YC Partner AMA at the Female Founders Conference

Hello everyone, my name is Sharon Pope. I'm the head of marketing programs at Y Combinator, and it is my pleasure to welcome back to the stage YC’s partners coming up: Catman, y'all, Ik, Kirstie, Nephew, Adora, Polly, Jessica, and Carolyn. I'm gonna stand over here, I'm gonna stand.

Oh, just as a quick reminder, as I unlock my phone, please submit your questions at slide.O.com. ASL.I.do.com, and the event code is FFC. You can also upload 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.

Alright, okay, so first question: will YC ever open a New York City office? Carolyn, oh, I want to you, you know what? I think that we never say never at Y Combinator, and as somebody mentioned earlier, I can't remember, maybe it was Cat, 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'd like to try things and see what works. 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: 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 anywhere to spend, you know, three months in the Bay Area and get to build that network.

There are so many investors there, so many other founders. You can stay there for that amount of time, and then theoretically if New York is where your customers are, you 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.

Alright, and speaking of building our 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. 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 cushion the board?

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. I think if you're working on something interesting, then people who are really good will themselves be interested in it. 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 conversation, and people like that.

Yeah, what about Holly? Maybe you could answer also when it comes to dealing with the founder?

Well, I'll throw a fun story that a different YC founder, Eric Makovski, he was the founder of Pebble, and he came from Canada. Most people don't obviously have a network in Silicon Valley, and that's why they joined YC; 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 writing this blog, and it was a really nerdy blog.

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, there's a lot of paying-it-forward culture, particularly in Silicon Valley, which is another reason why people do like to have you come out there. And it's weird; investors don't like jumping on a plane. There's a lot of things they don't really like, and they'd like to meet you face to face still in many ways, if they can. So it's really good for that.

So, 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 questions." 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 how busy they are on that other side.

They'll be much 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. Marina was an expert in incense; 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 just count yourself out 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 media time with somebody awesome.

Also, a lot of people are 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?

Well, I was gonna 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. The founder-to-founder relationship that you form is probably more of an organic one.

So, college friends and old friends from your prior life, 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 with in college or at work.

I think those are the most common ones.

Are there startups that YC wants to fund more than others? Are there areas that YC is extra interested in, like female-founded startups?

Alright, there's also the requests for startups page, where we list like, "Hey, we'd love to see startups solve, you know, diversity, create a million jobs." If you don't have one in that area, it doesn't mean that we won't accept you. Even if you — it's just these are things that are interesting, and we put a call out for them.

And that's why Combinator dot 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, Holly 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'd never think an idea is like, "Oh, that's crazy; we'd never fund that." Like, we just don't have that thought.

And Kirstie, could you answer: Is there a level of startup that YC isn't mostly looking at in terms of stage?

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 have 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.

Nothing — any kind of applied before, please do apply again. We have like over 50% of the batch has applied before. I think of the numbers like creeping up now and throwing out. Nothing — we heard from earlier, sent, forgotten on our third try.

Cat, would you answer just generally what YC is thinking about what efforts YC puts forward to grow diversity within our founder population? This is something I'm super interested in, and you know 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 percent of the companies in the batch have a female founder.

One of the challenges is only 23 percent of the companies who applied had a female founder. So we want, you know, 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 conferences 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.

During the batch, we connect the women in our batches to female investors prior to going out and raising money just so they can get advice from women who have seen a lot of founders come to them, seen a lot of female founders, and 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 at YC. And I think out of Jessica’s slide, I think it's a total—how many? It's like three hundred fifty-eight women so far.

Yeah, it's great.

Um, fundraising questions. So maybe Kirsty grab the mic, but anyone else can chime in just on 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 of 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 on who you're raising from as well. Usually, the first money that a company will raise will be from individuals who are — 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 the people want what you're making.

And by 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.

And so, 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 — 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 and you're raising the next amounts 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 investor is putting money — and it's 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.

So Adora and Holly, maybe for this one, it's — speaking of traction, what are some examples of what counts as traction for a B2C company? And acknowledging that it varies by business, just kind of some principles that you might gauge.

That's for consumer companies.

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 ten.

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 Scentbird, you’re like "a hundred and five orders," we are onto something.

So the first little seed of traction is almost proof 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 ask you — well, 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 is very hard to do in your head, but pretty much by the end of the batch, will you 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, then you're like, "Oh yeah."

And for other investors, say, "Well, if you want to go more, that's really good." But don’t — until it's 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 that growth and that product-market fit, which we could help that 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 probably focus on users, whereas if you're building an e-commerce app, you would obviously focus on revenue more.

If they don't — watch for while you're growing if you're growing really fast is to pair it with observing reach. It's something like retention and engagement — 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 churn. If they churn right away or they're just not good for the product, 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.

Um, so as an engineer/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. I think you should launch; that's a great principle. Well, I think you could 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 signup button, nobody even wants to click on your setup, but 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 gonna take a while to build, there are 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 are 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, get some confidence if you launched, and you'll have some confidence around that.

And also, there's a big difference in terms of how much you can raise and the valuation you can get if you have users and 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 — it's 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 there the fastest, but that's the thing to do.

Alright, um, question: another related question which falls into the category of things that would never be at a male-oriented conference if they are those. But, um, 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?

It was a popular question, so I figured we'd ask to get — even though, you know, that 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 I just plowed right through it.

I never sort of planned; I wasn't very planful at all, which in hindsight is — I wish, and sometimes I wish things were different because 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 too long, be my other advice.

Yeah, I would echo that. I, 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 there's — 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 like ran out to go breastfeed her newborn in the car.

And weeks at the pair, 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 cliché, but I kind of think like you 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.

Yeah, so when I got married, like five months later, I just, 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. And no idea, this FYI, you do 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 — 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 prime Series A, Series B, but definitely by the time my kid came around, we were doing quite well, seriously. 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.

But that's kind of thinking about this thing. I do think about this as much as women, and there is the reality of a biological clock. But there are 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 and maybe even Carolyn, we might have, but I was definitely considered — I — what is it called? Geriatric pregnancy?

Yes, if you're over 35, you're advanced maternal age.

Yes, yeah we took my second one, they were like — they gave me like this pin or something. I don’t know; it was terrible. But it is very much — for all the parents out there, it is. The 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. Like, it's always Kabam, Holly. It always comes first, and like, I'm sorry.

So that it — but if you can surround yourself, don’t refuse help. I mean, it can be done, and there are many YC founders who have done it at various stages, all the way from the interview all the way to, you know, when it's a lot larger. Rashmi is one of them; she's gonna go do.

And yes, so it's very plausible. I think there's definitely some more tactical things if you do end up hitting at that point. Think about a plan when you leave — 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 in the YC community: your options should vest on maternity leave. I was just shocked, but it was there was a whole discussion around that. No, really! Somebody's options vesting suspended during pregnancy?

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 sit — like would you consider suspending your options?" Don’t ya know that I — you’ve ever — we're gonna be illegal too.

So, just one more question. And 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 an 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 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 new way of a different way of doing things. And so as long as you're inflecting, playing well in this stage, I'm doing X; in this next stage, I'll be doing Y. And 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 for coming. [Applause]