instead of a product so you launch it you know multiple times launch it quickly um talk to a bunch first first users and then get feedbacks iterate and repeat until you get to the point where people love it and people tell their friends about it um here's a quote from michael himself hold the problem you're solving tightly hold the customer tightly and hold the solution you're building loosely um a lot of people think that getting feedbacks for a shitty initial product um doesn't matter but actually it's way better to figure out that um find out that what you're building what the fantasy you have in mind is actually not what people want um so a personal example um when i was little i used to play with legos and stuff i had this fantasy in my mind that you know like this is like a lego terminator thing that is gonna dominate every other lego characters um but then you know my sister would come in and break it apart and i was like why would you do that it was awesome um and turned out uh it was way too ugly that she thought it's just some random leftover pieces um so this is kind of like uh getting feedbacks from your customers um if my target user is my sister i'm not gonna blame her for not being artistic enough um to appreciate my work you know it's ugly okay i got it i'll go back fix it come up with a better version of my lego terminator um so here's a video hopefully you can get play nice uh can everyone see it though can i um can i get a thumbs up if you guys can so um i think that was a pretty good example of um what mvp is um if you don't you know remember if you ever don't uh can't remember what mvp is just think of this character for key um it's scrappy it's fast it's rough but you know it gets the job done um so to recap uh mvp and allows you to test the market in early stages um and it you know gives you feedbacks and then it's a foundation for the development of your product in the future um so that's my part for the overview um today's speaker um there's really no need for introduction but um we're very honored to have michael sibo here um he's a ceo i y combinator founder at twitch and one of the board members at reddit so without further ado let's welcome michael c right so i was thinking about what to talk to you all about and um i came up for a topic but it's going to require you all to participate in the conversation and so if you can turn your cameras on that would be ideal so the topic of the conversation is the hunt for in the startup world because there's a lot of in the startup world and i think you all are probably starting to encounter some of it and the more you dig into startups the more you're going to see it so i have come up with the first five topics on the list that i want to talk about and i want to get the next five topics from all of you so i'll give you my five topics to start and then i want to see some topics appear in chat so first my first topic is what i call scenesters people who are doing a startup to be part of the startup scene but don't actually want to do all the hard work it takes to build a successful company number two investors who haven't done anything they're a large source of number three the low success rate the reality that most startup founders don't succeed number four the economic argument do you actually make more money if you do a company or if you work at google and number five accelerators including yc are they worth it or are they so those are the first five i want to hear suggestions from you all as the next five what do you think is the that's being given to startup founders and or college kids thinking about startups right now that you want to dig into where is your skepticism um what kind of gets the alarm bells ringing where that sounds too good to be true or that sounds stupid or this feels fake throw some ideas out in chat and i'm going to start seeing what you all come up with yeah michael real quick can you just repeat the list real quick for people to yes so my first five are scenesters fake founders um number two investors who haven't done anything folks you know we call these kind of like the vc twitter folks number three the fact that startups have a very low success rate but people don't talk about that number four do you actually make more money doing a startup or working for google and number five are accelerators worth it at all so those are the first five what do you all got what are the next five topics okay here we go stuff's coming in all right let's see dropping out of college i like that one i like that one all right let's see um too young too inexperienced okay failing fast i like to call this pivotitis pivotitis okay getting rich quick i like that one okay giving advice is hijacking an idea by more experienced people who who suggested that can you just get on the mic real fast and explain what you meant um so what i was saying is that at least in my experience uh whenever i've like gone to someone for advice they've just tried to um chalk out my entire path ahead and kind of give just tell me everything about everything and sing if this is what you do this is what you'll get okay all right so the last one i'm going to roll with is one that just came in which i like to call hustle porn how hard do you actually have to work versus should they be i'll call it work-life balance that's a better one all right so um just to give you a bit of a framing here you all are considering startups at a moment where startups are really really high in the hype cycle and just like the mortgage-backed security market in 2008 or any of the kind of hype cycles that have come previous um hype cycles drive low quality people to an industry hype cycles also tend to drive low quality money to an industry so there are a lot of low quality people getting involved in tech startups right now and a lot of low quality money now that's fine you know i'm not not complaining but i think that the fact that this is a big hype cycle should make you all skeptical and the fact this is a big hype cycle means that there are a lot of new vcs new investors new advisors new accelerators new programs that have no track record but who are trying to present themselves as good that's what happens in hype cycles and so to start i think the most important problem strangely or area of is what it yc we call scenesters so um one way that i can highlight a scenester quality is please type in yes if you are currently working on a startup keep them rolling i think somebody some people sense this might be a trick but don't worry okay okay um for all those people who typed in yes and i can see all of your names here um please type in yes if you're working on that startup full time and know if you're working on that startup part time there we go now that is one of the signs of being a scenester i speak to college students all over the country god now all over the world i've probably spoken to 2 000 college students in the past four months strangely zoom makes it a lot easier and this is one of the most common things i've seen lots and lots of people working on a startup quote unquote but not very many people fully committed um what i will tell you is that this is part of a bigger picture of people wanting to be part of the startup scene founders wanting to get on techcrunch be on product time be in hacker news get invited to parties get early access to clubhouse basically like people wanting to be part of this startup scheme but actually not really being interested in building something not really being interested in solving an important problem um here's the thing most people will not tell you whether you're a scenester or not and a lot of scenesters have the trappings of success they can raise money they can hire employees they can launch a product these things are all very easy especially during the hype cycle but when you really dig into what scenesters do they almost always are spending more time trying to impress someone who's not their users that typically means they want to impress their peers and more typically they want to impress investors because in our world investors are like the source of power they're the gatekeepers and if you want some of that juice you want to become friends with them at yc we don't like scenesters and the reality is that scenesters don't solve important problems scenesters are kind of like litter on the road they're kind of like noise that prevents you from hearing the radio clearly um or they're like too many people using netflix so your netflix is all up and you can't watch well um they're kind of the result of pollution in the system and you need to be aware of this because you can't be influenced by them you have to be able to when you're thinking about who your peers are going to be who the people that you're going to reach out to you're going to measure yourself by you have to make sure you're not measuring yourself by seniors so that's topic number one scenesters i'm happy to go into more detail at the end number two investors who haven't done anything there's an explosion of funds of new vc funds um there's an explosion of scouts there's an explosion of college programs and college-focused vcs there's a very specific reason why that people don't talk about interest rates are very low technology companies are a main driver of returns for large institutional investors and technology companies are staying private longer and longer now without you knowing it really those three things have caused institutional investors the folks who invest in the vcs to pile money into early stage investors for the past eight years and they're piling piling piling piling as a result you know just to give you kind of a sense of this the number of attendees at a yc demo day number of investor attendees have gone from around 400 to 600 eight years ago to over 2000 now and all of that is because investors perceive that this space early stage tech is where they can make returns so as a result after the good investors have been exhausted the folks who work hard who had value there was more money that needs to be piled into this space and so not high quality people started raising it as well and now you know my friends who run a band called the chainsmokers have their own fun and i love the chain smokers but it's kind of a sign of the times and so number two is you really need to be aware of investors who talk a good game but have never done anything um and this is something new like it used to be back when i was doing my first startup in the mid 2000s that if someone was going to give you money and it was an it was