Geoff Ralston And Adora Cheung - Introduction To Startup School

Good morning to you guys who are here live, but good day to everyone who is viewing this class online. Welcome to Y Combinator's second annual massively open online course, Startup School. So, I'm Jeff Ralston, I'm a partner here at Y Combinator and one of the organizers of this year's Startup School. Starting today, we're hoping that Y's knowledge about entrepreneurship will help spur incredible innovation from all of you here and out there to create enormous value for the societies in which you live, for your friends, your families, your employees, and for yourselves.

We're going to cover just a few things before we actually get started on the course, so I hope you'll bear with us. First, more companies than ever before asked to take part in Startup School this year. 27,000 companies from around the world asked to be part of it! Yeah, that's a number that kind of blows me away every time I think about it. 15,000 of those companies asked to actually participate in the class, and that's from over a hundred countries in over eight thousand cities around the world. Really extraordinary numbers!

Now, some of you may have heard that we had, in fact, intended to actually only allow about a quarter of those 15,000 to take the class just because there are actual infrastructure limitations. Well, I don't know if you did hear or didn't hear, but there was a slight glitch in our process, and in the end, we accepted all 15,000 companies, give or take. We accepted everyone; it's 15,000, give or take. This means that this will be by far the largest class for startups that Y Combinator or, for that matter, anyone else has ever taught. So congratulations on being part of the biggest class! I don't know if that's great or not, but congratulations, you're still part of it.

So, let me just do a brief interlude about Startup School. My competitor began in 2005 by funding more companies simultaneously than had ever been done before, even though we only started with eight companies in our first batch. Today, we fund over 300 companies every year and work with them in an intense three-month program. But there are many, many more thousands who actually apply for each one of those spots, and we always knew that there was a possibility of our knowledge having greater reach. So that's why we started Startup School, to maximize how many companies we could reach with our knowledge, to get it to as many companies around the world to maximize—and this is our stated goal as a company—the innovation in the world because we think that that is almost always a really good thing.

We would like to find a way for every startup to succeed. And yes, there is self-interest here, because it would be awesome if one or more of you out there today was the next huge Y Combinator company. And why not, right? We first experimented with the idea of greater reach in 2014 with a course taught by Y Combinator's president Sam Altman called "How to Start a Startup". It was a conventional course taught at Stanford with the difference that there was an online component. The lectures were videoed and then placed online. Last year, we rethought that course as a massively open online course with the difference that the classes would be coupled with online access, community software tools, and of course, most importantly, weekly meetings with groups and check-ins.

So this year, we're going to reprise that idea with some notable differences. We're still going to have a combination of in-person and online classes, but we have revamped the software this year. Most of the curricula will be taught by YC partners and YC alumni. As I mentioned, there's new software for community and for management; we're scaling larger than we ever have before. The timing of this class is different; last year it was taught in the spring, and this year is timed to coincide with a YC batch so that hopefully as many of you all as possible who want to apply to the YC winter 2019 batch can conveniently do so.

There's also a $10,000 grant—non-equity grant—available for a hundred companies who complete and graduate from the course. In a few moments, my partner Adora will go through the criteria for graduation. Also, for the first time, we've collected really an extraordinary library of startup content at the URL you see there, and I really encourage you guys to go look at it. You can find that there's a link to it online when you log in to the site; it's available, it's an open library available to anyone.

And also, we have some incredible deals for the 15,000 companies that you can also see when you log in online. I want to call out the folks offering deals—we're not expecting to offer those deals to 15,000 companies. There's a big surprise, and a number of whom really, really, really stepped up. Amazon Web Services is offering a thousand dollars in credits to every single company! Thank you, Amazon! Thank you, Google for offering a thousand dollars in Google Cloud and Firebase credits.

To YC companies, Stripe and Clerke have also really stepped up. Stripe is offering an incredible deal—50% off for all of the companies and $5,000 of fee-free payment processing. Clerke is also giving a fantastic deal: $5.99 gets you formation, a bank account, and lots more from Clerke.

