From the CEO: Secret to Getting Into YC - Michael Seibel + Charles Hudson

this is awesome great crowd wow this is amazing so many great people out here on a rainy day that's awesome we're going to give you all the secrets you're getting into YC all right well I want to make the most out of time we have with Michael today it's really fun I've known you for a long time and I have all these questions I want to ask you about YC I've never had a chance to act so let's start with let's just start with the basics I mean usually have a really unique background in the context of YC you've been a two-time YC participant you've been a YC investing partner and now you're the CEO of YC effectively so why don't you just talk about your journey how you found out about YC in the first place and sort of the steps that brought you to be CEO Wow I was called sky Niger my dad is programmer I went to Yale I got kicked out of Yale my senior year so I repeated my senior year which was an exit into being a bad thing at all and one of my drinking buddies a designer named justin Khan and after we graduated he applied the first batch ever of YC that was summer 2005 on Cambridge Massachusetts I once worked for a local campaign his company didn't do so well he ended up selling on eBay for about a quarter million dollars my campaign he didn't do so well ends up losing a US Senate campaign license at that point and he decided to start this company called justin.tv and somehow he patrols me into joining some spaces and so we went to YC that was actually his second of free time I feel like my first did two times and that was the winter of 2007 how many how many companies were in that batch so we just did our any revisions of the back I think there were 12 something in that batch we all look a lot older and very good so yeah so we byc back then there were the people who weren't really that popular as angels yet there's a dude named Mike maples there's no dude named itom Saint another dude named Paul goo Heights and you know they were trying to just cool down to hung around YC back then now they deployed fun on the right compartment shows crazy stuff and they decide to invest in our really crappy start with the idea that Justin would broadcast his life 24/7 on the Internet which is the worst startup idea if economy everyone here has a better idea and so you know our angel round back then was a hundred and seventy thousand dollar that's the way that we used to get started that's what a lot of years justin.tv became bigger raised money um and kind of hit this point where we couldn't make it huge and so we didn't know what to do and we couldn't raise money so we had to make the company profitable which we did and then we started a new idea and crazy enough that this - new idea to team up with were one call justin.tv gaming which retains rich and the other which is a modification of our mobile English again and so this isn't working with the community all the within the companies over five years to that point besides if finfisher came out as its own product and then did YC again so we were in the winter of 2012 clocks black which was crazy I just can actually did it again as well those hippies in my batch doing Cyrus called exact and we ended up selling Socialcam on in about a year for 16 million dollars and I was invited to come back as a part time partner and then about a year later I was invited to join as a full time partner and about and a half later I was invited to be to see ya and I think I'm just being promoted to my level in classes what my maximum and so what's the biggest difference so far and being see over to being one of the full time investing partners I didn't just hit a big difference in YC and for all we found a lot more companies now and that requires a bunch of bigger organization so I see has an over 50 employees now and so being CEO means I still get to work with companies every day I'm still the head of a group along with the door another one of our partners but I also have to help manage this organization that go software for our companies that builds the admission process that those are internal forum our internal book base all of the kind of tools that companies you usually use to your job so in some ways it's like being a farmer in some ways like check another pump and some and this so people have a sense in terms of intake how many companies apply to YC these days let me give forgive a batch 7,500 companies will apply to YP each batch of those 500 will receive introduced and between 100 115 Logan and I think for a lot of people YC can feel like this magic black box you apply if you're chosen you get in what are some of the biggest misconceptions you find that founders have about what either what happens at YC or the kind of people you're looking for so the first thing is that the number one reason why Congress don't apply to white finishes they don't think okay so don't be that for them I always tell people like no matter what like you should be the one rejecting off it's free to apply it's open to apply apply and if you get in like reject us if you don't want to be watching um the biggest misconception I'm too young to be a YC Thunder we have funded a 17 year old I'm too old to be licensed under we funded 65 years I'm too far along to do YC we funded companies with 40 million dollar I'm not too far along to UIC we have funded companies that haven't written a single line of code when they apply Oh God I'm superior to you why she we had companies that have sold for Founders Day filter companies for over 250 million dollars will come and NYC again that's a lot of them um oh I don't have second result founders it's harder but not impossible every batch we probably fund on the order of five to ten teams as been a technical co-founder Scott it goes on and on basically we have funded over 3,000 founders and there really is no oh I didn't go to high school if you funded founders from over 180 colleges and universities around the world I'm not from the from right country we funded founders from 25 countries not - so it's just like every single way that you think you might not belong to this community I can show you ten companies it looks exactly like you excellent so we've been kind of the full arc of YC and I've as an observer watch the program develop can you give me a sense of one or two things that you know YC used to believe deeply in the beginning that maybe you no longer believed as deeply today with the benefit of time um yeah that's a really hard question because I think that a lot of our core beliefs haven't changed strangely but if you think about right before belief one is a belief in technical co-founder histories engineers can be business people the second is do things that don't scale the third is that why she should be an open place for everyone you don't need to know anyone in