early stage before you raised a series a it used to be it was because they were either a founder or an early employee at a very successful company so they made that money and they were giving you money out of their bank account nowadays that's not the case nowadays there's so many people out there with five 10 15 20 50 million dollar funds and they've never done anything they never they didn't have to work hard for that money they didn't make that money themselves number three the success rate um unfortunately the press and the kind of twitter hype cycle really people up when it comes to how hard it is to make these companies work you can read on techcrunch in the tech news every day about a company that's raised money how often do you read about vc vc-backed companies that die very rare very very very rare but like let's be clear let's do the math right we know that 99 percent of startups die we know that a vc is only going to in fact is going to only going to expect one out of every 10 investments they make to be a big winner and they expect seven out of every ten investments they make to effectively be a zero or just give their money back so here's my question where are all the failures where do you go to see all the failures uh you can't go tech crunch you can't go tech meme it's not on twitter where are all the failures and so um this is something that you should keep in mind you're not being primed by your general news and and kind of the where you generally consume startup news is not communicating a real picture of the game it's communicating a very very fake picture of what's going on most startups never raise series a's most startups never hit product market fit most startups you never hear of even the ones who raise one two three four ten fifteen twenty million dollars most you never hear of most die one of the things we say at the beginning of the yc batch is here welcome out of a batch of 200 companies we only expect five to be successful let's be clear we'll have twelve thousand to sixteen thousand companies apply we select two hundred out of them we expect five to do well to create a billion dollar company and actually solve the problem that they want to solve and serve their customers and so understand that you're probably getting into something that looks a little bit more like being a successful rapper or singer or athlete the odds look a lot more like sports and entertainment and look a lot less like being a successful lawyer or doctor or banker all right number four the economic argument doing a startup versus working at a big company i think that i see this argument all the time on hacker news what's my expected returns if i do a startup versus i spend 10 years working at google and i'll tell you straight up your expected returns are better at google if you are making an economic decision to do a startup that's pretty dumb that's pretty dumb the math is not in your favor the math is not on your side and so i don't think that startups are a good career option right if i'm comparing lawyers versus bankers versus doctors i can think about career and i can do pros and cons on those careers because none of those careers have a 99 failure rate right imagine you get into uh you know berkeley law school and they tell you the first day only five of the folks who get here are actually going to become lawyers you'd be like you give me my money back this isn't worth it but that's exactly what the startup world's like and so you have to have a motivation besides making money put another way you have to enjoy it enough that if it doesn't work out you're still happy you did it you have to pick a problem that you're going to be excited to work on even if it doesn't work out you've got to work be teammates you're excited to work with even if it doesn't work out all right next accelerators including yc um yc was started 15 years ago in the past 15 years 3 000 accelerators were launched around the world me 3 000 accelerators just to give you a sense yc's two best companies the two companies that we have the highest expected return for are airbnb and dropbox and neither of them i'm sorry only one no neither of them have gone public so why see what many and i would include myself describe as the number one accelerated on earth our biggest bets that haven't come public yet are not realized i think that a lot of people want to equate accelerators to universities and that's the exact exact exact wrong thing to do one for most jobs out there you need to go to university most of the startups you use today never went to an accelerator so clearly it's not required two if you go to any of the top 100 universities without even thinking about it any of the top 100 universities and you're smart and you're motivated you can get a good job and you can learn a lot any of the top 100 universities have graduates who've gone on and become very successful that's not the case with accelerators the vast majority of accelerators have never worked with a single company that's become wildly successful some one or two so when you think about accelerators you should not think about them as a required step you should basically say my startup is so high risk that why would i take risk on a startup accelerator why would i add the risk that i have to the risk of working with the program that hasn't worked any successful founders also if you're considering giving away seven to ten percent of your company how many alumni have you spoken to are you receiving the pitch from the people running the accelerator or are you getting the pitch from alumni you've participated in it is ahead the second group's way better than the first okay so those are my five five sources of i'm gonna go with the next five now and i love them first one dropping out of college there are too many young founders who think they're too cool for school literally they think it's cool to be hanging out with people who are older than them investors people go to cool parties and all that stupid they think about the people around them as being lame young not savvy not cool the reality is a lot the vast majority of startups do not start in college starting your company in college is actually not clearly strategic it's not a clear strategic use of your time especially because you can't work full-time most people start companies in college and all those things turn into is resume fodder that's the thing you use to get the google internship um dropping out of college is not required to be a successful founder not at all not it's not required that you work on a startup in college it's not required that you drop out of college not required at all here's some of the counter-intuitive things that are really viable about college you will never be around a group that's this large of smart people with almost nothing to do ever again ever again the vast majority of people who start their companies in their early to mid twenties start their companies with their friends from college and so one question i would have for you is are you making the right friends are you making friends with people who you might want to work with are you making friends with people who you respect who you like talking to are you making friends it's funny because sometimes people are too cool to make friends i want to give you an example my wife my wife went to berkeley haas to get her mba and uh needless to say we have a bit of a bias against mbas nyc but i had to go to a lot of her events you know and meet her classmates i had to be nice one of her classmates told me i want to start a tech startup and i said great do you know how to code no do you have a technical co-founder no i don't need one that's it's like okay uh what are you doing oh i'm doing this online subscription i need a website and to be able to charge people i need all this stuff and um i talked to her about six months later and she hadn't made a lot of progress and she started coming around to the idea that she might need help with software but she confessed something to me she said when i was going through school i never made friends with anyone who knew how to code i didn't realize it was important all i tried to do was network with people who are into banking because i liked banking and you know she went to duke and there were a lot of people who knew how to code at duke and didn't matter and so when i asked her has she ever gone is she friends with college and she go to is she friends with anyone from college who knew how to code her answer was no i asked her what you do after that banking consulting do you ever meet an engineer there no it's like oh wow so you want to start your company you're now 30 and you've never been friends with a software engineer you're screwed you yourself so who you make friends with is probably the most important thing in college and probably the second most important thing in college is are there hard skills you can pick up whether it's being a better software engineer or something in class are there hard skills you can pick up that can help you all right next one i'm too young i'm too inexperienced um i think this has kind of two different flavors of on one hand they're gatekeepers who will tell you oh you can't do what you want to do you're too young you're too inexperienced in my mind those people should just be ignored there's clear history of many many many people who started very early and did well so if you just look at the products that you use today and you look at the age of the founders who made them you'll find a lot of young people in that group but here's the second thing there are a lot of young people who work on problems that they know nothing about top three most common question i get from young people are how do i find my first customer let's think about that for a second you've decided to not take that job in google sacrifice 150 000 a year plus stock to start your company where people expect you to have a unique insight and where there's a 99 failure rate and you've picked a problem where you have no idea who your first customer is huh that sounds pretty stupid so there's this phenomenon that's going around where young people are looking for what i call clever ideas ideas that when they tell their friends what do you think about this their friends say that sounds cool why why are your friends valuable at all when it comes to picking the problem you're going to work on in fact i think that they're the opposite of value i think they're completely useless unless they're the actual user who might use your product furthermore i see a lot of young