Applying to Y Combinator: How to Get into Y Combinator
Ashu Desai, Founder of MakeSchool and YC alum (W’12), hosted the following Codementor Office Hours going over the structure of Y Combinator, the benefits of joining YC and how to get into Y Combinator.
Ashu Desai is a Y Combinator alum and also the founder at MakeSchool. MakeSchool empowers students to build and ship products, preparing them for all sorts of careers in tech. They taught over five hundred students through in-person courses, over a million students through online tutorials.
When he was in high school, Ashu built his first iPhone app, which sold fifty thousand copies in the app store. When he got to college to study computer science, he realized he didn’t want to be learning the things he was learning—he just wanted to be building cool products. So, he left college and paired up with his cofounder, Jeremy. Jeremy was at MIT and had been building apps as well, in which his first game was featured by Apple in the app store. The two joined forces to work on different projects and eventually had this idea to teach high school and college students how to build their first product, and they applied for the first time to Y Combinator with that idea and got in with one try.
After successfully helping dozens of aspiring entrepreneurs with their YC applications and interviews, Ashu joined Codementor for an office hours session to answer some of the common questions about Y Combinator and how to get into the famed accelerator program.
What is Y Combinator?
Y Combinator is basically an MBA for startups. When you go to business school, you’re learning how companies work with businesses that are already fairly large; it’s less about learning how to start a business from the ground up. YC teaches you everything you need to know about how to take your product – whatever app or website you’ve created – and turn that into a real company.
I personally jumped right out of college into YC. I had actually left college right before joining YC and it was my first startup ever. If you’re someone who’s in my boat where you’ve never done a startup before, YC is absolutely hands-down the best place you can go to learn about those things.
The Structure of Y Combinator
Every Tuesday night, YC will have weekly dinners, which are talks by successful entrepreneurs. Paul Graham, the founder of Y Combinator, will host the first dinner. Paul will tell you a bit about what his experience was like starting YC, and he will also let you know what should expect from Y Combinator. From there, other successful founders (e.g. other YC alumni founders, founders from other companies such Reddit and Dropbox) might come and speak. People like Peter Thiel, Marc Andreesen, or Mark Zuckerberg might also come in and talk to you about their experiences doing startups, what they learned, and what advice they have for you.
One of the most powerful things about the weekly dinners is that they will help you realize that the people who have founded these billion dollar companies and the people who have become incredibly successful—they were sitting exactly where you are today when they got started as well. They had no idea how to start a startup, they had no idea how to build products, and they were just learning. And it turns out pretty much everyone who’s started a successful company, at some point, they didn’t know everything that they know now. The weekly dinners helps you really connect to these people.
When we look at these people who are very successful, we often think if them as of a different species or of a different breed; we can’t ever be like that. But in reality it’s not the case, and when you have these successful entrepreneurs speaking to you, you realize that they’re just like you. They were going through the same struggles you’re going through. When they were struggling, they were always on the brink of failure, they were always stressed out, and they were always trying to learn things they were completely incapable of doing. However, they were the ones who persisted and continued to fight and continued to learn very quickly to adapt themselves to whatever challenges that were presented to them.
In conclusion, it doesn’t matter if you don’t know very much about startups right now or you don’t know much about building a product right now. Everyone who’s successful was in your shoes today. You’ll have a lot of self-doubt during that process, and hearing the stories of these successful entrepreneurs really helps you connect with that situation and helps you feel a little more secure in the fact that you’re doing a startup.
YC Partner Meetings
The next big component of Y Combinator is partner meetings. There are one on one, or sometimes group partner meetings, during which you’ll be talking to a YC partner. YC partners are all people who have started companies before, and more importantly, they’ve also seen a lot of other companies before.
About eight hundred companies have gone through Y Combinator, so the amount of data YC has on these companies is phenomenal. What’s more, there are more billion-dollar startups have come out of YC in the last five years than have come out of the entire continent of Europe, which means YC has done an amazing job of taking startups that are young students (or old students; the average age of the student is about thirty years old) and sort of taking people who have never done startups before, and teaching them how to be incredibly successful.
What’s really useful about these meetings is you’ll learn that almost every problem you’ll have when you’re running your startup, someone else has had before you. These YC partners have seen eight hundred other startups, so when you’re saying, “I have a problem selling my product to customers,” or “I’m having a problem fixing some technical complexity,” chances are, if the partner doesn’t know what the answer is, they know another company that does. They can connect you with whatever company that may be useful to you in that state, and there are lots of different companies that are in the same industry, so the partner meeting is a great way for you to get help for a very immediate problem you’re facing.
