Y Combinator Startup Podcast - #85 - YC Partner AMA at the Female Founders Conference

Episode Date: July 11, 2018

Recorded live at our Female Founders Conference in New York, an AMA with Kat Manalac, Kirsty Nathoo, Adora Cheung, Holly Liu, Jessica Livingston, and Carolynn Levy.This panel was hosted by Sharon Pope, Head of Marketing Programs at YC.We’re also posting the other talks from the Female Founders Conference today. You can see all of them and read the transcripts at blog.ycombinator.comIf you’d like to learn more about the Female Founders Conference, head over to femalefoundersconference.org

Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is an AMA with YC Partners. It was recorded live at our female founders conference in New York. The YC partners on the panel were Katman Yalik, Kirstie Nathu, Adora Chung, Holly Liu, Jessica Livingston, and Carolyn Levy. And this panel was hosted by Sharon Pope, head of marketing programs at YC. We're also posting the other talks from the female founders conference today, and you can see those at blog.w.Ycombinator.com. And if you'd like to learn more about the female founders conference, head on over to female foundersconference.org. All right, here we go.

Hello, everyone. My name is Sharon Pope. I'm the head of marketing programs at Y Combinator, and is my pleasure to welcome back to the stage YC's partners. Come on up. Kat Mniallick, Kirstie, Matthew, Adora, Holly, Jessica, and Kee. Carolyn, I'm going to stand over here. This microphone. Oh, this one works now. I'm going to stand. Okay, so just as a quick reminder as I unlock my phone,

please submit your questions at slido.com, slydo.com, and the event code is FFC. So you can also upbook questions. So if you want to kind of try to prioritize what questions get asked, these are your questions, this is your time to ask. Okay, so first question, will Yisey ever open a New York City office?

Carolyn, I'll send that one to you. I'll send it to Kirstie. Kirstie's the CFO. You know what I think? I think that we never say never at Y Combinator. And as somebody mentioned earlier, I can't remember, maybe it was Kat, we experiment a lot. So it could be that in our future we have an experimental NYC outpost or maybe in a different city. But I think that we like to try things and see what works.

And if it doesn't work, we don't do it again, but it's always worth a try. Please, though, don't, like, start any rumors or get your hopes up. This is just the point is we never say never. There are no plans. That's true. There are no immediate plans to do that. So, yeah, that's, but yeah. Sorry, there are no plans.

One thing I'll add to that is that I meet a lot of founders all over the world. And at this point in time, I still think it's helpful for any founder from any way. are to spend, you know, three months in the Bay Area and get to build that network. There's such, so many investors there, so many other founders, and then you can, you can stay there for that amount of time. And then theoretically, if this is where, if New York is where your customers are, you know, move back to New York. But at this point, it is still so much easier to raise and build that network there. So even spending a short amount of time, I think, still helps.

All right. And speaking of building your network, one popular question is, I think a few people have talked about finding people who are 10x people, right? So those people who you hire and the people you surround yourselves with that are just over the top really great mentors and peers. So how do you go about building that network? How do you find that? And how did you find the ones in your lives? I will throw that one to Jessica. How do you surround yourself? How do you find the kind of excellent people that will help push you forward? I mean, I think I can think back to what we did 13 years ago, because by the way, we didn't know anyone in Silicon Valley, and we had to meet people and grow our network.

And I think if you're working on something interesting, then people who are really good will themselves be interested in it. And if you sort of genuinely want to talk to people and get advice, I mean, most people in Silicon Valley are pretty open to it. but I think just working on something interesting and being insightful about what you're working on makes for fascinating sort of conversation and people like that. Yeah. What about Holly, maybe you can answer also when it comes to building a company as a founder.

Well, I'll throw out a fun story about a different YC founder. Eric McGikovsky, he was the founder of Pebble, and he came from Canada. And most people don't obviously have a network in Silicon Valley, and that's why they join YC, and that's why you should join YC. but he came down and he was working on basically trying to fit like an entire computer processor in this little tiny little form factor. And the early, early Apple computer designers were like writing this blog and it was like a really nerdy blog and he followed it and he sent out a note to the founder.

And he's like, yeah, I'll meet with you for coffee. And I think as Jessica said that there's a lot of kind of paying it for. forward culture, particularly in Silicon Valley, which is another reason why people do like to have you come out there. It's weird investors don't like jumping on a plane. There's a lot of things they don't really, and they like to meet you face-to-face still in many ways. So it's really good for that. So, but piggybacking off of Jessica in terms of that, definitely start finding people that you look up to that are in the same field. And I think you can reach out to them in terms of like, hey, you know, I want to ask, if you can ask specific question,

that's actually very helpful because on the other side, in general, I think people are looking to help, but if they're just like, hey, do you want to meet and just have coffee with me, it's really hard, because you don't know on that other side how busy they are. It'll just be much, they'll be more appreciative of it if they're like, hey, these are the questions I'm looking to answer and what your background can give to me. And then obviously sometimes, you know, you'd be surprised, but there are also things that you can give as well. Like you are the expert in, well, Maria was expert in sense. Like there would be nothing I would be able to tell her around that.

