We're trying something brand- new today... an asynchronous AMA with four YC partners. Post your questions below and they'll respond throughout the week! We've got:Adora - former founder of Homejoy (YC S10) and current YC Group Partner (which means she advises our startups most closely). She can answer any questions about how to build your companies.Anu ā€“ a partner for YC's Continuity Fund, which makes investments in our growth-stage companies. She was previously a partner at a16z. Anu can answer any questions you have about making your company bright and shiny for investors.Kat is YC's Director of Outreach which means she helps spread the good word about YC to students, cities, and countries who don't already know about us. She also helps companies in the current batch launch in the press so can answer questions about press strategy.Kirsty is YC's CFO and has witnessed something like 20 YC batches. In addition to watching YC grow from its earliest days to the behemoth it is now, Kirsty is an encyclopedia of knowledge about startup financial and corporate structure, and can answer your questions about how to set yourselves up to grow right.Of course there are tons of fields of knowledge these women have that I haven't listed here so almost any question goes. :D Let's get started Leap! Ask Us Anything!
@adora, @kirsty -- feel free to ignore these questions if they're too specific!1. At what point does a founder need a Terms of Service and Privacy Policy? And what's the best way to get these? 2. I want to start charging customers and accepting payments (using a subscription model), but am not sure what steps I need to take, in what order, and how cemented things are from the get-go.- What legal paperwork is required to do this? - Do I need to set up Stripe (or something similar) or can I accept a check or use PayPal for now? - How much can I experiment with my business model in the beginning? Any advice would be greatly appreciated!!!!
Check this out: I think generally these are fine as-is to start. Once you start taking off, definitely pay the $ to have a lawyer fine-tune it. Also, if you're collecting personal data, would read it through and make necessary changes. Basically, don't over-promise what you won't do with their information.
@adora thank you! this is perfect.
I'll jump in on #2. You can start as soon as you're ready! No legal paperwork required. You can certainly try using PayPal or check but depending on your product that might inhibit some folks who are used to smoother web transactions. I've used PayPal and checks in the past when a customer wants to place an ad on my site, or something like that where it's a one-off transaction. Stripe has a really nice widget you can add to your site that's just a little bit of JS. I recommend it! I charge customers for things all the time on side project apps that aren't incorporated businesses :) Just make sure if you're collecting any confidential info yourself, you are using encryption. HTTPS FTW!
Go with Stripe - it takes just a few minute set up and integration on site makes it look very professional. Since you're a US-based business, most people have credit cards and are used to it. Wouldn't worry about the edge cases for now.
Have you observed any differences between female founders and male founders in aggregate? (This Q can be generalized to broader groups of underrepresented founders) Do you see any trends in the type of industries, strategies, or operations that turn out to be an advantage or even disadvantage?
The big difference I have noticed in fundraise pitches is - women founders don't sell themselves as well. Often the women founders are crushing it and are super thoughtful about cash burn but when they present at an "All Partner" meeting, they rush through the presentation and often feel a bit under confident. If you are doing much better than a competitor it is ok to take a moment and say that you are doing WAY better than competitor.
This is very concrete and illuminating. Maybe one day YC can provide skills building development opportunities (workshops, coaching) for founders from underrepresented groups. Thanks for your answer!
The others probably have a more developed, deeper view on this than me (they've been investors far longer, and so have a much larger data set in their heads). What I have noticed is a disproportionately higher number of female founders in biotech and CPG. I suspect the former is because the field (in college and research) is more inclusive of women than say computer science. And the latter is because, well, women are the main buyers.
@Kirsty - what's one administrative/financial/legal thing founders should do in the early days to make their lives easier as their company grows?
There are a few things that that you can do in the early days that will make your life easier down the road. These are all things that we've had to help founders with.1) Incorporate as a C-Corp if you plan to take external money. Use a service like to incorporate or lawyers who are used to startups. 2) Keep all the incorporation documents as vanillas as possible - there is no need to add fancy vesting provisions, worry about super-voting etc when there are just the founders. Adding in non-standard items will make the process much more expensive.3) Make sure to actually issue stock and /or options to yourselves and employees. Just agreeing that they will get stock isn't enough - there is paperwork involved.4) Have a folder of all the signed documents in relation to anything to do with incorporation, equity allocation, employee documents and keep everything well organized. Make sure that the documents you save are all fully executed, which means that they should be the full documents plus signature pages, have dates filled, no [ ]. Don't just have random signature pages floating about.5) Keep your cap table up to date and make sure you understand how any convertible notes or safes will convert in a (hypothetical) priced round.There are loads more so feel free to ask any more questions about it!
Solid advice! Thanks. Helpful, as my newly born social club for women just launched and these items are next up on the horizon. An aside:Do you know Shanis Windland? She's a very cool woman acting as VP of Finance for Heptio who mentors for Gather, the social club I just mentioned.
@Kat - what is your dream batch composed of (in terms of company verticals, age, gender, ethnicity, etc.) and what do you think is your biggest challenge in creating that from the ether?