Y Combinator vs. Conventional Venture Capitals
Most investors, when they invest in you, they’re interested in investing in you later. VCs might invest in your seed round with the hopes of investing your A round, with the hopes of investing in your B round. What that means is you don’t want to come to your VCs. Sometimes you are fearful of going to your VCs with the biggest problems you’re facing, because if the VC senses that the company’s not in a good spot, they might be less incentivized to invest in your next round.
Y Combinator, on the other hand, is structured very differently. Once they put money in, they don’t invest in you again. What this means is you can go to them with the biggest problem you’re having as a company and get advice from them. If you were to tell your VC you and your cofounder are fighting constantly, that would be a big red flag and they would run in another direction as fast as possible. However, YC is there to help you, and their incentives are directly in line with yours. They’re not interested in really investing again, which is why you’re able to come to them with the biggest problems you’re facing and get help from them.
Right now Y Combinator invests about 120K in every company, and they typically take seven percent of the company. It’s a pretty minority stake and it’s definitely worth it, because you will raise money at a better valuation once you graduate from YC. You get a good amount of seed capital to start with, it helps you pay rent for the first few months, and it helps you build out a team a little bit if that’s what you need.
Demo Day: Getting Investors for Your Startup
During Demo Day, you’ll be pitching for about two and a half minutes to a room full of five hundred investors. Y Combinator’s brand allows these startups to attract the best investors in the world. All of the top VC firms will have representation at YC Demo Day, along with angels, along with a lot of international investors or whoever it might be. The power of having five hundred investors in one room all watching you pitch is really incredible. It turns out you get to raise money a lot faster when there’s a lot of competition around your deal or your company.
At Demo Day, all the Demo Day investors know one or two of these companies in YC Demo Day are likely going to be a billion dollar company, so they’re all desperate to invest in the company that is going to become a billion dollar company. So, when you’re at Demo Day, you’re pitching to investors and you just need to plant the seed of doubt in their mind that you might in fact be that billion dollar company from your YC class. If that happens, and if your pitch is exciting and memorable, then you’ll suddenly have created this amazing competition around your company and your investment round. Then, you’ll sign up meetings, where in the next two weeks you’ll be meeting with investors who’ve expressed interest in you, or investors you’ve met on Demo Day. What happens there is that your fundraising round becomes a lot shorter than the traditional process.
Typically when you’re fundraising, what you do is it takes a while, you reach out through your personal connections to a variety of investors, and it takes a few weeks to get the first contact with these investors. Now with Demo Day, they’re all sitting in the same room at the same time and you pitch to all of them. So they get to decide about you immediately and they want to take a follow-up meeting with you and a lot of them, in that follow-up meeting, will immediately decide whether to invest. So you can close your fundraising round within two weeks or three weeks or a month after Demo Day because there’s so much competition and there’s so many other investors in the room, and this actually acts as a forcing function to speed up the fundraising process so you can get back to focusing on your product and building your company.
The YC Network
The YC Network is a really key piece of YC, and there are eight hundred companies in this network. If you have a problem, chances are someone else has faced that problem before. You have a Google group and now a section of Hacker News where Y Combinator founders can request help from other YC founders.
The other day I actually posted a question in the YC list, which is as follows:
“What’s the downside of risk on new construction? For our startup program we’re thinking about renting space in New York that’s still under construction, so I wanted to find out is there a way that, in a contract, I can protect myself against downside risk that if the construction is not ready, we can still get paid additional for that so we can go find a new space.”
I immediately got an answer from someone who has a lot of experience dealing with these kind of things.
It turns out that the YC founders don’t just have a lot of information about startups, but they come from a variety of backgrounds. Some come from academia, some come from tech, some come from advertising, etc. Therefore, you can get answers to whatever it is that you want to get answers to, which is really, really powerful.
A lot of my best friends now are from the YC network, and it’s really great to be surrounded by a community of entrepreneurs because starting a startup is really hard. You will go through sleepless nights, you will go through nights where you’re thinking you completely screwed everything up with your company, thinking you’re not the right person to do this. There will be times when you’ll be filled with self-doubt, filled with stress, when you haven’t seen your family in a while and your personal life is in ruins, and you’re trying to make this company work. During those moments, it’s really helpful to be able to go to your friends and talk to them and ask them, “Hey, what can I do in this situation? Can you help me out with this kind of problem?” The YC network is incredibly close, there’s a lot of trust there, and they’ll be willing to help you out and help you solve those problems.