So briefly, I'm going to take you through the curriculum here. Our first week kicks off with an introduction to get Startup School and your company off the ground. Then, for the next three weeks, we dig in deeply into building something that people want and then figuring out how to get users for that something. Then we spend a bunch of time talking about how to effectively run a startup, with an interlude by YC partner Dalton Caldwell in week six, which I think you'll find very helpful in terms of thinking through how to apply to YC, how to succeed at an interview with YC, and NYC itself. Then we finish up with some lectures on fundraising and with an eye towards the future.

Another new aspect to Startup School this year, something I'm really excited about, which is something we're calling "conversations." There's going to be two kinds of conversations: real ones, live in-person with a notable expert in some useful domain, as well as "ask me anythings" on our forums where the experts will respond to questions both asked in advance and live. Actually, this week, we have an AMA tomorrow and a conversation on Friday, which you can learn more about.

So if it's not obvious, we're doing a lot more this year— a lot of new things, and some of those things weren't planned. So we ask you to bear with us. This is our small team; we're very effective and very tight, but small. We'll fix everything that goes wrong as quickly as possible and respond to you as quickly as possible. Understand that there's a big scale here, and there are many companies that are taking Startup School, and we are going to do our best to make all of your experiences as successful as possible.

So now, Adora, the YC partner with whom I'm organizing Startup School, is going to go over some of the details as to how the 2018 class is actually going to work.

All right, so I am going to talk about the structure of the course. There are five main components to this course: what you see up here, weekly class lectures, weekly group office hours, company updates, and presentation day. So I'm going to go over all of these, and at the end, I will demo how it actually works in the software.

All right, start off. So, as you already know, each Tuesday we will be recording around two hours of lectures on a variety of topics related to building and growing your startup, which Jeff already did a good preview of before. Most lectures we will be sending out what we call "prep material," which is like videos and slides to review so that the speakers can get to the good stuff ASAP instead of spending too much time on the mundane basics. Please take the time to review those notes if you can.

If you're in the San Francisco Bay Area, you will be able to attend these lectures in person. Unfortunately, there's only a limited amount of seats, so we can't fit everyone each time, but we will confirm via RSVPs if you can attend the lecture. So please only come if you get an invite to that particular lecture. We will start at 10 a.m. each Tuesday; please be in your seat by then. The speaker will give the lecture and then Q&A will be done afterwards.

However, most of you will actually be watching the lectures online. We will be posting the lectures every Wednesday after the Tuesday lecture around 12 p.m, or at least by 12 p.m. each week. We encourage you to just watch whenever you get a chance.

All right, so weekly group office hours. As you may or may not know, we've already placed you in groups of 15 to 30 companies, each mostly based on location. This is to provide a more intimate experience. Consider this group your immediate support network for Startup School and hopefully beyond Startup School. These are your go-to people when you need help or you want to discuss something related to your startup.

So one of the ways we make sure you leverage this group effectively is through weekly group office hours, and we think this is actually the most important thing to participate in, even more so than potentially the lectures. So you can think of weekly group office hours as two things: one, it's a weekly check-in to keep everyone accountable, and two, it's like a group therapy session where you can air out your week, ask for help and get feedback from your peers.

The way that group office hours work is pretty straightforward. Each session is led by a moderator. The moderator calls the meeting to order and then he or she facilitates a discussion in which one founder from each company says three things: one, their company one-liner to remind everyone what they're actually working on—which actually is quite a tough thing to say about your working on one line—so you should help each other work on that. Two, is goals for your last week and why they did or did not meet that goal. And three, your biggest problem or obstacle that the group can help you with. This is followed by discussion in which each company spends about five to ten minutes, depending on the number of people showing up to group office hours that week, and the moderator goes last.

So, like I said, each group has only one moderator. Some groups have already been assigned a moderator; these are volunteers from the YC founder community. Many groups do not have one yet, so these groups will need to select one among themselves. So if you are in a group without a moderator currently—and you will know this via the software, which I'll show you shortly—your homework is to do this ASAP by Thursday.