And she could give me some interesting insights into that that might be helpful for what I'm doing in my business. So don't discount yourself either. The one thing I'll add is you can always just go work at a startup from someone that you admire and work directly with the founder. And I think that's a good way to get some meaty time with somebody. Awesome. Also a lot of people wondering about tips on how they can find a co-founder.

Adora, while you're talking, do you want to talk a little bit about that? My co-founder was my brother, so that was easy. Easy? Yours was... Well, I was going to say one of the things to be careful about is I get a little nervous when people say, how do I find a co-founder? Because one of the things that we stress is that you don't actually go out and find one. You probably look within your own network, and the founder relationship that you form

is probably more of an organic one. So college friends and old friends from your prior life, like people that you know pretty well, people that you're close to, tend to make the best founder teams. Yeah, usually it's someone you spend a lot of time within college or at work. I think those are the two most common ones.

Awesome. Question of just generally, are there startups that YC wants to fund more than others? Are there areas that YC's extra interested in? Female founded startups. All right. There's also the request for startups page where we list like, hey, we'd love to see startups solve diversity,

create a million jobs, voice. If you don't have one in that area, it doesn't mean that we won't accept you. It's just these are things that are interesting, and we put a call out for them. And that's ycombinator.com slash rFS. And yeah, I think some of the most interesting ideas, we fund are things we wouldn't have thought of ourselves. You know, I know when Airbnb came through

Jessica and Paul thought the idea was crazy, right? So we, you know, I think, yeah, as O'Hawley was saying, just because your idea is not on that list doesn't mean we're not interested in it. I think also just no idea is too crazy for us. Like we never think an idea is like, oh, that's crazy, we'd never fund that. Like, we just don't have that thought. Yeah. And, Christy, could you answer, Is there a level of startup that YC is mostly looking at in terms of stage? So we think we can be helpful to any startup up to Series A. So that's like a really big spectrum. We have companies who come to us with just an idea.

We have companies who come to us who are already generating revenue. We have companies who are already profitable. We have companies who've raised maybe a million or two in seed funding. and because we work with each company in a very specific manner to them, we help them with what they need, we can be helpful in all those stages. And so I think the important thing is let us make the decision about who we want to fund. You know, if you say, oh, I'm too early for Y Combinator, I'm not going to apply.

You're not even giving us the chance to see your company. So apply. You have nothing to lose. and it means that, you know, we can see and we can apply our expertise to see what could be amazing about your company. Awesome. Any of you applied before, please do apply again. Is it like over 50% of the batch has applied before? I think of the numbers like creeping up.

Now I'm throwing out numbers. And we heard from sentfer earlier. Senter got in on our third try. Kat, would you answer just generally what YC is. is thinking about what efforts YC puts forward to grow diversity within our founder population. Yeah, this is something I'm super interested in, and we've all had the pleasure of working on at YC. For female founders, for example, in this batch of YC, so summer 2018, 27% of the companies in the batch have a female founder. One of the challenges is only 23% of the companies who applied had a female founder.

So we try to do as much as we can to support female founders, even outside of the YC network. So we do female founders conference hoping to connect with women who are starting companies already or inspire women who haven't started companies to start them. We do office hours with female founders. We also do office hours with black and Latino founders to encourage them to apply.

What else? During the batch, we connect the women in our batches to female investors, to going out and raising money just so they can get advice from women who've seen a lot of founders come to them, seen a lot of female founders can give them advice. Is there anything I'm missing? And yeah, so I think hopefully over the course of the next few years we'll see that number increase of women in YC.

And I think on Jessica's slide, I think it's a totally funded, how many, it's like 358 women so far. Yeah. That's great. Fundraising question, so maybe curse to grab the mic, but anyone else to chime in. Just the question of when to raise. Like, how do you know when to raise, whether it's seed funding and then also maybe thinking about that series A? Can I just say one thing on this? Raise money when you don't need it. Like that's the best time to, but don't wait until you only have like three months runway. We have, believe it or not, a lot of startups that come to us and like, we're running out of money. We have, you know, four months in the bank and we're like, what? You're going out to raise money with only four months of runway? Like, it just creates