This is an enormously meaty question. I'll start with the first question and then answer the "challenge" question later. Vertical: I'm delighted by the range of companies we accept. In this batch (S17) there's everything from b2b software and dev tools aerospace and biotech. One thing I like about YC is that we don't put too much emphasis on predicting the next big idea or vertical. What we do know is that great companies are started by strong founding teams. Our focus has always been more on founders than on verticals. Age: The average age of a YC batch has been between 28-30 for the past few years. This batch, we have a 15-year-old founder and a founder in his 60s. There's a myth that YC is all people in their early 20s. That's actually not the case at all anymore. I'll have to look at the data, but my sense is that there's been a decrease in people in their early 20s starting companies. Many college students I talk to have a hard time turning down offers at larger tech companies that offer a 6-figure starting salary out of the gate. Gender: Roughly 13% of the founders that apply to YC are women. I'd love to see that % closer to 50% (or even 30%). I focus on getting more women to apply because we've seen that the % of women we fund usually matches the % of women who apply. Race/Ethnicity: I'd like to see the demographics of a batch better reflect the demographics of the country. One thing we've seen positive movement in is an increase in international companies applying to YC. We did an international tour last fall and we saw an increase in applications from India and Nigeria. 40% of the Winter 2017 were companies that came from outside the US.
"the % of women we fund usually matches the % of women who apply."this is an extraordinarily eye-opening and empowering fact! i wish this were made more visible, as I think too often people just assume this is *not* the case.
@Anu - was the decision to migrate from Andreessen to YC a tough one? What tipped the scale for you?
I consider both a16z and YC as transformational to the VC space. I had interacted with so many YC companies during my time at a16z. What stood out for me was how founders spoke so passionately about YC - both the network and the Partners. During my interactions with YC partners it became clear to me that the mission was a lot bigger and the amount of impact we could have in enabling startups globally was a lot more. On a personal note - I am a bigger fan of growth stage investments and the opportunity to help build the Continuity Fund for YC was what tipped the scale for me. I also liked the transparency of all the Partners through the interview process.
I'm currently going through a long round of interviews and experiencing a level of transparency and honesty that I've never experienced before. It's really refreshing.
Thank you all for taking the time to chat with us!!In your experience, how much is luck a factor in the success of a startup?
Inspo to share the quote by Seneca: "Luck Is What Happens When Preparation Meets Opportunity"
@Adora - as a partner who works with YC startups super closely during the batch, what's surprised you about the 3-month experience they have? Was there anything you weren't quite prepared for or surprised/delighted by when you came back to YC after 6 years away?
re: 1st question. After a decade in the Valley, nothing surprises me anymore :) But perhaps I can answer that question in the shoes of the founders. For them, many are surprised by how much they can push and accomplish in 3 months. Certainly constantly interacting with fellow high-performance peers around you helps a ton. So the challenge is figuring out how to keep that momentum going after Demo 2nd question. YC is bigger these days (more founders, more employees). I had imagined it possibly being less cohesive and disorganized as a result but this is furthest from reality. And that's because the secret sauce to YC is the operations and software team. You never really see them (in a public anyway) but they're practically running the entire show. I've only seen it get better over time.
When you have a few highly valuable advisors whose input can turn the trajectory of the company closer to hockey stick, the tragedy of commons is real, even within YC. How do you keep from burning out? How do you keep from losing passion to the point where you care less about the value you would bring to the next founder who comes to talk to you? What do other advisors you know do to prevent that? What does YC do?
For me, there's something eternally fascinating about seeing all the bits of the future being built in front of you. If there's ever a dull moment, it's quickly forgotten with an exciting one. There's also just knowing what makes you a happy, effective person and having the flexibility to schedule towards that. For example, I leave huge blocks of time across the week for learning a new topic, whether it's in the form of reading, coding or just watching YouTube videos. Or I do office hours no more than 3 hours in a row because I know I'm less effective after that (breaks are your best friend). Etc, etc.In terms of what YC does. We actually have a ton of flexibility when a batch is not in session (much fewer events). We also have people rotate into sabbaticals. Jessica Livingston and Paul Buccheit, for example, are taking one now.
@Kat - How do you think about your work directing outreach for YC in the context of systemic change for representation in technology, entrepreneurship, and general economic empowerment? Where in the pipeline is YC focused on doing outreach (i.e. working with technical college graduates, folks who have no prior exposure to startups or entrepreneurship, ...)
YC was started to help smart, hardworking founders get started -- and it was especially helpful to people who didn't already have existing connections to angels and VCs. I'm proud of the fact that even today, over 60% of the founders we fund have never touched base with a YC partner or alum before. You don't need a connection to YC to get funding. Having an open application system, versus relying on warm intros (which is what most VCs/funders do) keeps YC accessible to anyone, anywhere. We realized years ago that we were doing a great job of getting Hacker News readers to apply to YC. But we realized we needed to get the word out about YC in communities beyond HN. Over the past few years we've launched programs to reach more female founders, more POC and international founders as well. We also run Startup School -- our free, 10-week online class. The goal with Startup School is to make everything YC teaches accessible to anyone, anywhere. We believe startups are positive for the economic development of regions that need growth, and we want to help more get started around the world.
I'll come up with something! Thanks for this AMA. So cool.
@ all members of this AMA:Q: From what you've seen and experienced, what do you believe the biggest obstacles are to realizing full entrepreneur-centric careers, for women ages 18-34? When I say "realizing," I mean, being able to experience returns on all counts such as high/fair compensation, learning, leadership opportunities, fully utilizing ones talents and skill set.Thank you! :)
And generally -- all YC partners are involved in recruiting founders, application reading, and the interview/funding process. So feel free to ask questions on those fronts as well.