So how to select a moderator for your group? First, ask yourself if you are that person: do you want to do this? This involves extra time, energy, and thought, so just be cognizant of the extra work before volunteering. You will need to set the weekly schedule for your group, encourage and drive discussions, and constantly ask the group for input and guide the conversations. Should you choose to accept this mission, we will be running a moderator training session this Friday. It's going to be a live stream at 9:00 a.m. Pacific, and we will be posting the live stream recording of it afterwards if you can't attend.

So you should immediately get together with the group via the two channels we provide, which is video chat and group form, or some other way that's best for you, and figure this out. One easy way to figure this out is whoever volunteers first gets the role, so there's no arguing there. So please submit your choice by Friday so that the right person knows to attend the training session.

Here is the link to submit; we will send this out to you afterwards, so you don't really need to write this down now. So the obvious question might be what if no one in your group volunteers to be a moderator? Well, the answer is, if no one volunteers, then no one in the group can participate in Startup School—your entire group will be auditing the class instead. Whoops! I don't know what I did there, but there we go.

This seems hard, but for this to work, we think having a moderated group office hours—just based on experience—is very important. Maybe the most important thing for this entire class. So we've made this a requirement to stay in the course.

All right, I'm a little bit… okay, weekly company updates. So sometimes this week, you should actually sit down and think with your other co-founders about a goal for Startup School that is at least one key metric that defines what success is to you by the end of the ten weeks. This might just be launching your product, but hopefully it's some kind of key metric like monthly recurring revenue, number of active users, and so forth. Each week, you will be asked to submit an update of your company in particular, whether you achieved your weekly goal for this key metric.

We find that submitting this adds an extra layer of useful accountability and will help you to drive to accomplish more than you would have otherwise. So please submit this by Tuesday, end of day Pacific, excluding this week, so the first day, I believe, is September 3rd.

All right, so one of the things we're doing new this time, in which I'm personally excited about, is the community and forum, which some of you may have logged in and already started posting. This is the place where you can talk to fellow founders like yourself. You can poll for opinions on a variety of matters related to your startups and ask for help for things like what's the best way to do X, Y, and Z, and so forth.

We've also created a private channel for your group, and we think that most of the conversations will have will actually be in these private channels talking to tens of thousands of people will be almost usually ineffective and tough for many topics. So one of the first things you do if you haven't already done is log into the software, which is live now, and introduce yourself to your own group. Basic forum rules apply: be nice, don't spam. I've already had to delete some posts, so try not to do that.

Only post things that will be helpful to you and everyone else. If you break these rules, we unfortunately will have to remove you. Finally, at the end of the course, we will have a virtual presentation day where you'll pitch your company via video and slides. This is where telling the story of your startup is important, and Jeff will go over how to do this and how to think about it in a few minutes.

So while presentation day is actually optional, it's a good way to use this day to set an ambitious goal of what you would like to show off to others in ten weeks from now. There will be many of you who, if you take this seriously, will be amazed in ten weeks by what you can accomplish and what you'll be able to present by just setting a goal, holding yourself accountable each week by one, submitting updates, and talking about your progress with your group during group office hours.

All right, so to help us keep the community tight and on track together, we will be removing inactive companies, unfortunately. So if you don't submit updates and skip group office hours in the first two weeks, you will be auditing instead. We want to work with you if you're serious about your startup and making progress. Now, some of you may decide this is not the right time to do your startup, and that's obviously totally fine.

To officially complete the course, aka to graduate, you just need to do two things. One is to submit nine out of the ten weekly updates, and two is to participate in nine out of the ten group office hour sessions. And that's it. And as you know, as Jeff already mentioned, we are giving out $110k equity-free grants for the most promising startups. Course completion is the minimum requirement to be eligible for these grants, but regardless if you're aiming for this or not, we believe the success of your startup will increase if you actually complete the course. So regardless, please, you know, we encourage you to just complete the course.

