September 2022

I recently told applicants to Y Combinator that the best advice I could give for getting in, per word, was

Explain what you've learned from users.

That tests a lot of things: whether you're paying attention to users, how well you understand them, and even how much they need what you're making.

Afterward I asked myself the same question.

What have I learned from YC's users, the startups we've funded?

I recently told YC applicants that the best advice for getting in, per word, was: Explain what you've learned from users.

That tests a lot: whether you're paying attention to users, how well you understand them, even how much they need what you're making. Afterward I asked myself the same question. What have I learned from YC's users, the startups we've funded?

The best advice for getting into YC, per word, is "Explain what you've learned from users." So I asked myself the same about the startups we've funded.

The first thing that came to mind was that most startups have the same problems. No two have exactly the same problems, but it's surprising how much the problems remain the same, regardless of what they're making.

Once you've advised 100 startups all doing different things, you rarely encounter problems you haven't seen before.

This fact is one of the things that makes YC work.

But I didn't know it when we started YC.

I only had a few data points: our own startup, and those started by friends.

It was a surprise to me how often the same problems recur in different forms. Many later stage investors might never realize this, because later stage investors might not advise 100 startups in their whole career, but a YC partner will get this much experience in the first year or two.

That's one advantage of funding large numbers of early stage companies rather than smaller numbers of later-stage ones.

You get a lot of data.

Not just because you're looking at more companies, but also because more goes wrong.

Most startups have the same problems. No two are identical, but it's surprising how much they stay the same regardless of what's being made. Advise 100 and you rarely meet a problem you haven't seen.

I didn't know this when we started YC. Later-stage investors might never realize how often the same problems recur, because they may not advise 100 startups in a career; a YC partner gets that in a year or two.

That's an advantage of funding many early-stage companies rather than few later-stage ones. You get a lot of data — not just because you see more companies, but because more goes wrong.

Most startups hit the same problems regardless of what they're making, and funding lots of early-stage companies is how you learn them all.

But knowing (nearly) all the problems startups can encounter doesn't mean that advising them can be automated, or reduced to a formula.

There's no substitute for individual office hours with a YC partner.

Each startup is unique, which means they have to be advised by specific partners who know them well. [1]

We learned that the hard way, in the notorious "batch that broke YC" in the summer of 2012.

Up till that point we treated the partners as a pool.

When a startup requested office hours, they got the next available slot posted by any partner.

That meant every partner had to know every startup.

This worked fine up to 60 startups, but when the batch grew to 80, everything broke.

The founders probably didn't realize anything was wrong, but the partners were confused and unhappy because halfway through the batch they still didn't know all the companies yet. [2]

At first I was puzzled.

How could things be fine at 60 startups and broken at 80?

It was only a third more.

Then I realized what had happened.

We were using an O(n2) algorithm.

So of course it blew up.

The solution we adopted was the classic one in these situations.

We sharded the batch into smaller groups of startups, each overseen by a dedicated group of partners.

That fixed the problem, and has worked fine ever since.

But the batch that broke YC was a powerful demonstration of how individualized the process of advising startups has to be.

But knowing nearly all the problems doesn't mean advising can be reduced to a formula. Each startup is unique, so it has to be advised by partners who know it well.

We learned that in the notorious "batch that broke YC" in summer 2012. Until then we treated partners as a pool: any partner could take any startup, so every partner had to know every startup. That worked up to 60, but at 80 everything broke — founders didn't notice, but partners were confused, still not knowing all the companies halfway through.

How could things be fine at 60 and broken at 80, only a third more? We were using an O(n2) algorithm. So of course it blew up.

The fix was classic: we sharded the batch into smaller groups, each with dedicated partners. But the batch was a powerful demonstration of how individualized advising has to be.

Knowing every problem doesn't mean advising can be automated; each startup is unique. The "batch that broke YC" in 2012 proved how individualized advice has to be.

Another related surprise is how bad founders can be at realizing what their problems are.

Founders will sometimes come in to talk about some problem, and we'll discover another much bigger one in the course of the conversation.

