Y Combinator Startup School Flashcards
What are the Essential Elements of a Successful Startup?
- Idea.
- Product.
- Team.
- Execution.
What are the Traits of a Bad Startup Idea?
- It is a Tarpit Idea.
- It is highly abstract.
- It is a solution in search of a problem.
- It does not solve a valuable problem.
A ‘Tarpit Idea’ is a valuable problem that is deceptively formidable to solve for structural reasons.
What are the Traits of a Good Startup Idea?
- It is highly scalable.
- It is difficult to initiate.
- It is simple and practical.
- It solves a valuable problem.
- It targets a market ripe for disruption.
- It targets a market with potential for exponential growth.
What Questions must you Answer before Committing to a Startup Idea?
- What is your competition?
- How scalable is this business?
- How valuable is your problem?
- Is this solution in a fertile idea space?
- How big is the market and how big will it get?
- How much value would your solution provide?
- Does your solution actually solve the problem?
- Has your solution only recently become possible?
- Why is now the right time for this solution and business?
- Is your team the right team to execute this idea (Founder-Market Fit)?
What is the Value of Users to Startups, revenue notwithstanding?
They are the gauge for whether and how much a product creates value.
It is for this reason that startups must be in constant communication with current and prospective users, for their input largely influences startegy.
What are the Core Business Models for Startups?
- E-Commerce: You sell products online.
- Advertising: You use ads to monetize users of a gratuitous product.
- Hardtech: You invent and monetise a solution to a STEM problem.
- Enterprise: You sell large fixed-term contracts to large companies.
- Usage-Based: You earn revenue from pay-as-you-go user consumption.
- Transactional: You earn revenue by helping process or execute transactions.
- Software as a Service (SaaS): You sell a subscription for a cloud-based software.
- Marketplace: You earn revenue by facilitating transactions between buyers and sellers on a proprietary platform.
What traits make the Core Business Models likelier to succeed?
- They have high retention.
- They build defensible moats.
- They generate recurring revenue.
- They are highly scalable at low costs.
- They faciliate rapid product evolution.
- They position themselves close to the transaction.
What is the Value of Pricing to Startups, revenue notwithstanding?
It is a gauge for:
* Who wants the product, if at all;
* How much they want the product, if at all;
* How much value the product provides, if at all;
* Which users derive the most value from the product;
* Which channels are ripest for customer acquisition.
How should Startups price?
- According to value added to users, not cost of production.
- Not only does this maximise revenue, it lets you gauge user perception of the product’s value.
When may Startups discount prices?
- To acquire initial or trophy users; but only if
- The product has in-built lock-in or switching costs; and
- You can later reliabily and frictionlessly increase prices.
How should Startups approach product development?
- Lauch quickly, then iterate.
- Without launching, you cannot get user feedback. Without user feeback, you are unlikely to make the correct iterations.
What is the Value of Key Performance Indicators (KPIs)?
They help determine strategic priorities, and consequently, daily, weekly, and monthly operations.
Which KPIs are the most Important for Startups?
Those concerning revenue or users, as they most strongly indicate Product-Market Fit.
Depending on the business model and sector, this may include:
* Net Revenue.
* Gross Margin.
* User Retention.
* Net Promoter Score.
* Annual Contract Value.
* Net Revenue Retention.
* Gross Transaction Value.
* Gross Merchandise Value.
* Weekly or Monthly Growth.
* Customer Acquisition Costs.
* Daily or Montnly Active Users.
* Monthly or Annual Recurring Revenue.
How many KPIs should a Startup have?
Five at most.
What are Y Combinator’s Maxims for Success in the Startup World?
- Do things that do not scale.
- You build what you measure.
- Be clear, concise, and simple in all things.
- The more technical your team, the better.
- Always go after the easiest customers first.
- Quality and user experience are everything.
- Startup ideas find you, not the other way around.
- Founders determine culture through their actions.
- Hire slow, fire fast. One mediocre hire will kill the company.
- With equity, be generous with employees and stingy with investors.
- It is better to build something a few people love than something many people like.
- The best iterative loop is as short as possible and resolves the biggest users concerns.
- The best ideas seem bad, because if they seemed good, they would have already been done.
- Find latent demand, then create supply; You cannot create a market people do not want to exist.
- Compared to Incumbents, your edge is in your risk tolerance, operational dexterity, and strategic agility.
- The best Founders are calm, tough, resilient, and resourceful, and they need frugality, focus, obsession, and love.