Finally, Jeff already kind of mentioned this, but while Startup School is completely independent from the YC core program, we would love for as many of you to apply to it as possible. In this vein, as Jeff has pointed out, we have a lecture dedicated to how to create the best application possible and the best practices for the in-person interview should you get one. The course just happens to finish just in time for you to apply on time, and so we hope to see many of you do so.

Yeah, I just wanted to spend a couple of minutes talking about something that I think is absolutely vital to startup success but, although it's fundamental, is often somewhat overlooked, and that is really the invention—the creation of the story of your startup. This might sound obvious or basic, but it turns out that getting this right is actually non-intuitively important.

The reason that it is so important is because startups are so hard; they're so very, very hard. It is almost certainly going to be the hardest, most difficult thing you will do in your professional career. If you don't create a story—the right story—that you can tell yourself to keep going when things go wrong, you'll quit, and your startup will die.

So it's worthwhile. My YC partner Aaron Harris, who's going to be giving a lecture later on in Startup School, thinks and talks a lot about stories, and I'm indebted to him for a number of the ideas in what I'm about to say. So there are stories, and there are stories. The famous author E.M. Forster maybe said it best many, many decades ago when he gave this example:

So, "The king died, and then the queen died" is certainly a story, but it's not a very interesting story, is it? It's not a story that grabs you, it's not a story you necessarily care about. But "the king died, and then the queen died of grief"—well, there's something there! There's something that grabs you, there's something human there. There's something in that story that seems to matter.

And it turns out founders spend a lot of time telling stories. They tell stories about what they're doing; they tell stories about the future that they're trying to create. They tell stories originally maybe to their parents, to their friends, to their family, eventually to co-founders, potential customers, partners in the company, investors, but most of all, they need to tell a story that resonates with themselves.

It's the story of your startup that will nourish you—that will keep you going through hard times and setbacks. It's a story that will persuade you to actually do this crazy thing, and it's the story that will maybe just convince others to join you on your journey. How crazy it is to convince someone else to follow you on such an uncertain path; it's not easy.

So we actually spend a lot of time at YC helping people craft and sometimes even reimagine their stories. So I'd strongly recommend that you do these things during these 10 weeks: start with your idea, and then, as Adora mentioned, create a one—preferably one-sentence or maybe two-sentence—explanation that is so easy to understand you can stop anyone in the street and they wouldn't just look at you blankly when you're telling them what you do!

Create your—what we call your "vertebrae," the framework of your story that captures really what it's all about and that, if you were to tell your story, you would expect, hope, that people might just remember because they will not remember your entire story! And create a two-minute demo day like pitch—it doesn't have to be exactly two minutes—but create a pitch that captures the essence of your story and communicates those vertebrae in a memorable way.

Last but not least, work with your co-founders so that you're on the same page; so that you all share the same story and can all relate that story—tell that story in a way that's compelling and believable. Because when you have it right, it will be believable, and equally importantly, it will be memorable! And it will, I hope, sustain you as you go through your path and your journey.

Good luck to everyone! I hope that Startup School helps everyone realize the dream, and the company you're creating has a ton of success. So Adora, come on up! We are going to do a quick Q&A. I just want to say one thing about one part of what Sam talked about, which is "we'll figure it out." Don't minimize the importance of getting that as part of the fundamental culture of your team.

In fact, as an example, Y Combinator might not feel to you guys like a startup, but it always feels to us like it's a startup even though we're 15 years old now. A week ago, everything went to hell and we had a pretty big problem with Startup School, and we weren't quite sure how to deal with it. Our small team sat down together, and everyone said, "Well, we'll figure it out; we're going to let everyone in and we'll figure out how to make it work."

Now you guys will be the judge of how good a job we do figuring it out; we're going to do our very best! But that sort of attitude, this default towards positive action, makes for great startups. Any questions you have, we're going to take whatever questions you have, if any. Then we're going to take a short break, and then we'll continue with the second half—the second lecture today on startup mechanics, led by our incredible legal team from Y Combinator, who's hiding in the corner over there.

