TechWatch Q&A Series: What Makes YC Great, Business Models, and My Favorite Apps

I want to thank everyone for the great questions. I promise to answer more next week.
1. Why did you join the YC program? What is the difference between YC and other incubators?

-Tokyo

To give a brief background, YC or Y Combinator is a startup incubator based in Silicon Valley in the United States. Founded by Paul Graham, the incubator has helped develop large technology companies like Dropbox, AirBnB, Reddit, Stripe, and many more. For more information, here is a link to an article about Y Combinator on Wired Magazine. (http://www.wired.com/2011/05/ff_ycombinator/)

I truly believe that YC stands alone as the best in breed for incubators worldwide. I think there are many reasons why a company should join YC, but in my opinion here are the top 4:

  1. The YC Partners

The YC partners are not only incredibly accomplished and insightful -they tell you the unfiltered truth.

After being accepted into Y Combinator, I remember being excited about our first meeting with Paul Graham. After all, he had been the one to interview and admit us into the program. But, rather than praising our progress, he pointed out every flaw he saw with our product and company.

Media attention and fundraising success make it easy to buy into your own hype as a startup, but really revenue and users are all that matter. The YC partners have a wealth of experience and are able to quickly assess and provide assistance with issues ranging from founder disputes to contract negotiations.

  1. The YC Network of Entrepreneurs

When I applied, I knew how helpful the partners would be, but had no idea how valuable the other founders in Y Combinator would be too. Our batchmates (companies that were in Y Combinator at the same time) and alumni (those who graduated in previous batches) are a tremendous resource. Not only are they incredibly intelligent, they are also eager to help and give support.

Since it is rare that a startup is facing a problem that has not been seen before by others, having a network of successful, yet accessible founders makes every team that much stronger.

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Startups are not easy. Try to learn from the best!
  1. YC Network and Relationships

Almost everyone in Silicon Valley is a first or second-degree connection from someone in YC. One example of that reach is Demo Day. After the end of every batch, startups are launched at Demo Day, having as an audience hundreds of top tier investors from Silicon Valley. In addition to making introductions, YC can tell startups who is actively investing and who is just trying to learn more about the market. This kind of information is almost impossible to get any other way.

  1. Building a Silicon Valley Network

I think this is more of a benefit for international founders, but Y Combinator is the best introduction possible to Silicon Valley. With Y Combinator’s help, international founders are able to leverage the network to build a ready network of friends and peers and a career in Silicon Valley.

If you are currently running a startup, I highly recommend you apply: http://ycombinator.com/apply.html. I am happy to help with your application if you need it. Send me a tweet (http://www.twitter.com/njcar)

 

2. What do you think about Silicon Valley as a unique domain? I think SF is techy and advanced, NY/LA are fashionable and sophisticated, Northern Europe has a strength creating games.

@kcassandra

-Tokyo

While I think that Silicon Valley has unique advantages compared to other startup ecosystems around the United States and the world, I think this breakdown does not do any of these cities justice.

The cost of starting a company has never been lower. Open source tools and decreased hosting costs have enabled entrepreneurs from cities all over the world to impact whatever industry they choose.

Personally, I have brilliant technical friends that have founded companies in New York and Los Angeles. At the same time, there are highly successful fashion and gaming companies that are based in San Francisco. Though I don’t have as much experience with companies in Northern Europe, I assume the same is true there. In fact, I hope to learn more on my trip to Europe next month.

 

3. What are your favorite apps?

@goleador0322

-Tokyo

Though there are many apps that are beautiful and easy to use, my favorites are the ones that I use the most: Twitter, Yelp, Waze, Sunrise, and Spotify.

 

4. Thank you very much for giving me a chance to ask you a question! What is the best way to create an innovative and competitive business model for you? Is there any good way of thinking or research method? Mm Silicon Valley friend told me to just copy existing popular service like Groupon. He said we will need to make it different anyway after starting from copy(=pivot). What is your opinion?

@ishiid

– Tokyo

Thanks for asking!

Out of context, I think it is tricky to define what makes a business model innovative. For example, the freemium business model is popular for software startups. For those that are not familiar with the model, a company makes its software available to a customer for free, and then charges as the product is used more. One example is Dropbox, a cloud hosting company. The product itself is free, but to add additional storage, a customer pays a fee.

Though the freemium model has been used for years, if we take this model and apply it to a hardware company it becomes innovative. Imagine if Google gave away Google Glass for free, but then charged to either add any apps or record any data. I’d say that’s taking a common business model and applying it to a different industry, for instance, makes it innovative.

