Recorded live at our Female Founders Conference in New York, an AMA with Kat Manalac, Kirsty Nathoo, Adora Cheung, Holly Liu, Jessica Livingston, and Carolynn Levy.

This panel was hosted by Sharon Pope, Head of Marketing Programs at YC.

If you’d like to learn more about the Female Founders Conference, head over to femalefoundersconference.org.

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Transcript

Sharon Pope [00:01] – Hello everyone, my name is Sharon Pope. I’m the Head of Marketing Programs here at Y Combinator, and it’s my pleasure to welcome back to the stage, YC’s partners. Come on up Kat Mañalac, Kirsty Nathoo, Adora, Holly, Jessica, and Carolynn. I’m going to stand over here. I’m going to stand. Alright, so just as quick reminder, as I unlock my phone, please submit your questions at slido.com, s-l-i-d-o dot com, and the event code is FFC. You can also upload questions if you want to try to prioritize what questions get asked, these are your questions, this is your time to ask. Alright, okay, so first question: Will YC ever open a New York City office? Carolynn, I’ll send that one to you.

Carolynn Levy [01:03] – You know what I think? We never say never at Y Combinator, and as somebody mentioned earlier, I can’t remember, maybe it was Kat, we experiment a lot. It could be that in our future, we have an experimental NYC outpost, or maybe in a different city, but we like to try things and see what works, and if it doesn’t work we don’t do it, and again, but, it’s always worth a try.

Jessica Livingston [01:28] – Please though, don’t like start any rumors or get your hopes up. This is just, the point is, we never say never. There are no plans.

Carolynn Levy [01:36] – That’s true. There are no immediate plans to do that, so yeah.

Kat Mañalac [01:46] – One thing I’ll add to that is that I meet a lot of founders all over the world, and at this point in time, I still think it’s helpful for any founder form anywhere to spend, you know, three months in the Bay Area, and get to build that network. There’s such, so many investors there, so many other founders, and you can stay there for that amount of time, and then theoretically if this is where, if New York is where your customers are, you move that to New York. But um, at this point, it is still so much easier to raise up and build that network there, so even spending a short amount of time, I think still helps.

Sharon Pope [02:18] – Alright, and speaking of building our network, one popular question is, I think a few people have talked about finding people who are 10X people. Those people who you hire, and the people you surround yourselves with that are just over-the-top really great mentors and peers. How do you go about building that network? How do you find that? How did you find the ones in your lives? I will throw that one to Jessica. How do you find those kind of excellent people that will help push you forward?

Jessica Livingston [02:54] – I can think back to what we did 13 years ago because, by the way, we didn’t know anyone in Silicon Valley. We had to meet people and grow our network, and if you’re working on something interesting, then people who are really good will, themselves, be interested in it, and if you sort of genuinely want to talk to people and get advice, most people in Silicon Valley are pretty open to it. Just working on something interesting and being insightful about what you’re working on makes for fascinating conversation, and people like that.

Sharon Pope [03:33] – Yeah. What about, Holly, maybe you can answer also, when it comes to also when–

Adora Cheung [03:37] – Yeah, I’ll throw out. Uh, well I’ll throw out a fun story that a different YC founder, Eric Migicovsky, he was the founder of Pebble and he came from Canada, and most people don’t, obviously, have a network in Silicon Valley. That’s why they join YC, and that’s why you should join YC, but he came down, and he was working on basically, trying to fit, like an entire computer processor in this little, tiny, little form factor and the early, early, Apple computer like, computer designers were like, writing this blog, and it was like a really nerdy blog, and he followed it, and he sent out a note to the founder, and he’s like, “Yeah, I’ll meet with you for coffee.” And when I think, as Jessica said, there’s a lot of kind of paying it forward culture, particularly in Silicon Valley, which is another reason why people do like to have you come out there. It’s weird, investors don’t like jumping on a plane. There’s a lot of things they don’t really… and they like to meet you face-to-face still in many ways if it… So, it’s really good for that. Piggybacking off of Jessica in terms of that, definitely start finding people that you look up to that are in the same field, and I think you can reach out to them, in terms of like hey, you know, I want to ask– If you could ask specific questions, that’s actually very helpful, because on the other side, in general, people are looking to help, but if they’re just like, hey do you want to meet and just have coffee with me, it’s really hard, because you don’t know on that other side how busy they are.