So, any questions for Adora or myself? Yes, when should we submit the weekly updates? Should we do it nice and early, or should we try getting as much done as possible and can wait as late as possible to submit them close to the deadline?

Well, look, the updates are for you, right? So the updates are to derive progress in your company, and it's usually better to have an update that is better than worse. So, you know, if you think you're gonna get five sales between now and the deadline, will get the five sales and have a better update. I would actually, in general, recommend doing them on a pretty consistent temporal basis just because that gives you some clues to your progress, like every week we’re going this much.

But look, they're a week apart, so the importance of a few days is not going to make or break your startup. The important thing for the updates is to have a measure that you hold yourself to that really tells you whether you're making progress or not. Because a startup that doesn't make progress is going nowhere, that's redundant but true!

You know that when Chesky and Nate and the folks at Airbnb were at YC, they used to wake up every morning and see their revenue graph in their bathroom mirror, and that drove them. And, you know, it helped and it worked out for them, so why not you?

Questions? Yeah. The question is about AWS credits, and you probably missed the beginning, but if you log in to the site, you can see all of the deals that the companies who are following Y Combinator and following Startup School. Yep, there was a thousand dollars of AWS credits for all of the participants, yeah.

What about the group office hours? There's a lot of people in the room who are all from here so, is there like a way for us to physically do that? And then further, like we're in San Francisco, so coming down here is harder. So I get more out of being in a room with other people than I do like on the internet.

So if you just look at who's in your group and see where they are… Can you repeat the question because on this theorem? So the question is, should we be doing group office hours in person? And if so, like how do we go about doing that?

So we encourage, because most people are distributed, to do them through the video chat online. That assures, you know, we just click it in you're in. If you do want to do in person, that's up to you, but that's something you should work with your group on.

Yes, so you should—if you're having issues with your account, who should you contact? If you're having issues with your account, you should email startupschool@ycombinator.com.

Yes, so the question is how will we choose the hundred companies who get the $10,000? As Adora pointed out, the first criterion that we'll look at is did you actually complete the requirements of the course? If you do that, then we're going to take a number of measures to see who's the most promising. It's kind of what we do at Y Combinator; we're always trying to judge who's the most promising.

So we're going to look at everyone who graduated and everyone's status updates, and we'll talk to moderators, and we'll look at the information we have about the company and then make judgments as to who we think is most likely to take that ten thousand dollars and do something useful with it.

Yes, in the back. I mean, I work on both digital and… Can you stand up and speak more loudly please? So I think the question was if you're working part-time on your company because you have to work full-time, how do you stack up?

Well, I think the hard answer there is there's few startups that are successful working part-time. So eventually, if you're not full-time, the likelihood that you're gonna create an epic company by working a few hours a week, even if you're amazing and you're working 40 hours a week in one job and 40 hours a week in another, your probability of success is pretty low. Can you guys think of any amazing company where part-time founders actually made it amazing?

So I think the question isn't really to us, it's to you: how successful can you make your startup working part-time? I think you can get it going, but at some point, you're going to have to commit to it if you want to make that startup real.

Yes, there is really no such thing. The question was about the advisor track program; there's really no such thing. There's one program with all 15,000 companies, and we're going to try to make the program as identical for everyone as possible. Some groups have a built-in moderator, some don't and have to add their moderator.

Look, we think that's going to work out very well. We'll find out. It's going to depend on you all—the folks who choose to be moderators to take it seriously and to create a community and a useful group that actually helps folks as they have their encounters, as they talk about progress, as they talk about problems.

We think that one of the most important things for startup success is actually to have a community of folks to whom you can talk. Just having that community can be one of those things that does with your story sustain you as you build your startup.

Yes, so the question is if you haven't launched yet, what should be a good weekly metric? So the obvious number one thing you could go after is the number of days till public launch. That way, the way you make progress over the weeks is the technical milestones that you need to hit, like one, two, three, and four to get to that.