To answer your question, borrowing a business model from a popular service is not a bad idea as long as the value proposition for the company is compelling and different. For example, an entrepreneur can take the Groupon group-buying business model and use it to build a company that sells airplane tickets in Japan. Though it is the same model, being aware of cultural differences or targeting a specific customer segment makes the product different. In general, I believe that ideas are not as important as the execution of those ideas in innovative ways.

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TechWatch Q&A Series: Introduction

I’m very excited to share that I will be answering questions from Japanese readers weekly on the TechWatch Blog, a technology blog supported by East Ventures. This is a copy of my introduction post in English. If you can read Japanese, take a look here: http://www.evtechwatch.com/2014/04/y.html

スクリーンショット(2014-04-06 22.56.38)

“Software is eating the world.”

– Marc Andreessen, co-founder of Netscape and Partner at Venture Capital Firm Andreessen Horowitz.

Marc Andreessen wrote these famous words in 2011 and could not have been more right. As an entrepreneur in Silicon Valley, I have seen entire industries disrupted by small groups of dreamers and product builders. Large organizations must adopt innovative, lean practices to enable them to design, build and implement products and programs. This is not a battle for growth, but for survival.

This disruption is not only felt on a macro level, but also a personal one. For example, I still remember the night before my high school prom. Covered in maps, my father and I sat at the dining room table, and I hand-wrote driving directions on a notepad. Today, I could have left the house the night of the event with only a smartphone and Google maps. In less than 10 years, all of that time, planning, and paper have been replaced by a single device.

Ever since graduating from Stanford University, I’ve played my role both failing and succeeding to disrupt large companies. I firmly believe that positive disruption has the potential to create jobs, improve living conditions, and change lives.

This is true in Silicon Valley, but also the rest of the world. As a Global Shaper of the World Economic Forum, I have been lucky to visit entrepreneurial ecosystems and meet company builders from Rome to Madrid to Tokyo. In my eyes, promoting and enabling entrepreneurship internationally is a crucial next step.

When Satoru and I first discussed this opportunity to share Silicon Valley insights with the Japanese tech community, it excited me. I am humbled by the opportunity to help educate and grow the Japanese startup ecosystem. This will not be a one-sided dialogue; I very much want to learn from your stories and experiences.

To facilitate conversation, every Monday I will be answering questions that you send and care about the most. To submit a question please use this form or send them to me via Twitter.

I look forward to learning together and embracing disruption and positive change.

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I Believe Every Lie That I Ever Told

I’m not a lyrics connoisseur, but occasionally I’ll hear a line I can’t stop thinking about. In high school, it was from “Air Force Ones,” a heartfelt ode to sneakers. The line was “I treat my shoes like my ride.” It made as little sense then as it does now – I bought my shoes at Costco and did not own a car.

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I miss this Nelly

Then, I heard “The Man,” and it made me only think of being an entrepreneur.

I believe every lie that I ever told. – Aloe Blacc

Every entrepreneur constantly pitches, to investors, employees, customers, advisors, family, friends and in those pitches he or she shares the dream of a better future and how to achieve it. Hindsight makes some of these statements truths and some of them lies, but, at the time every entrepreneur believes them and that is what matters.

Well said Mr. Blacc.

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What’s the One Thing that Makes You Happy?

I don’t usually gain insight from the morning radio. Yes, when in the car I still listen to the radio, but between songs this morning DJ asked, “What is the one thing that makes you actually happy?”

My first thought was the weather (it’s 75 degrees and clear skies as I write this). Then I changed my mind. It’s my family, my friends, the fact that I really enjoy what I do for work. Or food (they immediately started talking about a sushirrito).

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How did I just find out about this. Who wants to go?

Thinking through those things made me smile and it hit me. The common link between everything on my happy list is smiling. When it’s sunny outside, I smile. When I’m laughing with friends and family, I’m smiling. When I feel like I’ve accomplished something at work, I smile. It’s really that simple. Smiling is free, easy to share with others and something I am in complete control of.

What is the one thing that makes you happy?

CDR-Be_Happy-9x12

 

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What I Learned My First Time on Live TV

This week I shot my first live TV segment for FOX on the Napwell (http://www.napwell.com), the world’s first napping mask and a Kickstarter project I launched with one of my longtime friends, Justin Lee.

