In Part 1 I mentioned I went to Y-Combinator‘s 10-week Startup School a few months ago. So what is Y-Combinator, anyways?
Y-Combinator is the #1 accelerator based in the startup capital of the world, Silicon Valley. Their job is to take startups that are just starting off, or going through some trouble, and accelerate their growth into greatness. Y-Combinator does this by taking a group of startup founders — known as a “batch”, fund them (taking less than 10% of the company), teach them the tips & tricks other successful founders learned, and connect them to investors to grow the company.
Some of the companies they took in include AirBnB, Twitch, Dropbox, Stripe, Reddit, Quora, and much, much more. Since their inception in 2005, Y-Combinator has funded 1,900 startups which have a combined value of over $100 BILLION.
Since 2017, the team at Y-Combinator decided to have a Startup School which teaches the exact same concepts to more companies, only without the funding. The top companies — however they are rated — get a $10k grant. By the sheer chance of luck, I happen to get into 2018’s Startup School representing Dubata.
While at the online school, I learned from those who taught the founders of these top companies the real blueprint to become multi-million, and at times multi-billion companies. Believe it or not, the path of success is a narrow road — BUT THERE IS A PATH!
This path is what I’m going to show you. Are you ready?
But before we get the videos started, there are some terms you need to learn before moving forward. Without learning these, you will be lost — because some of the language may confuse you.
Here are the terms:
- Startup – A new business that’s dedicated to solving a problem you see, and to somehow make money in the future (but not immediately).
- Capital – Money used to run/fund your startup, used to pay for things.
- Scale – Ability to “grow”. Also, if a product is not scalable, it means it’s not built to handle lots of new users/customers. The goal is to eventually build a product (or service) to handle large amounts of users, customers, or even team members you hire.
- Founder – The person who started the startup (also known as a “solo-founder”)
- Co-Founders – Two (2) or more people that started a startup
- MVP (Minimum Viable Product) – This is literally your product with the least amount of features, takes the least amount of time to build, one that just works. Yes, this will have many defects. The point of this is to make sure people are even interested in it. If not, then it’s better to save your money/time and try something else.
- Defect – Also known as “bugs”. It’s when something in your product doesn’t work and it needs to be fixed.
- B2B – Business-to-Business. A startup (business) who’s customer is other businesses.
- B2C – Business-to-Consumer. A startup (business) who’s customer is the consumer.
- Leads – Potential customers you’re going to contact via email/in-person that you want to try out your product/service
- KPI – Key Performance Indicator (a metric, like “weeks until launch”, “revenue” or “number of users”). This is used to track the growth of your product. There are a number of metrics you can choose from.
- Launch – The day your product/ service is released to the public
- Beta – A launched product that is available to a select few users, like friends, family, people who need it the most, etc.
- Pivot – The act of completely changing your startup’s focus. Almost like starting a brand new company.
- Iteration – Another way (solution) to serve your customers’s needs.
- Product Market Fit (PMF) – This is where all startups eventually strive to achieve. It’s when your product grows to a point where you/your team can’t handle all its requests anymore — like a snowball running down a snowy slope by itself, getting bigger as time passes. It takes around 1000 days (nearly 3 years!) to achieve this, something you have to understand asap — or you’ll be discouraged and quit.
- Marketplace – A website platform that has buyers and sellers. Think Uber (people looking for rides = buyers; drivers = sellers), AirBnB (homes = sellers; people looking for homes = buyers), and Amazon.com (products = sellers; people looking for products = buyers). The platform’s revenue comes from a percentage of sales from either the buyer or seller (known as the “take rate”).
- Equity – A percentage of your company, usually in stock. When a company is formed, it has stock (aka “shares”). You can choose any amount of shares when you create your company: Usual cases are either 5,000 shares (if you’re not trying to add investors), or 10 million shares (if you’re trying to add investors in the future). This is like “receipts”. When you give receipts away, you give away shares — or parts of ownership of your company.
- Shareholders – The people who own shares (aka “stocks”) in your company. If you started a company by yourself, you are the only shareholder in your company (and own 100% equity).
- Dilute – This is losing a percentage of your company. If you previously owned 100% of your company, and you hired an early employee that will have 10% equity of your company, you have diluted your equity (ownership) to 90%.
- Liquidity – When a company actually makes money. Or when a company generates money.
- Pre-Seed – Fundraising money raised by friends or family to support your startup — for small percentage of your company (or maybe they won’t ask for a percentage).
- Seed – Fundraising money raised by Accredited Investors, like Angel Investors, who fund your startup. They usually have more money than friends/ family (and can save your relationship w/ them if your startup didn’t work out).
- Angel Investor – Also known as “Angels”. A single person who funds your company in exchange of a small percentage of your company, usually in the seed stage.
- Series A – Fundraising money raised by Institutional Investors, like Venture Capitalists (VCs), who fund your startup for a percentage of your company. It’s the first of many times money will be raised by these individuals, hence the term “Series A”. Money raised after Series A is Series B, Series C, etc.
- Burn Rate – How fast the money in your business bank account decreases, due to paying employee salaries, marketing, etc — in a daily, weekly, or monthly basis.
- Exit – When your company (which is a private company by default) enters into the stock market via IPO (making it a public company that anyone can buy stocks with), or when your company gets acquired (bought) by a bigger company.
- MM – Roman numeral for Million. $5MM = $5 million.
- DAU – Daily Active Users
- MAU – Monthly Active Users
- AAR – Annual Accruing Revenue (How much money your business generated each year — usually based in money made from subscriptions)
- YoY – Year-over-Year (How your data compares from one year to the next)
- Cohort – A group of people / users at any period of time (also known as a batch)
- Retention – How many users returned after using your product/service the first time
- Sprint – The length of time it takes to release a new featured (or fix an issue) for a product
For everything else you may hear and not fully understand, simply pause the video and search the term on Google. You can always come back here to check the terms.
Now that we got that out the way, let’s go to Part 3 below: