Michael Seibel first joined YC as a founder (twice: w07, w12) — once with the live streaming service Justin.TV (which morphed into Twitch) and later on Socialcam, another streaming app. Michael later served as a group partner, managing director, and CEO of YC. The YC companies Michael has worked with are worth a combined $192 billion.
A few weeks ago Siebel announced that he is stepping down from Y combinator. So I thought it’s a good time to share the video where lists are the key learnings from YC on how to start a technical startup:
- Start with a strong technical co-founding team: You need two to four co-founders with at least 50% engineering background. All co-founders should have roughly a year’s worth of very frugal living expenses saved up and must have quit their jobs. Notably, an initial idea is not a prerequisite at this stage.
- Collaboratively develop an idea focused on personal or known daily/weekly problems: Brainstorm with your co-founders, as the initial idea often comes from one person but benefits from team input. Prioritize solving problems you personally experience or are very aware of. Focus on daily or weekly problems, as they offer more frequent engagement opportunities than monthly or yearly ones.
- Conduct brief initial market research: Spend about an hour researching to determine if there’s a substantial market with billions of dollars being made. Also, try using your competitors’ products.
- Launch a Minimum Viable Product (MVP) quickly: Aim to get something into users’ hands within two months, regardless of the initial state. Avoid excessive iteration before launching, as getting user feedback is crucial.
- Prioritize growth as the primary metric for fundraising: For Silicon Valley investors, growth is the most important factor, even more so than the team or past experience.
- Adopt a strategic approach to fundraising: Only start fundraising when you don’t urgently need the money, as this makes investors more interested. Structure your company to minimize early expenses, focusing on covering co-founders’ living costs. Schedule investor meetings close together in time (within one week) to create buzz and a fear of missing out (FOMO). Having growth makes fundraising significantly easier.
- Manage operations leanly: The most common problem for startups is spending too much money. Reduce expenses, pay yourselves less, and opt for a less impressive office to extend your runway. Regularly review your monthly spending to identify areas for reduction.
- Focus on increasing average talent with each hire and hire slowly: Your early employees should ideally be smarter and slightly more risk-averse than the founders. If a potential hire doesn’t increase the company’s average intelligence, it’s a mistake. Hiring a large number of people is not necessary for early success; focus on the core founding team initially.
- Handle Public Relations (PR) yourself in the early stages: Avoid spending money on PR firms initially, as you can likely do it yourself effectively. Treat PR like business development: seek warm introductions, follow up, build relationships with reporters, and offer newsworthy pitches (launches, funding, significant hires, deals).
- Incorporate in the US for easier fundraising from American investors: This is a straightforward and inexpensive process (around $250 through clerk.com) if you intend to raise money in the US.
As a pre-seed investor at Remagine Ventures I think Michael’s advice is gold for founders early in their journey. I would add that understanding your target market and users is another critical success factor. Watch the full talk in the video below.
Co Founder and Managing Partner at Remagine Ventures
Eze Vidra is the founder of VC Cafe and the co-founder and managing partner of Remagine Ventures, a pre-seed fund investing in ambitious founders at the intersection of AI, technology, entertainment, gaming, and commerce with a spotlight on Israel.
He is a former General Partner at Google Ventures (GV) in Europe, former head of Google for Entrepreneurs in Europe, and founding head of Campus London, Google's first startup hub. Eze writes on Israeli tech, venture capital, artificial intelligence, and founder strategy.
He is also the founder of Techbikers, a nonprofit that brings together the startup ecosystem on cycling challenges in support of Room to Read.
He is a former General Partner at Google Ventures (GV) in Europe, former head of Google for Entrepreneurs in Europe, and founding head of Campus London, Google's first startup hub. Eze writes on Israeli tech, venture capital, artificial intelligence, and founder strategy.
He is also the founder of Techbikers, a nonprofit that brings together the startup ecosystem on cycling challenges in support of Room to Read.
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