founders afraid to solve real problems they think they need a warm-up startup so they go into a space that don't know well and they assume everyone who's currently in the space and everyone who came before them they're all dumb well if you're doing those types of things then you are too young and you are too inexperienced because you should never start a company where you don't have some personal unfair advantage right 99 higher um chances of failure you should have some personal unfair advantage and that unfair advantage is not that you know how to code because there are a lot of people who know how to code so i often challenge young people if they're going to start a company after school right after school to think about problems that they've had personally or that they grew up with or that their family has problems where they already know the first 10 people they're going to ask to use the product problems where maybe you have tried all the alternatives and you know exactly why they suck now here's something counterintuitive right mentally it's hard to convince yourself you want to start work on that problem the problems you know well and that haven't been solved you tell yourself maybe there isn't a good solution a lot of people have tried this is really hard the problems you know well and that haven't been solved are really hard whereas the problems that you don't know well you convince yourself are easy it turns out all problems are hard it's just you're not a good grade of how hard they are unless you have any personal experience with them so the too many young founders who basically pick the found the problem that like looks cool looks easy and they have no experience in they end up shooting themselves in the foot right when they've started all right next pivotitis so pivoting as a term was invented in the last 15 years in the context of startups back when i first started doing startups um pivoting was called failing there wasn't a term um for for it and nowadays there is this assumption that the solution that you create should work so here's kind of a common bad flow that occurs i decide to work on a problem i know nothing about i don't bother to really research or talk to users who intensely have the problem i assume everything that comes before me or currently is bad so i don't look at that either i dream up a solution i build the solution right can't be based on much insight the solution doesn't work i pivot pivotitis is when you do that cycle more than twice i bet you have friends who have pivotitis right now i bet some of you have pivotitis right now um typically the number one cause of pivotitis is false expectations the idea that you expect the first solution that you come up with and build to work that seems crazy in a game with over 99 failure rate why should your first solution work why shouldn't it take more than three months of hard work to solve a problem why shouldn't it take three years why shouldn't it take five years right if it's that hard it should probably take a lot of time to be successful um but the number two cause of pivotitis and and extremely common is not working on problems you're passionate about it turns out that when you spend a lot of time and energy building a product launching it and no one uses it that's a big punch in the face and if you don't like that problem and you don't love those users why the hell would you continue building for them it's easier to abandon them so pivotitis one of the major accelerators of pivotitis is the availability of early stage funding some people can raise money before they even have an idea before they even have a team before they've launched a product before that product generates any revenue right so when you get this money you assume that it changes your odds of success but it doesn't especially in the early stage it doesn't and so then your expectations for whether your product works goes up it doesn't work cycle so pivotitis is the eighth pieces of bolt you know major piece of in the startup problem we got two more number nine is getting rich quickly um you would be surprised at um how long it takes to get rich um if i were to recount my own personal story started justin tv along with emmett justin and kyle in the fall of 2006 when i was 23. um made a life-changing amount of money in the summer of 2014. so eight years later i was 31. i want to give you a sense right that's my whole 20s my whole 20s gone right if you think about your productive decades right you probably have about four of them 20s 30s 40s 50s so one quarter of my productive work life was invested to get this return takes a long time and what's interesting is that there are a lot of people who are worth a lot of money on paper who until that paper actually turns into cash they don't have any money and so if you're going to do this life one of the things you have to realize that all your friends who go work at facebook and google and dropbox they're going to have money they're going to go on nice vacations you're going to see them posting cool on instagram they're going to go out to clubs they're going to go to bars they're going to be able to afford doordash every day you won't if you need that life startup is not for you um so yeah getting rich quick doesn't happen the last note on this you might see companies getting acquired on techcrunch for 10 15 20 30 40 50 million dollars and you might think those founders made a lot of money um they didn't i promise you yc is on the other side of a lot of those transactions we're on the cap table of a lot of those companies and let me tell you what happens in a 20 million dollar acquisition so first let's say that company raised a seed round in series a that's 7 million bucks bang that's out the door let's say that company has some accounts receivable or has some debt out the door now let's take the remainder of that money is that paid in cash or stock does the founder get that stock right away or cash right away or do they have to earn it by working at the acquiring company for a number of years let's say they get the cashier stock is it liquid is the stock liquid or do they get stock in another private company that they can't do anything with let's say they get cash the typical estimate i tell founders to make is that you'll lose half in taxes half i tell founders half because the number is a little bit less than half but i'd rather them be surprised by the amount of money in their bank account than disappointed by the amount of money in their bank account so there are a lot of oh oh and then by the way let's say you did make three million dollars um when i was selling my first company and i want to give you exact math i saw my first company for 60 million dollars um after tax that netted me five million dollars let's just give you some real numbers right you didn't read the five million dollar number in techcrunch you read the 60 million dollar number right um but one of my close advisors at the time when i was talking to him about whether to sell my company or not he said michael let me explain to you how money works and it was the best explanation ever heard he said if you make 6 million or below nothing is much different in your life you still have to work you have your call your kids college paid for you get a down payment on your house and you have the start of your retirement plan six or less that's what you get how up is that homes in san francisco that are nice at all they start at three million bucks and go up from there okay if you make 12 6 to 12 what he said was the only difference is you're better off for retirement and you don't have to work a job you don't like meaning you want to take six months off you want to take 12 months off you can do it you never have to say yes to a job you don't like somebody 12 million bucks and that's all they get retirement good they still get the house down payment they still get the kids college oh and if they don't want to work for google they don't have to when you start getting around 20 that's the beginning of the moment where maybe you don't have to work but not if you live in the bay area that bear is expensive as right you live in some place like florida the caribbean some places in the mediterranean south america there are a lot of places you can live southeast asia but you can't live in any major city in the united states but you can start thinking about not having to work and if you make 50 million dollars that's the time where you can start thinking about flying private that's when the math on private flying private starts to work so think about those ranges man the number of people who make 50 million dollars or more in this game is tiny the vast majority of acquisitions that you read about on techcrunch or see on twitter they're not making that you money um even if their company sells for 200 300 400 million dollars you'd be surprised you'd be very surprised how little money they make so get rich quick no dice last is work life balance i think that all this going down on twitter around work-life balance is complete if you want to win in the startup game there are sacrifices you're competing against some of the smartest and most driven people out there if they put in the extra hour and you don't they will beat you period let's be clear it's not just the extra hour it has to also be a massively productive hour if you don't expect there to be significant sacrifices then you're lying to yourself you're lying to yourself and i like using sports as an analogy right if you're going to become the next nba all-star how many hours after practice are you going to be in the gym how many hours not are you going to stay after practice not does your coach drag you out after practice how many hours after practice are you gonna spend trying to be better than the other kid who's spending his or her hours after practice that's the game let's be clear that doesn't mean that you should be stupid it doesn't mean that you shouldn't be healthy it doesn't mean that you shouldn't get sleep it doesn't mean you shouldn't work out you shouldn't hang out with your friends of course you need to do those things but if you're not amongst the top one percent of hard workers amongst your friend group when you're doing a startup probably doesn't look good probably doesn't look good this is not a career this is not oh you work at google you work 40 hours a week you eat our food you take our bus everything is great we don't even give you hardship to do because like half of the reason why you're here is because you're not working at apple or facebook