So hopefully by the end of ten weeks, you're able to launch it to either a set of private beta users or to the world. And beyond that, if you're also someone asked us in the forum to if you're in private beta right now, like, you know, what's a good metric? Also number of days to public launch, but also, for example, a number of active users using you or something, some engagement metric that shows that people are loving what you're building.

One good rule is to launch earlier than you think you should. Now, there are exceptions to that. If you're, you know, if you're thorough and your thing doesn't work—not a good idea—so there are exceptions. But in general, you should launch sooner than you think you should.

Yes, like value and metrics? I guess like value is just like a number, right? It's very arbitrary. So the question was on the weekly updates and what we mean by "value." I don't think it's arbitrary at all; like if it's revenue, it should be a real number. If it's users, it's a real number.

The reason we're not prescriptive about what that should be is because it depends so much on the stage of your startup—the sort of startup you have. What we encourage you to do is to try to figure out what metric is most likely to be representative of success—what actually tells you that things are going well. It's not a fake one if it's the number that happens to be the biggest every week, but actually doesn't really represent whether things are going well.

If you're getting a ton of registrations, and people are signing up for your product, but nobody's using it, so you use registrations as your metric. You might think that that's impressing us, but in the end, you're just waving your hands around, and something's not working. So in that case, for example, maybe active users was a better metric to use.

Yes, sorry to ask another question. We're a hardware company, so the nature of what we're doing is that we're making something physical. So what is a useful hardware metric that you've seen over time that might be different than what you've already talked about?

So the question was what metrics make sense for hardware companies? Look, we fund lots of hardware companies. One of our partners, Eric Makovski, founded Pebble, and he probably would be much better at answering that question than I would. But every company—hardware, software, hard tech—if you're building like a YC company like Boom, a supersonic airplane, still makes progress. If you're not making progress, what exactly are you doing?

It might be that you're trying to find a factory in China to manufacture your product, so maybe you've made progress on that deal. Maybe it's in the design of the product; so the milestone we've completed the design of the wing or the engine. Again, I will default to what I said before; there is some way that you believe that your prior project, your company, your product is proceeding on a path toward success, and along that path, there will be important milestones. Those should be your metrics.

We have a lot more questions, so I'm just gonna take it. I apologize, a couple more questions because I want to give everyone a bio break, and I want to move to the next session, so just a couple more. Yes? Yes, so the question is how can you connect with YC alumni or partners to get feedback?

So we're a lot of alumni, or at least over 100, are actually in the forum and they'll be answering your questions. Jeff and I will also be in the forum; we were YC partners, so hopefully that covers that. And we'll also have AMAs with other YC partners. For example, Eric from Pebble will be doing something for the hardware startups, and so we'll have those interactions as well.

So look, it's a great question! You know, there's a lot of you out there; there's 15,000 companies, and so we can only give so much feedback. But the whole point of Startup School is to try to give YC knowledge to everyone who can make use of it, so we'll do our very best to do exactly that.

All right, one more question? Yes? Yeah, so the question is can I repeat what I meant by "the vertebrae of your story"? The way I usually think about that is if you tell, let's say you meet an investor and tell them, I'll give them a little two-minute pitch for your story. You have to remember that they're gonna hear lots and lots and lots of pitches. They're not going to remember your entire two-minute pitch. They're probably gonna remember three or four things from that pitch—the vertebrae—the three or four things you want them to remember.

So if you build a story and the focus is on something like, you know, they walk away saying, "Oh, he's from San Mateo"—like, who cares? What we really want them to remember is, "We're growing at 30% every week, and this market is a gigantic market, and our product solves an incredibly important problem for somebody."

So the vertebrae are the key elements around which you build a story. The vertebrae are the elements that are the memorable ones of what you're building and that comprise really the essence of your story. Hope that helps!

Look, we're going to take a 12-minute break and start again at 11:20. There's coffee and snacks in there, and the bathrooms are over there. Thank you!