Boston News, Weather, Sports | FOX 25 | MyFoxBoston

Having never been on live TV, here are 11 things that I learned:

  1. News anchors are fantastic speakers. The teleprompter moves quickly, and they are consistently poised and speak slowly and clearly. There is a lot to learn.
  2. Plug, baby plug. Don’t assume that people will know what your website is or how to buy your product. In our case, they did not show the website address on screen so make sure to say it out loud.
  3. Know your themes and frame the conversation. The anchor will naturally guide the segment but have 2-3 things that you want to say and work them in.  In our case it was our Kickstarter success, the fact that we iterate to solve real problems, and our target customer scenarios.
  4. News teams are a prime example of operational efficiency. The team is lean and without redundancy.
  5. Know which camera you are supposed to look into. There were a few of them and I wasn’t sure where to be looking.
  6. Take pictures!
  7. Be yourself. I tried to sprinkle in a few jokes because that’s what I do normally. It put me at ease, and hopefully you chuckle at one of them.
  8. Wear something with pockets. They give you a little microphone box that needs to go somewhere so make it easy for them.
  9. Time goes by very quickly.
  10. Wear solid colors. A pro tip picked up from my new friend and airplane rowmate and Director of Public Relations at Reputation.com. Thanks Leslie!
  11. Smile, you don’t get to be on TV every day. It will remind you to be less nervous and have fun.

Still much to learn, but how do you think we did?

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Meaningful Conversation 5: Building a Private Car Service Empire in 13 Minutes

I am running a social experiment to have more meaningful conversations. This is a recap of one of my attempts. If you want to see why I am doing this, please read this: My Experiment to Have More Meaningful Conversations.

This time I chose my cab driver.

I wondered what kind of ideas he would have for my iOS problem, but knew that first I needed to learn about his familiarity with his smartphone. We follow the same process when doing user testing for Clippo. Someone’s background shapes the questions you can ask. For a social media app, you’re going to ask a hardcore Instagram user different questions than someone who doesn’t use Facebook.

I started with a basic first check: what kind of smartphone did he have? Samsung. I knew he could not become an immediate user because our Android version has not launched yet.

Second check: what apps does he normally use? Text messages and maps. The fact that he told me texting was an app probably eliminated power user type questions.

Not expecting much, I told him how difficult it was for us to get users and asked if he had any ideas.

“I have not the first clue, but you seem like you know about the Internet – why don’t you help me.”

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What can Walter White teach us about a private car business?

Now we were getting somewhere. He wanted to get more customers for his private car service in addition to those coming through using apps like Uber. It was his most profitable type of ride and he wanted to use the Internet to grow his customer base. I told him I would try to help, and started asking him questions to learn more about the numbers.

He told me how much he makes from each service, and I asked him what hours of the day and types of trips were the most profitable. The depth of his knowledge about the taxi business in SF was awesome – I learned so much.

After doing a quick analysis of his revenue streams, we decided the most profitable trip for him was to the airport using his private car service. What I told him was that his focus should be on booking as many of those kinds of trips as possible.

Then I told him that because he lives in the Bay Area, the Internet was probably the wrong way to get customers. For example, if he wanted to create an AdWords strategy for San Francisco, he would be competing against the savviest search marketing specialists from Uber, Lyft, etc. That’s tough for anyone, especially an AdWords beginner. What he could do, however, is try non-scalable tactics that would be hard for those companies to replicate.

Given his target customer was an airport traveler, we decided to focus on hotels. But, as opposed to going to large hotels, I told him he should try to form relationships with boutique hotels.

I think that boutique hotels gave him more opportunity for two main reasons: 1) Utilization – large hotels have lines of cabs waiting for passengers, so it was a fairly large opportunity cost to be sitting in the car hoping for an airport trip. 2) Competition – boutique hotels were less likely to be approached by rival cab drivers and would be more amenable to making him a preferred driver for a cut.

This gave us the strategy:

1. Create referral deals with the bellhops at boutique hotels for airport travelers. Why the bellhops? They are the most motivated to create a deal, because they can use the extra money, and are the ones that call the cabs. Also, skipping the hotel establishment allows the deal to close much more quickly.

2. In the down time between calls from bellhops, use Summon and Uber to fill the time and keep his utilization rate high. This would avoid long hotel lines and keep him earning while waiting for the higher payoff trips.

(Side Note: I had to leave Lyft off the list, because he refuses to drive for them. Apparently for a driver to sign up on Lyft, there is only a simple five-minute application. It upset him that inexperienced drivers could thus immediately be put on the road; he felt that he has paid his dues and needs to be treated differently. Though there is nothing he can do about it, I told him that I definitely agreed with him on principle. In fact, I think this lack of driver experience does make the Lyft product suffer a bit. When I took Lyft on Saturday, my driver did not know the city well (she was from San Jose) and we went the wrong way. I did not use Lyft on the way home. Step up your game Lyft!)