that's that world this world is someone wants to eat your lunch are you going to eat it or are they going to eat it there's only one lunch and so i think sometimes people don't this comes back to the problem that you choose to solve and the people that you choose to work with is the problem going to motivate you to work harder than you've ever worked before are the people going to motivate you to work harder all too often young founders are trying to optimize for skill sets oh i'm good at this they're good at that like oh i'm the tech person i need a business person right like no one has a lot of skills right now none of you have skills right you get skills by doing you're students you haven't done anything yet you're going to develop skills but here's the question how do you hack your motivation how do you hack your motivation when you're getting punched in the face how do you set up an environment where you don't quit that's how you should be thinking about this game all right i want to do one more which is startup trends and vc twitter um anyone who is working on anything related to remote work type in yes in chat anyone doing anything related to work remote work gotcha lovely how did i how how did i guess that oh my god am i i'm clairvoyant holy how did i know all right so let's pick on some folks um let's see is a salani here all right get on the mic solani and tell me why you're working on a remote work startup all right get on the mic hello perfect go ahead i'm sorry i'm not home i there's gonna be a largest velvet that's fine do you have two sets we can hear you yeah all right um i'm i'm not working in my own stock up i'm um working with someone else who's like one of my previous teachers who kind of started a coding startup and she reached out to me so i i had time okay let's try someone else joshua sanchez are you here i'm here why are you working on a remote work startup um previously i was interning um in marketing at a journalism startup at ucla what does that have to do with remote work um i was um working remotely so i wasn't working at ucla i was working um somewhere across um the county so i was traveling and um i didn't work at a physical station there so you're working on a remote startup because you right now because you and your last company were working remote that's correct okay thomas are you here no i'm here why are you working on a remote work startup um so it was remote because the pandemic just started but then after a while um i started going to the office but then now school starts i kind of just step back and um doing stuff behind the computer and stuff okay so so folks um i think this is the thing that i i want to talk about when it comes to this point um one of the things that i noticed time and time again is that young founders like to follow the current hot trend and i think this has a lot to do with them seeking the approval of their peers because their peers like to follow the current hot trend and i want to go one step deeper your peers have been so useful to you up until this point um if you put yourself in a group of smart people in middle school and you worked hard and you all kind of hung together you got tracked into good classes in high school if you took the good classes in high school you had a better chance of getting into places like uc berkeley and if you follow what all the smart people do at uc berkeley you got a better chance getting the google in the facebook internship so time and time again in your young life putting yourself around smart people and doing what they do has worked but here's the thing none of those endeavors have a 99 failure rate this is the first time that you might actually have to do something that a lot of people around you think is dumb because you're not aiming for a trend that is peaking today you're aiming for a trend that might be peaking five to ten years from now now let me give you an example there's a guy named brian armstrong who created a company named coinbase now a lot of people in the world became familiar with coinbase and bitcoin in 2017 when bitcoin ran up and it's not a surprise that for the next two years yc got a ton of crypto applications just a mess of crap a bunch of young people following a trend but let's talk about brian brian started coinbase in 2012. when brian started coinbase if you signed up for coinbase do you know what you got one free bitcoin and nobody gave a do you want to be coinbase but suffer through the nose and your friends think you're an idiot or do you want to be all of those stupid failed crypto startups in 2017 who get money who everyone thinks is cool but who very quietly all die three years later who do you want to be we have this saying in yc which is don't peak in high school you don't want to peak in the first year or two of your startup but so many young founders who follow the trend that's exactly what they do because you know when the right time to create a remote work startup was the same time that zoom launched right who's making all the money right now from this remote worksheet zoom slack right it's totally easy to have an insight when everyone else has the same insight have you ever tried having an insight when it's not popular you ever had an insight when a lot of people said that's a bad idea most of the successful yc companies their ideas looked stupid when they started and if they were the types of people who were polling their friends in order to pick an idea their companies will never exist so friends are helpful for support they're great to have a drink with great to date not great as a filter for your startup ideas um okay i can talk a lot about a lot of other things but i'd like to jump into questions now i'm happy to answer questions about additional forms of in the startup world but i'm also open it up and happy to answer questions about literally anything you want and if possible i really like when people actually say their their questions so let's figure out a way where we can get people to unmute themselves and speak out loud yeah great um so for the students if you guys have any questions uh use the racing feature and then um me or michael can just pick and choose all right two people raised their hands fiona kick us off what do you got um wait uh let me try to start my video hi um because because my camera is a little bit off but um i want to ask what do you think about neurotech in this future i have no idea so um here's a trick a lot of investors and vcs um especially nowadays have theses they have like oh i think this type of company is good i think crypto's hot i think remote works hot i think bio is hot i think this is hot and i want to invest in that and whenever an interesting new startup happens or an interesting new product comes out it creates one of these like mini trends right so like everyone's an ai startup everyone's an ml startup it just it continues forever um at yc this isn't really how we work because if you think about it if it takes 10 to 12 years for our startups to be successful if you were in my shoes would you spend a lot of time trying to predict what the world's going to be like 10 to 12 years from now that seems crazy right that's really hard right if i'm a smart investor i want to leave that risk to you right i just want to back the most capable the smartest people here and let them figure out what the future is going to be and god forbid i have an opinion in the late um 1990s that search engines are mature search engines solve problem eyes miss google god forbid in the mid-2000s my thesis is social networks they're mature look at myspace i miss facebook time and time and time and time again i can be too smart for my own good and miss the trend because how am i supposed to know every trend that's going to happen over the next 10 years right impossible so you know what my job is take 12 000 really smart applicants draw a circle around the 200 most capable help them all and let's see what the gonna happen so if you need to know what i think about any thesis for you to get excited in it already lost shouldn't give a what i think now if you want to ask me a question like have we funded a lot of companies in neurotech space and how have they done if you learn anything from them sure maybe i can share some insights there of course we haven't neurotech space doesn't exist but if you want to do it we'll fund you if you're capable if you're getting done we don't care and what's funny is when we fund stuff people laugh at us right we funded a supersonic jet company named boom when they applied they had one small piece of the leading edge of one wing that's what they had they had a little bit of a wing it was like this big people thought we were stupid they were like you guys are not aeronautical experts you don't know this you don't know that you're idiots now i don't know if boom's gonna work but i just saw a video from the founder where he's standing in front of their first plane that's gonna get ready to start flying in the next year now it's a small two-seater but almost everyone had no idea it was going to get that far so i don't want to be too smart that's a big big thing here all right next um kevin hey michael uh thank you for your time today um wanted to ask you uh what should you be doing if you find yourself working with scenesters as co-founders run away yeah let's be clear most of you are working with scenesters like let's just be real real here right if i forced you guys if i basically gave everyone a bet with ten to one odds right you pay me a hundred i'll pay you out a thousand hundred to one odds i pay about ten thousand if the people you're working with today will be working on their startup the summer after they graduate how many all who are working on startups today would take me on that bet 101 odds how many not many you get to choose your friends let's be clear it's totally okay to work on the side project it's totally okay to get experience building something and launching something that's great let's not lie to ourselves and tell ourselves that's a startup let's not go and go to pitch competitions networking with vcs all that stupid right it's like okay if you're having fun because you're actually talking to users and building something they want great you work on a side project that's awesome but if you're spending all your time trying to find cool ideas and networking with people who are older than you you probably could be spending your time doing other things um all right who's next let's see i'm gonna butcher this name yeah hi go ahead um yeah it's totally fine