What's up, everybody? This is courtland from indie hackers stock com, and you're listening to the indie hacker er's podcast. More people than ever are building cool stuff online and making a lot of money in the process. And on this show, I sit down with these and the hackers to discuss the idea I S, the opportunities and the strategies they're taking advantage of so the rest of us can do the same. Michael cyber, welcome to the ni hacker podcast.

Thanks having me.

You are the C O Y commentor, or you also, I guess, a managing director, a partner. What's the appropriate title for you?

Who knows? I help the companies.

He help the companies. You do the job, I help the.

yes, Y.

C is kind of the original started to accelerator. IT almost needs no introduction, is by far the most successful and prestigious of the start of accelerators that exists. He was started by pog gram in two thousand and five. And since then, he sort of passed on the torch. And now you guys are funding like six or seven hundred companies a year at this point, which is crazy because when when I went through in two thousand and eleven, IT was like forty companies were like, this is way too big.

It's crazy not only how much bigger Y C is gotten, how much bigger the start of community has gotten, how much more international. Why see is gardens. It's now fifty percent international. We've got founder and almost anytime on it's been a lot of fun. It's been a lot of fun to help more people. One of the things that we think about, especially because we were alarm, is know, how do we bring that great experience that we had to more people, people who maybe never thought they could do, I see or raise money, you do, to start up. So yeah.

you guys reaching a tonic. people. And i've seen a international trend sort of expand as well, like andy, hackers listeners, I think it's barely thirty percent are the people into this podcast are sign in up for the website or in the U.

S. And most of them are not in looking valley. They're just everywhere. Starting startups and y see itself is sort of reference to the same sort of trends I got like a million questions I want to ask you. I think it's cool that you're you're in this position.

First, let's talk about like andy hackers itself because we're talking before the show. The show is mostly listen to by boot strappers. These are people who build businesses that are ever having raised a dime.

But I think when companies go through Y, C, the emphasis obviously, like on the opposite, everyone is encouraged to go to demo, present their companies to investors and raised tone of money. Do you think andy hackers and boost rappers sort of hand capping themselves by trying to build online businesses without raising money? What you take on this approach.

I think the first thing I say is that one of the most successful founders that I know who who did I see was in the hacker himself. He he was the founder of a company named in cinta in search. And basically IT was, as you say, you type in the man you want to buy IT tells you the demain available and similar words to IT and read direct you to go, dad.

He makes commission. And for almost the entire time i've been in the y community, he's been running that side and make a real money with almost no work every month, tens of thousands of dollars. So I think that, you know, we have yc founders zaire's perfectly example where they raised a million box on the money, and they never raised again until years and years and years and years later, saying these all types of different models and how you want to raise a company.

I don't really want to judge what people want to do. I am the thing that I try to figure out for founders is what's your goal and how do you match the method that you want to run your company to the goal of your company. And I think we're founders kindly get screw up, is the often think they can innovate everything and turns out that like it's really hard to innovate everything. So your goal is to build the company as big as google, for example, you probably can't innovate the funding model.

And so you know, a lot of the conversations I have the founders is like how do you pick where you invade? How do you pick where you copy? How do you figure out where to put entrepreneur energy? And how do you kind of unpack some of the assumptions that a lot of people have when IT comes to raising money from investors? Because if you want to build a large company, more often than not, you've to fired how to interact with investors and and a lot who would have have really bad assumptions about how that works.

Well there a lot of bad stories about investors on this show and a lot of fear expressed from founders. The investors are going to push them to make bad decisions, push them into building a company that much bigger than can really be sustained at a profile level.

I went push back on that. I want to push back on that. I'll ask you live on this podcast. You mention that you're broken right now. That's awesome. I need you to go and take something valuable in the apartment that tune right now, walk over the book and bridge and thought .

off the bridge well, i'm staying at an airport and bees I be liable to replaces .

kind of who care yeah, i'm not saying it's a good decision. I'm saying that's what I needed to do and I am going to use my words to get you to do that.

I mean, to get your point as a founder, I can ignore you as an investor .

giving me the words like, look, I can't i'm not in britain. I can't hold a gun your head yeah I mean.

that's true. And so these are worth coming from a person who has presumably invested millions of dollars in your company. Who cares? Who do somebody hold your fade in their hands, who you might feel obligated to?

Yeah, that's that's your interweavings. I'm sorry, like that's the cop out because the founder who thinks that way, the founder doesn't understand the arrangement they got into the job of that investor is to manage someone else's money and to make that client money back.

The relationship you got into that when the investor is to produce a return for that investor, the advice, the value at all that other stuff is, take her to leave IT your responsibility. T is not to take the advice, your responsibility lit. E S.

