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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