um yeah um basically my question is that suppose we create an mvp right um four months down the line and you go walk up to an investor and say hey um this is what i have now um it's more than an idea at this point and they're like okay it's still corona um time right now like how is this um product gonna pay like play a role right now and i argue saying that this is designed for something that is going to end like like but how do we convince um investors right now who have the mindset that products should be for right now um that's a great question so um here's the reality investors only invest in companies for one of two reasons love or fear love is this is my pet idea i've always wanted to quit my job and start this company but i was never brave enough to do it and now the company walks in the door you can't bet on love love is rare so you gotta bet on fear my question is why is the investor afraid of you nothing you've said so far makes me afraid of you oh you launched a product great so has i don't know a hundred thousand other people right so how do we develop more fear right that should be your question right how can i get this investor to be afraid of me all right well what makes me if what makes an investor afraid what makes michael afraid one do the people in the founding team know how to code two how long are they working on their product and what have they gotten done has it taken four years to build an app or two months three do they have users are those users paying four how is the product growing five how are those users retaining six how what does that team know each other so whenever you pitch an investor i always like to think of the founder who pitched right before me and the founder who pitched right after me how do i know that i'm better because you know what that investor told the one right before me no and the one right after me no so how do i make sure that i'm so much better than the one who came before and when it came after that they're gonna be afraid that they're gonna miss out that's the game and all too often people think i need an investor i need an investor i'm going to give you all analogy it's not quite pc so bear with me imagine a typical bar situation attractive woman sitting at the bar 20 dudes sitting at random tables right this social experiment represents raising money the guys go and hit on the girl the girl gets to choose which guy to give her number to who do you want to be the guy or the girl you want to be the girl in any negotiation in any pitch in any challenge of wills there's two players there's the one who gets to pick and the one who's pitching what most founders don't realize if they get enough success they become the one who gets to pick and the investors swarm them and they get to pick and so you should design a plan your plan for creating your startup so that you can get enough progress so you flip this leverage and the investors are hunting you if at all possible you should not develop a plan the investor has to pick you where you're one of the guys and the investor is the girl you should not develop a plan that requires the investor to put money in for your thing to work if at all possible because you give up leverage because in that situation you're relying on love and i much rather rely on fear so what i'd think about is let's how do we make this startup look better how do we actually have real results why do we have a plan that requires the investor in the early stage and you'll find just like a relationship between guys and girls if you do something good right if you look attractive if your stat your progress right looks attractive but you're leaning forward too much people lean back but if you lean back a little bit people will lean forward so all too often people spend so much time trying to like we call ninja their deck how do i make my deck better because that's what gets me raised fundraise right if they had put all that time and energy in getting 10 customers paying and then getting 10 more customers paying they would look so much better than all those people who were ninja in their deck that's the game right there all right next question matthew hi um my question was how do you get in contact with vcs um well first let's define terms when you use the term vc can you give me an idea of what you're thinking about well give me a couple examples so i understand so like uh getting in contact with um big like tech investors like who um i don't have any examples so you're asking a question but you don't even have any examples of the kind of people you want to talk to like mark cuban for example mark cuban okay um so i want to kind of divide out the world into different players and matthew i'm picking you a little bit but i don't want you to use the term vc because um vc is kind of like an umbrella word it's kind of like you know if you and i were friends and i asked you hey what do you want to eat tonight and you said dinner it doesn't really communicate anything it's like yes i also want to eat dinner but what do you want to eat okay so let's separate out the players um primary players in this game if we want to simplify angel investors seed funds series a investors angel investors typically are individuals who have made money personally and who are investing their own money seed funds are typically funds that are between two million dollars up to a hundred million dollars they tend to invest anywhere from fifty thousand dollars to two million dollars in companies and they tend to be what's called ownership sensitive they tend to want to buy five percent to 10 of your company and then vc firms vc firms tend to be managing 200 to 500 plus million dollars per fund they like to write five to 15 million dollar checks and typically they only invest in companies that have some sign of product market fit something's working something's aggressively working so um one of the big things that founders get wrong is that the vc funds are the ones who typically have the biggest brands a16 sequoia benchmark they're the ones with the big brands a lot of times founders try to go raise money from them [Music] when most of the time those funds do not invest in early stage companies most of the time so most of the time what this is what happens a founder gets a meeting with sequoia they think they're the they assume that they're going to raise money because they got a meeting even though it's extremely clear that sequoia does not invest in every company they meet right almost by definition they have this meeting sequoia is really good at making that founder feel good until they figure out whether they want to invest in the company or not they figure out they don't want to invest they say thank you very much you don't have any money most typical the folks who tend to give money to early stage founders are these seed funds and these angel funds how do you get in touch with them first it really pays to do your research it turns out that while i believe early stage money is somewhat of a commodity these people don't believe that they believe that they're special and unique in some kind of you know amazing way right think about it like colleges right every college wants to be attractive to its incoming freshmen right to the people who are interested in applying so they pitch themselves as unique and special no matter where they are in u.s news and world reports right that's where the seed funds are and so if you want to be introd it really helps you to figure out what are the types of companies that this fund invests in it's really helpful to talk to some of the founders that they've invested in and those founders can provide the best interest so i want to be really really clear here the best intros to an investor come from founders who that investor is funded because if you think about it the investor thinks that this is proprietary deal flow here's someone that i've given money to so they trust me they have my back and they're telling me that their friend or this person that they met is really cool that's a great way of getting access to investors and let's be clear what most founders are afraid of is they don't send that initial email they don't even do the research they don't even do the research to figure out the type of investors who invest in their space and then they certainly don't send an email to the founders that comes up that investor is invested in right so i always like to think of what's the hard work that my secret competitor's doing that i'm not my secret competitor's doing the research my secret competitor is emailing those founders that person's invested in my secret inventor is emailing founders of companies who tried to solve the problem i'm solving and failed i have to match up with my secret competitor because if i don't they'll win so that's the best way to get insurers honestly like probably the second best way is going to a really good accelerator of which like there are arguably three to five in the world arguably three to five in the whole world um those are probably the two best ways for young founders to get intros to investors um real and real quick uh when you were found in your first company did you ever feel like you were like gonna fail and then like when were those points in you know through in the different stages where was that always you always thought you were going to fail yes here's the fun part um most of the people who run the companies that you all think are safe and big and cool they still think their company's gonna fail um i'll give you an even more depressing thought what a lot of founders fear is not hitting product market fit no one using their product and that's what they dread that's what they go tonight fearing that's what they hate when you talk to founders who have product market fit they often come and do office hours with us and they say you didn't tell us how much it sucks to have product market fit because now it's your game to lose whereas before it's like okay we were trying to find product market fit but like we didn't know if we were going to get it now if you execute you're going to have a very successful company if you're not someone's going to execute you and you're going to die and everyone's going to be like wow you had a shot but you it up also when you're a founder or ceo as your company scales the shittiest problems on your desk always the easier problems get knocked out by your employees by your executives you always get the shitty project you always get the hardest thing the thing that's most up the worst thing that one of your employees did to another