To treat that investment ethically and to try as hard as possible to make more money for the investor where founders get confused when they think their industry are parents and not even parents. Perfect parents, perfect mentors, perfect life. Guys, it's like you come on that's magical thinking that doesn't exist. Like your investor is not going to get the advice right more often than not your investors and even even started a company then you know, talking about. So I just I I reject that line of thinking because like if I can convince to do something that you know is bad with for your company after giving you money using my words sorry, like if that doesn't kill you, something else going to kill you in the start of game.

okay. So let's talk about that. Let's talk about what kills startups. You ve obviously advised thousands of startups over the years, many of which have been super successful.

And I think the obvious question for you is what separates the successful startups from the ones that fail? And I think you talk about this quite a lot. And I think the approach you come from is usually sort of flip around. And I ask, what do you need to do to succeed? There's a many different ways to succeed. Usually ask like what do you need to do to fail because IT turns out there's only a handful of reasons that most startups fail, and you're going pretty good if you can keep that list of reasons in your head and then just avoid most of those mistakes. So what are the most common mistakes that kill startups?

So you know, just in kind, mail cofounder, he always talked about cargo cult and was so funny as that, you know, in my interest of not looking dumb for the longest time, I didn't know if cargo counting was and but I would not along and bail yeah, cargo counting, that sucks. And I finally asked him like, what's what's Carter talking? And it's basically like copying the people around you by copying the wrong things.

And IT basically comes from not understanding what actions the people that you're around are leading the success are, the methods where success are being created versus what actions are the results of success. You give a really specific example, right? If you're building a good company, lot of investors you want to invest in you and you might raise a very large round at a really great Price.

Most founders will think that, that round is the important thing, and they won't dig deeper and figure out what did this company figure out in its business that gave IT the leverage to raise that round. The round was the result of the company doing something right. I should be studying.

And what the company did didn't write, not just taking away the simple thing, if I raise a lot of money, I win. And I think that what I have to be careful about here is that my instinct sometimes is to teach this stuff like math, like you should have to teach any one algebra, right? Like IT.

That complicated i've come to learn is that learning these lessons while dealing with the stress of doing a start up, while being in a world where, like most people are just wrong with their crop theses, it's a little bit more like yelling at somebody who's a good high school aspa player. But IT didn't make the MBA. That doesn't seem right.

It's like that doesn't doesn't seem moral. IT doesn't seem right. It's like you need a lot of lucky breaks to make the NBA right, like.

And so know, whenever I kind of get too preachy, I kind of say, back in music, look, this is hard. This is really hard. This isn't like becoming a successful lawyer. This isn't like getting into a good school, like the odds of success on this one are so low that, like most people going to be getting wrong most of the time.

right? And you have this unique vantage point as an investor, or you get to see thousands of companies, and you can just very soberly unemotionally stop and consider the odds. You can ask yourself what percentage of companies need to succeed for me to get to return to my investment.

But as a founder, it's kind of like you've got that one thing you've got you're started up and see there are one or a zero it's going to exceed. It's onna fail and you don't really care about the odds if you just want to succeed. Now that's a very emotional position to be in. I think what else is in that, that list of things that founders should be worried about that commonly makes startups to fail.

I fear. What about to say is a series of things that people have heard over, over and over again. So here goes one, you should be able to build on product like the founding teams should have the technical talent to build the product.

Probably one of the most common reasons why a company doesn't get in White too. Dam of its helpful if you've experience the problem yourself. Three, you can be a free to charge money if you're providing a service to someone for you can't be afraid you can't.

And I must be clear, that doesn't mean you can't feel fear, but fear can be your primary. Decision making variable, right? I see so many people who they're encountering this world, and they're basically saying, I just wants to run away from fear.

Everything that seems scary I wanted to do, and everyone who succeeds in this game has to deal with things that scare the crap of, and like in many ways, like if a start up is like a burning of a burning house, you're a firefighter, your jobs to run into the house, not not to run away from that. And and so within Y, C, when I see founders make the most destructive mistakes, they're almost always driven by fear or envy. Fear, I don't want to do this thing.

It's uncomfortable. I'm gonna think about IT. Or envy that person has something that I want, or that I think that I want money, employees, office. And like, I wanna go get IT.

It's weird because so many people come into the start of game coming from a community, whether it's like a place of work or a university, and like in that community, as long as they were leg put themselves in the leg, cool kids, the mark kids, they would, they would win. Where was like in our game, almost ever one losses. And so I think, you know, in the fight to get into a good college, you're looking at what your peers are doing.