And that was that, we were able to create this plan in the 13 minute car ride. I gave him my contact info and I hope that he tries what we discussed.

Would you have added anything else?

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Meaningful Conversation 4: Mongooses and User Experience

I am running a social experiment to have more meaningful conversations. This is a recap of one of my attempts. If you want to see why I am doing this, please read this: My Experiment to Have More Meaningful Conversations.

This is the first conversation in this series that is not centered on my work, but rather focuses on someone else’s work. I was in New York last week and one evening, I went to dinner with two friends and a girl I did not know.  At the table, she and I shared a side.

We started with small talk: the weather, what people did for work, etc. She mentioned that she was in the Columbia Anthroloplogy PhD program and I told her that I ran a startup. We moved on to cover food (we were at a pretty amazing Japanese restaurant), our trip to NYC, and other generalities. Since I am now constantly worried about falling into Type 2 Conversations, the basic trajectory of conversation worried me. So, I asked her more about her research. I told her that at a high level I knew what Anthropology was, but not really much more than that.

She started describing one of her former research projects, a study to preserve the seabird population in a specific habitat of Hawaii. Unfortunately to do that, their team had to control the mongoose population, which was eating many of the birds.

Animal rights issues aside, it fascinated me that someone was able to come to the decision that the seabird was more valuable than the mongoose. There are so many factors that determine an animal’s value in an ecosystem that I think it would be almost impossible to understand them all.

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Rikki Tikki Tavi is the only mongoose I know

The thought process seemed unethical, until I found an analog in my life: controlling user behavior in a mobile app.

While not a predatory animal, any mobile app has predatory buttons, menus, and options that all compete for the user’s attention. When trying to determine how to have users take the actions we want, we also run experiments. Much like the researchers did with the mongoose, we have to predict the number one reason users are being led astray from what we feel is the optimal behavior.

For example, we just faced this with our new user tutorial. We created two versions, 1) have every new user make a Clippo and 2) have every new user just watch popular Clippos. We decided that having a user make a Clippo would make them understand the purpose of the app better. Then, we executed on that plan by actively restricting elements that competed for a user’s attention.

Though the teams had Anthropology and software development backgrounds, our experimental approaches were similar. I think the major difference is that unlike the mongoose, our users can choose to participate in the experiment. Then, to take that to the extreme, the mongoose lost its life in the process. This makes me a bit uncomfortable, but perhaps is the result of me not understanding the research industry.

What do you think?

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22 Lessons Learned in New York

After returning from a last minute trip to New York (for reasons I cannot share yet), I want to share 22 quick lessons I learned. Can you relate to any of them?

1. Why is Uber taking over New York? I couldn’t walk more than a block without finding a cab.
2. Someone as poised as a major news network anchor still needs cues from time to time
3. Warm weather always beats cold weather
4. Off-broadway performers are more coordinated than I will ever be
5. There is always a way to connect with someone
6. Flying into Laguardia is much easier than JFK
7. Always have google maps open while in a cab to monitor the trip
8. Don’t be afraid of the competition – try them on your head

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9. Avoid connecting flights as best you can
10. 4am is a lot later than it seems
11. Starbucks wifi is optimized for customer turnover
12. Product demos always have a problem – bring a spare needle and thread in case
13. Land ownership in Burgundy is really confusing
14. Strong showers are critical to my happiness
15. You cross from friend to really good friend when you pick fuzz off his fleece
16. Always take pictures
17. McDonald’s chicken nuggets are good at any time of the day
18. If you want something ask for it, worst case they say no which is the same as not asking
19. When playing serious ping pong, make everyone use the same paddle
20. Dance floors are locked on Mondays
21. Drinking wine with a sommelier changes how you think about wine
22. Chicken wings in the bathroom make shower time delicious

Am I missing anything?

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What Guyana Taught Me about Startups

I am a proud member of the Global Shapers, a program created by the World Economic Forum to empower millennials in cities all over the world to make a local impact.

Conversations with international Shapers are inspiring. They give me alternative perspective, both cultural and geographic, and I try my best to use their wisdom to improve my life.

For example, this is an unedited conversation I had with Onika Stellingburg, the curator from Georgetown, Guyana. We were talking about what it is I do for work. (Am I really this terse online? Anyone have a guide to proper Facebook chat etiquette?):

Onika: What does Clippo do?

gysa
I always knew it was there.