one of your employees that's on your desk you got to fix that so um what i find interesting is that i actually think that something is wrong with successful founders like if you look at like mark zuckerberg or bill gates like or uh jeff bezos i think something's a little off i don't think for a norm they live a life that a normal person would ever want to live i think that one they believe in the mission of their company and two there's something a little off that allows them to get punched in the face every day and then get up the next day and do it again i think this is kind of the problem with scenesters is that like they're not willing to do that they're not willing to they they don't even they can't even convert when they hit product market fit because they're not willing to get punched in the face every day all right thank you very much you're welcome who's next uh wish um hello i have a question so based on your talks about startup like trends and also based on your perspective what kind of industry is better to like invest in for the next few years like excluding the video conferencing which are pretty popular right now so hey wish did you hear any of my talk uh yes okay we're gonna try and experiment who wants to answer wish's question guessing what i am going to say anyone come on i think you all know the answer i have no idea it's not my job to figure out what the future is going to be it's my job to pick capable people who have an insight on what the future is going to be and help them if i spend too much time thinking about what the future is going to be i will miss it because the software future is happening in every industry all at the same time there's no way that i can be an expert in every industry there's no way that i can have unique insight on every industry right so what's going to be the hot industry i got no idea you know i'm covering my bases i invest in all industries you want to see that stupid clear go to the yc directory let's pull it up i'm going to share my screen okay so what's hot okay well we've invested in all of these industries boom hell we've invested in an industry unspecified which is very impressive i wonder who doesn't even have an industry there we go um even within these we invest in all these industries just this is within b2b software we got every vertical what about location we got founders everywhere right everywhere so it's not my job to predict what's the big trend not even a little so so one follow quick follow-up question even you have to come up with one it will be very hard for you to like kind of answer it i don't want to because god forbid someone on this call believes that they should work on an idea based on me thinking it's a trend okay i think this is what one of the biggest causes of young people working on stupid stuff is vc saying oh we're big on gaming now oh we're big on crypto now oh we just do ai oh we only do social apps it's all this that investors put out there instead of them saying hey why don't you work on something that you give a about and by the way if you don't give a about anything why are you starting a company why don't you go work at google there are a lot of people there who don't give a if you don't give a and your competitor does they win so you should care a lot less about what i give a about and a lot more about what it's going to take what problem can you work on get punched in the face every day for 10 years and not succeed in and be okay with that and say you know what that was worth a quarter of my working life you pick a problem not an idea you make a problem like that you've got an advantage over every other scenester who's getting into your space because they're a scenester right that's the advantage you want so i won't tell you other than i think rockets are awesome you should make rockets but only if you're a billionaire it helps to start as a billionaire then rockets bezos is doing it elon's doing it it's the cool thing on the block every billionaire should do a rockets company all right that was a joke by the way okay next um uh is this ciara uh yeah it's kiara kiara sorry go ahead i'm michael so currently there's a growing number of like social enterprise accelerator like all over the world but in your opinion like what makes an effective social enterprise accelerator and like there are no effective social enterprise accelerators they're not okay this is not like college where you have to pick the engineering college versus the art college where you have to pick an accelerator that's branded the way you want like i said before most accelerators are horrible in every way horrible in every way have no record of success have an alumni base that you would not want to associate yourself with are not making money will go out of business [Music] if you want to make the world a better place i almost rather you go start without an accelerator than to do any accelerator that calls itself a social enterprise accelerator and by the way i don't think that the people running it are bad people i think they're perfectly fine people i just think that they made a very critical mistake and the mistake is is thinking that the value of an accelerator is to help you with the core part of your business if you're doing a social impact startup around helping poor families get food stamps right and i know more about how to help poor families get food stamps than you do you've already failed so what are you consuming from this accelerator right if you want a mentor and someone is going to tell you how to build a billion dollar business i'm telling you right now that person doesn't exist that's a lie anyone who tells you that they're that person they're lying to you right the best an accelerator can do is put you in a group of people who are really smart and really motivated can help you raise money from investors because they create a good auction on their demo day and can give you insights on how the companies who came before you have failed so you don't make those mistakes that's a plus now there are a lot of people pitching a lot more than that but i'm telling you i run the best accelerator in the world i can't promise you more than that so i don't know what the these other people are promising but that's um i will answer this a different way though one trend that i've seen that has existed for international startups for longer but that is becoming a lot more prevalent amongst u.s founders since 2016. are companies that actually want to make america a better place i think they're kind of two versions of this that kind of are on either side of the political divide there's one version where i think both republicans and democrats looked at the last term that obama had and said oh wow like the government can't agree on anything so he can't get done and then i think republicans and democrats look at the trump presidency and just say like this didn't go to plan either and so i think faith in government is basically at an all-time low and the positive is that a lot more people are saying if i want the country to be a better place if i want my city to be a better place i like my community to be improved i need to do it and a lot more of those founders are applying to yc which i love here's the trick i'm going to ask you a trick question is uber a social impact company kiara go ahead um i i wouldn't say so just because there's a lot of like allegation that says the other way around okay well um let me ask you this can you name a non-profit that either directly employs or has inspired the employment of 10 plus million people so because of this non-profit 10 million people every day get to go home and put food on the table around the world what's the nonprofit that did that because that's what uber did can you name me a non-profit that allows you to download an app and if you have a skill that most people learn before they're 18 you can get a job name the nonprofit i'm waiting um i don't think i can name a non-profit as of now just like corporations i don't think you can name any companies at all and so is uber run perfectly no of course not does uber have problems clearly clearly a cultural problem is for sure does uber treat its drivers as well as they should probably not there's probably an opportunity to disrupt uber but is uber enabling people to put food on the kids table every night yeah you don't need to be a social impact company to do good there's this myth out there that if you want to do good in the world you have to do a non-profit or a social impact company when the reality is there's a ton of good that's done in the world by companies right you can choose to be a company that makes the world a better place or not that's your choice and i'll tell you company is one of the best ways to collect resources one of the best place to build a group of really motivated and smart people and to get them all working on the same thing way better than a non-profit way better than this you know wishy-washy social impact-e thing the problem with companies are when their founders prioritize making the extra dollar above everything else and they trade off making that extra dollar for making their users lives worse their environment worse the community's worse that's when problems when startups go from being good to bad and that's a founder's choice you don't have to choose that there are a ton of investors in the valley who want to invest in startups that are doing good for the world some of the most smartest and talented most talented people believe those investors don't exist so they don't even try to raise money from them so um yeah you should definitely do a company that makes the world a better place if that's what you want to do everyone should everyone should all right next up um i'm not going to pronounce this correctly so x i is that he hi it's she go ahead yeah um my question is what is the best way to attack startup that's also platform based in nature can cater to or market itself to different segments of consumers that question is so broad and somewhat meaningless um i i don't know what you mean basically yes more to be more specific it's like recently i have to i came to see an opportunity in the pool where i see a chance to connect uh from my personal experience i have difficulties to connect with industry workers but i was thinking there is a chance for the platforms to connect high school students college students to industry workers with people who share the similar experience and backgrounds yes so what you've stumbled in is what yc calls a top 10 college tar pit idea a tarpon idea