And the fight to get back facebook or google, internship, college, you're looking at what your peers are doing. And in the start up, that exact same technique almost always screws you like you're playing a single person game. You know, if you want to be Michael journey high school baseball player, and you're looking at what your peers are doing, none of your peers are going to make the NBA like that absolutely can be your god.

And and, and I think that that really wants people stray. And let's be clear, I think IT hurt investors just as much as founder. I see investors copying their peers way too much as well.

You mention that started flowers often have to run tour their fears. What are your fears as the CEO and a partner comment later?

I think my biggest fear in the start up game in general that we have to do with Y. C, is that startups went from being not popular to being, I might describe, too popular. So I think that there were a lot of people, when why he started, who didn't have their risk reward ratio correct, and therefore were afraid of doing something when they shouldn't have been.

And a lot of Y, C was designed around, no, you can do that. You can do this, right? I think in this kind of stock market and crypto run up, some people are looking at startups as either a resume item or get rich quick scheme.

And those people are toxic to the ecosystem. And Y C is so large now we're part of the ecosystem so those people can be toxic to us. And how do we make sure that we're not accepting those people within our community is a big thing because like I think that a lot of people think about Y C kind of incorrectly.

You know, I think when people look at an ivic c university from the outside in high school, they think that like the teachers matter. They think that like the degrees matter. They think the classes matter, right? And then once you go through a good university, you realize the peers matter appears of what drive you.

I think the same thing happens. A I, C, from the outside, people think, oh, Michael, giving you the great advice. It's like, no, i'm putting you in the community of people who you respect, who can support you and who you can support them and who hopefully can be additive to the process of you trying to succeed.

And if I don't get that pool of people write, I can break IT. So I think that's probably the number one thing i'm afraid of is that that's a new chAllenge. That wasn't the chAllenge why he faced in two thousand and five if you are crazy enough to do to start up in two thousand and five, boom, were here. Now that its mainstream, it's different.

Well, I think you have developed a skill set that would be valuable for lots of founders. I mean, you're looking at people who are applying interesting who are the right people to put into this peer group who are going to make things Better for their peers and have, you know, great companies but an individual founder looking your own company.

Can I get to ask us some question, you know, like, am I working on the right thing? Am I the right person to do this? And so I wonder what you've learned about evaluating those things that other people could also learn when asking those questions about themselves.

So spiritually is similar, but the differences is that I get to learn faster. So, like, I don't think a founder can use the same technique that I use. Because I get to read eight hundred applications.

I get to interview god knows how many companies. I, at least eight hundred companies every batch, right? My group has one hundred companies in IT, so I get to learn in parallel and a thousand hundred dozen.

So while it's kind of like similar, similar problems, like the solution techniques very different as long as the founder has technical skills or the founder and as something that's irrationally getting them to focus on just one problem and one customer, I think generally they do okay. Like generally they they can figure some stuff out. There's mean they are going to win, but generally, they can not get off at a minimum of basic like a minimum then get the dam thing for going.

I think sometimes when i'm seeing founders now is that like oh, if something doesn't work in three weeks, I have to switch or I can just do this with no code, I can just hire some overseas engineer. Software is not important. That's like, oh, you're removing some of the base things.

Like one of the base things is that software in the world, you got to be able to create software. Another big thing is that you have to learn about the customer's needs. IT takes time. This isn't overnight. And so it's kind of like trying to bake a cake, but trying to remove all the ingredients and still expecting me a cake. It's like if you don't have flower and eggs and is going to be a fucking and cake, like you can remove some things and and I see a lot of found channel remove as much as passport, because I just want to get to the end, I just want to be rich, I just want to be famous, and it's like do another career. Like.

I like these list of basic things, though, because I think we often get addicted to novel advice. You know, we want to hear something we've never heard before. We want like that secret ingredient, that secret key and IT like really that the fundamentals will get you so far.

And it's really easy to ignore in the thing because it's like, yeah, yeah, I ve heard all that, but it's like not doing any of IT. And then there's like a whole other set of people who haven't heard any of that to begin with, like most people who are getting started like make the most basic mistakes. And so I think it's worth repeating that kind of stuff and not him, until people can actually do IT.

You know, it's funny because the strike founders came to a talk away. C, and at some point they had this aside, and they were just kind of like, you know, like, we did all this stuff. But if if we can do IT, you can do IT, we're not that smart. And I saw all these founders look at them being like, no, but you guys are like legends. And then I realize something, you know, being disciplined is way more powerful in this game than being smart.

Like, because of an execution game, being disciplined was so important, and like, IT was so funny, was that, like the strike fire founders had a hypothesis, and then they tested IT in a disciplined manner that, like almost a scientist, what remember a really simple thing, people asked them how you Price. Like, oh, what were a start up in payments? Of course, we've got to be cheaper than the competition.