Adora Cheung [05:03] – It’d just be, they’ll be more appreciative of it if they’re like hey, these are the questions I’m looking to answer, and what your background can give to me. Obviously, sometimes you know, you’d be surprised, but there are also things that you can give as well. You are the expert in… Well, Mariya was expert in scents. There would be nothing I would be able to tell her around that, and she could give me some interesting insights into that, that might be helpful for what I’m doing in my business. So don’t discount yourself, either.

Holly Liu [05:30] – The one thing I’ll add is you can always just go work at a startup from someone that you admire, and work directly with the founder, and I think that’s a good way to get meeting time in with somebody.

Sharon Pope [05:42] – Awesome. Also, a lot of people wondering about tips on how they can find a co-founder. Adora, while you’re talking, do you want to talk a little about that?

Holly Liu [05:52] – Well, my co-founder was my brother, so that was easy.

Carolynn Levy [05:57] – Well, I was going to say one of the things to be careful about is, I get a little nervous when people say how do I find a co-founder, because one of the things that we stress is that you don’t actually go out and find one. You probably look within your own network, and the founder relationship that you form is probably more of an organic one, so college friends and old friends from your prior life, like people that you know pretty well, people that you’re close to, tend to make the best founder teams.

Holly Liu [06:26] – Yeah, usually it’s someone you spent a lot of time with in college or at work. Those are the two most common ones.

Sharon Pope [06:33] – Awesome. Question of, just generally, are there startups that YC wants to fund more than others? Are there areas that YC’s extra interested in?

Holly Liu [06:42] – Female-founded startups.

Sharon Pope [06:45] – Alright!

Adora Cheung [06:51] – There’s also the request for startups page where we list like hey, we’d love to see startups solve, you know, diversity, create a million jobs, voice. If you don’t have one in that area, it doesn’t mean that we won’t accept you, and even if you– It’s just these are things that are interesting, and we put a call out for them.

Kat Mañalac [07:10] – That’s ycombinator.com/rfs. Some of the most interesting ideas we fund are things we wouldn’t have thought of ourselves. You know, I know when Airbnb came through, Jessica and Paul thought the idea was crazy, right? As Holly was saying, just because your idea’s not on that list, doesn’t mean we’re not interested in it.

Carolynn Levy [07:32] – I think also, just no idea is too crazy for us. Like we’d never think an idea’s like, oh that’s crazy, we’d never fund that. We just don’t have that thought.

Sharon Pope [07:43] – And Kirsty, could you answer, is there a level of startup that YC is mostly looking at in terms of stage?

Kirsty Nathoo [07:50] – We think we can be helpful to any startup, up to Series A, so that’s like a really big spectrum. We have companies who come to us with just an idea. We have companies who come to us who are already generating revenue. We have companies who are already profitable. We have companies who have raised maybe a million or two in seed funding, and because we work with each company in a very specific manner to them, we help them with what they need, we can be helpful in all those stages, and the important thing is let us make the decision about who we want to fund. If you say, oh I’m too early for Y Combinator, I’m not going to apply, you’re not even giving us the chance to see your company, so apply. You have nothing to lose, and it means that we can see, we can apply our expertise to see what could be amazing about your company.

Sharon Pope [08:49] – Awesome.

Adora Cheung [08:51] – And if you’ve applied before, please do apply again. We have is it, like over 50% of the batch has applied before? That the number’s like creeping up. Now I’m throwing out numbers–

Sharon Pope [09:00] – We heard from Scentbird earlier. Scentbird got in on her third try. Kat would you answer, just generally what YC is thinking about and what efforts YC puts forward to grow diversity within our founder population?