is a idea that looks attractive but a lot of people walk into and die just like a tarpon so the number one thing that i would ask you before you ask the question you asked me is how many people have you spoken to who have tried this exact idea and failed i would say i have been actually conducting interviews with some organizations that's more like in persons and so the answer is zero right how many startup founders who've tried to build this exact startup raised money and failed have you spoken to no okay step one whenever someone tells you you have a star pit idea that doesn't mean you should stop working on it not at all but it does mean that you want to understand why the everyone walks in the tarpon and dies right start doing your research start emailing super common idea you should be able to find 10 startups within a week who tried and failed on this idea um all right next uh hey michael yep um real quick um so i asked everyone who raised their hand typed their question in the chat so you can actually go through the chat and choose the question you want to answer oh okay okay but i like i like when people talk though talking is good um let's see i am destroying names here um ruizi is that close yes that's correct oh nice all right what's your question um yeah so um i was gonna ask like you mentioned investor wants to find the capable people who have unique insight about the industry they are in and i just want to know from like a vc site from an investor's site how do you know if someone has unique insight and is capable of like solving the problem um so there's two things capable of solving the problem usually because they're doing it because when they're pitching you they actually have an mvp that's launched and they have users that's how you know unique insight here's the up thing here's the thing that you don't realize what do investors do all day listen to founders pitch them none of you have a unique idea i guarantee it right i read 800 applications every six months and i've been doing it for almost five years you think you have an idea that i haven't read you think i have a that's that no one's ever had before you think you have an idea that no one's applied to yc for come on no one's got that so what most founders don't realize is they think that they're special snowflakes right they think that they're special and they're unique right because they haven't been pitched by people for the last five years non-stop so as an investor it's pretty easy my first thing is i compare what you're saying to the 20 other people who pitch me the same idea over the past two years you said anything different [Laughter] that's the first step one second i want to dig a little bit into that you know how you can defeat that one so easily you talk to those people before you talk to me if you go talk to the 20 other founders who started a company like this before you talk to me maybe you might figure out something that they didn't realize you might figure out how to tell me something that they haven't already the other trick is to actually talk to real users who have a burning problem burning problem i define burning problem is they're willing to use your almost completely broken mvp because they have this problem so bad they will trust an early stage startup with almost nothing help them solve it if you bring insights from those two groups um you can probably say something explain to me an angle or how to look at something that i haven't heard before because let's be clear i'm not an expert right you can always do more research on your business than i can um and so that's it but you know what most people think you know what's so up and weird in college you're told that the product of your brain is interesting you're told to think about something and then come up with something interesting and then you're given an a when you do it how many of you write papers that are exactly the same with the exact same thesis as the kids the previous year and the kids the previous year and the kids the previous year right i know this because i barely did any work at yale i wrote papers based on that i learned in high school and i still was getting b pluses so if y'all are good students you're getting a's and no one is telling you this is the exact same that last year's class came up with now of course right the reason why is that college isn't set up that way right college is set up for most people to graduate but the startup world is set up for most people to fail so in a weird way you're used to this world where like what's coming out of your brain is what's coming out of your brain almost exclusively is rewarded and you're entering a world where what's coming out of your brain almost exclusively isn't rewarded at all and the founders who can make that adjustment or the founders who are solving personal problems right they're the ones who have the advantage because they know about the problem um so anyways that's the hack um all right what's next uh thomas um yeah so uh my question was sort of about um just how do i set myself best up for you know maybe not startups but just whatever i do later in life um so like what sort of hard skills um and how do you you used a really interesting phrase that really appealed to me which was hacking motivation um i don't know if you know from personal experience or you know maybe other people various techniques is there anything you could say as to these things that i could learn right now thomas do you write code yes okay um i'll give you two things straight away you can get good at building and launching things right instead of working on a startup in college you can build side projects and launch them um you can deal with all the that goes from like having something that qualifies to be handed in on a problem set versus having something that actually a person might consider using you could build for yourself that's number one um so make the jump to actually launching product and suppo instead of just building product um number two make good friends i'm gonna say this over and over and over and over again there's some set of people at berkeley who will change the world um there are talent is not distributed equally intelligence is not distributed equally the spirit resilience is not distributed equally the ability to get done is not distributed equally you should try to surround yourself with people who their ability to get done impresses you who you enjoy talking to about important problems right that doesn't say like oh all the time you should be debating the election or some stupid like that like yeah whatever you can talk about pizza too i don't give a but like you should be your goal should be to surround yourself with impressive people and let's be clear impressive doesn't mean like resume impressive it means like people who get done um i'll tell you a little story i was in the five-year program at yale um they don't call it dropped out because you know we're too fancy for dropping out i was invited to leave for a year that's what happens when you get bad grades this happened to me my senior year so i had two senior years i would argue in the scheme of things this was the best thing that ever happened to me um my first senior year had talkers my second senior year had doers my first senior i was with a group of friends that i loved and we always talked about doing businesses oh wouldn't it be cool if we did this wouldn't it be cool if we did that wouldn't it be cool if we did this but nothing ever got done my second senior year i came back became friends with a guy named justin khan justin khan's a doer right he didn't talk about building a startup he started building this little calendar product he applied to the first batch of yc with his co-founder he got in he did i didn't care about his grades he wasn't the coolest kid he didn't have a good resume he didn't go to any good internships none of that you know why we became friends because he gets done and i enjoy after spending all this time with my set of friends who never got anything done and who just like got good grades in school i enjoyed hanging out with someone who gets done turns out two years later we're co-founders so i don't want to say this in a wrong way like i don't want you to think about friends like networking but you know there are a lot of weird sayings about how you're the sum of the company that you keep and if you thought a little bit more strategically about the people you hang out with and you ask yourself amongst all my good friends who could i even see myself starting a company with who would i trust who who impresses me who intimidates me maybe you should try to spend more time with those types of people and if you don't have those people in your life let's go find them they're all sitting at home just like you all are doing these stupid zoom classes right like with nothing to basically do go find them become friends do some zoom hang out or some right um honestly i think i spent 120 000 on yale and becoming friends with justin khan made it worth it one friendship i'd pay triple i'd pay 10x it'd be worth it it wasn't the classes it wasn't the accolades it wasn't the awards and all that other stupid it wasn't being in secret society i was in a fancy secret society none of that it was being friends with the doer that was the value it took me five years to find it all right we got a couple more um is it dane is that right yeah it's dame okay yeah um you kind of went into my question a little bit but i i definitely agree when you say like you need to find a great group of friends and i was hoping you can go into more of how you go about finding this group of friends and then finding ways to spend a lot of time with them and building this like rapport because i spent like last year at berkeley um you know trying to pursue i'm very passionate about natural language processing but i feel like a lot of students at clubs i i joined you know it's very different vibe with them but i actually think like when it comes to finding group people you want to work with like how do you go about doing that in college oh thanks howard yeah um i'm not sure i have much to add to the last one i would say that um doers have to do so let me give you some examples right um kyle vogt who's uh co-founders tv and twitch went on to do crews sold it for a billion dollars doing self-driving cars um he was part of this group of mit kids who built these like fun things that we would get emailed about at yale so like they soughted a whole hallway of a dorm so that their whole dorm inside was