And they were like, no, we are trying to verify if these developers and early stage companies desperately needed our product. So we charged higher than the competition. Now if you were a scientist or with a scientific way of looking at you, like, of course, if you want to verify demand, make something harder to get and say, people to to reach for.

But if you're fear based, if you're coming from a place of fear, you say, oh god, I don't want to get to know. I'm so afraid of, you know, i'm gonna charge any money. I'm going to do this, do that i'm never gonna unch and is i'm just so afraid of, I know and so I think that what was funny, I was the way he described everything, was just like they were disciplined and not driven by fear.

You know, I must not smart. But they weren't like iron sines out there. Like IT was a different muscle that that was that was being used aggressively.

I remember talking to a David shoe from retour on the podcast last fall, and he's talking about he is pricing in the early days and he is like the definition of fearless was just like a very small teams to the founders, and they get that point. And their first twenty customers, they were charged like an average like twenty five thousand dollars a year for this, like half big product that theyd barely slept together.

And like strategy was he just like continued to say a higher and higher Price until people said no, and then he figured out what to do to get them to say yes. And they just kept raising the Price until, again, I making five hundred grand a year from our first twenty customers, which is amazing. You know, most people, I think, write that off and say that kind of self is impossible and don't charge a tent of that much.

you know. And it's funny you can hear that advice, just like you hear the best baseball players saying, I stayed three hours after practice. But what's funny is like doing IT is the hard thing going into that meeting and saying a number that scares s the crap.

Dy, that's the hard thing. Some people do IT, some people don't. But like, I don't think anyone playing on that basketball am believes that they can become a hall of famer without staying after practice.

I boring advice, nobody wants to hear. Nobody wants to stay late after practice.

No, they choose every day to not stay late after.

So I want ask you one more question, which the list of boring advice people already heard you mentioned that you you get more practice than everybody else is seeing these startups. You review eight hundred applications a year, something crazy like that every six months, every day. So okay, almost two thousand applications a year.

What you what you know from, like reviewer these things that other people don't know. What are the mistakes people keep making? When are applying besides that you already mentioned, which is that people are trying to build technology companies without understanding technology.

You know, I answer that questions so little differently and say, what do investors screw up? So I think a lot of times founders get discourage from doing the startups to discourage from pitching because I get to know from an investor, and you've to understand that nowadays, almost no one who applies A Y C hasn't pitched some other investor who's told them no.

And what shocks me more than anything is not, you know what our magical process is, is that how can we get companies that other people said no to and they actually have be in good companies. So it's kind of like if you assume the typical Y C planner has gotten ten nose before even getting in the Y C. One as a founder, you should think to yourself in those some investors, I should discount the zero.

And two, you should think HMM, maybe investors aren't actually good and analyzing my business, maybe they are more oriented around how I pitch, how credential I am, how confident I am, maybe those of the signals they're taking in more. And so a lot of times that I see admissions, our jobs should not be too smart. Whenever we think we know too much about a space, we have to push back.

And one of the things that like we end up doing, which is really funny, is that we almost end up never working with companies in our former industries. It's really easy for me to pretend to be smart about live video or video online. And that's the exact muscle I don't want to have because everyone thought just in T, V, in twitch was not gonna be a good business.

And so I can easily form the trap of being like on now that i'm an expert i'd be able to pick. But just in TV started out with Justin and Cameron ahead. I never would have invested in Justin TV.

never. And so more often than not, it's about not believing that the company that applying right now is in its final form. And the biggest mistake that investors make at every stage of thinking is this company with this product ready to scale.

And like, I think that what I see, we just kind of don't think that way. We just know nothing is ready to scale, like almost no companies that we fund hair product market fit. Almost every founder who says that a product market fit right now was lying.

Once you product market fit and you're a software company with software margins, it's hard to not become a blade. Our company. It's hard like it's it's your game to fail.

And so um I think that's kind of how we think about and we think about IT differently. And I think that weirdly, funding more companies gives us the freedom to do that. For me, funding an incremental company is so easy.

I can tell myself, Michael, don't be too smart. Does this feel like a motivated founder? Can they write code? Give him a chance. Someone gave you a chance, and that was basically all you. And so whether I think sometimes investors are like uber, what are my life is going to say or how can I fit in to my model this then? And it's like very different.

I'm super curious. But how does like someone get to your position? You mentioned a bit of your history, Justin TV social camp witch, what's was the path that somebody takes to become the C O of White community?

So my double Y C is to manage the early stage accelerator, along with a number of other group partners. So, you know, as kind of managing director of A Y C early stage, the single most important thing that I think got me this job as I actually like advising companies, I think that um maybe the flip side of that is I actually don't really like being an investor.