Finally, if you are a company that gets involved with other companies, for example if you are building a product other startups need, you’ll suddenly have a big customer base that already exists. For Makeschool, we’re trying to get our students hired, so it’s very easy for us to call up another YC company and say, “Hey, do you want to become a corporate partner of MakeSchool so you can hire our students?” because, again this trust between the YC network exists, they already believe that, “Hey this seems like a good company. We’re a YC company that’s been around for three years, we’re close friends with some of the partners. They know that we’re building a good product,” and there’s a higher level of trust there.
How to Get Into Y Combinator: What YC is Looking For
Most people apply to Y Combinator a few times before getting in. What’s more, most people who apply to Y Combinator already have traction, which means they already have a product that’s doing somewhat well, they have customers, etc. At this stage at Y Combinator, even if you have a product and you’re starting to sell it, about thirty percent of YC companies end up pivoting in the middle of YC because they’ve having products that are doing pretty well, but don’t quite have the growth that they need to be a successful startup.
Makeschool was a bit lucky in the sense that we got in very early, and YC liked a couple things about us, especially since we applied to Y Combinator with an idea that was a bit rare.
Based on our experience, here are a few things that YC will be looking for in their applicants
One of the biggest misnomers is that if you have a really good idea then you can get into YC or you can have a successful startup.
The truth is your idea is absolutely worthless.
If you have an idea, there’s a very, very high chance someone else has had that idea before. No matter how good the idea is, or how original the idea seems, chances are someone else has also had that idea and chances are someone has tried to do it before.
An idea does not make a company.
A company is built over five or ten years, when the idea turns into more and the idea’s executed well upon, so the idea’s really worthless. The point of the idea is simply to prove that you as founders can come up with good ideas. If you’re starting a company, you’ll face a lot of different problems and you’ll need to creatively solve them or you’ll need to change the direction of your company, etc. The point of the idea’s just to prove you as founders can come up with good ideas.
The thing that matters the most, beyond anything, is traction.
At the end of the day, startups are all about growth. That is what builds a good company because, at the end of the day, investors are looking for a way to get a high return on their principle. They’re looking for companies that can have 10x year over year growth. They’re looking for Slack, they’re looking for Zenefits, they’re looking for Instacart. They’re looking for a company where it will be worth a million dollar one year, ten million dollars the next year, a hundred million dollars the following year, and finally a billion dollars, etc.
Investors are looking for hyper-fast growth. If you can show that your company is growing and that your product is in such high demand users cannot get enough of it and all you need to do is just build more of the product and build it a little bit better in order to give the customers what they want, that is the biggest proof point you can possibly ever have. Every other proof point that you might have is just an estimator for growth.
So, if you have traction, that is the best thing you can do. If you’re thinking about applying to YC, the best thing you can do is say, “What can I do to increase my user base? Or increase my revenue?” If you’re able to do that, you’ll put yourself in a much better position to get into Y Combinator.
In addition to traction, the next thing YC looks at is your team. YC will be looking to see if your team is one that they can really invest in, so this is also extremely important.
At the end of the day, a company is really just a group of people. It’s a group of people working on some idea or some product, and the company will change. Again, the idea will change even slightly. Even if your company doesn’t pivot, there are little things, little decisions that will need to be changed as time goes on. And the most important this is: Does YC trust your team to make the right decisions? Do they think that you’re the people who are capable of building good products and shipping good products?
For Makeschool, we did not have anything built when we applied to YC; Jeremy and I applied just on an idea. However, what YC really liked about us were two things:
- We had built and shipped apps before. So I had built my first game and it was successful and Jeremy had built his first game and it was successful.
- We had known each other since high school. Jeremy and I met in a computer science class in high school, and this proved that our team was very close and very tight-knit.
About thirty percent of companies die because founders breakup, which is phenomenal. This can get really ugly sometimes. There are horror stories of founders running away and stealing money, of founders fighting over really petty things, and this can really, really kill a company.
So, you need to be very careful about picking a cofounder who you trust very well, who you’ve worked with before, and who you know you work with well.
My cofounder and I have lived together and worked together for three years now, which is really phenomenal. We spend more time together than most married couples do. Our entire company and the culture of our company and our community has been built around the fact that we have a very close relationship.
So, it’s very, very important for Y Combinator to look at a team and say, “Hey these founders seem like they’re going to be sticking by each other no matter what happens.
No matter what your startup is, you will face a point where your startup is about to fail. There was a story about FedEx, which was at one point where they didn’t have enough money to put fuel in the next plane, so the founder went to Vegas and gambled away all the money, ended up making 60K, which was enough to put fuel in the next flight, and saved FedEx from going bankrupt.
