How to get into YC and Doing VC in College | Lessons from Holly Liu (Founder of Kabam & ex-YC Visiting Partner)
How college students can get involved in YC, factors of success in the gaming industry, tips for YC, and more!
Members of the Remote Students Community had the opportunity to meet Holly Liu and ask her questions about her experience as an entrepreneur and VC. Apply here to join the invite-only community and meet our amazing lineup of guest speakers!
Holly Liu co-founded Kabam, a mobile game company that has built hit games such as Marvel: Contest of Champions, Fast & Furious: The Game, and Hobbit: Kingdoms of Middle Earth. Holly was in charge of product design and was lead designer on their flagship franchise Kingdoms of Camelot, a game that grossed over $350 million in revenue in its lifetime. She later oversaw the worldwide People and Culture function as Kabam grew to over 1,500 employees, including contractors. Most recently she was a Visiting Partner at Y Combinator and now writes a newsletter FounderMusings.
Since many startups applying to YC might not have a minimum viable product, what are some other factors that you take into account before giving them funding?
1. Clear communication. If you cannot clearly communicate what your company does then it’s really hard to even continue.
2. Unique Insight. If the problem is common then you should be able to answer, why this team and why now?
3. Market Size. Sometimes YC funds something that is currently a small market size and niche but grows to very big — Airbnb, PagerDuty are examples of these. If it’s currently something small, then you should show that not only people love it (by revenue/usage growth and/or retention), but that it has the potential for more people to love it. Pairing this with a unique insight can be powerful.
4. Making a ton of progress in a short amount of time. We’ve had founders who have come in with an idea but have grown a large amount of pre-orders before doing a single line of code. With that, it’s highly recommended to have a technical founder because in the batch, it’s really hard to make progress if all the founders are not technical.
What are the most common problems/roadblocks that prevent startups from taking off?
I would say not making something that people want. In other words, not finding product market fit. The reasons for this can be abundant. It can be the team gives up, the team does not move fast enough, the market is off, the solution is off, or they did not define the problem, etc. To counterbalance this, aspiring entrepreneurs can work on building companies early-on to get much needed practice and experience on how to build something users really want.
How can college students get into VC? What skill sets would you recommend?
There are several routes to this:
1. Create a vetted talent pool of great founders that only you have access to. This may be one area where college students have a distinct advantage and also why places like Dorm Room Fund exist. I would recommend if you are currently a college student to get involved in these types of student-run funds.
Other ways:
2. Start your own tech company, fundraise, and have a successful exit.
3. Go into investment banking like everyone else and grind it out to be the best. This is a crowded route.
4. Start investing your own money or fundraise money to invest in other companies.
Two skillsets I recommend: (1) selling, selling, and selling (2) recognizing great talent (founders)
VCs are high-level money managers that are always selling their services. They get their money from LPs (Limited Partners) and need to deploy it wisely to make a return for their LPs. They invest in startups. Most experienced VCs say you need to be good at these following areas to be a good VC: Dealflow, picking, winning and helping.
Dealflow — You have to have access to great startups/companies to invest in
Picking — You have to be able to pick winners.
Winning — You have to be able to have founders take your money at terms that are agreeable to getting great returns on your money
Helping — the ability to help the company — this could be deep knowledge, recruiting or partnerships. Usually, investors are really good at helping founders get more money and talk to their investor friends.
Can you give advice for applying to YC in the future?
I think the best resource on this is the YC video on How to Successfully Apply to YC. YC has done a phenomenal job of open sourcing a lot of their advice. They love getting great founders to apply, just follow their advice and you will be fine! More specifically they look for clear communicators and ability to make a ton of progress in a short amount of time. To prove the second one, it usually comes down to the team and sometimes the unique insight that could make this a large company one day. PG has famously said that the most successful founders are “determined”. Which is true, but I think people think that founders just work harder and harder and ram-rod their vision through. The reality is, being determined requires a ton of flexibility and adaptability. The best founders behave like water, they keep flowing. If there are rocks or obstacles, they will go around it or find the cracks to keep going.
How one can effectively prepare for accelerators or entrepreneurship down the road?
I would consider learning to code. Even if you do not become a software engineer, it is a useful skill to have and will help you communicate across functions. Outside of that, if you are looking to build a tech startup that requires VC money, then a VC and accelerator are for you. If you want to start a startup, I highly recommend YC Startup School (it is free and online). You will first need to recruit a tech founder and work together on a project or two, then find an idea that makes the most sense to build into a large growing business.
What are the good predictors of success for a startup in the gaming industry?
It is so hard to predict success especially in games and even in startups. Hits driven businesses tend to be hard to predict. But, here are some thing that you should look for: low acquisition costs of the player (free is best, that means you have something viral), high retention metrics… this is usually calculated on a cohort basis, and finally a high LTV (lifetime value, what the customer pays over their lifetime).
What was the #1 factor behind Kabam’s success?
Timing. We were incredibly lucky to have timing on our side; however, it takes a special team to recognize the opportunity and to be able to move in the directions of the waves.
How did your different roles challenge you and excite you? And, how did you get into the gaming industry?
I’ve been pretty fortunate in having the ability to play many roles in my time. The one role I miss the most is actually UX design. I enjoyed that time because not only was it collaborative but also a very creative time. This time fed into enabling me to start a startup, because I learned what it took to launch a product and what functions were needed. I also learned how to form a team, which became fundamental when I pulled together the founders [of my own company], and I continued to grow this skill as I went into HR and built talent spotting across the organization I was in at the time. Building a culture inside an org has been incredibly rewarding as well. It is one of the few things that leaves a mark on people that will last.
In terms of gaming, we pivoted into it when the 2008 financial crisis hit and we were building an ad supported business and our business was wiped out overnight. We needed to find a non-ad supported business that matched our competencies (Facebook apps) and our passion points. Our CEO was really into gaming. You can read more about our journey here.
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