Um I think one of the things that I realized is that investors are a lot more like hunters than there are nurtures you know in investor, once they have a otherness in the company is under the next one, under the next one, under the next one. And often times they're competing with each other and kind of is just a weird game that I don't really understand and I don't find to be a lot of fun to me. The most fun part about why he is doing offers, that's the most fun part.

And so I actually think the reason why i'm in this job, because I like the work, because I think that when you like something irrationally and you care about something irrationally, you work irrationally hard at IT, and then you achieve good results. And so this isn't for everyone. I'll love to do office hours with about forty companies this week. A lot of people don't want to keep forty companies in their head in a week, know like people who don't like this work. But in terms .

of the needy gitty, i'm sure lots of other people also like advising startups. People were probably good at IT. Probably a lot of people would want to be the CEO of yc. What was that process like? We just sort of appointed, you know, was like a competition for .

you to get this role was IT? No, no. yeah. Step one. I was A Y, C. Founder, so I did Y, C in two thousand and seven and two thousands, twelve. Step two, I informally advised there, B, B founders encourage them to do Y, C, which turned out to be very good for Y, C.

Step three is, after second time doing Y, C, I, I saw that company social camp, and I was invited to be a, uh, what was called that a part time partner. And basically the only job then is to do off hours. And and I really enjoyed IT, and I liked to.

The next step was that I was recruit to join as a full time partner when why he was positioning from being run by pg, of being run by sam, and once I was a partner, why he was just really caring about why he being successful. I've made enough money to provide for my family, for the rest of my life in their lives. I wouldn't have had that opportunity without Y.

C. And so I think that, like everyone see, alarm is contributing anything to, I see feels like they have a bit of a sacred of to give others what they got or Better. And so I don't really perceive this is running a business really like in some ways, the money takes care of itself.

When IT comes to Y, C, like I think about IT more. Like how do I give people what I got and then how do I give people more? Because like when we can do, I see there are all these things we wished why you could do that IT wasn't doing yet. And so it's like how do we give them as much as we got and more, I think, is the thing that that um I just got addicted to and yeah it's funny because when I went to yell, IT was celebrating its three hundred anniversary and I remember at some point thinking it's cool to be a found of a blind. Our company, but how many people know our companies that are people are creating in the software world will be around fifty years now, hundred years from now, will be helping people three hundred years from now. And I felt like, why is being a small, a part of building institution that could last for three hundred years and help people would actually be a lot more rewarding then being, you know, the founder of a company that, you know, might only be around for a couple decades? But I can think about why .

this is a business quite often, actually. And IT doesn't. IT doesn't seem like a business like not verminous.

People asked these hypes of questions, but like there are a lot of competing accelerators and funding mechanisms that like i've never come close to, I think, affecting the ecosystem and funding his many founders as why he has. And I think from the outside looking in, it's okay. Well, what does yc do for marketing?

On one hand, almost effortless, looks like kind of like the Matthew fact where the rich kit, Richard and you're all sort of benefiting and a sort of self sustaining away from being the number one accelerator and the sort of benefits continued to a car year after year. But on the other hand, it's like most of the things I see yc doing is just helping founders. It's how do we how do we put on programs help educate founders, how do we like a cofounder matching tool to health founders ah and that ends up being like, I think, a pretty good way to vacuum up a lot of the founders who need help and they end up applying to I C.

You know, isn't that weird, right? Like isn't the core part of a business providing a service that people need? But isn't that the core part? Like what is the toilet paper company do? right?

Like is not glamorous, it's pretty simple. But like try to live in your life without toilet paper. And so I think sometimes people can make businesses into two. They become too complicated. Like why do you use google? Because the best search, and you know, I argue that slipping now, but like, no google is going to tell you all kings of crazy ship and organize little information that I did not be used google.

Because most time when you do a GLE search, you find out looking for, I think that like the reason why Y C works as a business is because most of the founders who do yc think why I see a disproportionate ate positive impact on their company. That's IT right. And like every batch is an opportunity to perpetuate that or to fuck IT up. So when someone is, it's like we're only as good as our last badge because those are the people going out in the world saying why to change my tropical tory or didn't yeah.

it's kind of heads back to that point you made earlier about how people sort of began throwing away the basic ingredients of the cake for any business like a basic ingredients like provide value to your customers. Like do the thing that they expect of you and and in some ways, it's so munday and so boring and it's easy to lose side of. And everyone focuses on all the bells and whistles.

But I have my own like sort of theory for, like, okay, what what does yc due to provide value, right? So you ve got all the different things you do for people who aren't even part of yc yet. But then as a vlada, look at what is like the secret sauce that makes Y C.

tick. I want to go through my list. I I want to hear what you think about these different things. Number one is the momentum that comes from being part of a batch of people who are also pushing in the same direction at the same time, I think, is extremely energizing and amazing.