Kat Mañalac [09:15] – This is something I’m super-interested in and we’ve all had the pleasure of working on, at YC. For female founders, for example, in this batch of YCs, summer 2018, 27% of the companies in the batch, have a female founder. One of the challenges is, only 23% of the companies who applied had a female founder. We try to do as much as we can to support female founders even outside of the YC network. We do Female Founder’s Conference, hoping to connect with women who are starting companies already, or inspire women who haven’t started companies to start them. We do office hours with female founders. We also do office hours with black and Latino founders to encourage them to apply. During the batch, we connect the women in our batches to female investors, prior to going out and raising money, just so they can get advice from women who’ve seen a lot of founders come to them. Seen a lot of female founders can give them advice. Is there anything I’m missing? Hopefully, over the course of the next few years, we’ll see that number increase, of women in YC, and I think out of Jessica’s slide, I think it’s a total, we’ve funded– How many? It’s like 358 women so far.

Sharon Pope [10:36] – That’s great. Fundraising question, so maybe Kirsty grab the mic, but anyone else to chime in. Just, the question of when to raise? How do you know when to raise, whether it’s seed funding and then also maybe thinking about that Series A?

Jessica Livingston [10:52] – Can I just say one thing on this? Raise money when you don’t need it. Like, that’s the best time to but, don’t wait until you only have like three months runway. We have, believe it or not, a lot of startups that come to us and like, we’re running out of money. We have four months in the bank, and we’re like what? You’re going out to raise money with only four months runway? It just, creates disaster..

Kirsty Nathoo [11:23] – It depends who you’re raising from as well. Usually, the first money that a company will raise will be from individuals who are investors, and at that stage, when you’re talking to those people is when it’s usually because they’re either super interested in the space that you’re in, or you already know the people, and they know how amazing you are as a founder, and so that stage, it’s easier. Fundraising is never easy, but it’s easier to raise on an idea that doesn’t necessarily have traction and growth. As you then progress, and you’re talking to institutional investors, so VCs, some of the larger seed funds, that’s the point where you need to be able to show that people want what you’re making, and by the way that you do that is that you show that there is growth in users, that there’s growth in revenue, that your churn is at a manageable level, and that’s how you start to then, paint the story of this is how this company becomes a billion dollar company. Depending on the stage that you’re at will depend on who you talk to, how you talk about your company, and the types of money that you raise. It’s also very, it’s very easy to fall into the trap of raising too much money. If you’re one of the lucky people that have a relatively easy time fundraising, so also think about how much money do you actually need to get to that next milestone, because when you get to that next milestone, and you’re raising the next amount of money, it’s going to be at a higher valuation, in theory,

Kirsty Nathoo [13:04] – and so you know the dilution that you’re taking as a founder will be less, because the investor’s putting money in at a higher valuation, whereas if you raise a bunch of money really early on, that’s likely to be at a much lower valuation, so more dilution to you as a founder.

Sharon Pope [13:21] – Got it. Adora and Holly for this one. Speaking of traction, what are some examples of what counts as traction for a B2C company and the acknowledgement that it varies by business? Just kind of some principles that you might gauge this by.

Adora Cheung [13:39] – Mine is a gaming company and it might be a little unique in terms of traction, because it’s usually very much like hits driven, so it’s either a hit or it’s not, and it needs to get into the top 10. But in terms of early on, when we were just starting out, in terms of traction, it’s really weird, because it’s a little bit of an art and a science. I can’t really say this is the exact number but, for sure, just like Mariya had with Scentbird, you’re like 105 orders, we are on to something. So, the first little seed of traction is almost to prove to yourself, that you are on to something. And then the next seed is about like, proving it to others. Once you’re in YC, we usually kind of ask you, well we usually kind of push you to say if you’re growing 10% week over week, that’s really good, because that means that, you have the traction and then exponential growth, it’s very hard to do in your head, but pretty much by the end of the batch you’ll have grown 10x if you do 10% week over week, so that’s usually something that is, okay, we’ll keep on pushing that and if you could get to that thing, you’re like, oh yeah, and for other investors, they’ll be like, well, if you want to go more, that’s really good, but 10% is pretty good in terms of within the batch. If you’re almost getting in to that inflection point, it might be a good time to really figure out how to focus and get to those, that growth, and that product-market fit, which we could help at YC.