For example (and this case is all too common), founders will come in to talk about the difficulties they're having raising money, and after digging into their situation, it turns out the reason is that the company is doing badly, and investors can tell.

Or founders will come in worried that they still haven't cracked the problem of user acquisition, and the reason turns out to be that their product isn't good enough.

There have been times when I've asked "Would you use this yourself, if you hadn't built it?" and the founders, on thinking about it, said "No." Well, there's the reason you're having trouble getting users.

Often founders know what their problems are, but not their relative importance. [3] They'll come in to talk about three problems they're worrying about.

One is of moderate importance, one doesn't matter at all, and one will kill the company if it isn't addressed immediately.

It's like watching one of those horror movies where the heroine is deeply upset that her boyfriend cheated on her, and only mildly curious about the door that's mysteriously ajar.

You want to say: never mind about your boyfriend, think about that door!

Fortunately in office hours you can.

So while startups still die with some regularity, it's rarely because they wandered into a room containing a murderer.

The YC partners can warn them where the murderers are.

Another surprise: how bad founders are at realizing what their problems are. They worry about raising money; the real reason is the company is doing badly and investors can tell. I've asked "Would you use this yourself, if you hadn't built it?" — and they said "No." Well, there's your reason.

Often founders know their problems but not their relative importance. They'll raise three: one moderate, one that doesn't matter, and one that will kill the company now. It's like a horror movie where the heroine is upset her boyfriend cheated and only mildly curious about the door that's mysteriously ajar. You want to say: never mind the boyfriend, think about that door! In office hours you can warn them where the murderers are.

Founders often misdiagnose their problems, or know them but misjudge their relative importance — fixating on the cheating boyfriend while ignoring the door that's mysteriously ajar.

Not that founders listen.

That was another big surprise: how often founders don't listen to us.

A couple weeks ago I talked to a partner who had been working for YC for a couple batches and was starting to see the pattern.

"They come back a year later," she said, "and say 'We wish we'd listened to you.'"

It took me a long time to figure out why founders don't listen.

At first I thought it was mere stubbornness.

That's part of the reason, but another and probably more important reason is that so much about startups is counterintuitive [blocked].

And when you tell someone something counterintuitive, what it sounds to them is wrong.

So the reason founders don't listen to us is that they don't believe us.

At least not till experience teaches them otherwise. [4]

The reason startups are so counterintuitive is that they're so different from most people's other experiences.

No one knows what it's like except those who've done it.

Which is why YC partners should usually have been founders themselves.

But strangely enough, the counterintuitiveness of startups turns out to be another of the things that make YC work.

If it weren't counterintuitive, founders wouldn't need our advice about how to do it.

Not that founders listen. As one partner who'd seen the pattern put it, "They come back a year later and say 'We wish we'd listened to you.'"

Partly it's stubbornness, but the bigger reason is that so much about startups is counterintuitive [blocked]. Tell someone something counterintuitive and it sounds wrong. So founders don't listen because they don't believe us, at least not till experience teaches them.

Startups are counterintuitive because no one knows what it's like except those who've done it, which is why partners should usually have been founders. But strangely, that counterintuitiveness is another thing that makes YC work: if it weren't, founders wouldn't need our advice.

Founders often don't listen, and come back a year later wishing they had. The deep reason: startups are so counterintuitive that true advice sounds wrong, so founders don't believe it.

Focus is doubly important for early stage startups, because not only do they have a hundred different problems, they don't have anyone to work on them except the founders.

If the founders focus on things that don't matter, there's no one focusing on the things that do.

So the essence of what happens at YC is to figure out which problems matter most, then cook up ideas for solving them — ideally at a resolution of a week or less — and then try those ideas and measure how well they worked.

The focus is on action, with measurable, near-term results.

This doesn't imply that founders should rush forward regardless of the consequences.

If you correct course at a high enough frequency, you can be simultaneously decisive at a micro scale and tentative at a macro scale.

The result is a somewhat winding path, but executed very rapidly, like the path a running back takes downfield.