When I went through yc, he was a tone of people all working hard to get the shutdown of the ground. And andy, hackers, like I, mostly taught to people who are like working in their basement by themselves. And it's really easy to quit and give up.

So that to me was like one of the the number one things. Number two was again, the peers like having a network of people who can potentially be your first customers was extremely is extremely easy to get started. So okay, building is B2B too l.

Who am I going to sell to you? Oh, look, there's two hundred companies that I know all around me like that's a huge for a step. And if you can get get that sort of confidence and get into the sort of positive feedback loop of having founders for customers, that's awesome.

And it's not even just like the companies around you, also all the past yc companies that you know have access to and conceal you. And so that's kind of tremendously unfair advantage that I think you have going through something like yc that you don't. Uh, on the outside, those two seem to be like the the biggest, obviously like demo day and access to all these investors who are sort of trusting that because you've been through Y C.

Or sort of prevented, obviously you thought to be a good company in pitch, well set and show get metrics. But like that's helpful. And then this some psychological stuff, it's almost like getting into like harvard MIT or something like once you get in, you feel like there's this expectation.

You you're gonna do well, like everyone's happy that you ve got in and you don't want to be a failure. And so that kind of motivates you to try you harder. And then there's like all the obvious stuff I can you get advisors. You've got obviously the funding that why he gets you. But like those first three things I think I have undertake, what what I missing, what do you think about sort of secret says of Y C.

I think you know that. I think that the biggest misconception is the single greatest value of Y C. Is is fun reading.

And I I, over percent of the companies to do I C, raise the money they need on demo day. And two percent become successful. Billion our businesses. So clearly, money ain't the number one deciding factor.

I think that um maybe the last thing that I will add is that I think why c is or at least tries to be very good at telling you what you can ignore an early stage of an early stage company is basically, imagine being a firefighter and you go into a neighborhood and they're twenty houses on fire and you don't have enough folks to fight all ti fires, what do you do? And I think what a lot of Y C does is kind of tell you OK, well, like, I can't promise you'll successfully fight the fires eventually. You have to fight all of the fires.

But let me give you some hints, the winds blowing in this direction. So maybe you want to fight the fires over here before ever there. This houses all by itself in a big rock corry, so IT can't infect anyone else, right?

So maybe you can go down for and kind of giving you the confidence to be like I don't have to fight twenty fires at the same time. It's counter intuit because so many things are broken and only see start up. But sometimes a founder can not make any progress because they are trying to fix everything. And a lot of times what they need us to do is not tell them how to solve a problem, but tell them whether they can ignore IT. For now, it's kind of true to how many problems you can ignore as a start up free product market fit.

And it's also another point for team discipline because it's hard to ignore stuff as a founder. It's much easier to go down every single rabid hood that you come across to fix every single problem you see and try to make everything perfect, then IT sort of let some fire summer and ignore them and focus on the thing that matters.

I think why see you guys have a lot of distractions to I mean, yeah to be the kind of institution that you are 呃， you've got a targeted on your back. You've got a lot of detractors. People complain that Y, S, E doesn't do enough to fund under represented minorities and women.

People criticize Y, C, for being a leader and exclusive, but then they also criticize Y C for accepting too many companies and becoming too big. And even in my own time, and Y, C, I felt like Y C really did contribute to a popularity contest mentality. There were a lot of people who just wanted to be seen sters.

They wanted to be part of yc because I was cool and they could hob now. But the best investors and founders as somebody who is running the ship, what are the biggest conceptions about? Why see that you want to change people's minds about? What are the bigger criticisms that you want to sort of um fix or reversing people's minds?

You know funny, the woman in faja did I see in twenty eighteen and section him spoke today to the batch and she's not in company named promise and promise is effectively building straight for government, like an easy way to pay government and receive payments from government.

And um she's had a long and very successful career before being a sort of founder and one of her jobs was to be the manager for prince and SHE got this piece of advice from prince that he gave to me. Actually that's one of the hidden thinks we won't realize. What I see is how much the founders actually advise us and teach us.

And one of things he told me that printed to her is that if you don't want any booze, you can only play in your backyard. But if you play in medicines for garden, you're going to get booze deal with IT. And i've had to really take this to heart right. Like part of building something successful means that you have to be willing to accept criticism, because criticisms going to come your way, both justified and unjustified.

And so i've really had to kind of be a little bit zen about IT and be like that the role once you become kind of a pillar in this industry, part of the role of being the pillars are part of the responsibility is to get criticism and respond to the criticism and and try to be Better from that perspective. It's, it's it's positively motivational. We have the privilege to be criticized to be important of people think maybe affecting Y, C, infect the whole start of community.