Holly Liu [15:06] – Yeah, for consumer companies I think there’s two, there’s various types of metrics, in terms of growth, that you can focus on. One is just user growth. Another one is revenue growth, just depending on what you’re doing. If you’re building a social app, you’d probably focus on users, versus if you were building an e-commerce app. You would obviously focused on revenue more. The thing to watch for while you’re growing, if you’re growing really fast, is to pair it with, by observing something like retention and engagement, to making sure that you’re growing the right types of users or the right types of revenue, because if you’re bringing on what I call bad customers or bad users, they’re going to churn. If they turn right away or they’re just not good for the product, and you have to just fire them, it’s like a waste of time, almost, and that growth is just kind of like fake growth at the end of the day.

Sharon Pope [15:55] – Great. As an engineer/designer building a product, between prototype and beta, what are the pros and cons of launching before trying to raise money?

Adora Cheung [16:07] – Oh, you should always launch before you raise money, but I don’t– Yeah, I think you should launch as soon as possible.

Sharon Pope [16:11] – Elaborate, please.

Adora Cheung [16:13] – You can launch as soon as possible. In our industry we always say, you never know if your polishing a turd, because you could be sitting there, and you could be like, oh my god this is the most beautiful thing, and then you launch it and you realize, nobody can find the signup button. Nobody even wants to click on your signup button. Nobody even wants to open up your email and then you realize you have much bigger problems than what you thought you were solving. I’m a huge fan of trying to launch as early as possible, and even, let’s say, you know it’s going to take a while to build, there’s certain things you can do even before that. You can start talking to your customers. You can start building a wait list of things. You can start doing… There’s always things you can be doing, but the most important thing is to launch as early and as often.

Holly Liu [16:54] – There’s two ways to think about this: one is if you don’t launch, then you don’t know if you have a product anyone wants, and why raise money for that? Where’s the confidence in that? Get some. If you launch, then you’ll have some confidence around that. And also, there’s a big difference in terms of how much you can raise and in valuation that you can get if you have users and revenue, verses if you have absolutely nothing. Launch now, even if you’re an engineer, like, if Shopify is going to be the fastest way to do it, then just do it. I know some engineers are just like, they are just embarrassed that they have to use Shopify to get it out there the fastest, but that’s the thing to do.

Sharon Pope [17:37] – Alright. Question, a mother related question, which falls under the category of things that would never be at a male-oriented conference, if there are those. For the folks who have kids, how do you factor in decisions to have children with some of your work goals and your ambitions in your own careers? It was a popular question, so I figured we’d ask it even though, it can be a tough one.

Jessica Livingston [18:06] – I never did factor it in. I just worked on YC, then Paul and I got married, and had our son right away and then we just plowed right through it. I never sort of planned, I wasn’t very planful at all, which in hindsight is, I wish, I don’t know, sometimes I wish things were different because as YC was growing, and I was working so hard to make it succeed and it was so time consuming. That’s when I was having babies and like, I barely took any maternity leave, I just worked through the whole thing, and maybe I should have been a little bit more planful but it’s hard, you know? Don’t put it off for too long, would be my other advice.

Carolynn Levy [18:46] – Yeah, I would echo that. I came from a law firm before I was at Y Combinator, and I have nothing but sad stories of colleagues who didn’t have children because they wanted to make partner, and it’s just there’s, I just don’t have any happy stories from that era. I’m kind of like Jessica. I just thought, life goes on, and I’m having children, so I had children while I was at a big law firm. I do want to mention, we have a lot of great anecdotes about parents at YC, and one of my favorites is that we had a female founder apply, and she was at Y Combinator for her interview and she ran out to go breastfeed her newborn in the car. We accepted her, of course and she’s great. We have lots of stories like that, and I guess just, I mean this kind of sounds cliche, but I kind of think like, you’ve got to live your life, and there’s tons of examples out there of women who are having children and having a startup, and a startup is like a baby, so it’s just like you have another baby.