order to get into I see like these are things that are cool another is like 9 to 10 can you get 92 some of the results for only 10% of the work all of these things are like extreme only four - I see I would say that like an extreme really days why Stevie's former skeptical of inductors and you know that was left over from like being the first leg room but you know that's certainly change so ya know I think that like maybe the only significant change that's really happened over time we had to because it's scale is how can we continue to support our alumni after the come to the program we method a lot of time and energy and software and event to continue to re-engage the alumni and give them value throughout the top I think that's a big exchange YC continuity fund it's been a part of that Emanuel reunions now are y'all go camping there's been a lot of software folks so those are the big changes well one of the things I always enjoy reading is whenever you all publish your requests for startups that gives me a sense of the things you'd like to see built and I was really struck by the last wave because they were things that I wouldn't normally associate with YC I think they were news the future of work and democracy which are three kind of big things I wouldn't normally associate with YC can you talk about what led you to select those things so it's it one of our core beliefs of ICS that software's instruct every industry and I think in the early days of YC there is a perception that we just wanted to fun to act with a web app and then you do mobile apps and with our request for startups what we're trying to do to kind of build this case that industry after industry software is going to disrupt whatever's going on and I think what's cool is that you know in many ways we have to build the case so and more even more importantly with the fund the companies so there's been a huge push into hardtack and tons of founders are starting to apply with really hard technology and I've had companies that are building supersonic jets and satellites and we've had to serve them and be done well by with and this is like the next set of things that founders are really passionate about and what I would say is that people think that investors have a thesis founder centimetric have a thesis and that they need to kind of shape or somehow tell the story in a way that fits the investor species I don't know about anyone else but YC we have no thesis we try to figure out what you guys like and what you guys are into and then we figure it out as we look at what people are playing with and a lot of times our requests for startups are not us coming up with a new idea it's us seeing you guys applying with these startup ideas and us saying to the world hey anyone else with these ideas can apply too and so for us it's cool because our theses come from you like we just want to take 150 best companies we literally do not care what they're working on what industry they're in and it makes it really exciting for me because I get to see everything from I mean everything it's a lot of fun cool I want to switch gears a little bit like we I reading the things that you write and you wrote I thought a really good blog post about how fund raising is not a milestone and there's a lot of the whole sub industry in tech media about covering fundraising and financing events that happen in venture companies can you talk about what motivated you to write that post yeah we have a great founder iyc her name is Annie and she sold a company called poppy and poppy is basically an uber for babysitting and she's willing the company in Seattle and she asked me for advice you soon as she said you know I think it's time for us to go out and raise a Series A and I was like why how much money to have in the bank she's like oh we have over two years of runway it was like oh and like are you cash-strapped or just something unique to spend money I was like no and I was like well why are we talking about this and she said oh well you know a number of investors and advisors have just started asking her when am I going to raise the three day so I thought that meant now seven is Thursday and I was just like holy crap like what do you mean like because Thursday is just money and I started digging in more and more and I started realizing that this is something that a lot of YC companies face this idea that like the last round of funding is what your status is I'm a Series A company I'm a series B company that's how I establish my status and which so funny is that man I've seen great funding companies being funded and meet you to you and I've seen horrible company be invited and so the idea that what some investor wants to invest in you equates to your value or status is like hilarious to me because we just see so many companies and so many bad underground so it kind of cost me to write this descent saying should really talk to people about why money is just a tool it's not status I much rather she said we need this money for something we've reached this milestone or we don't need money for something but we've reached this milestone neck now we think we have leverage so we can go in and raise money faster at a better evaluation with better investors and that's why I want to talk about serious a that's fine too and so I kind of wanted to support other people who were like her who should just you know ignore their investors and keep their heads down and fill making their business grow she's going to great job but one thing you touched on a little bit is just I think a lot of us think about the front-end application side of YC people applying to get in the current batch but with every current batch the Alumni pool gets larger and larger can you talk about some of the efforts that activity to energy are spending on making that alumni experience amazing for YC folks yeah so this is a really big thing I think that a lot of people kind of missed how the early days of lysine it's kind of like when like some people talk about the 50s in America but Cisco those are the good times and you know early days you I see there what since an alumni community like if you wanted to know something like you had you know a couple hundred alumni and most - there weren't experts in the community we were all young and stupid we get a bunch of young stupid people to ask the question you know now we have this community of over 3,000 sound as we funded and there are real experts on almost every subject and so a lot of what we do is build tools to help the Alumni help each other and for me it all starts with camp I see which is our annual reunion it's weird because I think we always had little reunion events but this is kind of a true college reunion three days in the middle of the woods and you'd be so surprised what happens when you mix founders over 12 years in one place this