And so, you know, I used to take IT a lot more personal than I do now. Now misconception is, is, is different. I would say that like it's always been cool to shed on things, right? It's like IT always has been a human technique of like by putting something down, you feel above IT.

And like for people who want to kind of shouldn't why see just to get that personal win? And like OK, I am like you do you what i'm not gonna IT. You're worrying about that, right?

For people who want to honestly understand why why I can deliver me value, I meant i'm happy to engage and like skirt test, engaging talk to our users like you talk to ten alem, you'll hear the good, the bad and the ugly make a call um and so you know to me, the folks who are want to hide their product, who want to a pitch all widely and then kind of hide. So what does that thing do? What does that look like? You know about that behind the curtain? Like, hey, luck, we get six thousand plus alone that you wanted. Know whether i'm lying or not. Go reference check.

Okay, let's watch here. Here for a second. One of the things I do on the show is I asked founders about revenue numbers. I asked what the financials behind their companies. So we've get a Better sense of how they run. I have no idea to what extent you can be transparent here, but I do have a lot of questions about the financials of yc at me.

And then I I will either dior accept the bullets.

How does Y C raise and make its money? Um how profitable is Y C .

itself OK? So Y C has a number of funds that we've raised from L S traditional rational peace like large .

universities.

And how bigger these funds, oh, we announced ed them. I think Y C has raised now at least over two billion doors problem, probably higher than that.

And how profitable is Y Y as a organization?

Like how are these friends doing? Oh, they're doing well.

And how how are how are the partners know? Like what is IT? yes.

So one one kind of maybe not secure, but something that maybe you want to realize about why he is that unlike almost every investment fund, why see um is an equal equity partnership. So all of the partners of Y, C, both investing and Operational, are all equal equity holders. cool.

L I wasn't aware that. And next question was actually how are the partners doing financially? Yc, mental billion airs and hundred millionaire on the partner side of things? Or is that only on the founder side of things? Because I would guess the program .

is a billiards a like in everything IT takes a long time. How stripe was funded and what await. It's it's not liquid. So um i'll say this P G doing extremely well and I think that all of the partners who worker I see from long enough will do very well as well.

And where do you .

think why is is going to be time? Where is why going to be?

And an obvious you you can know the answer is defectively like what do you think things are going ten years from now? The outside looking in IT seems like you the directions why is moving in are putting out more and more started like founder friendly resources and then just funding more and more and more companies. Does that scale forever at some point? Is the model change? What is what is the future of voice Y.

I? I can think of three things that I believe are a vital. Number one is continuing to invest in the core accelerator experience, like why sees exciting the program is the the core, the base of our business and IT can ever be taken for granted.

IT has to always improve. IT is to always errors. Every batch we have to figure out, I make IT Better. So one number two, the internet is come into the rest of the world is coming fast.

So over the next ten years, why we will become more and more international as I believe um as the internet becomes more more international. And then number three is investing in our founders. Both prin post badge.

So we have the found matching tools and start up school and the y start up library and all the outreach we do pay back getting the word out here are some things you should do if you want to start to start on and then post badge. I think what most people don't see N Y see at all is that IT doesn't end on demo day. So we have a program for every founder resistors N Y C.

We rebatable ed them with new peers and go through all the chAllenges of being a post proof series, a company. We have another program called the growth program, which is like post product market at fifty plus people. You have to start building an ord, building exact team at that up.

We have another program for that, and we batch you with companies in that stage and we bring back a one night speakers for both of those programs who can speak to those chAllenges as opposed to the finding product market for a chAllenge. We've got the constitute funds. We can actually fund you later on racial large check.

And so um we have a programme called worker to start up, which is effectively a common application where anyone can apply to every Y C. Company with one application. And so we want to be a part of your hiring your first time employees.

And so I think that the last most important theme is how do we continue to add value post demote? You know, one of the things agrees to my mind is one, why he should be with you from credit to IPO. And two, Y, C, should earn at seven percent every year.

And like the analogy that I come up with, this is actually, and necessarily do SHE is actually the tesla. So i've got a test years ago, and three months in a little ert pops up on the screen and he says, your car has an update here. The six ways your cars gna get Better.

No, doesn't how cars work. We all know that the only thing that happens with the car is every minute you own IT is getting worse. And like tesla kind of felt that around was like, no, no, like. And so the way I think about why he is that, like maybe did the y see seven years ago, there still should be something you're pointing to right now that why he can is doing a little bit.