disaster. So, sorry, I've been thinking about that lately, so I wanted to put that in. Go ahead. So I think it depends who you're raising from as well. Usually the first money that's a company will raise will be from individuals who are investors. And at that stage, when you're talking to those people, then it's usually because they're either super interested in the space that you're in, or you already know the people and they know how amazing you are as a founder. And so at that stage, it's easier. Fundraising is never easy, but it's easier to raise on an idea that doesn't necessarily have traction and growth. As you then progress, and you're talking to institutional investors, so VCs, some of the largest seed funds,

that's the point where you need to be able to show that people want what you're making. And the way that you do that is that you show that there is growth in users, that there's growth in revenue, that your churn is at a manageable level, and that's how you start to then paint the story of this is how this company becomes a billion-dollar company. company. And so depending, depending on the stage that you're at, will depend on who you talk to, how you talk about your company, and the types of money that you raise. It's also very, it's very easy to fall into the trap of raising too much money if you're one of the lucky people that have a relatively easy time fundraising. So also think about how much money do you actually need to get to that next milestone? Because when you get to that next milestone, you get to that next milestone, and you're raising the next amount of money, it's going to be at a higher valuation, in theory. And so, you know, the dilution that you're taking as a founder

will be less because the investors putting money in as a higher valuation. Whereas if you raise a bunch of money really early on, that's likely to be at a much lower valuation, so more dilution to you as a founder. Got it. So Adora and Holly maybe for this one. So speaking of traction, what are some examples of what counts as traction

for a B to C company. And the acknowledgement that it varies by business, just kind of some principles that you might gauge this by. I guess we both thought consumer companies. So mine is a gaming company, and it might be a little unique in terms of traction because it's usually very much like hits-driven. So it's either a hit or it's not,

and it needs to get into the top 10. But in terms of early on, when we were just starting out, in terms of traction, it's really weird because it's a little bit of an art and a science. I can't really say like this is the exact number, but for sure, just like Maria had with Centbird, you're like 105 orders, we are onto something. So the first little seed of traction is almost to prove to yourself

that you are onto something. And then the next seed is about like proving it to others. Once you're in YC, we usually kind of push you to say, if you're growing 10% week over week, that's really good because that means that, you know, you have the traction. And then exponential growth, it's very hard to do in your head. But pretty much by the end of the batch, you'll have grown 10x if you do 10% week over week. So that's usually something that is like, okay, we'll keep on pushing that.

And if you can get to that thing and you're like, oh, yeah. And for other investors, they'll be like, well, if you want to go more, that's really good. But 10% is pretty good in terms of within the batch. So if you're almost getting into that inflection point, it might be a good time to really figure out how to focus and get to those, that growth and that product market fit, which we could help at YC. Yeah, for consumer companies, I think there's various types of metrics in terms of growth that you can focus on. One is just user growth. Another one is revenue growth, just depending on what you're doing. So if you're building a social app, you'd probably focus on users versus if you're building an e-commerce app, you would obviously focus on revenue more.

The thing I'll watch for if you're growing really fast is to pair it with, by observing something like retention and engagement to making sure that you're growing the right types of users or the right types of revenue because if you're bringing on what I call bad customers or bad users, they're going to turn, if they turn right away or they're just not good for the product and you have to just fire them, it's like a waste of time almost and that growth is kind of just a fake growth. at the end of the day. Great. So as an engineer slash designer building a product between prototype and beta, what are the pros and cons of launching before trying to raise money? You should always launch before you raise money, but I don't. Yeah, I think you should launch as soon as

possible. Well, I think you can launch as soon as possible. In our industry, we always say you never know if you're polishing a turd, because you can be sitting there and you can be like, oh my God, this is the most beautiful thing. And then you launch it and you realize nobody can find the sign-up button. Nobody even wants to click on your sign-up button. Nobody even wants to open up your email. And then you realize you have much bigger problems than what you thought you were solving. So I'm a huge fan of trying to launch as early as possible.

And even, let's say, you know, it's going to take a while to build. There's certain things you can do even before that. You can start talking to your customers. You can start building a wait list of things. You can start doing, there's always things you can be doing. but the most important thing is to launch as early and as often. Yeah, there's two ways to think about this. One is if you don't launch, then you don't know if you have a product anyone wants

and why raise money for that? Like, where's the confidence in that? Like, if you launch, then you'll have some confidence around that. And also, there's a big difference in terms of how much you can raise an evaluation you can get if you have users in revenue versus if you have absolutely nothing. And so I think launch now, even if you're an engineer, like, if Shopify is going to be the fastest way to do it, then just do it. I know some engineers are just like, they're just embarrassed that they have to use Shopify to get it out. They're the fastest, but that's the thing to do.

