Y Combinator

People buy a transformation, not a course

Shaan's core lesson from building a course: work backwards from a clear outcome. People don't pay for knowledge they may or may not use; they pay for a change in themselves, like going from unfunded to funded.

“I was brainstorming, I was like very interested in working backwards from what's a course where the person gets a clear outcome. So this is part of my learnings of like doing a course, which is people don't buy a course for learning, they buy some change, they buy a transformation for themselves.”

Steal thisDesign any course or offer backwards from a concrete transformation the buyer wants, not the information you want to teach.

Altman's startup success formula: idea x product x execution x team x luck

Sam quotes Altman's 2014 Stanford class formula for a startup's odds: idea times product times execution times team times luck, where luck is a random number between 0 and 10,000.

“the formula for estimating a startup's chance of success is something like idea times product times execution times team times luck, where luck is a random number between 0 and 10,000.”

Zach: the connector who referred 22 companies into one YC batch

Shaan describes Zach, a young ex-YC founder who joined the rolling fund and became arguably YC's number-one referrer, knowing a huge swath of the young-founder community and seeing deals earlier than almost anyone.

“And so because of that, he's like referred a huge number of people into YC and into On Deck. And so he's got this really great network and he's like able to like see things earlier than most. And so I brought him into the fund and gave him a chance to, hey, now you can have some upside in this thing.”

Shaan discovered 'Kube,' the TikTok of Russia, years before TikTok

Shaan recounts inviting visiting Ukrainian entrepreneurs to his office and asking what the hottest thing back home was; the answer was Coub, a short-video-with-mismatched-audio app already at 10 million daily users. It got into Y Combinator but never crossed over to America, and years later TikTok did the same concept better.

“And I said, what's the hottest shit in Ukraine? I asked it kind of as a joke. And they go, oh, Kube. And everyone's like, Kube, Kube, Kube. And I was like, what the fuck is Kube? And I go to the website and it's basically TikTok. It's these short videos with audio that's like mashed together that doesn't fit the video. And they were funny as hell.”

Superhuman for X will mint multiple billion-dollar companies

Rahul Vohra predicts the 'Superhuman for X' pattern (premium, fast, well-designed versions of everyday tools) will produce multiple billion-dollar products and companies, noting it was the most common pitch at the last YC Demo Day.

“I do think that Superhuman for X is It's a very real thing. There's going to be multiple billion-dollar products and billion-dollar companies to be made. In the last YC Demo Day, superhuman for X was the most common X for Y. It's pretty interesting to see the trend take off.”

Y Combinator for music (Kanye's pitch)

Kanye West tweeted that someone should build a Y Combinator for music: standard, transparent, founder-friendly terms for up-and-coming artists instead of the predatory record-label model.

“I want to create Y Combinator for music. So like, the record industry has historically had like very predatory kind of bad deals for musicians and artists. And it's just not right. Like, this— the system is screwed up, and the people who kind of do all the work and create all the value, the creatives, don't go on to sort of own their stuff and build big, big enterprises off this because the way the industry is set up.”

Steal thisBuild an incubator that takes a tiny stake, lets artists own their masters, and uses standardized transparent terms.

Lloyd Armbrust: 5 exits, 5 kids, now reshoring N95 masks

Lloyd Armbrust, a YC 2010 founder with five acquisitions (and five kids) under his belt, went all-in on US-made medical masks with Armbrust USA. Sam, who had Shabbat dinner at his house, vouches for him as a sharp, real hustler.

“Lloyd's a hustler, I'll say that. The small amount of time that I've hung out with him, great guy, Total, like, real sharp businessman.”

Founder/company fit is as important as product/market fit

Altman argues that introspecting on what you're well-suited for matters as much as finding a market: he believes founder-company fit is as good a predictor as product-market fit.

“So like if you do some introspection or you ask your mentor to figure out what you're good at, he goes, I believe that founder company fit is as good as product market fit.”

A startup raised $8M copying the org-chart idea from the show

After Shaan and guest Daniel Gross brainstormed a public, crowdsourced org-chart tool on the pod, a stealth startup called The Org launched doing exactly that and raised $8M from Sequoia and Founders Fund.

“There's actually a startup that came out of Stealth that is doing this after we talked about it. Clearly stole our idea. It's called The Org. They raised $8 million from Sequoia and Founders Fund, and it looks like they're doing exactly this.”

Goldbelly: YC founder ships frozen Lou Malnati's pizza nationwide

Shaan breaks down Goldbelly, founded by Joe Ariel (ex-CEO of Delivery.com), which lets local mom-and-pop restaurants ship their signature foods nationally. It went through Y Combinator and raised close to $30M, with demand so high pizzas now ship with delays.

“He was the CEO of Deliver.com. So he has a history in the restaurant business. They raised close to $30 million. And Joe, Joe Ariel is his name. He, their office was up the street from my house. I live in a residential neighborhood and they had a house they lived out of and they went to Y Combinator. And I have to imagine they're booming right now. They're booming so much so that the pizzas all have delayed delivery due to high demand.”

An agency staffed by failed YC founders

Shaan pitches turning failed YC startups into a high-end dev-shop talent pool: two-person 'demolition crews' you can hire for a period, positioned as the premium tier above Upwork/Fiverr/Gigster, with founders using it as an interim gig between startups.

“If they can get more failed YC startups to do this as an interim thing of like, hey, yeah, I do this while I'm in between figuring out what my next startup is. I think that's a very smart idea.”