deals getting done introductions being made and work being done friendships being made and you know the founders they can't help but talk about work and so that's been a huge thing and then the second thing is that one of our former partners Gary tan actually built an internal Korra and internal Facebook for YC about three four years ago and YC founders exclusively can use this ask each other questions to look each other up to sell their products to each other to get advice about which investors to talk to you we also have an investor database where everyone is rated charles has an entry in that database and what we didn't realize was that this was some of the most active software that we've built literally two-thirds of our alumni active and non-active use our software every week and so they were just continuing a value out of it even the billion-dollar companies continue to get value out of it every week and so now we're just doing so much more to build that out but I think you know between the events and the software it's a network that's I think stronger than any other network I've seen in a valley you know since the early days you basically 10x the size of the class more or less I put my first bachelor's I think eat so good yeah 15 X is their upper bound on how big Weis we can get in terms of class size and their ability to support them um I didn't restrict you I think that when people think about lysine they think about one three-month accelerator program and when I think about YC I think about every founder we touch in every way we touch them do I sense that our accelerator programs can expand to a thousand companies a year probably not but do I think that we can deliver value to many more founders than we are right now of course one of the things that we're launching as a replacement for the YC fellowship some of you might know about these startup core which is this massive online course that's being taught by us that's completely free that allows you to participate in group office hours allows you to have a group of founders that you can communicate with that can be done completely remotely wherever you are and it's one way that we kind of want to put ourselves out there and say here's a bunch of value it's really free no equity no anything let me help you guys get started from day one and I think programs like that could easily touch thousands of products a year I'm a related note you know I think in the beginning days why she was really oriented towards that first time founder as you've mentioned you've really started to expand the footprint and bring in more experienced folks what are the differences in sort of pitching YC the people who are maybe on their second or third company have had an exit there's a pitch difference so it was funny when I decided never do YC a second time for Socialcam I was extremely fortunate I got to ask Brian Chesky this question would you do I see again awesome and it was great because he basically sat me down and he said of course he said um some people think about an accelerator had status I'm a company and my stage is that I'm ready for acceleration just like those people who talk about Series a status sure he's B status he's like that is stupid he said YC is a crowbar it's a tool and the better you are at using a tool the more you're going to get done the more experienced you are doing startups the better you are at using YC and the more you get out of it and the second thing he said to me was that everyone remembers who's been a multiple time founder remembers when they were young and hungry and moving extremely and as we get older it's hard to summon not feeling but when you're in YC and you're around 100 to 150 other teams that are grinding every day you got to come with your A game and it is so helpful to start your company off at that pace because the the initial pace of your company you will never be faster in that pace you better set a high bar and so you know he's a good picture I was great fish and he was totally right we grew Socialcam 3x during YC we raised at a twenty million dollar cap coming out of YC and we sold four months later for 60 million dollars and none of that would have happened without the pressure to just to push as hard as possible if you look for different traits or attributes is repeat people than you do in for the person who's maybe coming out up for the first time no I think that life it's funny that's what we look for is so ingrained in every partner because we read so many applications you know I'll read like about a thousand to fifteen hundred applications every year and so it's just like it's in our own software so I can just like programmatically and exactly look for and it's really the same the first thing I look for is like what does this company do and what I find so strange I didn't realize plush are looking into many pitches is like your ability to clearly say what you do makes you stand out against literally 50% of the people apply to YC and and it's this cliche that's a totally correct which is like if you can't explain what your mom what you do in two sentences then you probably need to rethink those two sentences like everything can it be explained to your mom justin.tv can explain when I would call but just from TV right so my mom she asked what I did I said Justin saw card the camera said we're filming his life 24/7 it's a website we can go see that and like she got a shutter was stupid but she completely understood what it was you know and I can do that and often have to for every single something goes do I see what is the simplest explanation so first is like can I understand easily what you do I think the second thing is I want to know how technical your team is like to me at a glance I equate having technical co-founders and I equate a more equal equity split over a less equal equity split to a team that can execute the next thing I look at is your progress so in the application we ask these two questions how long then working on the startup and like what have you done and I just like divide those two questions and I ask myself am i impressed with your progress if you know you're doing a web app and you've been working for two years and you're xx's then that's not that impressive if you're building a supersonic plane and you've been doing it for you know two months and you're at sketches it's probably pretty good and so I found that that ratio works for any type of company whether that's biotech or software um then the last thing I look for is really simple it's like what do you know that no one else knows like what is the conviction that you're holding what is the non-obvious way you look at this market there's like so many different ways of getting to this point another way I like to say is like what can you teach me about this market but I don't know if you check those boxes I would