All right. Question, a mother-related question, which falls under the category of things that would never be at a male-oriented conference, if they are those. But how do you, for the folks who have kids, how do you factor in decisions to have children with some of your work goals and your ambitions and your own careers? And it was a popular question, so I figured we'd ask it even though, you know, it can be a tough one. I never did factor it, and I just worked on YC, then Paul and I got married and had our son right away. and we just plowed right through it, I never sort of planned. I wasn't very planful at all, which in hindsight is, I wish, sometimes I wish things were different because, like, as YC was growing and I was working

so hard to make it succeed and it was so time-consuming, that's when I was having babies. And, like, I barely took any maternity leave. I just worked through the whole thing. And maybe I should have been a little bit more planful. But it's hard, you know, don't put it off for time. too long, would be my other advice. Yeah, I would echo that. So I came from a law firm before I was at Y Combinator, and I have nothing but sad stories

of colleagues who didn't have children because they wanted to make partner, and it's just I just don't have any happy stories from that era. I'm kind of like Jessica. I just thought life goes on, and I'm having children. So I had children while I was at a big law firm. I do want to mention, we have a lot of great anecdotes about parents at YC. and one of my favorites is that we had a female founder apply, and she was at Y Combinator for her interview,

and she ran out to go breastfeed her newborn in the car. And we accept her, of course, and she's great. So anyway, yeah, we have lots of stories like that, and I guess just, I mean, this kind of sounds cliche, but I kind of think, like, you've got to live your life, and there's tons of examples out there of women who are having children and having a startup, and a startup is like a baby, so it's just like you have another baby.

maybe. I love that. Yeah, so when I got married like five months later, I told my husband, I'm like, basically, I'm leaving to start this startup, and he's like, what? And I think it's always, it's a very personal and tough decision as to whether or not you want to have a kid. Some people know right away and some people don't, and I knew this was something that I had wanted, and now I can't take it back. No undue. Just FYI, if you think about it, it is a big decision. Sadly, I will be honest, I do think women have to also think about a biological clock. For me personally, it took longer than we had expected. And we had, like, there were just a lot more extra things we had to do at the same time trying to do this startup. Luckily, my startup was probably

pre-series, like, series A, series B. Definitely by the time my kid came around, we were doing quite well, series C. But the whole impact of even thinking about having a kid, honestly, it impacts you almost when you turn seven, eight. It's just so young, this kind of thinking about this thing. I don't think guys think about this as much as women. And it's, it's, there is the reality of a biological clock. But there is also a lot of great things in science. We have some wonderful, like, we have carrot fertility that can help you, you know,

extend some of that. And I think, like, maybe me and Jessica would, and maybe even Carol, we might have been, I was definitely considered a, what is it called, geriatric pregnancy? Yes. Yes, if you're over 35, your advanced maternal age, which I was. Yeah, me too. My second one, they were like, they gave me like this pen or something. I don't know.

It was terrible. But it is very much as for all the parents out there. It is, a startup is like having a kid. It's so cool that you did it with your husband. I feel like I had a kid without my husband, so it feels like I was having an affair all the time. He was like, it's always cabam, Holly. It always comes first.

I'm like, I'm sorry. So that, but if you can surround yourself, don't refuse help. I mean, it can be done. And there's many YC founders who have done it at various stages, all the way from interview, all the way to, you know, when it's a lot larger. Rushmi is one of them. She's going to go through it.

Rushma, due in August. So it's very plausible. There's definitely some more tactical things. If you do end up hitting at that point, think about a plan when you leave the, like leave for temporarily, definitely have the communication. I'm a huge fan of keeping the communication lines open. And I'm only going to say this because this came up within the YIC community. Your options should vest on maternity leave. I was just shocked, but there was a whole discussion around that. Really? Yes. Somebody's option vesting suspended during pregnancy leave? They didn't suspend it,

but the other founders had suggested that. They're like, since you're going on maternity leave, we'd like to, like, would you consider suspending your options? Don't. No. Never ever agreed about. illegal too, I feel like. Actually think that is legal. Sorry. So just one more question. We've talked about doing things that don't scale. If you're doing things that don't scale early on, how do you convince an investor or someone else that it eventually will scale?

Well, you just need to have a product plan in place. And so anything that's, any investor should know at this point, especially if they're a tech investor, should know that something repetitive software can most likely replace. And so I think it's, I think it's, It's usually good to have a little bit of software to have automated some piece of what it is that is not scaling. And also at every stage of growth, there's a different way of doing things. And so as long as you're able to explain, well, in this stage I'm doing X.

In this next stage, I'll be doing Y and then in the future, this is my plan for the future, but at least I have the next few steps in place. That's great advice. Thank you very much, YC's partners. Thank you. Thanks for coming. all right thanks for listening so as always you can find the transcript and the video at blog dot ycombinator dot combe and if you have a second it would be awesome to give us a rating

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