And in practice there's less backtracking than you might expect.

Founders usually guess right about which direction to run in, especially if they have someone experienced like a YC partner to bounce their hypotheses off.

And when they guess wrong, they notice fast, because they'll talk about the results at office hours the next week. [5]

A small improvement in navigational ability can make you a lot faster, because it has a double effect: the path is shorter, and you can travel faster along it when you're more certain it's the right one.

That's where a lot of YC's value lies, in helping founders get an extra increment of focus that lets them move faster.

And since moving fast is the essence of a startup, YC in effect makes startups more startup-like.

Speed defines startups.

Focus enables speed.

YC improves focus.

Focus is doubly important early on: a hundred problems and no one but the founders. So the essence of YC is figuring out which problems matter most, solving them at a resolution of a week or less, and measuring — action with near-term results.

This doesn't mean rushing forward regardless of consequences. Correct course often enough and you can be decisive at a micro scale and tentative at a macro one: a winding path, but executed very fast, like a running back downfield. When founders guess wrong, they notice fast at next week's office hours.

A small gain in navigational ability makes you a lot faster: the path is shorter, and you travel it faster when surer it's right. That's much of YC's value — an increment of focus that makes startups more startup-like.

Speed defines startups. Focus enables speed. YC improves focus.

With a hundred problems and only the founders to work on them, focus is decisive. Correcting course often lets you be decisive at a micro scale and tentative at a macro one — moving fast along a shorter path.

Why are founders uncertain about what to do?

Partly because startups almost by definition are doing something new, which means no one knows how to do it yet, or in most cases even what "it" is.

Partly because startups are so counterintuitive generally.

And partly because many founders, especially young and ambitious ones, have been trained to win the wrong way.

That took me years to figure out.

The educational system in most countries trains you to win by hacking the test [blocked] instead of actually doing whatever it's supposed to measure.

But that stops working when you start a startup.

So part of what YC does is to retrain founders to stop trying to hack the test. (It takes a surprisingly long time.

A year in, you still see them reverting to their old habits.)

YC is not simply more experienced founders passing on their knowledge.

It's more like specialization than apprenticeship.

The knowledge of the YC partners and the founders have different shapes: It wouldn't be worthwhile for a founder to acquire the encyclopedic knowledge of startup problems that a YC partner has, just as it wouldn't be worthwhile for a YC partner to acquire the depth of domain knowledge that a founder has.

That's why it can still be valuable for an experienced founder to do YC, just as it can still be valuable for an experienced athlete to have a coach.

Why are founders uncertain? Partly because startups are new, so no one even knows what "it" is; partly because many were trained to win the wrong way. School trains you to win by hacking the test [blocked] instead of doing what it measures, and that stops working in a startup. So part of YC is retraining founders to stop — which takes surprisingly long.

YC isn't experienced founders passing on knowledge; it's more like specialization than apprenticeship. It wouldn't pay a founder to acquire a partner's encyclopedic knowledge of problems, nor a partner to acquire a founder's domain depth. That's why experienced founders still benefit from YC, as experienced athletes still benefit from a coach.

Founders are uncertain partly because school trained them to win by hacking the test — a habit YC must undo. And YC isn't apprenticeship but specialization: partners and founders have differently shaped knowledge.

The other big thing YC gives founders is colleagues, and this may be even more important than the advice of partners.

If you look at history, great work clusters around certain places and institutions: Florence in the late 15th century, the University of Göttingen in the late 19th, The New Yorker under Ross, Bell Labs, Xerox PARC.

However good you are, good colleagues make you better.

Indeed, very ambitious people probably need colleagues more than anyone else, because they're so starved for them in everyday life.

Whether or not YC manages one day to be listed alongside those famous clusters, it won't be for lack of trying.

We were very aware of this historical phenomenon and deliberately designed YC to be one.

By this point it's not bragging to say that it's the biggest cluster of great startup founders.

Even people trying to attack YC concede that.