say you have a probably about a 50% chance of gaining so as intimidating it is to apply with 7,500 other people I will tell you as a reader of applications these are the boxes that people are not checking when they're applying and you shouldn't be intimidated by this number because remember anyone can apply so it's not like you know for Harvard just to have like SAT scores to apply ycs have nothing so I really hate when people say like oh it's harder to get into YC even done it it adds like well almost other things you applied for have entry requirements we have none so it's kind of a fake number I just kind of say if you check these boxes you have a 1 a 2 chance of getting an interview in an interview you've got probably a 1 out of 4 chance of getting in that's how we pick the batch so only I've noticed in recent versions is increasing it feels like at least those observer increasing share of huge batches companies that are not based in only not in the Bay Area but not based the United States can you just talk about the international outreach you've done and how that's kind of changed the composition of the batch so most people don't realize is the current wife see - is 35% international when you apply as an international founder and if you're invited for an interview we pay for your flight we pay for your hotel we are 100% open to folks who are attacking markets that are not the u.s. from places that are not the US and I think that a lot of this required us to go on with the word so over the past couple of years we've done a lot of traveling around the world I've seen dave McClure and more cities than I then I can imagine he probably Siddeley outpaces every single YC partner combined but a lot of the times that we had to do is go someplace and say it's okay like you can get it because the number one reason why people don't apply they don't think they can get in so oftentimes just going somewhere you know I was in Nigeria for eight days this fall and Nigerian applications increased it's increased Forex and it was I didn't do any family I didn't do anything I didn't I just talked to people but it wasn't like I like you know which end checks out or anything I think people just need to know that YC cares and so that's helped a lot and we do not believe that the best founders are necessarily in the Bay Area we feel strongly that's extremely helpful to come to the area but we don't mind doing the people who bring you here we've had tons of success with that did you ever envision I mean you're very clear on the websites that like this is a program that works best when you're here and persevere do you ever envision a scenario where you would relax that I think we might experiment with it but I think that um you know it's funny founders who come to interviews who don't get in who are not from the Bay Area regularly tell me it was so great to even come to the area for just a week there's something special about this place and I'm not the kind of person who is trying to recreate Silicon Valley somewhere else I do think there needs to be awesome startup communities and a lot of in places but I don't think they can be Silicon Valley and so I think many ways we might be doing folks at disservice if we said oh we can do a program where you are I think a huge part of the value is to bring you here and to be the money and the support and the community and the friends and the kind of infrastructure that gets you here it's not easy to get here organically so yeah I came here - ten years ago I was on the East Coast so many YC founders made the journey here and yeah I I think it's served us extremely well and do you think just keeping with the theme of social inclusion do you think a domestic tour could be equally as effective it's definitely something we're thinking about I think that historically why she is done college tours have been really effective but historically startups have not been as cool as they are now and there's a lot of great local communities and to suffer some everything about for this fall morning short on time so I'm going to shift gears a little bit I think one of the most fascinating things is that you guys have done recently is the YC continuity fund just in terms of what it means to be a YC founder and also your relationship with the larger entity can you tell the group a bit more about what the YC continuity fund is and why you created it so we want to do a couple things with the continuity fund the first was that a lot of YC founders in the later stage expressed the problem which was that when I want to raise my growth rounds oftentimes those investors are what's the nice way of saying it okay it is tricky tricky may be hard to deal with and it'd be great you know at this point my board is set up I know what I'm doing we have our structure we have our finances were a real company and be gracious to have a very friendly face that can make a pitch make a quick decision and bus and so that's been one great value for that we can provide alumni continuity we'll start looking at companies that are raising growth rounds you know two hundred fifty three million dollar prices all the way up to you know billions and it's a place you can go I mean the second thing was we want to support our companies with pro rata investments and we never had money so now we can do that now we do blanket pro rata investments in every single YC company any time a YC company raises around we're alongside giving money as well and I think the last thing was the needs of companies changes that get older and doing constantly gave us the ability to build out a lot more infrastructure to support our later stage companies and to help us kind of bridge that gap and be able to give great advice and support from the earliest stage to the latest stage and then really YC is developing into this institution that's cradle to grave supports you the entire way and our goal of YC is to build an organization that can be over a hundred years old and there are no investing organizations in the valley that are that old and so you know we thought we can think differently about this I think that's a great note to end I want to thank you for all your great insight again [Applause]

Channel: Startup Grind

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Keywords: startup grind, entrepreneur, how to, how to be an entrepreneur, how to start a business, startup company, startup company tips, startup company ideas, how to be successful, startup tips, startup business tips, silicon valley startups, success story, startup advice, y combinator, yc, how to get into y combinator, yc pitch, yc video, michael seibel, twitch, charles hudson, softtechvc, precursor ventures, fundraising, seed funding, silicon valley, technology, founder advice, tech

Id: hF3JJ4gDGS0

Length: 29min 53sec (1793 seconds)

Published: Fri Mar 24 2017