Quoting Ben Horowitz, every single startup has a moment that’s called a “we’re fucked, it’s over” moment.
You basically need to know if you’re in one of those moments where your startup is about to die the next day, you’re about to run out of money and it feels as though everything is going to shit. You need to know your cofounder is someone who’s really tight with you, someone who will stay with you and help you get through that. When things are going bad and you have a bad cofounder relationship, you’re just going to break up as a company, and things are going to die.
YC cares about that cofounder relationship, about whether you trust each other, work well together, and get along. With a team, they’re looking for people who have past experience building and shipping things, people who have had success doing so. This is a great estimator, because if you’ve built something cool in the past, chances are you’re going to build something cool in the future. If it seems like you guys know each other and trust each other well, it means you’re going to build a good team. YC are also obviously looking for people who come across as smart, people have good ideas and can respond to their questions very well.
This is actually the product you built. A lot of times, you can go into the YC interview and actually demo the product you have. Again, the product is simply an estimator or traction. The product is simply saying that, “Hey this is an idea it seems that people want. We have some demand expertise in this area, we’ve felt this problem is something that we had ourselves.”
So in our case, Jeremy and I went to college, took computer science, and didn’t really like what we were learning there so we had to face that problem. Then, we built a product that teaches high school students how to build iPhone games so we could actually show that product to YC and say, “Hey, it looks like the user experience with this product is pretty good. It looks like the features are something that people might want.”
Again, the product is just an estimator for traction, because if you show someone a good product, it’s just saying if a product looks better, there’s a higher chance for it to grow faster. If you can get that growth, that is much better proof than the product. However, if you don’t have that growth, then you can use the product to tell YC you have this cool product and you think that once you launch it and get users, a lot of people will start using it. You can use that as a check to show that you are a good team, and that you are able to build quality experiences users will actually buy.
YC Application Process
The Written Application
When you’re applying to YC, they first have a written application, which is an online form where they ask you questions about your company.
Going through this written application is actually really valuable because it asks you the right questions about your company, such as: Why do you think this is a really big market? Why do you think this is a business that can make a lot of money? Why do you think you guys are the right people to build this? What is the domain expertise you have in the area and what do you understand about this area that nobody else really understands?
It’s really cool because it helps you understand what is valuable about your startup and what is valuable about your team. Through writing the application, you’ll really drill down and analyze your company and realize whether this is an idea worth working on. Just the process of going through that application is really valuable.
The written application also asks you a few questions about your team. One cool question they asked you is: What’s a time you’re hacked a non-computer system? Which is basically to say like, “Show us a time you were clever and figured out how to solve a problem most people wouldn’t be able to solve.”
And so that’s again a good estimator. You’re going to see a lot of problems in the future when you’re running a startup. You have to be the person who has this mentality that, “I’m not going to give up until I’m going to be able to solve this problem, and I have a lot of clever ideas on how to do that.” They test for those kind of things in the application as well as what I mentioned about what you’ve built before.
When you’re filling out the YC application, they don’t want you to use marketing speak, they don’t want you to use fluffy words—they want you to be direct and to the point.
For me, one thing I really value in writing is George Orwell’s “Five Rules of Writing”, and if you take a look at those it basically says if you can cut out any words, you should cut those words. If you can preserve the same meaning in five words instead of ten words, use five words.
The people at YC are reading hundreds and hundreds of applications, so you need to be very direct, boil down whatever your idea is down to the essence, put the most important information about your idea in the first line, and then follow it up with the next most important information to answer the question.
You really want to directly answer their questions instead of answering a question that’s similar to what you really want to answer. It’s not about what questions you have good answers to, it’s about what question they’re asking. Be as direct as possible, have no bullshit, no marketing speak in your application.
This is where it’s very different than in a typical investor deck because in a typical investor deck, you’re trying to build this hype around your presentation and in a demo that you often will have sort of a lot of hype and fluffy words that you’ll use. But in a YC application, you really just want to be direct and to the point and make them understand: What is the content, what is the meat behind your idea?
The Video Introduction
With your written application, you also submit a video just introducing yourself and your cofounders and your idea. In the video we made for our application, my cofounder was speaking in a French accent, and I was speaking in an Indian accent just for fun. This was obviously a bit of a gag, but at the same time, it was something they remembered from the application; enough that when they met us again they said, “Hey you guys were the guys with funny accents.” So, having some way to be memorable is definitely important.
The application is a one minute video enough for only personal intros, so you shouldn’t squeeze in the problem plus status of your startup – just introduce yourselves and just explain what the product does.