Colleagues and startup founders are two of the most powerful forces in the world, so you'd expect it to have a big effect to combine them.

Before YC, to the extent people thought about the question at all, most assumed they couldn't be combined — that loneliness was the price of independence.

That was how it felt to us when we started our own startup in Boston in the 1990s.

We had a handful of older people we could go to for advice (of varying quality), but no peers.

There was no one we could commiserate with about the misbehavior of investors, or speculate with about the future of technology.

I often tell founders to make something they themselves want, and YC is certainly that: it was designed to be exactly what we wanted when we were starting a startup.

One thing we wanted was to be able to get seed funding without having to make the rounds of random rich people.

That has become a commodity now, at least in the US.

But great colleagues can never become a commodity, because the fact that they cluster in some places means they're proportionally absent from the rest.

Something magical happens where they do cluster though.

The energy in the room at a YC dinner is like nothing else I've experienced.

We would have been happy just to have one or two other startups to talk to.

When you have a whole roomful it's another thing entirely.

YC founders aren't just inspired by one another.

They also help one another.

That's the happiest thing I've learned about startup founders: how generous they can be in helping one another.

We noticed this in the first batch and consciously designed YC to magnify it.

The result is something far more intense than, say, a university.

Between the partners, the alumni, and their batchmates, founders are surrounded by people who want to help them, and can.

The other big thing YC gives founders is colleagues, which may matter more than the advice. Great work clusters around certain places: Florence in the late 15th century, Göttingen in the late 19th, The New Yorker under Ross, Bell Labs, Xerox PARC. However good you are, good colleagues make you better — and ambitious people need them most, because they're so starved for them.

We were aware of this phenomenon and deliberately designed YC to be one. By now it's not bragging to say it's the biggest cluster of great startup founders; even people attacking YC concede that.

Before YC, most assumed colleagues and independence couldn't be combined — that loneliness was the price. That's how it felt starting our own startup in Boston in the 1990s: a few older people for advice, but no peers.

One thing we wanted was seed funding without making the rounds of random rich people; that's a commodity now, at least in the US. But great colleagues can never be a commodity, because their clustering in some places means they're proportionally absent from the rest.

YC founders don't just inspire one another — they help one another. That's the happiest thing I've learned about founders: how generous they can be. Between partners, alumni, and batchmates, founders are surrounded by people who want to help them, and can.

The other big thing YC gives founders is colleagues, which may matter more than advice. Great work clusters in certain places, and YC was deliberately designed to be such a cluster — full of founders who help one another.

Notes

[1] This is why I've never liked it when people refer to YC as a "bootcamp." It's intense like a bootcamp, but the opposite in structure. Instead of everyone doing the same thing, they're each talking to YC partners to figure out what their specific startup needs.

[2] When I say the summer 2012 batch was broken, I mean it felt to the partners that something was wrong. Things weren't yet so broken that the startups had a worse experience. In fact that batch did unusually well.

[3] This situation reminds me of the research showing that people are much better at answering questions than they are at judging how accurate their answers are. The two phenomena feel very similar.

[4] The Airbnbs [blocked] were particularly good at listening — partly because they were flexible and disciplined, but also because they'd had such a rough time during the preceding year. They were ready to listen.

[5] The optimal unit of decisiveness depends on how long it takes to get results, and that depends on the type of problem you're solving. When you're negotiating with investors, it could be a couple days, whereas if you're building hardware it could be months.

Thanks to Trevor Blackwell, Jessica Livingston, Harj Taggar, and Garry Tan for reading drafts of this.

I've never liked calling YC a "bootcamp": intense like one but opposite in structure. When I say the 2012 batch was broken, I mean it felt wrong to the partners; the startups weren't worse off, and that batch in fact did unusually well.

The Airbnbs [blocked] were especially good listeners, partly because a rough year had made them ready. And the optimal unit of decisiveness depends on how long results take: days negotiating with investors, months building hardware.

Notes on why YC is the opposite of a bootcamp, what "broke" meant in 2012, the Airbnbs' listening, and the unit of decisiveness.