How we got into Y Combinator and what we’ve learned on our journey
Perspectives from a European B2B SaaS startup
Together with Alex, I founded Demodesk late 2017 in Germany. Demodesk is the first intelligent online meeting tool for customer facing teams — like inside sales and customer success. The core is our disruptive, 100% web-based virtual screen sharing technology that enables frictionless online meetings, instant collaboration and next-level data analytics for real-time conversational assistance.
One year after we founded the company, we applied for Y Combinator. We got in, moved to Silicon Valley, took part in YC’s Winter 2019 batch and raised our seed round on Demo Day — the grand finale of the accelerator’s 12 week program.
For us, Y Combinator was an incredible experience and a deciding factor for our success as a company so far. The reputation of being the world’s best startup accelerator is well earned. Especially as European B2B SaaS company, being part of YC gives you immediate access to an incredibly valuable network of customers, investors and peer founders. No wonder I am constantly being approached by other founders asking me about how we got into YC, whether it was worth it and what we’ve learned on our journey. So I thought I’d write a blog post to share our experience.
How we got into Y Combinator
Step 1: The application
Obviously, the most important step is to apply. If you don’t apply, you won’t get in. :)
To apply, you have to fill out an online application form and upload a short video of you pitching your idea. Alone the process of answering YC’s questions is a great exercise to clearly and concisely express what you are doing, which problem you are solving and why you are the right team to do this. There is a lot of material available on how to write a good YC application. The best resources in my point of view are Paul Graham’s words from 2009, Dalton Caldwell’s talk about how to apply and Drew Houston’s application from 2007.
You should expect an answer from YC within a couple of weeks. In some cases there are additional follow-up questions or a short video call.
YC accepts applications twice a year. The first time we applied for the Summer 2018 batch. We invested a lot of time in our application and did everything we could. We asked friends, investors, other founders and YC alums to read over our answers. Based on their comments, we reworked and fine tuned the application at least 20 times. The result? We weren’t invited.
Six months passed and the application deadline for Winter 2019 was approaching. We were unsure whether we should apply a second time with the same idea. But even though we thought there might only be a small chance of getting invited we applied again — same product, same team, same vision. The only difference was that we were able to show more progress and initial traction this time. We had a working product and more than 10 paying customers.
Four weeks passed without any reply or follow-up questions. We already gave up on it and were fully focused on further building the company. Then, on a Thursday morning, an email from YC with the subject “Your Y Combinator Application” appeared in my inbox. I was opening it, expecting to read the rejection. You can guess how surprised I was when the text body said I should schedule a personal interview and book our trip to Mountain View. We were thrilled — and immediately started to prepare for the interview.
Step 1: The interview
The personal interview is like a very intensive conversation. Three YC partners ask you 40–80 short questions in not more than 10 minutes. This leaves about 8–12 seconds per question for you to answer. It’s obviously very challenging to really understand a business in 10 minutes but YC partners are extremely good at this.
The interview typically starts with “Ok, so tell me: What do you do?”, followed by questions around the problem you’re solving, your USP, market, team and user acquisition. We prepared answers to common and obvious questions to make sure we can give a concise and short reply. We tried to use easy and simple words without any jargon. Assume that your interviewers know nothing about you or your market. My former mentor at Bain had a great advice: Speak as if you would explain it to your grandmother or your 6 year old kid.
There are also great resources available to help you prepare for those questions. The best ones for us were this TechCrunch article from 2012, a YC Alum’s blog post and James’ and Colin’s Interview Simulator.
Do mock interviews with friends, investors, befriended founders and YC alums. From our experience, successful entrepreneurs are in general very nice (more on this below) and enjoy helping other founders. So don’t hesitate to ask people in your network to do an interview with you. Just make sure to ask early, at least 2 weeks before your interview day.
YC’s Pioneer Fund offers mock interviews for anyone who got invited. You can schedule them online via this booking link https://pioneerfund.as.me/interview-prep.
We scheduled about 15 mock interviews with friends/founders, investors and the Pioneer Fund. After 10 interviews the learnings were only incremental so from my point of view doing 10–15 of them should be totally sufficient.
When you go to the interview, do stick to common sense. Be on time (arrive 30 minutes early if possible), shake the interviewers’ hands and thank them for inviting you. Having clear team roles also helps — don’t interrupt each other and assign clear responsibilities beforehand.
Your personal traits and behavior might in fact play a bigger role than you would think, especially for YC. As Paul Graham says: “The most successful founders are almost all good.”
In rare cases you’ll have to go on a second interview. This was the case for us. We knew that we didn’t do a stellar job in the first interview. But Aaron, Tim and Kirsty must have seen something in us or in Demodesk that they liked. So we were asked to come in for another interview with Dalton, Adora and Solomon on the same day in the afternoon.
For us, the first two minutes looked like this (slightly adapted for brevity).
“What do you do?” Demodesk is the first intelligent online meeting tool for inside sales and customer success.
“What’s the difference to Zoom?” By now, the entire sales stack has moved to the cloud — except for online meeting software. What makes Demodesk different than Zoom is our disruptive screen sharing technology. Existing tools record the presenter’s local desktop screen and stream that video to the customer. What we do instead is setting up a 100% web-based virtual display that anyone can access by just clicking a link. Benefits are: No downloads, no lags, meetings are truly interactive because both presenter and viewer can click and type at the same time, and presentation content can be automatically preloaded at the meeting start.
“Why intelligent?” We collect significantly more data to analyze than traditional web conferencing tools. The content that’s being shared is not just a video. We know exactly what’s being shared at which point in time.
And because we detach the meeting from the local desktop, we can assist the sales rep in real-time by showing layovers on the sales rep’s side without the customer seeing it.