If YC likes your written application, they’ll invite you for a 10 minute interview. They’ll fly you out to California from wherever you are in the world – so whether you’re from Japan or from Boston or wherever, they’ll invite you to Mountain View for a ten minute interview.
The interviews are a bit nerve-wracking because you’re sitting around a small table, where your cofounder’s sitting on one side and around the table are four YC partners grilling you with questions at rapid-fire. They’ll be asking you things such as: Why are you the right team to do this? Why is this idea good? How do you know this is going to make money?
And they only have ten minutes, so they will cut you off very quickly if they’ve heard enough of an answer and they’ll ask you the next question.
You need to just answer whatever question they ask. If they cut you off, just stop answering that question and go on to answer the next question. Move on. Make sure again you’re very directly answering their questions. If they’re asking you a question, don’t ask the adjacent question that you want to answer; directly answer their question that they are asking you. You’ll have to listen very carefully and say what is it that they are trying to learn from this question, and answer it as directly as possible. If they like your interview, basically the partners who interviewed you will talk amongst each other and they’ll call you that evening to tell you if you’ve been accepted to the process.
Get A YC Founder to Review your Application
When you’re filling out your application, what you want to do is find any mutual friends you have with YC founders, and ask them to review your application. People who have been through YC can give you a lot of advice, so reach out to as many YC founders as you’re somehow connected to. Unfortunately, I’m a bit swamped these days so I can’t be reading too many applications, but I’m happy to connect you with other founders as well who might be willing to read some applications and yeah, just try to get as much feedback on it as possible.
Get Help from Investors
You can also use the application process to start talking to investors, not asking them for money but for advice, which is actually much more powerful. You can go to an investor you might know or that you have mutual connections with, tell them you’re applying to YC right now, and ask them for feedback on your application. You can also ask them to help give you a mock interview if you have one with YC.
This will have two benefits: One, you actually get good advice from the investors and two, without you pressuring the investors by asking them for money, you’re basically introducing your company to the investor. They’ll hear a lot more about your company, and they start thinking about it.
Imagine if you do get into YC, then three months later when Demo Day rolls around, you can keep updating that investor with your progress through YC and they’ve now been following your story a little bit. When Demo Day rolls around and you’re starting to fundraise, you can go back to them and show them the progress you’ve made since you first met, and that will really impress them. VCs want to see you’re able to make a lot of progress in a few months, because that’s also an indicator for us. Use that as sort of a hack to start talking to investors as well.
YC vs other Incubators (e.g. Techstars, 500 Startups, etc)
I think the quality of the YC community is really, really good. They have a really strong filter for what founders they want in, both in terms of intelligence and determination and drive, as well as in terms of how nice they are and how willing they are to help the company.
Jessica Livingston, one of the founders of YC, recently wrote a blog post about what she did at YC, and building that community is incredibly, incredibly important. I know this because it’s the exact same thing for MakeSchool. The way we see it is that YC does a great job of turning people who know how to build good products into great founders, and we want to be the step before: teaching people how to code and taking them and teaching them how to build good products.
YC did an amazing job of building that community and not deluding that community with people who were not quality people. It’s one of those self-perpetuating things where they got a bit lucky in the sense that the first batch at YC had Reddit, Twitch with Justin.tv before, and Sam Altman who’s now the president at YC was also in that first batch. So, to some degree they got very lucky in the people who ended up joining YC, but once they went past that, they still had this amazing community they built, and Jessica really helped foster.
I know this because it’s the same for Makeschool. We are basically filling our first class of our college replacement program of fifty students, and the kids we’re getting are phenomenal – we even have 14 year olds building their first iOS app. We built a really strong community and brand around MakeSchool, so these kids want to be in this positive, warm, welcoming, trusting community where people are also really smart and people get shit done.
When you get to YC, you feel like you’re part of the family and you feel indebted to it the moment you walk in the door. They did an amazing job around that, so people are more willing to give back to the community and they’re really engaged with it, and that sort of perpetuated itself.
Once you have that strong community, you’ll also have the results, meaning you have really great companies coming out of it. These two things end up going hand in hand. Paul had these amazing essays and he was a thought leader in the startup space, so they had the great content and taught people the right things. Paul’s essays are available for free online. Sam’s startup class is available for free online. Other accelerators can use that and use that for the basis of what their program is, but you cannot replicate that community, so it’s what makes YC defensible and it’s much more lasting than having better content or whatever it might be. That community is what leads to better founders, the founders end up becoming partners, and it just perpetuates this entire cycle of what makes YC great.