Steal thisBuild a premium agency that farms the YC talent pipeline; hire founders between startups as elite contract teams.

Invest in YC founders 3 months after Demo Day, not during

Shaan's investing edge: skip Demo Day hype and approach YC founders 3-4 months later, once nobody else is competing for them, valuations have cooled, and real growth data exists. The conversation in the 'reality zone' yields far better terms.

“Give it 3 months after YC. So I don't care about Demo Day. I wait 3 months after YC, and then I go talk to all those founders. At this point, nobody else is talking to them. They've either already raised a round or they failed to raise a round and they're like humble, but they're, they, they're, and now reality has hit where they're like trying to actually grow their business.”

Steal thisWait 3-4 months after Demo Day to invest in YC startups, when hype has faded and terms are better.

Live in the future and build what's missing for everyone else

Shaan paraphrases Paul Graham's essay on getting startup ideas: the easiest way to invent the future is to already live in it (as Zuckerberg did by sharing his life online before others) and then build whatever is still missing for everyone else.

“So Paul Graham, again, YC. Has this essay and he's talking about like how to get great startup ideas. And if you're listening to this, you want to get great startup ideas, I would go— I recommend you go read this.”

Steal thisAudit the manual hacks and tools that already make your own lifestyle better than everyone else's, then productize and educate the market on them.

Why VCs slow down in a crash: the capital call problem

Shaan relays the All-In framing: VCs don't hold the cash, LPs do. When stocks crash, a fund's venture allocation balloons past target weight, so LPs ask the VC to delay capital calls, freezing the pace of startup investing.

“what happened in 2008 according to Chamath and Jason, it was very interesting. What they said was the VCs didn't stop investing, but they definitely slowed down because what happens is when the VC commits to a startup, they do a capital call. They say, hey, LPs, we found a startup. We need, you know, that money you committed.”

Better to have 1,000 people love you than a million people just kind of like you

Shaan invokes the YC principle that early-stage products win by getting a small core to deeply love them, not by being mildly liked by the masses.

“at YC they have this thing which is like, you'd rather have, um, 1,000 people love you than a million people just kind of like you.”

Steal thisOptimize early traction for intense love from a small core, not lukewarm reach.

Great investments look unclear at the start, then get a retrofitted narrative

Daniel Gross argues the best deals are tenuous at the beginning (Airbnb almost didn't get into YC, Stripe had no proper batch) and that media teams later retrofit a tidy origin story.

“I actually think all good investments at the beginning are super unclear. A lot of the great YC darlings almost didn't get into YC. Airbnb was super on the fence. I mean, even Stripe didn't properly do— I see there's no actual batch they participated in. And this is the truth about the world, I think, is a lot of the stuff that is great always starts humble and small. Then of course their media teams get together and retrofit the whole narrative”

The YC 'you're in, you're out, you're in' rollercoaster

Webflow's third YC interview ended with a 6pm acceptance call from Paul Buchheit during a movie — then, mid-celebration, a rejection email arrived saying the product was 'too complex for beginners and not powerful enough for pros.' After two hours of limbo, a partner called back: the rejection email was a mistake from their internal tracking board, and they were in.

“And then it buzzes, and I have an email from YC that says, unfortunately, we decided not to fund you because your product is too complex for beginner Beginners and not powerful enough for pros. And we're like, holy crap. So I sort of like signaled to Brian Sergi to step outside”

YC forced Webflow to charge — they hit $1.5M ARR before building the CMS

Vlad was sure no professional would pay without blogging/CMS functionality ('WordPress 101'). A YC partner threatened to kick them out if they didn't ship and charge in two weeks. They launched a single-page product, found a core of users for whom it was life-changing, and hit ~$1.5M ARR before the CMS they thought they needed even existed.

“By the time we actually got to building our CMS, the thing that we thought we needed to launch in order to charge, we already doing like $1.5 million in ARR, which was, you know, for me, a huge surprise. It was like a humbling moment to think, hey, let users and the market and customers decide.”

Steal thisDon't gate charging on the feature you assume is mandatory — ship, charge, and let the market reveal what's enough.

Build the Y Combinator of movies

Shaan pitches a startup accelerator for film and TV: give creators small funding to shoot a pilot, then hold a demo day where Netflix, Amazon, Hulu and other content-hungry buyers bid on the projects.

“The way I would do this is actually like creating Y Combinator for movies. So I would go down to LA, or I think Adam was telling us Humboldt is a good area near LA where they shoot a lot of stuff. And I would basically say, here's an accelerator. You want to create a movie? You want to create a show? This is an accelerator. You come in, we'll give you a small amount of funding, and you go shoot a pilot, and then we'll have a demo day at the end where the buyers from Netflix and Amazon Prime and Hulu and all the others, they'll all show up and they'll get to see these pilots and you can get funded.”

Steal thisRun a pilot accelerator and arrange a demo day where streaming buyers bid against each other for the content.

Webflow took 10 years and four failed attempts before traction

Sam reads Vlad Magdalin's tweeted timeline of Webflow: idea in 2004, three failed tries, a YC rejection in 2012, then YC acceptance in 2013 — with the company only finding traction in 2014, a decade after the idea.

“2004, idea. 2005, first try, fail. 2006, married. 2007, second try, fail. 2008, third try, fail. 2009, kid number one. 2010, day job. 2011, kid number two. 2012, fourth try, YC, which is Y Combinator, an incubator, says no. 2013, YC says yes, we get funding. 2014, hard work begins.”