By playing, you agree to uListen's Terms and Privacy Policy and YouTube's Terms of Service.
Summaries, chapters, transcripts, and FAQs on this page are made by uListen, not YouTube.
CHAPTERS
- 0:00 – 3:15
Founders Didn't Know What YC Actually Offers
Michael Seibel relays feedback from the latest batch: founders didn't realize YC offers follow-on investing, Series A help, group partners, small groups and hiring support. Seibel and Dalton Caldwell discuss why YC does a poor job explaining itself.
- •Founders said they thought YC was a three-month program or a big online lecture
- •Many didn't know about follow-on investing, Series A help, or the hiring platform
- •Seibel says it's a knock on YC that it assumes people know these things
- •Caldwell says many founders are surprised that they really do work with Seibel and Caldwell
- •Caldwell says some of what YC does and its data are kept secret, which makes marketing hard
- 3:15 – 4:57
YC Is a Product, Not a University
Seibel argues people wrongly picture YC as a university that stays the same year to year, when it is more like a product that keeps changing. Caldwell adds that YC has no syllabus; it is more like a club that gives access to resources, and the videos are not YC itself.
- •Universities are expected to change little, while a product like Instagram changes constantly
- •Caldwell says YC is not a syllabus of lectures and reading lists
- •Watching the videos is not the same as being in YC
- •Access to resources opens more doors the bigger the founder's ambition
- 4:57 – 7:02
The "Mafia" Joke: Access and Protection
Seibel jokes that YC has been accused of being a mafia and says it isn't, but that there are similarities. Members get privileges and access, and investors are less likely to take advantage of YC companies.
- •Seibel says YC is not a mafia but shares some similarities with the TV version
- •Going through YC gives access to resources others don't get
- •Seibel says VCs don't rip off YC companies
- •Feedback had two parts: unclear benefits and misconceptions cleared up only after getting in
- 7:02 – 11:02
Common Misconceptions About YC
Caldwell and Seibel take on misconceptions designed to dissuade founders: that investors build your company, that critics' opinions are informed, and that you must be far along to apply. They say founders do the work and that 40% of the last batch came in with just an idea.
- •Caldwell says you can't bake a company by sprinkling in investors; founders do all the work
- •Caldwell notes many loud critics of YC were never in a batch
- •Seibel says the claim that YC is for scaling, not starting, is garbage
- •Caldwell argues a clean cap table with new founders beats a company with a messy pre-seed history
- 11:02 – 12:33
Why Do YC and Spotting Fear-Selling
Seibel gives his reasons to do YC: peer group, not being screwed by investors, honest feedback, and confidence from past companies' success. He says people who only tear down YC without explaining their own value may just be selling fear.
- •Reasons: amazing peers, protection from investors, honest feedback, taking responsibility
- •Many great companies extracted value from YC
- •Critics often can't explain why their alternative is better
- •Seibel doesn't want investors who sell fear on his cap table
- 12:33 – 15:08
Fundraising Results from the Recent Batch
Asked what the reality was heading into Demo Day, Seibel reports valuations, speed and terms were nearly unchanged from the previous batch despite worries about a summer slowdown. Caldwell warns against using anecdotes and press articles to predict your own fundraise.
- •Valuations of $15-25 million, some at $30 million, with almost no change
- •Investors moved from meeting to commitment in one to two meetings
- •No demands for board seats or odd terms
- •Caldwell warns against basing expectations on TechCrunch stories
- •Fundraising is not an efficient market like the stock market
- 15:08 – 16:55
Running an Auction Instead of Begging
Seibel explains that YC companies can run an auction: name their price and receive inbound investor interest. Founders are often shocked at how different this is from fundraising before YC, sometimes with the same funds.
- •YC companies tell investors the amount and price and ask if they're in
- •Typical companies get 10 to as many as 60-70 investors cold emailing them
- •Early-stage founders usually beg for money
- •Founders see very different treatment from the same funds before and after YC
- 16:55 – 20:33
Friendly Gatekeepers and Fake Advisors
Using his music industry experience, Caldwell describes how the most approachable people to newcomers are often exploitative, selling access and promises. Seibel shares his own experience giving 2% to a fake advisor.
- •Caldwell saw parallels between the music/Hollywood industries and Silicon Valley
- •Friendly gatekeepers pitch themselves as important and able to open doors
- •Examples include advisor shares for introductions and pay-to-pitch events
- •Seibel gave a fake advisor 2% of his company, and the advisor failed to help raise a round
- 20:33 – 24:38
Investor Horror Stories from Founders
Seibel shares specific stories founders told about pre-YC fundraising: a investor buying over a third of a company for a small check, a $50,000 legal fee charge for a priced round, and investors who set strange conditions. Caldwell notes that talking points like board seats and ownership thresholds are convenient for investors.
- •One company came into YC with almost 50% dilution after taking leverage-driven money
- •An investor wanted a priced round with $50,000 of legal fees, whereas SAFEs cost nothing
- •Investors demanded to be last money in or committed only a portion and told founders to raise the rest
- •Caldwell says fundraising memes often serve investors' convenience
- •Founders were shocked that YC-era investors just signed SAFEs
- 24:38 – 26:41
Don't Rush to Raise, and Closing Thoughts
Caldwell argues VC content marketing pushes founders to think they must raise a pre-seed immediately, whereas YC says you don't need to raise to start. Seibel closes by crediting the founders and saying the in-person batch was a joy.
- •Caldwell says VCs push the message that you can't start without a pre-seed round
- •YC's message is that you don't need to raise money to start and get customers
- •Starting with a pitch deck can set you up to be taken advantage of
- •Doing something cool gives you more leverage
- •Seibel says the founders did the work and the in-person batch was a great one