Adora Cheung [19:46] – When I got married, like five months later, I told my husband, I’m like, basically, I’m leaving to start this startup, and he’s like, what? It’s a very personal and tough decision as to whether or not you want to have kids. Some people know right away and some people don’t, and I knew this was something that I had wanted, and now I can’t take it back. No end deal, just FYI. If you think about it, it is a big decision. Sadly, I will be honest. I do think women have to also think about a biological clock. For me, personally, it took longer than we had expected. There were just a lot more extra things we had to do, at the same time trying to do the startup. Luckily, my startup was probably pre-series, probably Series A, Series B, but definitely by the time my kid came around we were doing quite well, Series C, but, the whole impact of even thinking about having a kid, honestly, it impacts you, almost when you turn seven, eight, like because it’s just so young, this, kind of thinking about this thing. I don’t think guys think about this as much as women, and it’s, there is the reality of a biological clock, but there is also a lot of great things in science. We have some wonderful… We have Carrot Fertility, that can help you, you know extend some of that, and I think like, maybe me and Jessica would, and maybe even Carrolyn, we might have been– I was definitely considered a– What is it called? Geriatric pregnancy?

Jessica Livingston [21:14] – Yes, if you’re over 35, you’re advanced maternal age. Which I was.

Adora Cheung [21:19] – Yes, yeah, we took my second one, they were like, they gave me this pen or something. I don’t know, it was terrible. But it is very much is for all the parents out there, it is– A startup is like having a kid. It’s so cool that you did it with your husband. I feel like I had a kid without my husband, so it feels like I was having an affair all the time. Like it’s always, Kabaam, Holly, it always comes first, I’m like, I’m sorry. If you can surround yourself, don’t refuse help. I mean it can be done, and there’s many YC founders who have done it at various stages, all the way from interview, all the way to when it’s a lot larger. Ashley’s one of them.

Jessica Livingston [21:57] – Rush mom. Due in August.

Adora Cheung [21:58] – Rush, rush, rush, all the way. Whoo! So, it’s very plausible. There’s definitely some more tactical things, if you do end up hitting that point think about a plan, when you leave the, like leave for temporarily, definitely have the communication. I’m a huge fan of keeping the communication lines open, and I’m only going to say this, because this came up within the YC community your option should vest on maternity leave. I was just shocked, but it was, there was a whole discussion around that in our–

Carolynn Levy [22:27] – Really? Somebody’s option vesting suspended during pregnancy leave?

Adora Cheung [22:32] – They didn’t suspend it, but the other founders had suggested that. They’re like, since you’re going on maternity leave, we’d like to sit, would you consider suspending your options? Don’t, no.

Carolynn Levy [22:39] – Yeah. Never ever.

Adora Cheung [22:40] – Borderline illegal, too, I feel like.

Carolynn Levy [22:43] – I actually think that is…

Sharon Pope [22:45] – Just one more question, but, we’ve talked about doing things that don’t scale, but, if you’re doing things that don’t scale early on, how do you convince an investor or someone else that it eventually will scale?

Holly Liu [22:59] – Well you just need to have a product plan in place. And so, anything that’s, an investor should know at this point, especially if they’re a tech investor, should know that something repetitive, software, can most likely replace, and I think it’s usually good to have a little bit of software to have automated some piece of what it is that is not scaling. At every stage of growth, there’s a new way of, a different way of doing things, and so as long as you’re able to explain, well in this stage I’m doing x, and this next stage I’ll be doing y, and then in the future this is my plan for the future, but at least I have the next few steps in place.

Sharon Pope [23:36] – That’s great advice. Thank you very much, YC’s partners. Thank you.

Carolynn Levy [23:42] – Thanks for coming.