Most of the people seem to this are super early stage founders that people trying to decide what to work on. And in my experience, like one of the biggest things that sort of stop them from getting started, besides, you know, lack of confidence, is this overwhelmed feeling that they just don't have something to work on. They might have technical skills, they might have the motivation, but they like I don't have an idea that's worthy of starting anything um and lots of you have their own different frameworks for I had to get over that problem. And how to think about that what's your sort of personal take on idea generation and and figuring out what to work on as a founder when you think you've got the scales in the confidence, but you have no idea what to build?

So much of what we have to do is get people to unlearn the bad things that they somehow picked up along the road. And so I like to say that every founder has a business brain and a problem brain. Their problem brain is all the shit that pisses them off in their life, whether it's the problems they have or the problems that their parents have or their friends have or their relatives have, it's the stuff that just pisses them off.

And the really good problems are the ones they've tried to solve them. They try to do something and IT IT doesn't work or it's only half baked. Their solution.

Yeah, yes. yeah. That problem brain has been learning their whole life on their personal experience and is one of the smartest st brains that people have.

And you know that because if you hand someone a product that says that solves someone's problem and IT doesn't, how quickly the most people throw that frequent product away, how quickly can most people use their product brain? Try to use the product. This doesn't fuck and do anything.

And just like move on, right? Your product brain is really smart. Your business brain is not only not smart, it's more often holding you back.

Your business brain is the brain that tells you, is this a good business? Is this a good idea? Is there's something that VC would fun.

You have no experience there. No experience. The first time founder has nothing in their business brain, but a lot of bad beliefs.

Learn from VC twitter and the, god forbid, their friends who don't know anything either and is a bunch ous stupidity shark tank, god knows what right random should they heard about somewhere like. And so my jab, in many ways, is give people to ignore their business brain and double on their product brain. The biggest thing the founder screw up is ignore their product brain, problem brain and double down on their business brain.

And it's like. If I could solve that men, I would just retire. Because, like you, the sadness thing in the world is when a founder works in a problem that they know nothing about, because they think it's going to be a good business because they like work to onic sell, it's it's a joke.

And when you try to advise that kind of company, there is almost nowhere to go. So you don't know anything about this problem. You don't even like, you know, all get mails from first time found at all time being.

Like, can you tell me how to find my first customer? I like you, don't know anyone with the problem you solved. Like, why did you even decide to solve the problem? Like, you have no idea who has this problem.

And like, oh, well, because you know ah we're building this for that like youtube for N F T or whatever the fuck IT is right and she's like, okay, you have a snappy one minor but you're not actually solving a problem anyone's life so you know to me that's the kind of thing that's tRicky is that I don't think it's cool. I think that it's become cool to think that you've got a good business brain. And I think most early stage products, people shit on.

So most people when are trying to solve their own problems, their peers shit on them. And most people, when they try to sound like, isn't this people like M, B S, their peers are impressed with them when they use jargon and fancy words, and all is to shit. And so it's like, once again, we get back to you, like your peers are not your guide here.

And like, if you're not brave enough to do something that your appears think is stupid, I can't think of A Y, C company where the peers thought I was a good idea and IT worked like everyone thinks brian from coin base, is this genius. Now the dude could barely raise five hundred k on wic demo day. The dude gave away free bitcoin if you created a coin account in the beginning and nobody cared, right? And so it's like if you aren't brave enough to be brian when everyone thinks he's a dig, when everyone thinks he doesn't know anything, when everyone thinks he's on the wrong path, there is no way you can be a brian today.

Absolutely no way. But man, it's hard. It's hard for most people understand that.

I remember in the twenty eleven Y C batch, we used to do this thing where you would vote every couple of weeks on who we thought the best companies in our batch war, who do we look up to the most, who do we think we're going to succeed? And IT turned out that at the end of the batch, like none of the companies who were consistently ranked the highest actually did well, we were all wrong and so didn't really matter what our opinions were, even though these family should get voting for. Probably thought there was super cool, like I just didn't matter. And so if I can get some up your advice, it's number one, stopping afraid and and number two, stop trying to look cool among your peers because that is not the measures of success.

You know, we have this single I see called like do peak in high school if damage is the best day has to be your company, it's not a good thing.

Tell school Michael cyl, thanks for comment on the adia is forecasts. Can you let listeners ers know where they can get to learn more about what you're up to you, where you right, and share your ideas? And also more infor about my comment?

Yes, of course my comment to come is the the easiest place. Anyone who want started advice I direct you to either the Y C start up library or um start up school toward and then um uh I hate saying this because i'm not sure that I what people to spend any time on twitter but if you want to see me writing stuff, usually it's twitter at mw cyl or my website.

Microcar le come. Thanks mi. Thank you.