grass they they turned they built a floor in one of the dorm rooms that was like a disco light floor that like lit up when you sit when you stood on individual panels um justin he um organized the group of people to run what was called the god quad which was one of the best party suites at yale he created this thing called the men of branford calendar where he had a bunch of dudes like he kind of made like a sexy calendar with a bunch of unattractive dude friends um in various states of undress um like like there are certain people where is happening around them like real right um here's a second thing i'm a business guy i'm not i'm not a software engineer but one of the things that i encounter a lot are people who fall in love with technology i think in a weird way college is a little bit set up like if you think about what college is actually trying to do right i would say like who it's tricky one thing he's trying to do is provide fodder for the professional schools right future bankers future lawyers future doctors we know that right um another thing it's trying to do is kind of collect tuition right we know that it's business the third thing is trying to do is inspire the next generation of researchers and teachers and um i think this is where a lot of interesting stuff happens i think that called is actually halfway decent at convincing people to fall in love with a form of technology whatever it is the problem is is that it's actually really bad at producing researchers and teachers because if you think about it right the college is too filled up with grad students and researchers and teachers who want too few jobs right and these professors they don't go away right and people are living longer and longer so i think it's fine if you are in love with natural language processing to go get a phd in it and try to innovate in the space i think it's amazing go do it but i think it's horrible for i'm in love with natural language processing to be a starting point for our company horrible that's like you know the equivalent of that which sounds stupid now but sounded cool back in the day was like i'm in love with web apps there was a time when web apps were novel right mid-2000s web apps were novel i'm in love with web apps so i'm gonna go start a company nothing no dice so one way you might find more interesting people is to start thinking about what problems you're interested in instead of what technologies you're interested in maybe it's a problem that's directly related to natural language processing maybe it's not i don't know but um i think that weirdly technical departments in colleges are very good at getting people to fall in love with technology companies use technology as a means not an end all right last two um mahika is that right yeah that's right all right um so my question was about um when you're putting together a team right in the beginning so kind of like a co-founding team what do you look for in this sense that you look for experience and knowledge in areas that you don't have and like like you said i don't have knowledge in anything because i'm um so young right now and or do you look for someone who's like scrappy um i think that i would look for three different things someone that you actually have a relationship with a non-stranger someone who when you brainstorm with them they are a yes and person as opposed to a no because person so let's say you tell me hey you know it'd be cool like tinder doesn't work well someone should make a better dating app right if i'm like you know yeah you're right and you know this is one of the things that's wrong with tinder like it does that's one kind of person most people out there are know because they're going to say to you it's a horrible idea they're like hundreds of dating apps they all suck or that's a horrible idea there's a chicken in the egg how are you ever going to convince girls to get on the product right so yes and people and then the third is doers people who actually do as opposed to talk about so there's a certain set of people in your life who they'll come up one day and say let's make a calendar and then two weeks later they're making a calendar most people in your life they're like hey let's do this and then they never do um you can always hire experience that's the first thing and the second thing is that when you're doing a startup you learn at 10x the pace off if you're working in a company 10 acts the pace i told my mom i was going to be a lawyer and that's why she should pay for yale by the end of yale i knew i wasn't going to be a lawyer i hired my first lawyer at 23. he was 33 and already done two years of accounting masters and three years of law school right i got to that point a year after graduating so um assume that almost everything you learn you can learn on the job let's be clear this is almost always the case in software if you're trying to solve cancer you need phds if you're trying to build rockets just be a billionaire first if you're building software you can learn everything on the job um all right solonie take us home um how about you should probably you should probably type your question because it's a little too loud um is this better sorry at all is it better you're at a rock concert well i was in space okay go ahead but um you got to get a little too close closer to your computer i can't hear you how do you decide if um one time is better than another for your product or your startup one what a specific time is better for your product or your startup like is now the time or should you wait for save i don't like this is one of those questions um i'm happy to say this because i'll end on this point i think there's a lot of kind of startup theory questions that really don't have great answers um there are some around kind of yc's essential advice moving quickly and so and so forth but in general like these quite like like i think a lot of folks have a science background and they kind of want me to produce like basic scientific theories that they can use as building blocks to decide what to work on and the reality is is that like those don't exist this isn't really a science someone smarter than me has this great quote that i'm gonna butcher but basically it's like every billion dollar company is like a unique product in a unique moment in time and if you were to do the exact same thing in a different moment in time there'd be a different result and that's the exact opposite of science right science depends on if you drop a rock today from a certain height you drop it tomorrow from certain height the rock does the same thing and in business it's the exact opposite so while there are certain principles that are important um if we extend it too far we don't get anywhere because we can't experiment it's not repeatable we can't run true experiments so whether you should start working on your startup now or later maybe a better way of thinking about that question is that like when will you be motivated to work on it full time maybe that's when you should work on your startup for a lot of people the answer is never okay well then you should never work on that problem [Laughter] so um so yes all right so um it was great talking to everyone i hope you all had a good time i tried to be entertaining and um ideally you guys brought me in early my goal is to kind of set a bar so please judge all the speakers after me based on this talk and be critical don't be rude don't be an but be critical um my email address is just michael ycometer.com um you can email me now you can email me five years from now i try to respond to everyone who emails me sometimes it's easier than others but if you mentioned that we met in this class i will try to reply sooner rather than later um the email is just michael combinator.com it's very tricky hard to predict email i'll type it in chat and i talk to a lot of companies regardless of whether they want to do yc um i don't really care right like i'm doing yc almost as community service to give back because the startup world has been so great to me and because yc as an organization is the reason why i could talk to you all today and why i have more money than i can spend for the rest of my life but i see it as success when founders who want to do a startup can do it whether they do it with yc or someone else on the investing side though um i only invest in yc companies so if you ask me to invest in your company and you don't want to do yc unfortunately that's a no-go and then finally i don't mentor companies i don't believe in mentors i think there's like some stupid marketing around mentors or these people who are supposed to care as much about what you want to do as you do who are supposed to guide you who know the right way to do things and um who you know give you medicine when you're sick and wipe your ass when you go to the bathroom those people are parents and um you have parents hopefully but i'm not a parent of you i have my own kid and so don't ask anyone to be your parents don't expect people to be your parents the easiest trick in the world an investor will do is tell you they'll be your parents and it's the easiest lie they can tell you and there are a lot of other careers where mentors work right careers with more repeatable rules if you want to be a lawyer you want to be a doctor you want to be a banker mentors can probably be really helpful you want to be a startup founder that succeeds when 99.9 of startups fail probably no one can tell you exactly what to do to succeed including me so if you write me a concise clear email i'm happy to reply if you write me an email it says michael can you be my mentor michael can we spend an hour together michael um here's a six-page novel can you read it michael can you give me deck on your feedback on your deck here's what's gonna happen you're competing with the person who wrote me a good email they're going to get the reply before you and that's just a little microcosm of how this game works um so with that thank you so much i hope you all have a great evening great to meet everyone yeah thank you so much michael this is so good and i believe everyone is truly inspired by what you've shared so um everyone the recording will be posted and if you want to have access to the reporting uh look at the chat we have a youtube web facebook link so go to that link and we'll post it there thank you all for coming hope this is useful for you guys see you later thank you

Channel: Decode

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Length: 118min 18sec (7098 seconds)

Published: Tue Sep 22 2020