Advice for a Y Combinator Interview
I participated in Y Combinator’s Winter 2019 batch with NALA. I recently gave advice to a group of founders who had a YC interview. Similar advice exists elsewhere online, but I figured it’s still worthwhile for me to type this up.
Getting a YC Interview
Rather than focus on the initial application process, this advice is most relevant for those who are waiting to have their in-person YC interview. In reality, most of this advice is relevant for companies talking to any investors. For the best advice on being successful in the written application for YC, see their website.
The First Question
The first thing to ask yourself is whether you want YC. If your interview goes well, you will likely have to decide that same day whether you want to accept YC. I highly recommend the advice and mentorship during and after the YC program, and being a YC company gives you access to a fantastic alumni network and can skyrocket your funding opportunities. There are many great reasons to do YC, and in most cases you will want to, but for some companies, especially later-stage or with experienced founders, the YC financial terms may not be what you’re looking for. As a general rule, I think it’s important to intentionally consider what you’re getting into.
The Most Important Part of the Interview
Almost every YC interview will begin with the question “What does your company do?” Make sure you can clearly explain your company in one or two sentences in plain english with no jargon. In my opinion, this is the most important part of the interview, and probably the most important part of talking to any potential investor for that matter. If the interviewers don’t understand what your company does after your response, they will keep asking until they understand, and you will lose valuable time for the rest of the interview. In the worst case, if the interview ends and the investors still don’t understand what your company does, you won’t be accepted.
Seriously, this is important and not nearly as easy as it sounds. When I prep prospective YC companies for their interviews, we spend the first 30 minutes at least perfecting this one-line pitch. Practice explaining your company to your friends. If you say more than two sentences, stop yourself and try again. Write it down and don’t change it.
Here’s an example that I am making up. First, what you don’t want to say:
We are Air Bed and Breakfast, and we are the greatest new way to experience travel while saving money by not staying in a hotel. We are growing fast and are loved by our users.
What’s wrong? Forget for a second what you know about AirBnB and read the description again. Do you understand what AirBnB actually does? Not at all. You understand that it’s not a hotel, but that doesn’t actually explain what AirBnB does. In addition, the description is packed with the fillers “greatest,” “new,” and “experience.” These words may work well for marketing, but not for investors. “Greatest” is a fluffy superlative. Of course your startup is “new.” “Experience” isn’t that bad, but it also doesn’t add any value. The second sentence is intended to show how great the business is, but investors are skeptics and won’t believe fast growth and excited users unless you explain specifics with numbers. How fast is the growth and what is growing?
Here’s a better one, though I’m sure it can still be improved:
We are Air Bed and Breakfast, and we are a community marketplace where users can both list and book overnight accomodations all over the world at prices more affordable than hotels.
This sentence isn’t perfect, but it describes what the core business is and why it’s better than the incumbent hotel industry. It’s a start.
YC Interviewers are Investors
This is a reminder about something I slipped in the bad example from the previous section. YC interviewers are investors, not customers. Fancy superlatives and marketing jargon are not useful. They want to hear plain, simple, understandable descriptions. For example, saying “we offer best-in-class efficient beautiful cleaning” is much less meaningful than saying “we clean houses, and we do it better and cheaper because…”
Know Your Market and Traction
Once you’ve explained your business clearly, you’ve won half the battle. Now the second half is market and traction. Focus on being ready to describe the size and types of customers in your market, and describe your current revenue and future opportunities. If you’ve launched, know how many customers you have, who they are, and why they do or don’t like your product. Numbers are better than notions.
If you haven’t launched, for most startups the best thing you can do for your company and your YC interview is to launch. If you don’t think you can launch before your YC interview, you may be right, but relax your constraints and consider it again.
Be a Unicorn
This may sound a bit facetious, but truth be told, YC isn’t looking for a good business, they are looking for a billion dollar business. They probably won’t ask how you plan to become a $1B business, but they will notice whether you think big. If your business doesn’t sound huge, you’ll want to explain why it is. If your potential market isn’t huge, I suggest having a larger vision that’s reasonably realistic. You can say, “right now we are doing A, and that will prepare us to do X, Y, and Z, which are huge opportunities.” The mathematical way to think about this is, how will your company earn $100 million per year in revenue. If you earn $5 per year per user, you’ll need 20 million users, which may or may not be feasible, depending on your business. I say $100 million because it’s common enough for companies in Silicon Valley to be valued at 10 times revenue.
Another compelling argument is how your market is growing. YC will be very excited if you demonstrate that you operate in a decently large market, and it’s growing at X% per year. That’s an exciting business.
How to Close
Once you’ve clearly explained your business and demonstrated a compelling market, the two most important ways you can demonstrate your merit to any investor are:
- Why you?
- Why now?
What makes your team uniquely positioned to tackle this problem? Why are you determined and passionate?
And why now? Is there a new market growing or a new technology opening up space in an old market? Or is this an overlooked area—much less likely. Ending with a strong why will provide the final push on the what of your company. And the YC interviewers will likely ask.