Neil: Make animated gifs and memes from your phone

Onika: Ps- I’M Slightly technologically slow but what’s IOS? Smart phones right?

Neil: yes iphones

Onika: I keep seeing this word ‘gifs’ ….it’s the moving pictures right?

Neil: yes, you got it

Onika: Excuse me….I don’t even own a smart phone so I pick regular things up slower than most. Yayyyyyy. There is hope for me yet.

Neil: much hope

Onika: So what do you do when you make them?

Neil: Share them with friends. It’s a way to communicate with gifs

Onika (at the same time as my previous message): Sell them online?

Awesome

My creolese might come out here…..dats for fun or is it ya job?

Neil: love it, it’s my job and it’s fun

What I found interesting:

  1. She wasn’t sure what iOS was. I take having a smart phone for granted and iOS is a fairly common term, but this is not true for the majority of people outside the US.
  2. It was interesting that she knew what a gif was and not what iOS was, maybe the Buzzfeed effect?
  3. When she said smart phones, I said iPhones. Guess I’m not as quick to embrace Android.
  4. Her immediate question was whether we sell the gifs after we make them. At first I was amused, but then realized quickly that’s a very reasonable question. Businesses create products to ultimately generate revenue. The fact that we are focusing on growth and not revenue is probably amusing to her.
  5. I am a fan of Creolese.
  6. She asked whether Clippo is for fun or my job. I’m pretty happy to answer that it’s both.

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Meaningful Conversation 3 – Seducing the Teller at Wells Fargo With Work

I am running a social experiment to have more meaningful conversations. This is a recap of one of my attempts. If you want to see why I am doing this, please read this: My Experiment to Have More Meaningful Conversations.

This was the first day that I approached someone that I did not know well to have a candid conversation. In fact, it was the first time that I actually interrupted someone’s life (and their job) to talk about mine. It was at the bank when I had to deposit some checks (I realize there are high-tech ways to do this, but I still take pleasure in depositing them myself).

I decided beforehand to talk to any random teller, whether I knew them or not. I did not expect to be nervous, but I was. I had the same feeling that I get in a bar before approaching a pretty girl. The name of this blog is ‘Shooters Shoot’ for a reason, so I just started with, “I’m excited to show you the new app we just released.” The teller was excited and so was the manager next to him. I showed them Clippo and they thought it was cool, but that was not enough alone to sustain a longer conversation.

teller

The manager started to walk away, so I explained to the teller loudly enough so the manager could hear, how we were having trouble getting users and asked if he had any ideas. The teller said, “what about Facebook?” and then there was another 30-second silence. It would have been easy to give up there, but I kept pressing. I described how acquiring a mobile user on Facebook was quite expensive and it was only for larger companies like gaming companies with deep pockets who could buy users.

Thankfully, this brought the manager back (probably wondering what I was still doing there), with an idea. “You know,” he started, “one of my friends built this photo app that is one of the top 10 on the app store.”

Then the conversation started rolling. In fact, I ended up talking to them for almost fifteen minutes, completely monopolizing this teller’s time. What was even better was that he is an avid Vine user, so I was speaking to our target demographic.

Reflecting on this chat, I found two things interesting. First, I realized that there was a large barrier that I needed to surpass to even have this conversation; the teller needed tacit “approval” from his manager to talk to me. Second, once we started talking more personally about my problem, and not just the app itself, the teller began to think of more ideas, and became invested in the conversation. Maybe this is why as a startup we are supposed to “marry a problem” and not the solution?

Again like my first encounter, there was a fair amount of give and take. They offered ideas for my user acquisition problem and also asked some questions about startups, mobile apps, and other tech-related things they were curious about. Perhaps they didn’t have an outlet for this type of conversation or maybe they were just being polite and humoring me, but regardless I was happy to answer their questions. To be honest, I’m excited about taking my next trip to the bank- I am curious if our conversation has the potential to go deeper.

In addition to my commentary, I’m going to add a summary at the end of each post, so I can keep track of what the other person did, what they shared, and what I answered for them (if anything).

What they did:

  1. They both downloaded the app (2 new users!)
  2. The manager told me about his friend who made one of the 10 most popular photography apps in the app store – and one of his early user strategies (it’s a good one)
  3. One of them gave me feedback about the tutorial
  4. Both said they would try it and share with friends and will have feedback the next time I come in (I can’t wait)

What they asked me:

  1. What do you keep track of in a new app?
  2. How many users do you need to have?
  3. What was easier, building a product or finding investors? (I thought this was an interesting question – they didn’t ask about acquiring new users)

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