5 Lessons learned from YC
Joseph Lee (CEO)
Jun 20, 2023
Syncly is an AI startup that helps customer success and support teams increase product adoption by better understanding user feedback at scale. We participated in Y Combinator from January to April ‘23, as a W23 batch, and our founders worked together in an Airbnb in San Francisco, engaging with customers and developing our product.
We are a second-time founder who sold our last AI company 4 years ago, and this is our first time applying for YC. We believe the YC experience was crucial from Day 1 and we'd like to share 5 key lessons learned through this meaningful process.
Lesson 1: Find the Hair on Fire Problem
Before the official start of the YC program in January, we met with potential customers via Zoom calls for idea discovery. Through warm introduction and cold emails, we tried to find the pains that customers are facing, and we built an initial MVP and participated in YC. Once YC started, we were excited to find customers to use our MVP right away.
However, it didn't work out as well as we had hoped.
YC always emphasized the importance of finding the "Hair on Fire Problem”. A Hair on Fire Problem basically means a problem for which potential customers are willing to pay right away to solve. If you don't dig deep into the superficial issues and uncover the root problems, you'll never find the right problem to solve.
During our time in YC, we spent at least a month focusing on defining a hair on fire problem. We had 6-7 Zoom meetings or face-to-face meetings daily for a month and a half, and we were only able to start building our MVP in mid-February. Starting with our batch, YC went back to in-person (but remote friendly) sessions, and 86% of our YC batchmates were based in San Francisco. Living in the bay area and staying close to prospects really expedited our process of idea discovery to MVP building.
Our process for acquiring our initial paying customers can be summarized as follows:
Step 1) Initial discovery call with prospects (Cold email or Warm-intro through YC batchmate) over zoom.
Step 2) Show our mvp, and realized that it was not quite what they were looking for. Eventually, we stopped showing our MVP at all (related to Lesson 2).
Step 3) Request an in-person coffee chat or happy hour to double down their workflow and the pains.
Step 4) Share top concerns they wanted to address that we discussed in a meeting, and define use case that could solve the issues.
Step 5) Reiterate steps 1-4 with multiple people. Identify a common problem and start buidling an MVP, using tools like Google Looker Studio.
Lesson 2: Nobody is going to buy your product to solve their problem. Sell yourself as a founder whose life mission is to solve their problems.
We had the opportunity to meet Vendr's CEO Ryan Neu, who shared valuable advice, but one particular point stood out:
"Don't sell your product that's 4 weeks old.
Sell 'YOU' whose life mission is to solve their problem."
Customers may not use your product for various reasons: they're busy, lack budget, or face personal issues.
That's why Ryan advised not trying to solve their problem with a 4-week-old product, but instead prove your commitment and efforts as founders to solving their problem. We really relate to this advice early on, moved away from showing our product first, and focused on listening to customers' problems and considering solutions afterwards. Then, we spent no more than a week crafting initial solutions using tools like Google Looker, showcasing our team's AI application capabilities and how capable we are on solving customers' issues.
Lesson 3: Don’t make excuses for why you can’t move faster
Throughout the weekly office hours with our YC group partners, the most common advice we heard was, "Founders always make excuses for not doing more."
"Me: We onboarded 10 customers last week." (Thinking we did well)
"Group partner: Oh, really? Why couldn't you move faster?"
"Me: We had some team discussions about our product."
"Group partner: What made you not being able to onboard twice more customers? Founders always find excuses for not moving faster."
"Me: Yes… you're right."
Our group partners, who have advised many YC companies, said founders always find excuses for not moving faster: reasons why we couldn't meet more customers, launch faster, or close more deals. He wished that our team wouldn't repeat the same mistake.
Lesson 4: Don't lose your pace after graduating from YC
Another YC alumni, Parker Conrad, CEO of Rippling (YC W17), pointed out that successful YC companies share one thing in common: they maintain the extreme productivity they had during YC. As companies work intensively during the four months of YC, they achieve extreme productivity, but many lose pace and slump after graduation. Regaining momentum takes time, making it crucial for successful startups to maintain their extreme productivity as founders and as a team.
To maintain extreme productivity in YC, they emphasize extreme prioritization of tasks.
Set goals every two weeks (i.e., ARR), and review progress in sessions with 6-8 teams and a YC partner.
Discuss why we couldn't move faster in 'Lesson 3' and share those reasons with full transparency.
Identify the top 1-2 blockers preventing us from demoing to 50 customers and discuss ways to overcome them.
Sharing and reviewing goals with other batchmates and YC partners help prioritize tasks and share best practices across YC community. YC promotes information sharing and peer goal reviews in founder communities at similar stages.
Lesson 5: Startups die if they run out of cash, no matter the reason
My most nerve-wracking moment during YC came in March when the Silicon Valley Bank (SVB) failed. On March 9th (Thu), we noticed something suspicious about SVB, where I deposited most of my funds. While I was applying for a new account at another bank and waited to be processed, I received a call at 6AM PT (9AM ET) on March 10th (Fri), from my friends in NY, saying that I should check the news immediately.
SVB has failed in just two days.
I tried all my best to transfer my cash, but the account remained frozen the entire afternoon since SVB already failed. I immediately sent an investor update about our exposure to SVB, and all I could do is just wait and see over the weekend. That was the longest 48 hours in my life.
During the YC founders' retreat, YC emphasized that the reasons for startup failures are simple: founders split up early on, or they run out of cash. Since there are many different reasons for cash shortages, the principle of conservative cash flow management is crucial for founders. We would never expect that such an extraordinary case would happen. It turned out to be "the hardest 48 hours in US tech history".
Fortunately, the FDIC announced that depositors are made whole on Sunday evening. However, this extreme case alarmed us of the importance of cash flow management, one of the core responsibilities of a startup CEO.
These lessons are all linked to YC's motto, "Make Something People Want." It is fascinating to see how consistently YC has emphasized these principles over 18 years since Day 1.