“Which problem do you solve?” Sales is hard and sales conversations are a black box. Only very few people are born as rainmaker. And most of them had to learn it over multiple years. On average, new sales rep onboarding takes 6 months and only 50–60% of reps attain quotas.
Demodesk coaches sales reps on the fly by automatically loading the right content at the meeting start, providing conversational guidance and helping handle sales objections in real-time.
“How can this be a billion dollar company?” The market potential is huge with 20M sales reps accounting for a market size of $20B.
They’ll let you know by the same day — you get an email if it’s a no and a phone call if it’s a yes. In our case, Tim Brady called us. It was almost like a magical moment: Alex and I were just on our way back from Mountain View to San Francisco, driving through the night along congested 280 North on the backseat of our Uber driver’s Ford SUV. My phone rang. “Hi, this is Tim from Y Combinator, is it a good time to talk?”, he said. “We like you and we like your company and we’d like to invest in you.” He also said a ton of other things regarding the investment and the program, but that sentence I do remember like it was yesterday.
What we’ve learned on our journey
Alone the interview process was a great learning experience for us. But of course that was nothing compared to what we’ve learned during our time in Mountain View. I tried to condense our biggest learnings below.
#1 Silicon Valley changes your mindset
Alex and I moved to Mountain View on the 2nd of January. We rented a house where we both lived and worked at. We were lucky and found a nice sublease on Craigslist that was just around the corner from YC’s office on Pioneer Way. On a side note: If you haven’t killed each other after being together 24/7 for three months, it’s most likely a good co-founder match ;).
You are encouraged to stay in the Bay Area for the entire duration of the 11 week program. There is no better place to be at when starting a tech company. You are surrounded by so many successful entrepreneurs and startups. The majority of globally successful tech companies are founded or headquartered in Silicon Valley. It is truly inspiring how much faster things are moving in the Bay Area.
#2 Be a cockroach
YC on purpose doesn’t provide you with office or living space. They want you to focus on building your product and not being distracted from anything else. During our time in the Bay Area, we hardly did anything else but working on the product, talking to users and potential customers, and iterate.
YC really embraces a so-called cockroach mindset: Stay as lean, work as much and spend as little as possible until you have found Product Market Fit to make sure you don’t run out of money before. Don’t hire, don’t waste time with administrative things, iterate fast and focus on things that don’t scale.
#3 Iterate and follow your growth
During the program, you have regular office hours with your peers and your group partners to address challenges along the way and discuss potential solutions.
Coming to the first office hour, we were very excited to meet our group partners Adora, Dalton and Solomon. For sure, they would know exactly what we should do to find product market fit and how to get on the unicorn path. Of course they did not — what they told us was to talk to our users, refine our product, and follow our growth. There was no shortcut. We knew our market way better than any YC partner, screen sharing expert, or potential investor. We had talked to our customers more than they ever could. How could they possibly have a better answer than our customers and ourselves combined? They could not, and the only way for us to make progress was to keep iterating and continue building what our customers want.
#4 Think big
During the program, YC organizes weekly dinners with all founders from the batch. Every time, they host a successful YC alum who speaks at the event and shares her experience. In our case that were speakers like Mathilde Collin — founder of Front (which I personally admire a lot!), Peter Reinhardt — founder of Segment, Patrick Collison — founder of Stripe, Solomon Hykes — founder of Docker and Kyle Vogt — founder of Cruise amongst others. It is truly inspiring when they share their journey, key learnings and stay after the session to answer your questions one-on-one.
Today there are around 100 YC companies that are valued at over $100M. YC forces you to think big and requires you to consciously think about the question: “How can this become a billion dollar company?” Especially when coming from Germany, where people often think about potential downsides and problems that could arise along the way, this really forced us to change our mindset.
#5 Your network can be incredibly powerful
Our batch was so far the largest of all with almost 200 startups. It was a great mix of impressive personalities from all over the world. Most of them have a very powerful network already. And some have successfully founded companies before — in our batch were founders like the former co-founder and CTO of Zenefits or the first two employees at Docker.
YC creates a strong bond and the community is very supportive. You get other startups from your batch as early customers of your product, can approach YC alums for feedback and help and also use their extended network for introductions to customers or investors.
With a strong network backing you, you can meet almost anyone if you try hard enough.
A good example for this was our Product Hunt launch. Via the YC network, we contacted other YC founders who already had a successful launch. Most of them were happy to share their insights and best practices, which turned out to be crucial for us. In the end, we received almost 1000 upvotes and landed #1 Product of the Day.
#6 Fundraising in Silicon Valley is easier
Demo Day is the grand finale at the end of the program where founders present their companies to Silicon Valley’s most renowned investors. By being exposed to all those investors at the same time, this creates an urgency for investors to move fast if they want to fund the best companies.
But it was not only Demo Day that helped us with fundraising. Compared to raising money in Europe, the process in the Bay Area is extremely efficient and founder friendly. Pre-Series A investments are typically done via a standardized, simple agreement called SAFE, which is 5 pages long. The company receives investment in exchange for providing rights to the investor for future equity in the company similar to a warrant. There are no lengthy investor negotiations on investment terms and no expensive lawyers or notaries that have to be involved. The agreement is being signed electronically via the online platform Clerky. In practice, that means that the time from an investor saying “Yes, I want to invest” to you receiving the money in the bank can be as short as 2 days. This can be crucial for the success of your company, considering that you can go back to work faster and continue building the team and the product.
So now, what’s next after YC? Have we made it? Are we there yet? No, neither is any of the other companies from our batch (I think). But we are making great progress and are getting closer to our vision every single day.
